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):   April 10, 2019

 

   BLACKBOXSTOCKS INC.

 (Exact name of registrant as specified in its charter)

 

Nevada 0-55108 45-3598066

(State or other jurisdiction

of incorporation)

(Commission

File No.)

(IRS Employer

Identification No.)

 

5430 LBJ Freeway, Suite 1485, Dallas, Texas 75240

(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s telephone number, including area code: ( 972) 726-9203

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 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-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
None N/A N/A

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [x]  

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If an emerging growth company, indicate by check mark if the registrant has elected not to use extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Item 1.01 – Entry into a Material Definitive Agreement.

 

On May 21, 2019, Blackboxstocks, Inc. (the “Company”) issued an 8% Fixed Convertible Promissory Note (the “HGC Note”) to Harbor Gates Capital, LLC for a total principal amount of up to $550,000, which included an original issue discount of 10% on the investment amount of up to $500,000. The HGC Note consideration is deliverable in two tranches, the first in the amount of $350,000 upon the effective date and up to an additional $150,000 upon mutual agreement by the Company and the holder within 30 days of the effective date. The HGC Note bears interest at a rate of 8% per annum and matures six months after the date of each payment (the “Maturity Date”). If the Company prepays the HGC Note within 90 days, the Company must pay a cash redemption premium of 110%; if such prepayment is made between the 91st day and the 180th day, then such redemption premium is 115%. In the event that an event of default occurs under the HGC Note, a mandatory default penalty of 15% of the outstanding principal shall be added to the principal of the Note and the note shall begin accruing additional interest, in addition to the 8% per annum, at a rate of 18% per annum. The holder of the HGC Note is also granted piggyback registration rights with respect to the shares of Common Stock issued upon conversion and a right of first refusal upon additional financing sought while the note remains outstanding.

 

Pursuant to the HGC Note, the holder may convert all or a portion of the outstanding principal into shares of Common Stock of the Company at a conversion price per share equal to $0.65 until the Maturity Date and thereafter at the lower of (i) $0.65 or (ii) 65% of the lowest closing bid price during the 15 prior trading days, provided, however, that (i) if the Common Stock is not deliverable by DWAC, the conversion price shall be reduced by 5%, and (ii) if the Company experiences a DTC “Chill” on its shares of Common Stock, the conversion price shall be reduced by 10% while such DTC “Chill” remains in effect, such that, if both (i) and (ii) occur, the conversion price shall be reduced by an additional 15%. At all times, the Company must have reserved the amount of shares of Common Stock equal to at least five times the number of shares of Common Stock issuable upon conversion of the HGC Note.

 

Item 2.03 – Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information set forth under Item 1.01 above with respect to the issuance of the HGC Note is incorporated herein by reference.

 

Item 3.02 – Unregistered Sales of Equity Securities.

 

The information set forth under Item 1.01 above with respect to the issuance of the HGC Note is incorporated herein by reference. The issuance of the HGC Note was made in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Act.

 

On April 10, 2019 the Company entered into a Securities Purchase Agreement with an investor for the purchase of 153,847 shares of Common Stock and a Warrant, exercisable for a period of 5 years, to purchase 100,000 shares of Common Stock at an exercise price of $0.65 per share. The aggregate purchase price for the securities was $100,000.55.

 

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On or about May 3, 2019 the Company entered into a Securities Purchase Agreement with an investor for the purchase of 76,924 shares of Common Stock. The aggregate purchase price for the securities was $50,000.60.

 

On May 22, 2019 the Company entered into a Securities Purchase Agreement with an investor for the purchase of 38,462 shares of Common Stock and a Warrant, exercisable for a period of 5 years, to purchase 19,231 shares of Common Stock at an exercise price of $0.65 per share. The aggregate purchase price for the securities was $25,000.30.

 

The Common Stock and Warrants described above were privately offered and sold in reliance upon exemptions from registration pursuant to Section 4(a)(2) under the Securities Act. The Company reasonably believed that each of the purchasers of such securities had access to information concerning its operations and financial condition, were acquiring the securities for their own account and not with a view to the distribution thereof, and each investor qualified as an "accredited investor" as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act. Furthermore, no "general solicitation" was made by the Company with respect to sale of any of the securities. At the time of their issuance, the securities described above were deemed to be restricted securities for purposes of the Securities Act and the documentation representing the securities bear legends and/or non-transfer provisions to that effect.

 

Item 9.01 Financial Statements and Exhibits

  

(d) Exhibits:

 

Exhibit   Description
     
4.1   Form of 8% Fixed Convertible Promissory Note of Blackboxstocks, Inc. dated May 21, 2019
4.2   Form of Warrant Agreement
10.1   Securities Purchase Agreement dated April 10, 2019
10.2   Securities Purchase Agreement dated May 3, 2019
10.3   Securities Purchase Agreement dated May 22, 2019
     

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: May 23, 2019

 

  BLACKBOXSTOCKS INC.
   
By: /s/ Gust Kepler
Name: Gust Kepler
Title: President and Chief Executive Officer

 

 

 

 

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EXHIBIT INDEX

Exhibit   Description
     
4.1   Form of 8% Fixed Convertible Promissory Note of Blackboxstocks, Inc. dated May 21, 2019
4.2   Form of Warrant Agreement
10.1   Securities Purchase Agreement dated April 10, 2019
10.2   Securities Purchase Agreement dated May 3, 2019
10.3   Securities Purchase Agreement dated May 22, 2019
     

 

  Exhibit 4.1

 

Note: May 21, 2019

 

 

NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

 

THIS NOTE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE NOTE IN THE EVENT OF A PARTIAL REDEMPTION OR CONVERSION. AS A RESULT, FOLLOWING ANY REDEMPTION OR CONVERSION OF ANY PORTION OF THIS NOTE, THE OUTSTANDING PRINCIPAL SUM REPRESENTED BY THIS NOTE MAY BE LESS THAN THE PRINCIPAL SUM AND ACCRUED INTEREST SET FORTH BELOW.

 

 

8% FIXED CONVERTIBLE PROMISSORY NOTE

 

OF

 

BLACKBOXSTOCKS, INC.

 

 

Issuance Date: May 21, 2019

Total Face Value of Note: Up to $550,000

Initial Consideration: $350,000

Initial Original Issue Discount: $35,000

Initial Principal Sum Due: $385,000

 

This Note is a duly authorized Fixed Convertible Promissory Note of Blackboxstocks, Inc. a corporation duly organized and existing under the laws of the State of Nevada ( the “ Company ”), designated as the Company's 8% Fixed Convertible Promissory Note in the principal amount of up to $550,000 (the “ Note” ). This Note will become effective only upon execution by both parties and delivery of the first payment of consideration by the Holder (the “ Effective Date ”).

For Value Received , the Company hereby promises to pay to the order of Harbor Gates Capital, LLC or its registered assigns or successors-in-interest (the “Holder” ) the Principal Sum of $550,000, or such lesser amount of aggregate Consideration plus the applicable OID thereon (as provided herein) drawn by the Company hereunder (the “ Principal Sum ”) and to pay interest at a rate of 8% per annum on the Principal Sum, to the extent such Principal Sum and any accrued interest and any other interest, fees, liquidated damages and/or items due to

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Holder herein have not been repaid or converted into the Company's common stock (the “Common Stock” ), in accordance with the terms hereof. The sum of $350,000 (the “ Initial Consideration ”) shall be remitted and delivered to the Company, and $35,000 (the “ Initial Original Issue Discount ”) shall be retained by the Holder through an original issue discount (the “ OID ”) for due diligence and legal bills related to this transaction. The OID is set at 10% of any Consideration, defined below, paid. The Company covenants that within six months of the Effective Date of the Note, it shall utilize approximately $350,000 of the proceeds in the manner set forth on Schedule 1, attached hereto (the “ Use of Proceeds ”), and shall promptly provide evidence thereof to Holder, in sufficient detail as reasonably requested by Holder.

For a period of 30 calendar days following the Effective Date of the Note, the Holder may pay additional consideration (each such payment, along with the Initial Consideration, shall be deemed “ Consideration ” hereunder), plus the prorated 10% OID (together with the Consideration and OID, each, a “ Tranche ”), to the Company in such amounts (up to $150,000) and at such dates as mutually agreed by the Company and the Holder (each, an “Additional Tranche Date” ). The Principal Sum due to Holder shall be prorated based on the Consideration actually paid by Holder (plus the 10% OID, which shall be prorated based on the Consideration actually paid by the Holder) such that the Company is only required to repay the amount funded and the Company is not required to repay any unfunded portion of the Total Face Value of this Note. The Maturity Date is six months from the Effective Date of each payment (the “Maturity Date” ) and is the date upon which the Principal Amount Sum of this Note, as well as any unpaid interest and other fees, shall be due and payable.

In addition to the 8 % interest per annum referenced above, in the Event of Default pursuant to Section 3.00(a), additional interest will accrue on the Principal Sum then outstanding from the date of the Event of Default at the rate equal to the lower of 18% per annum or the highest rate permitted by law (the “ Default Rate ”).

This Note will become effective only upon the execution by both parties, including the execution of Exhibits B, C, D, E, Schedule 1 (collectively, the “ Exhibits ”), and the Irrevocable Transfer Agent Instructions (the “ Date of Execution ”) and delivery of the initial payment of consideration by the Holder (the “ Effective Date ”). The Company acknowledges and agrees the Exhibits are material provisions of this Note.

For purposes hereof the following terms shall have the meanings ascribed to them below:

“Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of New York are authorized or required by law or executive order to remain closed.

“Fixed Conversion Price” shall be fixed at a price equal to $0.65.

Principal Amount ” shall refer to the sum of (i) the original Principal Sum of this Note (including the OID, prorated if the Note has not been funded in full), (ii) all accrued but unpaid interest hereunder, (iii) any fees due hereunder, (iv) liquidated damages, and (v) any default payments owing under the Note, in each case previously paid or added to the Principal Amount.

Principal Market ” shall refer to the primary exchange on which the Company’s common stock is traded or quoted.

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“Trading Day” shall mean a day on which there is trading or quoting for any security on the Principal Market.

“Underlying Shares” means the shares of common stock into which the Note is convertible (including interest, fees, liquidated damages and/or principal payments in common stock as set forth herein) in accordance with the terms hereof.

The following terms and conditions shall apply to this Note:

Section 1.00 Repayment .

(a)       The Company may pay this Note, in whole or in part, in cash or in other good funds, according to the following schedule:

Days Since Effective Date Payment Amount
0-90 days 110% of Principal Amount so paid
91-180 days 115% of Principal Amount so paid

 

(b)       After 180 days from the Effective Date, the Company shall provide the Holder with two weeks’ (10 Business Days) prior written notice of the Company’s determination to pay any or all of its obligations hereunder. During such two-week period, the Holder may exercise any or all of its conversion rights hereunder. In the event that the Holder does not exercise its conversion rights in respect of any or all of such noticed, prospective payment, the Company shall tender the full amount set forth in such notice (less any amount in respect of which the Holder has exercised its conversion rights) to the Holder within 2 Business Days following the Holder’s exercise (or notification to the Company of non-exercise) of the Holder’s conversion rights in respect of the amount set forth in such notice or upon the expiration of the 10 Business Day period, whichever is earlier. Any such payment by the Company in connection with this provision shall be deemed to have been made on the date that the Holder first receives the above-referenced notice.

Section 2.00 Conversion .

(a)    Conversion Right . Subject to the terms hereof and restrictions and limitations contained herein, the Holder shall have the right, at the Holder's sole option, at any time and from time to time to convert in whole or in part the outstanding and unpaid Principal Amount under this Note into shares of Common Stock as per the applicable Conversion Price, but not to exceed the Restricted Ownership Percentage, as defined in Section 2.00(f). The date of delivery of any conversion notice (“ Conversion Notice ”) hereunder shall be referred to herein as the “Conversion Date” . The Conversion Price shall be equitably adjusted in the event of a forward split, stock dividend, or the like, but shall not be adjusted in the event of a reverse split, recombination, or the like.

(b)         Stock Certificates or DWAC . The Company will deliver to the Holder, or Holder’s authorized designee, no later than 2 Trading Days after the Conversion Date, a certificate or certificates (which certificate(s) shall be free of restrictive legends and trading

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restrictions if the shares of Common Stock underlying the portion of the Note being converted are eligible under a resale exemption pursuant to Rule 144(b)(1)(ii) and Rule 144(d)(1)(ii) of the Securities Act of 1933, as amended) representing the number of shares of Common Stock being acquired upon the conversion of this Note. In lieu of delivering physical certificates representing the shares of Common Stock issuable upon conversion of this Note, provided the Company's transfer agent is participating in Depository Trust Company’s (“ DTC ”) Fast Automated Securities Transfer (“ FAST ”) program, the Company shall instead use commercially reasonable efforts to cause its transfer agent to electronically transmit such shares issuable upon conversion to the Holder (or its designee), by crediting the account of the Holder’s (or such designee’s) broker with DTC through its Deposits and Withdrawal at Custodian (“ DWAC ”) program (provided that the same time periods herein as for stock certificates shall apply).

(c) Charges and Expenses . Issuance of Common Stock to Holder, or any of its assignees, upon the conversion of this Note shall be made without charge to the Holder for any issuance fee, transfer tax, legal opinion and related charges, postage/mailing charge or any other expense with respect to the issuance of such Common Stock. Company shall pay all Transfer Agent fees incurred from the issuance of the Common Stock to Holder, as well as any and all other fees and charges required by the Transfer Agent as a condition to effectuate such issuance. Any such fees or charges, as noted in this Section that are paid by the Holder (whether from the Company’s delays, outright refusal to pay, or otherwise), will be automatically added to the Principal Sum of the Note and tack back to the Effective Date for purposes of Rule 144.

(d)        Delivery Timeline . If the Company fails to deliver to the Holder such certificate or certificates (or shares through the DWAC program) pursuant to this Section (free of any restrictions on transfer or legends, if eligible) prior to 3 Trading Days after the Conversion Date, the Company shall pay to the Holder as liquidated damages an amount equal to $2,000 per day, until such certificate or certificates are delivered. The Company acknowledges that it would be extremely difficult or impracticable to determine the Holder’s actual damages and costs resulting from a failure to deliver the Common Stock and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs. Such liquidated damages will be automatically added to the Principal Sum of the Note and tack back to the Effective Date for purposes of Rule 144.

(e)        Reservation of Underlying Securities . Until such time as the full Principal Amount of this Note has been paid or converted as provided herein, the Company covenants that it will at all times reserve and keep available for Holder, out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, five times the number of shares of Common Stock as shall be issuable (taking into account the adjustments under this Section 2.00, but without regard to any ownership limitations contained herein) upon the conversion of this Note (consisting of the outstanding Principal Amount), under the formula in Section 3.00(c) below, to Common Stock (the “ Required Reserve ”). The Company covenants that all shares of Common Stock that shall be issuable will, upon issue, be duly authorized, validly issued, fully-paid, non-assessable and freely-tradable (if eligible). If the amount of shares on reserve in Holder’s name at the Company’s transfer agent for this Note shall drop below the Required Reserve, the Company will, within 2 Trading Days of notification from Holder, instruct the transfer agent to increase the number of shares so that the Required Reserve is met. In the event that the Company does not instruct the transfer agent to increase the number of shares so that the Required Reserve is met, the Holder will be allowed, if applicable, to

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provide this instruction as per the terms of the Irrevocable Transfer Agent Instructions attached to this Note. The Company agrees that the maintenance of the Required Reserve is a material term of this Note and any breach of this Section 2.00(e) will result in a default of the Note.

(f)        Conversion Limitation . The Holder will not submit a conversion to the Company that would result in the Holder beneficially owning more than 9.99% of the then total outstanding shares of the Company ( Restricted Ownership Percentage ”) .

(g)        Conversion Delays . If the Company fails to deliver shares in accordance with the timeframe stated in Section 2.00(d), the Holder, at any time prior to selling all of those shares, may rescind any portion, in whole or in part, of that particular conversion attributable to the unsold shares. The rescinded conversion amount will be returned to the Principal Sum with the rescinded conversion shares returned to the Company, under the expectation that any returned conversion amounts will tack back to the Effective Date.

(h)        Shorting and Hedging . Holder may not engage in any “shorting” or “hedging” transaction(s) in the Common Stock of the Company while the Note is outstanding..

(i)        Conversion Right Unconditional . If the Holder shall provide a Conversion Notice as provided herein, the Company's obligations to deliver Common Stock shall be absolute and unconditional, irrespective of any claim of setoff, counterclaim, recoupment, or alleged breach by the Holder of any obligation to the Company.

Section 3.00 Defaults and Remedies .

(a)        Events of Default . An “ Event of Default ” is: (i) a default in payment of any amount due hereunder; (ii) a default in the timely issuance of underlying shares upon and in accordance with terms of Section 2.00, which default continues for 2 Trading Days after the Company has failed to issue shares or deliver stock certificates within the 3rd Trading Day following the Conversion Date; (iii) if the Company does not issue the press release or file the Current Report on Form 8-K, in each case in accordance with the provisions and the deadlines referenced Section 5.00(j); (iv) failure by the Company for 3 Business Days after written notice has been received by the Company to comply with any material provision of this Note; (v) any representation or warranty of the Company in this Note that is found to have been incorrect in any material respect when made, including, without limitation, the Exhibits; (vi) failure of the Company to remain compliant with DTC, thus incurring a “chilled” status with DTC, or failure of the Company to abide by the terms of Section 3.00(d); (vii) other than indebtedness of the Company that is in default upon as of the Effective Date, any default of any mortgage, indenture or instrument which may be issued, or by which there may be secured or evidenced any indebtedness, for money borrowed by the Company or for money borrowed the repayment of which is guaranteed by the Company, whether such indebtedness or guarantee now exists or shall be created hereafter; (viii) if the Company is subject to any Bankruptcy Event; (ix) any failure of the Company to satisfy its “filing” obligations under Securities Exchange Act of 1934, as amended (the “ 1934 Act ”) and the rules and guidelines issued by OTC Markets News Service, OTCMarkets.com and their affiliates; (x) failure of the Company to remain in good standing under the laws of its state of domicile; (xi) any failure of the Company to provide the Holder with information related to its corporate structure including, but not limited to, the number of authorized and outstanding shares, public float, etc. within 1 Trading Day of request by Holder; (xii) failure by the Company to maintain the Required Reserve in accordance with the terms of

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Section 2.00(e); (xiii) failure of Company’s Common Stock to maintain a closing bid price in its Principal Market for more than 3 consecutive Trading Days; (xiv) any delisting from a Principal Market for any reason; (xv) failure by Company to pay any of its Transfer Agent fees in excess of $2,000 or to maintain a Transfer Agent of record; (xvi) failure by Company to notify Holder of a change in Transfer Agent within 24 hours of such change; (xvii) any trading suspension imposed by the United States Securities and Exchange Commission (the “ SEC ”) under Sections 12(j) or 12(k) of the 1934 Act; (xviii) failure by the Company to meet all requirements necessary to satisfy the availability of Rule 144 to the Holder or its assigns, including but not limited to the timely fulfillment of its filing requirements as a fully-reporting issuer registered with the SEC, requirements for XBRL filings, and requirements for disclosure of financial statements on its website; (xix) failure of the Company to abide by the Use of Proceeds or failure of the Company to inform the Holder of a change in the Use of Proceeds; or (xx) failure of the Company to abide by the terms of the right of first refusal contained in Section 5.00(l).

(b)                Remedies . If an Event of Default occurs, the outstanding Principal Amount of this Note owing in respect thereof through the date of acceleration, shall become, at the Holder's election, immediately due and payable in cash at the “ Mandatory Default Amount ”. The Mandatory Default Amount means 15% of the outstanding Principal Amount of this Note will be automatically added to the Principal Sum of the Note and tack back to the Effective Date for purposes of Rule 144. Commencing 5 days after the occurrence of any Event of Default that results in the eventual acceleration of this Note, this Note shall accrue additional interest, in addition to the Note’s 8% interest per annum, at a rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. In connection with such acceleration described herein, the Holder need not provide, and the Issuer hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by the Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the note until such time, if any, as the Holder receives full payment pursuant to this Section 3.00(b). No such rescission or annulment shall affect any subsequent event of default or impair any right consequent thereon. Nothing herein shall limit the Holder's right to pursue any other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Issuer's failure to timely deliver certificates representing shares of Common Stock upon conversion of the Note as required pursuant to the terms hereof.

(c)                Variable Conversion Price . If, and only if, the Note is not retired on or before the Maturity Date, then at any time and from time to time after the Maturity Date, and subject to the terms hereof and restrictions and limitations contained herein, the Holder shall have the right, at the Holder's sole option, to convert in whole or in part the outstanding and unpaid Principal Amount under this Note into shares of Common Stock at the Variable Conversion Price. The Variable Conversion Price (together with the Fixed Conversion Price, as may be applicable, the “ Conversion Price ”) shall be equal to the lower of: (a) the Fixed Conversion Price or (b) 65% of the lowest closing bid price of the Company’s common stock during the 15 consecutive Trading Days prior to the date on which Holder elects to convert all or part of the Note. For the purpose of calculating the Variable Conversion Price only, any time after 4:00 pm Eastern Time (the closing time of the Principal Market) shall be considered to be the beginning of the next Business Day. If the Company is placed on “chilled” status with the DTC, the discount shall be increased by 10%, i . e ., from 35% to 45%, until such chill is remedied.

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If the Company is not DWAC eligible through their Transfer Agent and DTC’s FAST system, the discount will be increased by 5%, i . e ., from 35% to 40%. In the case of both, the discount shall be a cumulative increase of 15%, i . e ., from 35% to 50%.

(d)    DTC Eligibility . The Company hereby warrants and represents to the Holder that as of the issuance date of the Note, the Company is not DTC eligible, and in order to induce the Holder into purchasing the Note, the Company agrees it shall use its best efforts to accomplish the following on or before the date that is 5 months from the Effective Date of the Note: (i) cause the Company’s common stock to be qualified to be held at DTC and traded and serviced through DTC’s electronic book-entry system; (ii) cause its transfer agent to execute a standard form contract with DTC to permit the transfer agent to act as a custodian for DTC, allowing the transfer agent to participate in DTC’s FAST program; and (iii) cause the Company’s common stock, or cause its transfer agent to cause the Company’s common stock, to be eligible for withdrawal via the DWAC system. Furthermore, the Company agrees it shall remain DTC eligible for as long as the Note is outstanding.

Section 4.00 Representations and Warranties of Holder .

Holder hereby represents and warrants to the Company that:

 

(a) Holder is an “accredited investor,” as such term is defined in Regulation D of the Securities Act of 1933, as amended (the “ 1933 Act ”), and will acquire this Note and the Underlying Shares (collectively, the “ Securities ”) for its own account and not with a view to a sale or distribution thereof as that term is used in Section 2(a)(11) of the 1933 Act, in a manner which would require registration under the 1933 Act or any state securities laws. Holder has such knowledge and experience in financial and business matters that such Holder is capable of evaluating the merits and risks of the Securities. Holder can bear the economic risk of the Securities, has knowledge and experience in financial business matters and is capable of bearing and managing the risk of investment in the Securities. Holder recognizes that the Securities have not been registered under the 1933 Act, nor under the securities laws of any state and, therefore, cannot be resold unless the resale of the Securities is registered under the 1933 Act or unless an exemption from registration is available. Holder has carefully considered and has, to the extent Holder believes such discussion necessary, discussed with its professional, legal, tax and financial advisors, the suitability of an investment in the Securities for its particular tax and financial situation and its advisers, if such advisors were deemed necessary, and has determined that the Securities are a suitable investment for it. Holder has not been offered the Securities by any form of general solicitation or advertising, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or other similar media or television or radio broadcast or any seminar or meeting where, to Holders’ knowledge, those individuals that have attended have been invited by any such or similar means of general solicitation or advertising. Holder has had an opportunity to ask questions of and receive satisfactory answers from the Company, or any person or persons acting on behalf of the Company, concerning the terms and conditions of the Securities and the Company, and all such questions have been answered to the full satisfaction of Holder. The Company has not supplied Holder any information regarding the Securities or an investment in the Securities other than as contained in this Agreement, and Holder is relying on its own investigation and evaluation of the Company and the Securities and not on any other information.

 

(b) The Holder is a limited liability company duly organized, validly existing

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and in good standing under the laws of the state of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted. The Holder is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties.

 

(c) All limited liability company action has been taken on the part of the Holder, its officers, directors, managers and members necessary for the authorization, execution and delivery of this Note. The Holder has taken all limited liability company action required to make all of the obligations of the Holder reflected in the provisions of this Note, valid and enforceable obligations.

 

(d) Each certificate or instrument representing Securities will be endorsed with the following legend (or a substantially similar legend), unless or until registered under the 1933 Act or exempt from registration:

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES WHICH IS REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.

 

Section 5.00 General .

(a)         Payment of Expenses . The Company agrees to pay all reasonable charges and expenses, including attorneys' fees and expenses, which may be incurred by the Holder in successfully enforcing this Note and/or collecting any amount due under this Note.

(b)         Assignment, Etc. The Holder may assign or transfer this Note to any transferee at its sole discretion. This Note shall be binding upon the Company and its successors and shall inure to the benefit of the Holder and its successors and permitted assigns.

(c)        Amendments . This Note may not be modified or amended, or any of the provisions of this Note waived, except by written agreement of the Company and the Holder.

(d)        Funding Window . The Company agrees that it will not enter into a convertible debt financing transaction, including 3(a)9 and 3(a)10 transactions, with any party other than the Holder for a period of 90 Trading Days following the Effective Date and each Additional Tranche Date, as relevant; except for (i) any such transaction, the proceeds of which shall be used to repay this Note and/or (ii) any transaction or series of transactions for convertible debt financing for debt not in excess of $100,000 and/or (iii) any convertible debt issued to Stephen Chiang under the terms of the Company’s Investors’ Rights Agreement with Mr. Chiang dated October 26, 2016, pursuant to which Mr. Chiang has the right to notice of any offering of convertible debt and a right to purchase on the same terms as any such offering. The

8  
 

Company agrees that this is a material term of this Note and any breach of this Section 5.00(d) will result in a default of the Note.

(e)        Piggyback Registration Rights . Except as provided in this Note, the Company shall include on the next registration statement that the Company files with the SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of this Note. If the managing underwriter of any registered offering shall determine and advise Company that, in its opinion, the distribution of all or a portion of the shares issuable upon conversion of this Note would materially adversely affect the distribution of securities being registered by the Company then Company will include in such registration first, the securities that Company proposes to sell and second, the shares issuable upon conversion of this Note, to the extent permitted by the managing underwriter, in its discretion. Failure to do so will result in liquidated damages of 30% of the outstanding Principal Sum of this Note, but not less than $20,000, being immediately due and payable to the Holder at its election in the form of a cash payment or an addition to the Principal Sum of this Note.

(f)        Terms of Future Financings . So long as this Note is outstanding, upon any issuance by the Company or any of its subsidiaries of any convertible debt security (whether such debt begins with a convertible feature or such feature is added at a later date) with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the Holder in this Note, then the Company shall notify the Holder of such additional or more favorable term and such term, at the Holder's option, shall become a part of this Note and its supporting documentation.. The types of terms contained in the other security that may be more favorable to the holder of such security include, but are not limited to, terms addressing conversion discounts, terms addressing maturity, conversion look back periods, interest rates, original issue discount percentages and warrant coverage.

(g)        Governing Law; Jurisdiction .

(i)                  Governing Law. This Note will be governed by, and construed and interpreted in accordance with, the laws of the State of Texas without regard to any conflicts of laws or provisions thereof that would otherwise require the application of the law of any other jurisdiction.

(ii)       Jurisdiction and Venue . Any dispute, claim, suit, action or other legal proceeding arising out of or relating to this Note or the rights and obligations of each of the parties shall be brought only in the or in the federal courts of the United States of America located in Dallas, Texas.

(iii)       No Jury Trial . The Company hereto knowingly and voluntarily waives any and all rights it may have to a trial by jury with respect to any litigation based on, or arising out of, under, or in connection with, this Note.

(iv)       Delivery of Process by the Holder to the Company . In the event of an action or proceeding by the Holder against the Company, and only by the Holder against the Company, service of copies of summons and/or complaint and/or any other process that may be served in any such action or proceeding may be made by the Holder via U.S. Mail, overnight delivery service such as FedEx or UPS, email, fax, or process server, or by mailing or otherwise delivering a copy of such process to the Company at its last known attorney as set forth in its

9  
 

most recent SEC filing.

(v)       Notices . Any notice required or permitted hereunder (including Conversion Notices) must be in writing and either personally served, sent by facsimile or email transmission, or sent by overnight courier. Notices will be deemed effectively delivered at the time of transmission if by facsimile or email, and if by overnight courier the business day after such notice is deposited with the courier service for delivery.

(h)        No Bad Actor . No officer or director of the Company would be disqualified under Rule 506(d) of the Securities Act of 1933, as amended, on the basis of being a “bad actor” as that term is established in the September 13, 2013 Small Entity Compliance Guide published by the SEC.

(i)        Usury . If it shall be found that any interest or other amount deemed interest due hereunder violates any applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it will not seek to claim or take advantage of any law that would prohibit or forgive the Company from paying all or a portion of the principal, fees, liquidated damages or interest on this Note.

(j)        Securities Laws Disclosure; Publicity . The Company shall file a Current Report on Form 8-K, including a copy of this Note as an exhibit thereto, with the SEC within the time required by the 1934 Act. From and after the filing of such Current Report, the Company represents to the Holder that it shall have publicly disclosed all material, non-public information delivered to the Holder by the Company, or any of its officers, directors, employees, or agents in connection with the transactions contemplated by this Note. The Company and the Holder shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor the Holder shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of the Holder, or without the prior consent of the Holder, with respect to any press release of the Company, none of which consents shall be unreasonably withheld, delayed, denied, or conditioned except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Holder, or include the name of the Holder in any filing with the SEC or any regulatory agency or Principal Market, without the prior written consent of the Holder, except to the extent such disclosure is required by law or Principal Market regulations, in which case the Company shall provide the Holder with prior notice of such disclosure permitted hereunder.

The Company agrees that this is a material term of this Note and any breach of this Section 5.00(j) will result in a default of the Note.

(k)        Attempted Below-par Issuance . In the event that (i) any requested conversion hereunder shall be at a Conversion Price that is less than then-current par value of the Company’s Common Stock and that any or all of such requested conversion would be precluded by state law or otherwise and (ii) within three business days of the requested conversion, the Company shall not have reduced its par value such that all of the requested conversion may then be accomplished, then the Company and the Holder agree to the following conversion protocol:

10  
 

the Holder shall generate and transmit to the Company (X) a “preliminary” Conversion Notice for the full number of shares of Common Stock of the above-referenced conversion at the Conversion Price without regard to any below-par value conversion issues; (Y) a “par value” Conversion Notice for the number of shares of Common Stock for the above-referenced conversion with the Conversion Price increased from the Conversion Price set forth in the “preliminary” Conversion Notice to a Conversion Price at par value; and (Z) a “liquidated damages” Conversion Notice for that number of shares of Common Stock that represents the difference between the number of shares of Common Stock in the “preliminary” Conversion Notice and the number of shares of Common Stock in the “par value” Conversion Notice and the Conversion Price of such “liquidated damages Common Shares” would be the par value of the Common Stock. The Company acknowledges that any failure by it to provide the Holder with its full conversion rights under this Note (as a result of a proposed “below par” conversion) will cause the Holder to incur substantial economic damages and losses of types and in amounts that are impossible to compute and ascertain with certainty as a basis for recovery by the Holder of actual damages and that liquidated damages would represent a fair, reasonable, and appropriate estimate thereof. Accordingly, in the event that the Holder is precluded from exercising any or all of its conversion rights hereunder as a result of a proposed “below par” conversion, the Company agrees that, in lieu of actual damages for such failure, liquidated damages may be assessed and recovered by the Holder without being required to present any evidence of the amount or character of actual damages sustained by reason thereof. The amount of such liquidated damages shall be an amount equivalent to the trading price (without discount) utilized in the “preliminary” Conversion Notice multiplied by the number of shares calculated on the “liquidated damages” Conversion Notice. Such amount shall be assessed and become immediately due and payable to the Holder (at its election) in the form of a cash payment, an addition to the Principal Sum of this Note, or the immediate issuance of that number of shares of Common Stock as calculated on the “liquidated damages” Conversion Notice. Such liquidated damages are intended to represent estimated actual damages and are not intended to be a penalty, but, by virtue of their genesis and subject to the election of the Holder (as set forth in the immediately preceding sentence), will be automatically added to the Principal Sum of the Note and tack back to the Effective Date for purposes of Rule 144.

(l)        Right of First Refusal . From and after the date of this Note and at all times hereafter while the Note is outstanding, the Parties agree that, in the event that the Company receives any written or oral proposal (the “ Proposal ”) containing one or more offers to provide additional capital or equity or debt financing (the “ Financing Amount ”), the Company agrees that it shall provide a copy of all documents received relating to the Proposal together with a complete and accurate description of the Proposal to the Holder and all amendments, revisions, and supplements thereto (the “ Proposal Documents ”) no later than 3 business days from the receipt of the Proposal Documents. Following receipt of the Proposal Documents from the Company, the Holder shall have the right (the “ Right of First Refusal ”), but not the obligation, for a period of 5 business days thereafter (the “ Exercise Period ”), to invest, at similar or better terms to the Company, an amount equal to or greater than the Financing Amount, upon written notice to the Company that the Holder is exercising the Right of First Refusal provided hereby. In furtherance of the Right of First Refusal, the Company agrees that it will cooperate and assist the Holder in conducting a due diligence investigation of the Company and its corporate and financial affairs and promptly provide the Holder with information and documents that the Holder may reasonably request so as to allow the Holder to make an informed investment decision. However, the Company and the Holder agree that the Holder shall have no more than 5 business days from and after the expiration of the Exercise

11  
 

Period to exercise its Right of First Refusal hereunder. This Right of First Refusal shall extend to all purchases of debt held by, or assigned to or from, current stockholders, vendors, or creditors, all transactions under Sections 3(a)9 and/or 3(a)10 or the Securities Act of 1933, as amended, and all equity line-of-credit transactions. In the event that the Company does enter into, or makes any issuance of Common Stock related to a 3(a)(9) Transaction or a 3(a)(10) Transaction while this note is outstanding, without giving Right of First Refusal to the Holder, a liquidated damages charge of 25% of the outstanding principal balance of this Note, but not less than $35,000, will be assessed and will become immediately due and payable to the Holder at its election in the form of cash payment or addition to the balance of this Note. Such liquidated damages will be automatically added to the Principal Sum of the Note and tack back to the Effective Date for purposes of Rule 144.

 

 

 

 

 

 

 

 

 

[Signature Page to Follow]

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IN WITNESS WHEREOF , the Company has caused this Fixed Convertible Promissory Note to be duly executed on the day and in the year first above written.

 

 

  BLACKBOXSTOCKS INC.
  A Nevada corporation
   
By:  
Name:  
Title:  
Email:  
Address:  
   

 

This Fixed Convertible Promissory Note of May 21, 2019 is accepted this ___ day of , 2019 by

 

 

HARBOR GATES CAPITAL, LLC 

   
By:  
Name:  
Title:  Manager

 

 

 

 

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EXHIBIT A

 

FORM OF CONVERSION NOTICE

 

(To be executed by the Holder in order to convert all or part of that certain $550,000 Fixed Convertible Promissory Note identified as the Note)

 

DATE:

FROM:

 

 

___________________________

Harbor Gates Capital, LLC (the “ Holder ”)

 

Re: $550,000 Fixed Convertible Promissory Note (this “ Note ”) originally issued by Blackboxstocks, Inc., a Nevada corporation, to Harbor Gates Capital, LLC on May 21, 2019.

 

The undersigned on behalf of Harbor Gates Capital, LLC, hereby elects to convert $ _______________________ of the aggregate outstanding Principal Amount (as defined in the Note) indicated below of this Note into shares of Common Stock, $0.001 par value per share, of Blackboxstocks, Inc. (the “ Company ”), according to the conditions hereof, as of the date written below. If shares are to be issued in the name of a person other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any. The undersigned represents as of the date hereof that, after giving effect to the conversion of this Note pursuant to this Conversion Notice, the undersigned will not exceed the “Restricted Ownership Percentage” contained in this Note.

Conversion information:

 

   
  Date to Effect Conversion
   
  Aggregate Principal Sum of Note Being Converted
   
  Aggregate Interest/Fees of Principal Amount Being Converted
   
  Remaining Principal Balance
   
  Number of Shares of Common Stock to be Issued
   
  Applicable Conversion Price
   
  Signature
   
  Name
   
  Address

 

 

 

 

14  
 

EXHIBIT B

 

WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF

 

BLACKBOXSTOCKS, INC.

 

 

The undersigned, being directors of Blackboxstocks, Inc., a Nevada corporation (the “Company”), acting pursuant to the Bylaws of the Corporation, do hereby consent to, approve and adopt the following preamble and resolutions:

 

Convertible Note with Harbor Gates Capital, LLC

 

The board of directors of the Company has reviewed and authorized the following documents relating to the issuance of a Fixed Convertible Promissory Note in the amount of up to $550,000 with Harbor Gates Capital, LLC.

 

The documents agreed to and dated May 21, 2019 are as follows:

 

8% Fixed Convertible Promissory Note of Blackboxstocks, Inc.

Irrevocable Transfer Agent Instructions

Certificate of Corporate Secretary

Disbursement Instructions

Schedule 1 – Use of Proceeds

 

The board of directors further agree to authorize and approve the issuance of shares to the Holder at Conversion prices that are below the Company’s then current par value.

 

IN WITNESS WHEREOF, the undersign member(s) of the board of the Company executed this unanimous written consent as of May 21, 2019.

 

 

   
   
By: Gust Kepler
   
Its: President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

15  
 

EXHIBIT C

 

CERTIFICATE OF CORPORATE SECRETARY OF

 

BLACKBOXSTOCKS, INC.

 

(Two Pages)

 

 

The undersigned, Gust Kepler is the duly elected Corporate Secretary of Blackboxstocks, Inc., a Nevada corporation (the “ Company ”).

 

I hereby warrant and represent that I have undertaken a complete and thorough review of the Company’s corporate and financial books and records, including, but not limited to, the Company’s records relating to the following:

 

(A) The issuance of that certain convertible promissory note dated May 21, 2019 (the “ Note Issuance Date ”) issued to Harbor Gates Capital, LLC (the “ Holder ”) in the stated principal amount of up to $550,000 (the “ Note ”);

 

(B) The Company’s Board of Directors duly approved the issuance of the Note to the Holder;

 

(C) The Company has not received and does not contemplate receiving any new consideration from any persons in connection with any later conversion of the Note and the issuance of the Company’s Common Stock upon any said conversion;

 

(D) To my best knowledge and after completing the aforementioned review of the Company’s stockholder and corporate records, I am able to certify that the Holder (and the persons affiliated with the Holder) are not officers, directors, or directly or indirectly, ten percent (10.00%) or more stockholders of the Company and none of said persons has had any such status in the one hundred (100) days immediately preceding the date of this Certificate;

 

(E) The Company’s Board of Directors have approved duly adopted resolutions approving the Irrevocable Instructions to the Company’s Stock Transfer Agent dated May 21, 2019;

 

(F) Mark the appropriate selection:

 

___ The Company represents that it is not a “shell company,” as that term is defined in Section 12b-2 of the Securities Exchange Act of 1934, as amended, and has never been a shell company, as so defined; or

 

_X_ The Company represents that (i) it was a “shell company,” as that term is defined in Section 12b-2 of the Securities Exchange Act of 1934, as amended, (ii) since December 1, 2015it has no longer been a shell company, as so defined, and (iii) on December 7, 2015, it provided Form 10-type information in a filing with the United States Securities and Exchange Commission.

16  
 

 

(G) I understand the constraints imposed under Rule 144 on those persons who are or may be deemed to be “affiliates,” as that term is defined in Rule 144(a)(1) of the Securities Act of 1933, as amended.

 

(H) I understand that all of the representations set forth in this Certificate will be relied upon by counsel to Harbor Gates Capital, LLC in connection with the preparation of a legal opinion.

 

 

I hereby affix my signature to this Notarized Certificate and hereby confirm the accuracy of the statements made herein.

 

 

Signed: ____________________________________ Date: __________________

 

 

Name: Gust Kepler         Title: Secretary

 

 

 

SUBSCRIBED AND SWORN TO BEFORE ME ON THIS ________ DAY OF ____________________ 2019.

Commission Expires:______________

____________________________________

Notary Public

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17  
 

EXHIBIT D

 

TO: Harbor Gates Capital, LLC

F R OM: Blackboxstocks, Inc.

DATE: May 21, 2019

R E: Disbu r s e m e nt of F unds

 

Pursuant to that certain Fixed Convertible Promissory Note between the parties listed above and dated May 21, 2019, a disbursement of funds will take place in the amount and manner described below:

 

Please disburse to:  
Amount to disburse: $350,000
Form of distribution Wire
Name Blackboxstocks, Inc.
Company Address

5430 LBJ Freeway, Suite 1485

Dallas, Texas 75240

 

 

Wire Instructions:

Bank: 

ABA Routing Number: 

Account Number: 

SWIFT Code:

Account Name:

Phone:

 

TOTAL: $350,000

 

For: Blackboxstocks, Inc.    
       
By:   Dated: May 21, 2019
Name: Gust Kepler    
Its: President and Chief Executive Officer    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18  
 

 

EXHIBIT E

 

COMPANY CAPITALIZATION TABLE AS OF MAY 21, 2019

 

COMMON STOCK AND COMMON STOCK EQUIVALENTS

ISSUED, OUTSTANDING AND RESERVED

 

DESCRIPTION     AMOUNT
Authorized Common Stock  
    Authorized Capital Stock 110,000,000
    Authorized Common Stock         100,000,000
    Issued Common Stock            23,115,500
    Outstanding Common Stock          23,115,500
    Treasury Stock                       n/a
*Authorized, but unissued        230,771
   
Authorized Preferred Stock 10,000,000
Issued Preferred Stock           5,000,000
   
Reserved for Equity Incentive Plans n/a
Reserved for Convertible Debt n/a
Reserved for Options and Warrants 100,000
Reserved for Other Purposes n/a
   

TOTAL COMMON STOCK AND COMMON

STOCK EQUIVALENTS OUTSTANDING

28,446,271

 

 

 

* Recently sold but unissued shares of Common Stock

 

Note: If not applicable, enter “n/a” or “zero” in Column 2.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19  
 

 

CURRENT DEBT AND LIABILITIES TABLE

 

CONVERTIBLE PROMISSORY NOTE BALANCES AND PROMISSORY NOTE BALANCES

 

DESCRIPTION      ISSUANCE DATE AMOUNT
Convertible Promissory Note   n/a
     
     
     
     
     
Promissory Note    
Trammell S. Crow 12-06-2018 $105,326.03
Michael Tierney 02-19-2019 $51,430.14
Gust Kepler 12-06-2018 $108,000.00
Gust Kepler 11-09-2018 $127,456.44
     
Other Debt and Liabilities    
Accounts Payable   $607,715.46
     
     
     
     

 

 

Note: If not applicable, enter “n/a” or “zero” in Column 2.

 

To my best knowledge and after completing the aforementioned review of the Company’s stockholder and corporate records, I am able to certify the accuracy of the statements made herein.

 

 

 

  BLACKBOXSTOCKS, INC.    
       
By:   Dated: May 21, 2019
Name: Gust Kepler    
Its: President and Chief Executive Officer    

 

 

 

 

 

20  
 

 

SCHEDULE 1

 

USE OF PROCEEDS

 

 

Pursuant to that certain Fixed Convertible Promissory Note between the parties listed above and dated May 21, 2019, the Company covenants that it will within, six month(s) of the Effective Date of the Note, it shall use approximately $ 350,000 of the proceeds in the manner set forth below (the “ Use of Proceeds ”):

 

The Company shall have broad discretion to utilize proceeds for general corporate purposes. Nevertheless, though the proceeds are not restricted to any specific purpose, it is anticipated that they will generally be utilized to satisfy Company debt obligations, settlement of Company accounts payable, pay administrative expenses, facilitate the implementation of the Company’s business plans and for working capital.

 

 

 

 

  BLACKBOXSTOCKS, INC.    
       
By:   Dated: May 21, 2019
Name: Gust Kepler    
Its: President and Chief Executive Officer    

 

Exhibit 4.2 

 

Form of Warrant

 

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO.

No. 00__ [______], 2019

BLACKBOXSTOCKS, INC.

 

Warrant for the Purchase of Common Stock

FOR VALUE RECEIVED, BLACKBOXSTOCKS, INC., a Nevada corporation (the “ Company ”), hereby certifies that [_________________], or [his/its] permitted transferees or assigns (the “ Holder ”), is entitled, subject to the provisions of this Warrant (this “ Warrant ”), to purchase from the Company, at any time during the Exercise Period (defined below), [___________________] ([____]) shares of common stock, $0.001 par value per share (the “ Common Stock ”), subject to adjustment from time to time as hereinafter set forth, at a purchase price equal to $0.65 per share, subject to adjustment from time to time as hereinafter set forth (as may be so adjusted, the “ Exercise Price ”). This Warrant has been granted pursuant to the terms of that certain Securities Purchase Agreement dated [______], 2019, by and between the Company and the Purchasers thereunder (the “ Agreement ”). Capitalized terms used but not defined herein shall have the meanings given such terms as set forth in the Agreement.

1.                    Exercise of Warrant .

(a)       This Warrant shall be exercisable for a period beginning on the date first set forth above (the “ Issuance Date ”) and ending [___________], [2024] [1] (the “ Exercise Period ”). This Warrant may be exercised in whole or in part during the Exercise Period by presentation and surrender hereof to the Company at its principal office, with the Purchase Form annexed hereto (the “ Purchase Form ”) duly executed and accompanied by proper payment in cash or check in an amount equal to the aggregate Exercise Price of this Warrant, as specified in such form.

(b)       Upon receipt by the Company of this Warrant and the Purchase Form, together with the aggregate Exercise Price, at such office, in proper form for exercise, the Holder shall be deemed to be the holder of record of the Common Stock specified in the Purchase Form (the “ Warrant Shares ”), notwithstanding that the transfer books of the Company shall then be closed or that certificates (if any) representing the Warrant Shares shall not then be actually delivered to the Holder. The Company shall pay any and all documentary, stamp, or similar issue taxes payable in respect of the issuance of the Warrant Shares. The Company shall not, however, be required to pay any tax that may be payable in respect of any transfer involved in the issuance or delivery of certificates (if any) representing Warrants or the Warrant Shares in a name other than that of the Holder at the time of surrender for exercise, and, until the payment of such tax, shall not be required to issue such Warrant Shares. In the event of a partial exercise of this Warrant, the Company shall execute and deliver a warrant to Holder for the remaining unexercised portion of this Warrant.

1  
 

2.                    Transfer, Assignment, or Loss of Warrant .  The Holder of this Warrant shall be entitled to transfer or assign its interest in this Warrant subject only to the applicable securities laws. Upon such assignment and surrender of this Warrant to the Company, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be cancelled. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant (which may be an affidavit of the Holder in the case of loss, theft, destruction), and (in the case of loss, theft, or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like term and date.

3.                    Reclassification, Reorganization, Conversion, Consolidation, or Merger .  In the case of any Reorganization Transaction (defined below), the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that the Holder shall have the right thereafter, by exercising this Warrant, to purchase the kind and amount of securities and property receivable upon such Reorganization Transaction by a holder of the number of shares of Common Stock that would have been received upon exercise in full of this Warrant immediately prior to such Reorganization Transaction. Any such provision shall (a) be binding upon the Holder without the Holder’s further consent and (b) include provision for adjustments in respect of such securities and property that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The foregoing provisions of this Section 3 shall similarly apply to successive Reorganization Transactions. For purposes of this Section 3 , “ Reorganization Transaction ” means any reclassification, conversion, or any consolidation or merger of the Company with or into another Person or any sale, lease, transfer, or conveyance to another Person of the property and assets of the Company as an entirety.

4.                    Stock Splits, Combinations and Other Adjustments.

(a)        Splits and Subdivisions; Dividends . In the event the Company should at any time or from time to time effectuate a split or subdivision of the outstanding shares of Common Stock or pay a dividend in or make a distribution payable in additional shares of Common Stock or any capital stock or other security of the Company that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company (including, without limitation, Common Stock) (“Common Stock Equivalents”) without payment of any consideration by such holder for the additional shares of Common Stock or Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of the applicable record date (or the date of such distribution, split or subdivision if no record date is fixed), the per share Exercise Price shall be appropriately decreased and the number of Warrant Shares shall be appropriately increased in proportion to such increase (or potential increase) of outstanding shares; provided, however, that no adjustment shall be made in the event the split, subdivision, dividend or distribution is not effectuated.

(b)        Combination of Shares . If the number of shares of Common Stock outstanding at any time after the date hereof is decreased by a combination of the outstanding shares of Common Stock, the per share Exercise Price shall be appropriately increased and the number of shares of Warrant Shares shall be appropriately decreased in proportion to such decrease in outstanding shares.

(c)        Adjustments for Other Distributions . In the event the Company shall declare a distribution payable in securities of other Persons, evidences of indebtedness issued by the Company or other Persons, assets (excluding cash dividends or distributions to the holders of Common Stock paid out of current or retained earnings and declared by the Company’s board of

2  
 

directors) or options or rights not referred to in Section 3 or in this Section 4, then, in each such case for the purpose of this Section 4, upon exercise of this Warrant, the Holder shall be entitled to a proportionate share of any such distribution as though the Holder was the actual record holder of the number of Warrant Shares as of the record date fixed for the determination of the holders of Common Stock of the Company entitled to receive such distribution.

5.                    Rights .  This Warrant shall not entitle the Holder to any of the rights of a holder of Common Stock until this Warrant is exercised in the manner provided herein.

6.                    Securities Laws .  The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are being acquired solely for the Holder’s own account for investment, and that the Holder will not offer, sell, or otherwise dispose of this Warrant or the Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of any federal or state securities laws. Upon exercise of this Warrant, the Holder shall, if requested by the Company, confirm in writing, in a form reasonably satisfactory to the Company, that the Warrant Shares so purchased are being acquired for investment, and not with a view toward distribution or resale in violation of applicable securities laws. Certificates (if any) representing Warrant Shares issued upon exercise hereof shall be stamped or imprinted with a legend in substantially the form set forth at the heading of this Warrant.

7.                    Reservation of Stock . The Company covenants that during the term this Warrant is exercisable, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the exercise of this Warrant and, from time to time, will take all steps necessary to amend its articles of incorporation as amended to provide sufficient reserves of shares of Common Stock issuable upon exercise of the Warrant. The Company further covenants that all shares that may be issued upon the exercise of rights represented by this Warrant and payment of the Exercise Price, all as set forth herein, will be free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein). The Company agrees that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the exercise of this Warrant.

8.                    Net Cash Settlement . Notwithstanding anything herein to the contrary, in no event will the Holder hereof be entitled to receive a net-cash settlement as liquidated damages in lieu of physical settlement in shares of Common Stock, regardless of whether the Common Stock underlying this Warrant is registered pursuant to an effective registration statement; provided, however, that the foregoing will not preclude the Holder from seeking other remedies at law or equity for breaches by the Company of its registration obligations hereunder.

9.                    Miscellaneous . This Warrant and any term hereof may be changed, waived, discharged, or terminated only in accordance with the Purchase Agreement. This Warrant and all actions arising out of or in connection with this Warrant shall be governed by and construed in accordance with the laws of the State of Texas, without regard to the conflicts of law provisions of the State of Texas or of any other state. Each of the parties irrevocably consents to the exclusive jurisdiction of, and venue in, the state and federal courts in Dallas County in the State of Texas, in connection with any matter based upon or arising out of this Agreement or the matters contemplated herein, and agrees that process may be served upon them in any manner authorized by the laws of the State of Texas for such persons. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.

IN WITNESS WHEREOF, the undersigned has executed this Warrant to be effective as of the date first written above.

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  BLACKBOXSTOCKS INC.
  A Nevada corporation
   
By:  
Name: Gust Kepler
Title: President and Chief Executive Officer

 

 

 

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PURCHASE FORM

Date: _______________

The undersigned hereby irrevocably elects to exercise the attached Warrant hereby purchasing ___________ shares of Common Stock of BLACKBOXSTOCKS, INC., a Nevada corporation, thereunder and hereby makes payment of $________ in payment of the exercise price thereof.

 

  Holder Name:  
  Holder Address:  
   
   
  Signature / By:  
  Name (if applicable):  
  Title (if applicable):  

 

 

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “ Agreement ”) dated as of April 10, 2019 , is entered into by and between Blackboxstocks, Inc., Inc. , a Nevada corporation (the “ Company ”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “ Purchaser ” and collectively the “ Purchasers ”) .

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an exemption from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “ Securities Act ”) contained in Section 4(a)(2) thereof and/or Regulation D, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

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

1.                    Purchase and Sale of Common Stock and Warrants .

(a)        Issuance of Common Stock . Subject to all of the terms and conditions hereof, the Company agrees to issue and sell to each of the Purchasers, and each of the Purchasers severally agrees to purchase, an aggregate of 153,846 shares (the “ Shares ”) of Company common stock, par value $0.001 per share (the “ Common Stock ”) at a price of $0.65 per Share in the amount(s) set forth opposite the respective Purchaser’s name on Schedule 1 hereto. The obligations of the Purchasers to purchase Shares are several and not joint.

(b)        Issuance of Warrants . Concurrently with the issuance of the Shares to the Purchasers, the Company will issue to each Purchaser a warrant in the form attached hereto as Exhibit A (each, a “ Warrant ” and, collectively, the “ Warrants ”) exercisable for a period of five (5) years, to purchase one share of Common Stock (the “ Warrant Shares ”) for each $1.00 of Purchase Price (rounded to the nearest dollar and set forth opposite each Purchaser’s name on Schedule 1 hereto) at an exercise price of $0.65 per share.

(c)        Delivery . The sale and purchase of the Shares and Warrants shall take place at one or more closings (each a “ Closing ”) to be held at such place and time as the Company and the Purchaser(s) may determine (the “ Closing Date ”). At the Closing, the Company will deliver to each of the Purchasers certificates (the “ Certificates ”) representing the Shares and the Warrant to be purchased by such Purchaser, against receipt by the Company of the corresponding purchase price set forth on Schedule 1 hereto (the “ Purchase Price ”). Each of the Certificates and Warrants will be registered in such Purchaser’s name in the Company’s records.

2.                    Representations and Warranties of the Company . The Company represents and warrants to each Purchaser that, as of the Closing:

(a)        Organization and Qualification . The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada; (ii) has the power and authority to own, lease and operate its properties and carry on its business as now conducted; and (iii) is duly qualified, licensed to do business and in good standing as a foreign corporation in each jurisdiction where the failure to be so qualified or licensed could reasonably be expected to have a material adverse effect on the Company.

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(b)        Capitalization . Immediately prior to the consummation of the transactions to be effected at the Closing, the authorized equity of the Company consists of 100,000,000 shares of Common Stock, of which 23,115,500 shares were issued and outstanding as of April 8, 2019, and 10,000,000 shares of preferred stock, par value $0.001 per share (the “ Preferred Stock ”), of which 5,000,000 shares have been designated as Series A Convertible Preferred shares (the “ Series A Shares ”), all of which Series A Shares are currently issued and outstanding. The Series A Shares are convertible on a one-for-one basis into shares of Common Stock and entitled to 100 votes per share on each matter submitted to a vote of the Company’s stockholders. All outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable and have been issued in compliance with all applicable securities laws. Except as disclosed in Schedule 2(b), there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any subsidiary is or may become bound to issue additional shares of common stock, or securities or rights convertible or exchangeable into shares of common stock. Except as disclosed in Schedule 2(b), there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) other than as provided herein and the issue and sale of the securities hereunder will not obligate the Company to issue shares of common stock or other securities to any person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities.

(c)        Valid Issuance of Securities .

(i)             The Shares and Warrant Shares . The Shares upon issuance and the Warrant Shares issuable upon exercise of the Warrants will, when issued, sold and delivered in accordance with the terms of this Agreement and the Warrant for the consideration provided for herein and therein, be duly authorized and validly issued.

(ii)             Securities Laws . Based in part on the representations made by the Purchasers in Section 3 hereof, the offer and sale of the Shares and Warrants solely to the Purchasers in accordance with this Agreement and the Warrants and (assuming no change in currently applicable law, no transfer of Shares or Warrants by Purchaser and no commission or other remuneration is paid or given, directly or indirectly, for soliciting the issuance of Warrant Shares upon exercise of the Warrants) the issuance of the Shares and Warrant Shares is exempt from the registration and prospectus delivery requirements of the Securities Act and the securities registration and qualification requirements of the currently effective provisions of the securities laws of the states in which the Purchaser is resident based upon their addresses set forth on the signature pages attached hereto.

(d)        Authority . The execution, delivery and performance by the Company of each of this Agreement and the Warrants (collectively, the “ Transaction Documents ”) to be executed by the Company and the consummation of the transactions contemplated thereby (i) are within the power of the Company and (ii) have been duly authorized by all necessary actions on the part of the Company.

(e)        Enforceability . Each of the Transaction Documents executed, or to be executed, by the Company has been, or will be, duly executed and delivered by the Company and constitutes, or will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

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(f)         Non-Contravention . The execution and delivery by the Company of the Transaction Documents executed by the Company and the performance and consummation of the transactions contemplated thereby do not and will not (i) violate the Company’s certificate of incorporation or bylaws or any material judgment, order, writ, decree, statute, rule or regulation applicable to the Company; (ii) violate any provision of, or result in the breach or the acceleration of, or entitle any other Person to accelerate (whether after the giving of notice or lapse of time or both), any material mortgage, indenture, agreement, instrument or contract to which the Company is a party or by which it is bound; or (iii) result in the creation or imposition of any security interest, mortgage, pledge, lien, claim, charge or other encumbrance (“ Lien ”) upon any property, asset or revenue of the Company (other than any Lien arising under the Transaction Documents) or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.

(g)        Approvals . No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental authority or other Person (including, without limitation, the shareholders of any Person) is required in connection with the execution and delivery of the Transaction Documents executed by the Company and the performance and consummation of the transactions contemplated thereby, other than such as have been obtained and remain in full force and effect and other than such qualifications or filings under applicable securities laws as may be required in connection with the transactions contemplated by this Agreement.

(h)        SEC Reports; Financial Statements . The Company has filed all reports required to be filed by it under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials (together with any materials filed by the Company under the Exchange Act, whether or not required) being collectively referred to herein as the “ SEC Reports ”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. The Company has made available to each Purchaser true, correct and complete copies of all SEC Reports. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the U.S. Securities and Exchange Commission (the “ Commission ”) promulgated thereunder, and none of the SEC Reports, 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 the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“ GAAP ”), except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for 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. All material agreements to which the Company or any subsidiary is a party or to which the property or assets of the Company or any subsidiary are subject are included as part of or specifically identified in the SEC Reports.

(i)         Material Changes . Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports, (i) there has been no event, occurrence or development that, individually or in the aggregate, has had or that could result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past

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practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting or the identity of its auditors, except as disclosed in its SEC Reports, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock-based plans or agreements.

(j)         Absence of Litigation . There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its subsidiaries that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(k)        Fees . Except for brokerage fees payable to Boustead Securities LLC, which have been separately disclosed to the Purchasers, there are no brokerage or finder’s fees or commissions which 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 this Agreement, and the Company has not taken any action that would cause any Purchaser to be liable for any such fees or commissions.

(l)         Registration Rights . Except as described in Schedule 2(l) or as contemplated by this Agreement, the Company has not granted or agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the Commission or any other governmental authority that have not been satisfied.

(m)      Patents and Trademarks . To the knowledge of the Company, the Company has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “ Intellectual Property Rights ”). Neither the Company nor any subsidiary has received a written notice that the Intellectual Property Rights used by the Company violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.

(n)        Transactions With Affiliates and Employees . Except as set forth in the SEC Reports, none of the executive officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company (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 executive officer, director or such employee or, to the knowledge of the Company, any entity in which any executive officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000.

(o)        No Other Representations . The Company has not made, or will be deemed to have made, any representation or warranty in connection with this Agreement or the transactions contemplated hereby other than as expressly made in this Section 2.

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3.                    Representations and Warranties of Purchasers . Each Purchaser, for that Purchaser alone, represents and warrants to the Company upon the acquisition of the Shares and Warrant as follows:

(a)        Binding Obligation . Such Purchaser has full legal capacity, power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement and the Transaction Documents constitute valid and binding obligations of such Purchaser, enforceable in accordance with their terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

(b)        Securities Law Compliance . Such Purchaser has been advised that the Shares, the Warrants and the underlying securities have not been registered under the Securities Act or any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available. Such Purchaser is aware that the Company is under no obligation to effect any such registration with respect to the Shares , the Warrants or the underlying securities or to file for or comply with any exemption from registration. Such Purchaser has not been formed solely for the purpose of making this investment and is purchasing the Shares and Warrants to be acquired by such Purchaser hereunder for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. Such Purchaser has such knowledge and experience in financial and business matters that such Purchaser is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment without impairing such Purchaser’s financial condition and is able to bear the economic risk of such investment for an indefinite period of time. Such Purchaser is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act and shall submit to the Company such further assurances of such status as may be reasonably requested by the Company. The residency of the Purchaser (or, in the case of a partnership or corporation, such entity’s principal place of business) is correctly set forth beneath such Purchaser’s name on Schedule 1 hereto.

(c)        Access to Information . Such Purchaser acknowledges that the Company has given such Purchaser access to the corporate records and accounts of the Company and to all information in its possession relating to the Company, has made its officers and representatives available for interview by such Purchaser, and has furnished such Purchaser with all documents and other information required for such Purchaser to make an informed decision with respect to the purchase of the Shares and the Warrants .

(d)        Tax Advisors . Such Purchaser has reviewed with its own tax advisors the U.S. federal, state and local and non-U.S. tax consequences of this investment and the transactions contemplated by this Agreement. With respect to such matters, such Purchaser relies solely on any such advisors and not on any statements or representations of the Company or any of its agents, written or oral. Such Purchaser understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment and the transactions contemplated by this Agreement.

4.                    Conditions to Closing of the Purchasers . Each Purchaser’s obligations at the Closing are subject to the fulfillment, on or prior to the Closing Date, of all of the following conditions, any of which may be waived in whole or in part by the applicable Purchaser:

(a)        Representations and Warranties . The representations and warranties made by the Company in Section 2 shall be true and correct in all material respects on the Closing Date.

(b)        Governmental Approvals and Filings . Except for any notices required or permitted to be filed after the Closing Date with certain federal and state securities commissions, the Company shall

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have obtained all governmental approvals required in connection with the lawful sale and issuance of the Shares and Warrants .

(c)        Legal Requirements . At the Closing, the sale and issuance by the Company, and the purchase by the Purchasers, of the Shares and Warrants shall be legally permitted by all laws and regulations to which the Purchasers or the Company are subject.

(d)        Proceedings and Documents . All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Purchasers.

(e)        Transaction Documents . The Company shall have duly executed and delivered to the Purchaser the following documents:

(i)             This Agreement; and

(ii)             The Certificate and Warrant issued hereunder;

5.                    Conditions to Obligations of the Company . The Company’s obligation to issue and sell the Shares and the Warrants at the Closing is subject to the fulfillment, on or prior to the Closing Date, of the following conditions, any of which may be waived in whole or in part by the Company:

(a)        Representations and Warranties . The representations and warranties made by the applicable Purchasers in Section 3 hereof shall be true and correct when made, and shall be true and correct on the Closing Date.

(b)        Governmental Approvals and Filings . Except for any notices required or permitted to be filed after the Closing Date with certain federal and state securities commissions, the Company shall have obtained all governmental approvals required in connection with the lawful sale and issuance of the Shares and the Warrants .

(c)        Legal Requirements . At the Closing, the sale and issuance by the Company, and the purchase by the applicable Purchasers, of the Shares and the Warrants shall be legally permitted by all laws and regulations to which such Purchasers or the Company are subject.

(d)        Purchase Price . Each Purchaser shall have delivered to the Company the Purchase Price for the respective Shares and Warrant being purchased by such Purchaser as indicated on Schedule 1 .

6.                    Miscellaneous .

(a)        Registration Rights .

(i)             Piggy-Back Registration . Company shall give each Purchaser at least 30 days’ prior written notice of each filing by Company of a registration statement (other than a registration statement on Form S-4 or Form S-8 or on any successor forms thereto) with the SEC. If requested by the Purchaser in writing within 20 days after receipt of any such notice, Company shall, at Company’s sole expense (other than the underwriting discounts, if any, payable in respect of the shares sold by the Purchaser), register all or, at Purchaser’s option, any portion of the Shares and the Warrant Shares (collectively, the “ Registrable Securities ”) concurrently with the registration of such other securities, all to the extent requisite to permit the public offering and sale of the Registrable Securities through the

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securities exchange, if any, on which the Common Stock is being sold or on the over-the-counter market, and will use its reasonable best efforts through its officers, directors, auditors, and counsel to cause such registration statement to become effective as promptly as practicable. If the managing underwriter of any such offering shall determine and advise Company that, in its opinion, the distribution of all or a portion of the Registrable Securities requested to be included in the registration concurrently with the securities being registered by Company would materially adversely affect the distribution of such securities by Company then Company will include in such registration first, the securities that Company proposes to sell and second, the Registrable Securities requested to be included in such registration, to the extent permitted by the managing underwriter.

(ii)             In the event of a registration pursuant to these provisions, Company shall use its reasonable best efforts to cause the Registrable Securities so registered to be registered or qualified for sale under the securities or blue sky laws of such jurisdictions as the Purchaser may reasonably request; provided, however, that Company shall not be required to qualify to do business in any state by reason of this section in which it is not otherwise required to qualify to do business.

(iii)             Company shall keep effective any registration or qualification contemplated by this section and shall from time to time amend or supplement each applicable registration statement, preliminary prospectus, final prospectus, application, document and communication for such period of time as shall be required to permit the Purchaser to complete the offer and sale of the Registrable Securities covered thereby.

(iv)             In the event of a registration pursuant to the provisions of this section, Company shall furnish to the Purchaser such reasonable number of copies of the registration statement and of each amendment and supplement thereto (in each case, including all exhibits), of each prospectus contained in such registration statement and each supplement or amendment thereto (including each preliminary prospectus), all of which shall conform to the requirements of the Act and the rules and regulations thereunder, and such other documents, as the Purchaser may reasonably request to facilitate the disposition of the Registrable Securities included in such registration.

(v)             Company shall notify the Purchaser within three (3) business days after such registration statement has become effective or a supplement to any prospectus forming a part of such registration statement has been filed.

(vi)             Company shall advise the Purchaser within three (3) business days after it shall receive notice or obtain knowledge of the issuance of any stop order by the Commission suspending the effectiveness of such registration statement, or the initiation or threatening of any proceeding for that purpose and within three (3) business days take action using its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued.

(vii)             Company shall within three (3) business days notify the Purchaser at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the reasonable request of the Purchaser prepare and furnish to it such number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities or securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made. The Purchaser shall suspend all sales of the Registrable Securities upon receipt of

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such notice from Company and shall not re-commence sales until they receive copies of any necessary amendment or supplement to such prospectus, which shall be delivered to the Purchaser within 30 days of the date of such notice from Company.

(viii)             If requested by the underwriter for any underwritten offering of Registrable Securities, Company and the Purchaser will enter into an underwriting agreement with such underwriter for such offering, which shall be reasonably satisfactory in substance and form to Company, Company’s counsel and the Purchaser’ counsel, and the underwriter, and such agreement shall contain such representations and warranties by Company and the Purchaser and such other terms and provisions as are customarily contained in an underwriting agreement with respect to secondary distributions solely by selling stockholders, including, without limitation, indemnities substantially to the effect and to the extent provided below.

(ix)             The rights of the Purchaser under this Section 6(a) shall apply equally to the filing by Company of an offering statement on Form 1-A under Regulation A promulgated under the Act and, if Company files such an offering statement instead of a registration statement, all references to (A) registration statement shall be deemed to be references to offering statement, (B) prospectus shall be deemed to be references to offering circular, and (C) effective date of a registration statement shall be deemed to be references to qualification date of an offering statement. The Purchaser’s rights under this Section 6(a) shall automatically terminate once the Purchaser has sold all of the Registrable Securities or all of the Registrable Securities may be resold by the Purchaser under Rule 144 of the Act without limitation as to the volume of Registrable Securities to be sold.

(b)        Waivers and Amendments . Any provision of this Agreement and/or the Warrants may be amended, waived or modified only upon the written consent of the Company and Purchaser(s) holding the Certificate(s) and Warrant(s) to be so amended, changed or modified.

(c)        Governing Law . This Agreement and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to the conflicts of law provisions of the State of Texas or of any other state.

(d)        Jurisdiction and Venue . Each of the parties irrevocably consents to the exclusive jurisdiction of, and venue in, the state and federal courts in Dallas County in the State of Texas, in connection with any matter based upon or arising out of this Agreement or the matters contemplated herein, and agrees that process may be served upon them in any manner authorized by the laws of the State of Texas for such persons.

(e)        Survival . The representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement.

(f)         Successors and Assigns . Subject to the restrictions on transfer described herein or in the other Transaction Documents, the rights and obligations of the Company and the Purchasers shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

(g)        Entire Agreement . This Agreement together with the other Transaction Documents constitute and contain the entire agreement among the Company and Purchasers and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof.

(h)        Notices . All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by electronic mail

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(if to a Purchaser or any other holder of Company securities) or otherwise delivered by hand, messenger or courier service addressed:

(i)             if to an Purchaser, to the Purchaser’s address or electronic mail address as shown in the Company’s records, as may be updated in accordance with the provisions hereof;

(ii)             if to any other holder of any Shares , Warrants or shares issuable upon exercise thereof, to such address or electronic mail address as shown in the Company’s records, or, until any such holder so furnishes an address or electronic mail address to the Company, then to the address or electronic mail address of the last holder of such Shares , Warrants or shares issuable upon exercise thereof for which the Company has contact information in its records; or

(iii)             if to the Company, to the attention of Gust Kepler at Blackboxstocks Inc., Lincoln Centre Three, 5430 LBJ Freeway, Suite 1485, Dallas, Texas 75240, or at such other current address as the Company shall have furnished to the Purchasers.

Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day. In the event of any conflict between the Company’s books and records and this Agreement or any notice delivered hereunder, the Company’s books and records will control absent fraud or error.

(i)         Separability of Agreements . The Company’s agreement with each of the Purchasers is a separate agreement and the sale of the Shares and the Warrants to each of the Purchasers is a separate sale. Unless otherwise expressly provided herein, the rights of each Purchaser hereunder are several rights, not rights jointly held with any of the other Purchasers. Any invalidity, illegality or limitation on the enforceability of the Agreement or any part thereof, by any Purchaser whether arising by reason of the law of the respective Purchaser’s domicile or otherwise, shall in no way affect or impair the validity, legality or enforceability of this Agreement with respect to other Purchasers. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

(j)         Counterparts . This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. This Agreement and any signed agreement entered into in connection herewith or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by facsimile, by electronic mail in “portable document format” (“.pdf”) form, or any other electronic transmission, shall be treated in all manner and respects as an original contract and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such contract, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties..

[signature page follows]

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The parties have caused this Securities Purchase Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

 

  BLACKBOXSTOCKS INC.
  A Nevada corporation
   
By:  
Name: Gust Kepler
Title: President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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The parties have caused this Securities Purchase Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

 

  PURCHASER:
   
By:  
Name:  
Title:  
   
Address:  
   

 

 

 

11  
 

 

 

 

The parties have caused this Securities Purchase Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

 

  PURCHASER:
   
By:  
Name:  
Title:  
   
Address:  
   

 

 

 

 

 

 

 

 

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Schedule 1

Purchasers; Purchase Price, Shares and Warrant Shares

 

C losing : A pril 10, 2019

 

   

Purchase

Price

  Shares Purchased   Warrant Shares

 

John R. Bertsch Trust

  $ 100,000.55       153,847       100,000  
[Address]                        
                         

 

[Purchaser]

   

 

$[_______]

      [_______]       [_______]  
[Address]                        
                         

 

[Purchaser]

   

 

$[_______]

      [_______]       [_______]  
[Address]                        
                         
                         
TOTAL:   $ 99,999.90       153,846       100,000  

 

 

 

 

 

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Disclosure Schedules

Schedule 2(b)

Under the terms of the Company’s Investors’ Rights Agreement with Stephen Chiang, a citizen of Singapore, dated October 26, 2016, Mr. Chiang has the right to notice of any proposed offering and a right to purchase Common Stock on the same terms as the Offering. If Mr. Chiang elects to exercise his right to participate in the offering, he is entitled to purchase up to 13% of the shares at the same price established in the offering.

Schedule 2(l)

Under the terms of the Company’s Investors’ Rights Agreement with Stephen Chiang, a citizen of Singapore, dated October 26, 2016, Mr. Chiang has piggy back registration rights with respect to shares of Common Stock held by him.

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Exhibit A

 

Form of Warrant

 

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO.

No. 00__ April [__], 2019

BLACKBOXSTOCKS, INC.

Warrant for the Purchase of Common Stock

FOR VALUE RECEIVED, BLACKBOXSTOCKS, INC., a Nevada corporation (the “ Company ”), hereby certifies that [_________________], or [his/its] permitted transferees or assigns (the “ Holder ”), is entitled, subject to the provisions of this Warrant (this “ Warrant ”), to purchase from the Company, at any time during the Exercise Period (defined below), [___________________] ([____]) shares of common stock, $0.001 par value per share (the “ Common Stock ”), subject to adjustment from time to time as hereinafter set forth, at a purchase price equal to $0.65 per share, subject to adjustment from time to time as hereinafter set forth (as may be so adjusted, the “ Exercise Price ”). This Warrant has been granted pursuant to the terms of that certain Securities Purchase Agreement dated April [__], 2019, by and between the Company and the Purchasers thereunder (the “ Agreement ”). Capitalized terms used but not defined herein shall have the meanings given such terms as set forth in the Agreement.

1.                    Exercise of Warrant .

(a)       This Warrant shall be exercisable for a period beginning on the date first set forth above (the “ Issuance Date ”) and ending April [__], [2024] (the “ Exercise Period ”). This Warrant may be exercised in whole or in part during the Exercise Period by presentation and surrender hereof to the Company at its principal office, with the Purchase Form annexed hereto (the “ Purchase Form ”) duly executed and accompanied by proper payment in cash or check in an amount equal to the aggregate Exercise Price of this Warrant, as specified in such form.

(b)       Upon receipt by the Company of this Warrant and the Purchase Form, together with the aggregate Exercise Price, at such office, in proper form for exercise, the Holder shall be deemed to be the holder of record of the Common Stock specified in the Purchase Form (the “ Warrant Shares ”), notwithstanding that the transfer books of the Company shall then be closed or that certificates (if any) representing the Warrant Shares shall not then be actually delivered to the Holder. The Company shall pay any and all documentary, stamp, or similar issue taxes payable in respect of the issuance of the Warrant Shares. The Company shall not, however, be required to pay any tax that may be payable in respect of any transfer involved in the issuance or delivery of certificates (if any) representing Warrants or the Warrant Shares in a name other than that of the Holder at the time of surrender for exercise, and, until the payment of such tax, shall not be required to issue such Warrant Shares. In the event of a partial exercise of this Warrant,

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the Company shall execute and deliver a warrant to Holder for the remaining unexercised portion of this Warrant.

2.                    Transfer, Assignment, or Loss of Warrant .  The Holder of this Warrant shall be entitled to transfer or assign its interest in this Warrant subject only to the applicable securities laws. Upon such assignment and surrender of this Warrant to the Company, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be cancelled. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant (which may be an affidavit of the Holder in the case of loss, theft, destruction), and (in the case of loss, theft, or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like term and date.

3.                    Reclassification, Reorganization, Conversion, Consolidation, or Merger .  In the case of any Reorganization Transaction (defined below), the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that the Holder shall have the right thereafter, by exercising this Warrant, to purchase the kind and amount of securities and property receivable upon such Reorganization Transaction by a holder of the number of shares of Common Stock that would have been received upon exercise in full of this Warrant immediately prior to such Reorganization Transaction. Any such provision shall (a) be binding upon the Holder without the Holder’s further consent and (b) include provision for adjustments in respect of such securities and property that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The foregoing provisions of this Section 3 shall similarly apply to successive Reorganization Transactions. For purposes of this Section 3 , “ Reorganization Transaction ” means any reclassification, conversion, or any consolidation or merger of the Company with or into another Person or any sale, lease, transfer, or conveyance to another Person of the property and assets of the Company as an entirety.

4.                    Stock Splits, Combinations and Other Adjustments.

(a)        Splits and Subdivisions; Dividends . In the event the Company should at any time or from time to time effectuate a split or subdivision of the outstanding shares of Common Stock or pay a dividend in or make a distribution payable in additional shares of Common Stock or any capital stock or other security of the Company that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company (including, without limitation, Common Stock) (“Common Stock Equivalents”) without payment of any consideration by such holder for the additional shares of Common Stock or Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of the applicable record date (or the date of such distribution, split or subdivision if no record date is fixed), the per share Exercise Price shall be appropriately decreased and the number of Warrant Shares shall be appropriately increased in proportion to such increase (or potential increase) of outstanding shares; provided, however, that no adjustment shall be made in the event the split, subdivision, dividend or distribution is not effectuated.

(b)        Combination of Shares . If the number of shares of Common Stock outstanding at any time after the date hereof is decreased by a combination of the outstanding shares of Common Stock, the per share Exercise Price shall be appropriately increased and the number of shares of Warrant Shares shall be appropriately decreased in proportion to such decrease in outstanding shares.

(c)        Adjustments for Other Distributions . In the event the Company shall declare a distribution payable in securities of other Persons, evidences of indebtedness issued by the

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Company or other Persons, assets (excluding cash dividends or distributions to the holders of Common Stock paid out of current or retained earnings and declared by the Company’s board of directors) or options or rights not referred to in Section 3 or in this Section 4, then, in each such case for the purpose of this Section 4, upon exercise of this Warrant, the Holder shall be entitled to a proportionate share of any such distribution as though the Holder was the actual record holder of the number of Warrant Shares as of the record date fixed for the determination of the holders of Common Stock of the Company entitled to receive such distribution.

5.                    Rights .  This Warrant shall not entitle the Holder to any of the rights of a holder of Common Stock until this Warrant is exercised in the manner provided herein.

6.                    Securities Laws .  The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are being acquired solely for the Holder’s own account for investment, and that the Holder will not offer, sell, or otherwise dispose of this Warrant or the Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of any federal or state securities laws. Upon exercise of this Warrant, the Holder shall, if requested by the Company, confirm in writing, in a form reasonably satisfactory to the Company, that the Warrant Shares so purchased are being acquired for investment, and not with a view toward distribution or resale in violation of applicable securities laws. Certificates (if any) representing Warrant Shares issued upon exercise hereof shall be stamped or imprinted with a legend in substantially the form set forth at the heading of this Warrant.

7.        Reservation of Stock . The Company covenants that during the term this Warrant is exercisable, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the exercise of this Warrant and, from time to time, will take all steps necessary to amend its articles of incorporation as amended to provide sufficient reserves of shares of Common Stock issuable upon exercise of the Warrant. The Company further covenants that all shares that may be issued upon the exercise of rights represented by this Warrant and payment of the Exercise Price, all as set forth herein, will be free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein). The Company agrees that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the exercise of this Warrant.

8.        Net Cash Settlement . Notwithstanding anything herein to the contrary, in no event will the Holder hereof be entitled to receive a net-cash settlement as liquidated damages in lieu of physical settlement in shares of Common Stock, regardless of whether the Common Stock underlying this Warrant is registered pursuant to an effective registration statement; provided, however, that the foregoing will not preclude the Holder from seeking other remedies at law or equity for breaches by the Company of its registration obligations hereunder.

9.                    Miscellaneous . This Warrant and any term hereof may be changed, waived, discharged, or terminated only in accordance with the Purchase Agreement. This Warrant and all actions arising out of or in connection with this Warrant shall be governed by and construed in accordance with the laws of the State of Texas, without regard to the conflicts of law provisions of the State of Texas or of any other state. Each of the parties irrevocably consents to the exclusive jurisdiction of, and venue in, the state and federal courts in Dallas County in the State of Texas, in connection with any matter based upon or arising out of this Agreement or the matters contemplated herein, and agrees that process may be served upon them in any manner authorized by the laws of the State of Texas for such persons. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.

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IN WITNESS WHEREOF, the undersigned has executed this Warrant to be effective as of the date first written above.

  BLACKBOXSTOCKS INC.
  A Nevada corporation
   
By:  
Name: Gust Kepler
Title: President and Chief Executive Officer

 

 

 

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PURCHASE FORM

Date: _______________

The undersigned hereby irrevocably elects to exercise the attached Warrant hereby purchasing ___________ shares of Common Stock of BLACKBOXSTOCKS, INC., a Nevada corporation, thereunder and hereby makes payment of $________ in payment of the exercise price thereof.

 

  Holder Name:  
  Holder Address:  
   
   
  Signature / By:  
  Name (if applicable):  
  Title (if applicable):  

 

 

Exhibit 10.2

 

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “ Agreement ”) dated as of May 3, 2019 , is entered into by and between Blackboxstocks, Inc., Inc. , a Nevada corporation (the “ Company ”), and John R. Bertsch Trust (the “ Purchaser ”) .

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an exemption from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “ Securities Act ”) contained in Section 4(a)(2) thereof and/or Regulation D, the Company desires to issue and sell to Purchaser, and Purchaser desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

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

1.                    Purchase and Sale of Common Stock .

(a)        Issuance of Common Stock . Subject to all of the terms and conditions hereof, the Company agrees to issue and sell to the Purchaser, and the Purchaser agrees to purchase, an aggregate of 76,924 shares (the “ Shares ”) of Company common stock, par value $0.001 per share (the “ Common Stock ”) at a price of $0.65 per Share, for an aggregate purchase price of $50,000.60 (the “ Purchase Price ”).

(b)        Delivery . The Closing (“ Closing ”) of the sale and purchase of the Shares shall take place on the date of this Agreement (the “ Closing Date ”). At the Closing, the Company will deliver to the Purchaser a certificate (the “ Certificate ”) representing the Shares against receipt by the Company of the Purchase Price. Upon Closing, the Certificate representing the Shares shall be registered in the Purchaser’s name in the Company’s records.

2.                    Representations and Warranties of the Company . The Company represents and warrants to Purchaser that, as of the Closing:

(a)        Organization and Qualification . The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada; (ii) has the power and authority to own, lease and operate its properties and carry on its business as now conducted; and (iii) is duly qualified, licensed to do business and in good standing as a foreign corporation in each jurisdiction where the failure to be so qualified or licensed could reasonably be expected to have a material adverse effect on the Company.

(b)        Capitalization . Immediately prior to the consummation of the transactions to be effected at the Closing, the authorized equity of the Company consists of 100,000,000 shares of Common Stock, of which 23,115,500 shares were issued and outstanding as of May 2, 2019, and 10,000,000 shares of preferred stock, par value $0.001 per share (the “ Preferred Stock ”), of which 5,000,000 shares have been designated as Series A Convertible Preferred shares (the “ Series A Shares ”), all of which Series A Shares are currently issued and outstanding. The Series A Shares are convertible on a one-for-one basis into shares of Common Stock and entitled to 100 votes per share on each matter submitted to a vote of the Company’s stockholders. All outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable and have been issued in compliance with all applicable securities laws. Except as disclosed in Schedule 2(b), there are no outstanding options, warrants, script

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rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any subsidiary is or may become bound to issue additional shares of common stock, or securities or rights convertible or exchangeable into shares of common stock. Except as disclosed in Schedule 2(b), there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) other than as provided herein and the issue and sale of the securities hereunder will not obligate the Company to issue shares of common stock or other securities to any person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities.

(c)        Valid Issuance of Securities .

(i)             Shares . The Shares upon issuance will, when issued, sold and delivered in accordance with the terms of this Agreement, be duly authorized and validly issued.

(ii)             Securities Laws . Based in part on the representations made by the Purchaser in Section 3 hereof, the offer and sale of the Shares to the Purchaser in accordance with this Agreement and the issuance of the Shares is exempt from the registration and prospectus delivery requirements of the Securities Act and the securities registration and qualification requirements of the currently effective provisions of the securities laws of the states in which the Purchaser is resident based upon the Purchaser’s address set forth on the signature page attached hereto.

(d)        Authority . The execution, delivery and performance by the Company of this Agreement and each other document contemplated by this Agreement (collectively, the “ Transaction Documents ”) to be executed by the Company and the consummation of the transactions contemplated thereby (i) are within the power of the Company and (ii) have been duly authorized by all necessary actions on the part of the Company.

(e)        Enforceability . Each of the Transaction Documents executed, or to be executed, by the Company has been, or will be, duly executed and delivered by the Company and constitutes, or will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

(f)         Non-Contravention . The execution and delivery by the Company of the Transaction Documents executed by the Company and the performance and consummation of the transactions contemplated thereby do not and will not (i) violate the Company’s certificate of incorporation or bylaws or any material judgment, order, writ, decree, statute, rule or regulation applicable to the Company; (ii) violate any provision of, or result in the breach or the acceleration of, or entitle any other Person to accelerate (whether after the giving of notice or lapse of time or both), any material mortgage, indenture, agreement, instrument or contract to which the Company is a party or by which it is bound; or (iii) result in the creation or imposition of any security interest, mortgage, pledge, lien, claim, charge or other encumbrance (“ Lien ”) upon any property, asset or revenue of the Company (other than any Lien arising under the Transaction Documents) or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.

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(g)        Approvals . No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental authority or other Person (including, without limitation, the shareholders of any Person) is required in connection with the execution and delivery of the Transaction Documents executed by the Company and the performance and consummation of the transactions contemplated thereby, other than such as have been obtained and remain in full force and effect and other than such qualifications or filings under applicable securities laws as may be required in connection with the transactions contemplated by this Agreement.

(h)        SEC Reports; Financial Statements . The Company has filed all reports required to be filed by it under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials (together with any materials filed by the Company under the Exchange Act, whether or not required) being collectively referred to herein as the “ SEC Reports ”). The Company has made available to each Purchaser true, correct and complete copies of all SEC Reports. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the U.S. Securities and Exchange Commission (the “ Commission ”) promulgated thereunder, and none of the SEC Reports, 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 the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“ GAAP ”), except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for 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. All material agreements to which the Company or any subsidiary is a party or to which the property or assets of the Company or any subsidiary are subject are included as part of or specifically identified in the SEC Reports.

(i)         Material Changes . Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports, (i) there has been no event, occurrence or development that, individually or in the aggregate, has had or that could result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting or the identity of its auditors, except as disclosed in its SEC Reports, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock-based plans or agreements.

(j)         Absence of Litigation . There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its subsidiaries that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

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(k)        Fees . Except for brokerage fees payable to Boustead Securities LLC, which have been separately disclosed to the Purchaser, there are no brokerage or finder’s fees or commissions which 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 this Agreement, and the Company has not taken any action that would cause Purchaser to be liable for any such fees or commissions.

(l)         Registration Rights . Except as described in Schedule 2(l) or as contemplated by this Agreement, the Company has not granted or agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the Commission or any other governmental authority that have not been satisfied.

(m)      Patents and Trademarks . To the knowledge of the Company, the Company has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “ Intellectual Property Rights ”). Neither the Company nor any subsidiary has received a written notice that the Intellectual Property Rights used by the Company violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.

(n)        Transactions With Affiliates and Employees . Except as set forth in the SEC Reports, none of the executive officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company (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 executive officer, director or such employee or, to the knowledge of the Company, any entity in which any executive officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000.

(o)        No Other Representations . The Company has not made, or will be deemed to have made, any representation or warranty in connection with this Agreement or the transactions contemplated hereby other than as expressly made in this Section 2 .

3.                    Representations and Warranties of Purchaser . Purchaser represents and warrants to the Company upon the acquisition of the Shares as follows:

(a)        Binding Obligation . Such Purchaser has full legal capacity, power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement and the Transaction Documents constitute valid and binding obligations of such Purchaser, enforceable in accordance with their terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

(b)        Securities Law Compliance . Such Purchaser has been advised that the Shares have not been registered under the Securities Act or any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available. Such Purchaser is aware that the Company is under no obligation to effect any such registration with respect to the Shares or to file for or comply with

4  
 

any exemption from registration. Such Purchaser has not been formed solely for the purpose of making this investment and is purchasing the Shares hereunder for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. Such Purchaser has such knowledge and experience in financial and business matters that such Purchaser is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment without impairing such Purchaser’s financial condition and is able to bear the economic risk of such investment for an indefinite period of time. Such Purchaser is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act and shall submit to the Company such further assurances of such status as may be reasonably requested by the Company. The residency of the Purchaser (or, in the case of a partnership or corporation, such entity’s principal place of business) is correctly set forth beneath such Purchaser’s name on the signature page hereto.

(c)        Access to Information . Such Purchaser acknowledges that the Company has given such Purchaser access to the corporate records and accounts of the Company and to all information in its possession relating to the Company, has made its officers and representatives available for interview by such Purchaser, and has furnished such Purchaser with all documents and other information required for such Purchaser to make an informed decision with respect to the purchase of the Shares.

(d)        Tax Advisors . Such Purchaser has reviewed with its own tax advisors the U.S. federal, state and local and non-U.S. tax consequences of this investment and the transactions contemplated by this Agreement. With respect to such matters, such Purchaser relies solely on any such advisors and not on any statements or representations of the Company or any of its agents, written or oral. Such Purchaser understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment and the transactions contemplated by this Agreement.

4.                    Conditions to Closing of the Purchaser . Purchaser’s obligations at the Closing are subject to the fulfillment, on or prior to the Closing Date, of all of the following conditions, any of which may be waived in whole or in part by the applicable Purchaser:

(a)        Representations and Warranties . The representations and warranties made by the Company in Section 2 shall be true and correct in all material respects on the Closing Date.

(b)        Governmental Approvals and Filings . Except for any notices required or permitted to be filed after the Closing Date with certain federal and state securities commissions, the Company shall have obtained all governmental approvals required in connection with the lawful sale and issuance of the Shares.

(c)        Legal Requirements . At the Closing, the sale and issuance by the Company, and the purchase by the Purchaser, of the Shares shall be legally permitted by all laws and regulations to which the Purchaser or the Company are subject.

(d)        Proceedings and Documents . All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Purchasers.

(e)        Transaction Documents . The Company shall have duly executed and delivered to the Purchaser the following documents:

(i)             This Agreement; and

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(ii)             The Certificate issued hereunder;

5.                    Conditions to Obligations of the Company . The Company’s obligation to issue and sell the Shares at the Closing is subject to the fulfillment, on or prior to the Closing Date, of the following conditions, any of which may be waived in whole or in part by the Company:

(a)        Representations and Warranties . The representations and warranties made by the Purchaser in Section 3 hereof shall be true and correct on the Closing Date.

(b)        Governmental Approvals and Filings . Except for any notices required or permitted to be filed after the Closing Date with certain federal and state securities commissions, the Company shall have obtained all governmental approvals required in connection with the lawful sale and issuance of the Shares and the Warrants .

(c)        Legal Requirements . At the Closing, the sale and issuance by the Company, and the purchase by the Purchaser, of the Shares shall be legally permitted by all laws and regulations to which such Purchaser or the Company are subject.

(d)        Purchase Price . Purchaser shall have delivered to the Company the Purchase Price for the Shares and Warrant being purchased by such Purchaser.

6.                    Miscellaneous .

(a)        Registration Rights .

(i)             Piggy-Back Registration . Company shall give Purchaser at least 30 days’ prior written notice of each filing by Company of a registration statement (other than a registration statement on Form S-4 or Form S-8 or on any successor forms thereto) with the SEC. If requested by the Purchaser in writing within 20 days after receipt of any such notice, Company shall, at Company’s sole expense (other than the underwriting discounts, if any, payable in respect of the shares sold by the Purchaser), register all or, at Purchaser’s option, any portion of the Shares (collectively, the “ Registrable Securities ”) concurrently with the registration of such other securities, all to the extent requisite to permit the public offering and sale of the Registrable Securities through the securities exchange, if any, on which the Common Stock is being sold or on the over-the-counter market, and will use its reasonable best efforts through its officers, directors, auditors, and counsel to cause such registration statement to become effective as promptly as practicable. If the managing underwriter of any such offering shall determine and advise Company that, in its opinion, the distribution of all or a portion of the Registrable Securities requested to be included in the registration concurrently with the securities being registered by Company would materially adversely affect the distribution of such securities by Company then Company will include in such registration first, the securities that Company proposes to sell and second, the Registrable Securities requested to be included in such registration, to the extent permitted by the managing underwriter.

(ii)             In the event of a registration pursuant to these provisions, Company shall use its reasonable best efforts to cause the Registrable Securities so registered to be registered or qualified for sale under the securities or blue sky laws of such jurisdictions as the Purchaser may reasonably request; provided, however, that Company shall not be required to qualify to do business in any state by reason of this section in which it is not otherwise required to qualify to do business.

(iii)             Company shall keep effective any registration or qualification contemplated by this section and shall from time to time amend or supplement each applicable

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registration statement, preliminary prospectus, final prospectus, application, document and communication for such period of time as shall be required to permit the Purchaser to complete the offer and sale of the Registrable Securities covered thereby.

(iv)             In the event of a registration pursuant to the provisions of this section, Company shall furnish to the Purchaser such reasonable number of copies of the registration statement and of each amendment and supplement thereto (in each case, including all exhibits), of each prospectus contained in such registration statement and each supplement or amendment thereto (including each preliminary prospectus), all of which shall conform to the requirements of the Act and the rules and regulations thereunder, and such other documents, as the Purchaser may reasonably request to facilitate the disposition of the Registrable Securities included in such registration.

(v)             Company shall notify the Purchaser within three (3) business days after such registration statement has become effective or a supplement to any prospectus forming a part of such registration statement has been filed.

(vi)             Company shall advise the Purchaser within three (3) business days after it shall receive notice or obtain knowledge of the issuance of any stop order by the Commission suspending the effectiveness of such registration statement, or the initiation or threatening of any proceeding for that purpose and within three (3) business days take action using its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued.

(vii)             Company shall within three (3) business days notify the Purchaser at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the reasonable request of the Purchaser prepare and furnish to it such number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities or securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made. The Purchaser shall suspend all sales of the Registrable Securities upon receipt of such notice from Company and shall not re-commence sales until they receive copies of any necessary amendment or supplement to such prospectus, which shall be delivered to the Purchaser within 30 days of the date of such notice from Company.

(viii)             If requested by the underwriter for any underwritten offering of Registrable Securities, Company and the Purchaser will enter into an underwriting agreement with such underwriter for such offering, which shall be reasonably satisfactory in substance and form to Company, Company’s counsel and the Purchaser’ counsel, and the underwriter, and such agreement shall contain such representations and warranties by Company and the Purchaser and such other terms and provisions as are customarily contained in an underwriting agreement with respect to secondary distributions solely by selling stockholders, including, without limitation, indemnities substantially to the effect and to the extent provided below.

(ix)             The rights of the Purchaser under this Section 6(a) shall apply equally to the filing by Company of an offering statement on Form 1-A under Regulation A promulgated under the Act and, if Company files such an offering statement instead of a registration statement, all references to (A) registration statement shall be deemed to be references to offering statement, (B) prospectus shall be deemed to be references to offering circular, and (C) effective date of a registration statement shall be

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deemed to be references to qualification date of an offering statement. The Purchaser’s rights under this Section 6(a) shall automatically terminate once the Purchaser has sold all of the Registrable Securities or all of the Registrable Securities may be resold by the Purchaser under Rule 144 of the Act without limitation as to the volume of Registrable Securities to be sold.

(b)        Waivers and Amendments . Any provision of this Agreement may be amended, waived or modified only upon the written consent of the Company and Purchaser.

(c)        Governing Law . This Agreement and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to the conflicts of law provisions of the State of Texas or of any other state.

(d)        Jurisdiction and Venue . Each of the parties irrevocably consents to the exclusive jurisdiction of, and venue in, the state and federal courts in Dallas County in the State of Texas, in connection with any matter based upon or arising out of this Agreement or the matters contemplated herein, and agrees that process may be served upon them in any manner authorized by the laws of the State of Texas for such persons.

(e)        Survival . The representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement.

(f)         Successors and Assigns . Subject to the restrictions on transfer described herein or in the other Transaction Documents, the rights and obligations of the Company and the Purchaser shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

(g)        Entire Agreement . This Agreement together with the other Transaction Documents constitute and contain the entire agreement among the Company and Purchaser and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof.

(h)        Notices . All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by electronic mail (if to a Purchaser or any other holder of Company securities) or otherwise delivered by hand, messenger or courier service addressed:

(i)             if to Purchaser, to the Purchaser’s address or electronic mail address as shown in the Company’s records, as may be updated in accordance with the provisions hereof;

(ii)             if to any other holder of any Shares, to such address or electronic mail address as shown in the Company’s records, or, until any such holder so furnishes an address or electronic mail address to the Company, then to the address or electronic mail address of the last holder of such Shares for which the Company has contact information in its records; or

(iii)             if to the Company, to the attention of Gust Kepler at Blackboxstocks Inc., Lincoln Centre Three, 5430 LBJ Freeway, Suite 1485, Dallas, Texas 75240, or at such other current address as the Company shall have furnished to the Purchasers.

Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt

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or five days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day. In the event of any conflict between the Company’s books and records and this Agreement or any notice delivered hereunder, the Company’s books and records will control absent fraud or error.

(i)         Counterparts . This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. This Agreement and any signed agreement entered into in connection herewith or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by facsimile, by electronic mail in “portable document format” (“.pdf”) form, or any other electronic transmission, shall be treated in all manner and respects as an original contract and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such contract, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties.

[signature page follows]

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The parties have caused this Securities Purchase Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

 

  BLACKBOXSTOCKS INC.
  A Nevada corporation
   
By:  
Name: Gust Kepler
Title: President and Chief Executive Officer

 

  PURCHASER:
   
  John R. Bertsch Trust
   
By:  
Name:  
Title:  
   
Address: 644 Cascade Hills Hollow
  Grand Rapids, Michigan 49546

 

 

 

 

 

 

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Disclosure Schedules

Schedule 2(b)

Under the terms of the Company’s Investors’ Rights Agreement with Stephen Chiang, a citizen of Singapore, dated October 26, 2016, Mr. Chiang has the right to notice of any proposed offering and a right to purchase Common Stock on the same terms as the Offering. If Mr. Chiang elects to exercise his right to participate in the offering, he is entitled to purchase up to 13% of the shares at the same price established in the offering.

On April 10, 2019 the John R. Bertsch Trust entered into a Securities Purchase Agreement with the Company for the purchase of 153,847 shares of Common Stock and a Warrant, exercisable for a period of 5 years, to purchase 100,000 shares of Common Stock at an exercise price of $0.65 per share.

Schedule 2(l)

Under the terms of the Company’s Investors’ Rights Agreement with Stephen Chiang, a citizen of Singapore, dated October 26, 2016, Mr. Chiang has piggy back registration rights with respect to shares of Common Stock held by him.

Exhibit 10.3

 

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “ Agreement ”) dated as of May 22, 2019 , is entered into by and between Blackboxstocks, Inc., Inc. , a Nevada corporation (the “ Company ”), and the purchaser identified on the signature page hereto (the “ Purchaser ”) .

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an exemption from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “ Securities Act ”) contained in Section 4(a)(2) thereof and/or Regulation D, the Company desires to issue and sell to Purchaser, and Purchaser desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

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

1.                    Purchase and Sale of Common Stock and Warrant .

(a)        Issuance of Common Stock . Subject to all of the terms and conditions hereof, the Company agrees to issue and sell to the Purchaser, and the Purchaser agrees to purchase, an aggregate of 38,462 shares (the “ Shares ”) of Company common stock, par value $0.001 per share (the “ Common Stock ”) at a price of $0.65 per Share, for an aggregate purchase price of $25,000.30 (the “ Purchase Price ”).

(b)        Issuance of Warrant . Concurrently with the issuance of the Shares to the Purchaser, the Company will issue to the Purchaser a warrant in the form attached hereto as Exhibit A (a “ Warrant ”) exercisable for a period of five (5) years, to purchase 19,231 shares of Common Stock (the “ Warrant Shares ”) at an exercise price of $0.65 per share.

(c)        Delivery . The Closing (“ Closing ”) of the sale and purchase of the Shares and Warrant shall take place on the date of this Agreement (the “ Closing Date ”). At the Closing, the Company will deliver to the Purchaser a certificate (the “ Certificate ”) representing the Shares and the Warrant to be purchased by such Purchaser, against receipt by the Company of the Purchase Price. Upon Closing, the Certificate representing the Shares and the Warrant shall be registered in the Purchaser’s name in the Company’s records.

2.                    Representations and Warranties of the Company . The Company represents and warrants to Purchaser that, as of the Closing:

(a)        Organization and Qualification . The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada; (ii) has the power and authority to own, lease and operate its properties and carry on its business as now conducted; and (iii) is duly qualified, licensed to do business and in good standing as a foreign corporation in each jurisdiction where the failure to be so qualified or licensed could reasonably be expected to have a material adverse effect on the Company.

(b)        Capitalization . Immediately prior to the consummation of the transactions to be effected at the Closing, the authorized equity of the Company consists of 100,000,000 shares of Common Stock, of which 23,115,500 shares were issued and outstanding as of May 16, 2019, and 10,000,000

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shares of preferred stock, par value $0.001 per share (the “ Preferred Stock ”), of which 5,000,000 shares have been designated as Series A Convertible Preferred shares (the “ Series A Shares ”), all of which Series A Shares are currently issued and outstanding. The Series A Shares are convertible on a one-for-one basis into shares of Common Stock and entitled to 100 votes per share on each matter submitted to a vote of the Company’s stockholders. All outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable and have been issued in compliance with all applicable securities laws. Except as disclosed in Schedule 2(b), there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any subsidiary is or may become bound to issue additional shares of common stock, or securities or rights convertible or exchangeable into shares of common stock. Except as disclosed in Schedule 2(b), there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) other than as provided herein and the issue and sale of the securities hereunder will not obligate the Company to issue shares of common stock or other securities to any person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities.

(c)        Valid Issuance of Securities .

(i)             The Shares and Warrant Shares . The Shares upon issuance and the Warrant Shares issuable upon exercise of the Warrant will, when issued, sold and delivered in accordance with the terms of this Agreement and the Warrant for the consideration provided for herein and therein, be duly authorized and validly issued.

(ii)             Securities Laws . Based in part on the representations made by the Purchaser in Section 3 hereof, the offer and sale of the Shares and Warrant solely to the Purchaser in accordance with this Agreement and the Warrant and (assuming no change in currently applicable law, no transfer of Shares or Warrant by Purchaser and no commission or other remuneration is paid or given, directly or indirectly, for soliciting the issuance of Warrant Shares upon exercise of the Warrants) the issuance of the Shares and Warrant Shares is exempt from the registration and prospectus delivery requirements of the Securities Act and the securities registration and qualification requirements of the currently effective provisions of the securities laws of the states in which the Purchaser is resident based upon the Purchaser’s address set forth on the signature page attached hereto.

(d)        Authority . The execution, delivery and performance by the Company of each of this Agreement and the Warrant (collectively, the “ Transaction Documents ”) to be executed by the Company and the consummation of the transactions contemplated thereby (i) are within the power of the Company and (ii) have been duly authorized by all necessary actions on the part of the Company.

(e)        Enforceability . Each of the Transaction Documents executed, or to be executed, by the Company has been, or will be, duly executed and delivered by the Company and constitutes, or will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

(f)         Non-Contravention . The execution and delivery by the Company of the Transaction Documents executed by the Company and the performance and consummation of the transactions contemplated thereby do not and will not (i) violate the Company’s certificate of incorporation or bylaws

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or any material judgment, order, writ, decree, statute, rule or regulation applicable to the Company; (ii) violate any provision of, or result in the breach or the acceleration of, or entitle any other Person to accelerate (whether after the giving of notice or lapse of time or both), any material mortgage, indenture, agreement, instrument or contract to which the Company is a party or by which it is bound; or (iii) result in the creation or imposition of any security interest, mortgage, pledge, lien, claim, charge or other encumbrance (“ Lien ”) upon any property, asset or revenue of the Company (other than any Lien arising under the Transaction Documents) or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.

(g)        Approvals . No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental authority or other Person (including, without limitation, the shareholders of any Person) is required in connection with the execution and delivery of the Transaction Documents executed by the Company and the performance and consummation of the transactions contemplated thereby, other than such as have been obtained and remain in full force and effect and other than such qualifications or filings under applicable securities laws as may be required in connection with the transactions contemplated by this Agreement.

(h)        SEC Reports; Financial Statements . The Company has filed all reports required to be filed by it under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials (together with any materials filed by the Company under the Exchange Act, whether or not required) being collectively referred to herein as the “ SEC Reports ”). The Company has made available to Purchaser true, correct and complete copies of all SEC Reports. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the U.S. Securities and Exchange Commission (the “ Commission ”) promulgated thereunder, and none of the SEC Reports, 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 the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“ GAAP ”), except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for 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. All material agreements to which the Company or any subsidiary is a party or to which the property or assets of the Company or any subsidiary are subject are included as part of or specifically identified in the SEC Reports.

(i)         Material Changes . Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports, (i) there has been no event, occurrence or development that, individually or in the aggregate, has had or that could result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting or the identity of its auditors, except as disclosed in its SEC Reports, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its

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capital stock, and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock-based plans or agreements.

(j)         Absence of Litigation . There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its subsidiaries that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(k)        Fees . Except for brokerage fees payable to Boustead Securities LLC, which have been separately disclosed to the Purchaser, there are no brokerage or finder’s fees or commissions which 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 this Agreement, and the Company has not taken any action that would cause Purchaser to be liable for any such fees or commissions.

(l)         Registration Rights . Except as described in Schedule 2(l) or as contemplated by this Agreement, the Company has not granted or agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the Commission or any other governmental authority that have not been satisfied.

(m)      Patents and Trademarks . To the knowledge of the Company, the Company has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “ Intellectual Property Rights ”). Neither the Company nor any subsidiary has received a written notice that the Intellectual Property Rights used by the Company violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.

(n)        Transactions With Affiliates and Employees . Except as set forth in the SEC Reports, none of the executive officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company (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 executive officer, director or such employee or, to the knowledge of the Company, any entity in which any executive officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000.

(o)        No Other Representations . The Company has not made, or will be deemed to have made, any representation or warranty in connection with this Agreement or the transactions contemplated hereby other than as expressly made in this Section 2 .

3.                    Representations and Warranties of Purchaser . Purchaser represents and warrants to the Company upon the acquisition of the Shares and Warrant as follows:

(a)        Binding Obligation . Such Purchaser has full legal capacity, power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement and the Transaction Documents constitute valid and binding obligations of such Purchaser, enforceable in

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accordance with their terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

(b)        Securities Law Compliance . Such Purchaser has been advised that the Shares, the Warrant and the underlying securities have not been registered under the Securities Act or any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available. Such Purchaser is aware that the Company is under no obligation to effect any such registration with respect to the Shares , the Warrant or the underlying securities or to file for or comply with any exemption from registration. Such Purchaser has not been formed solely for the purpose of making this investment and is purchasing the Shares and Warrant to be acquired by Purchaser hereunder for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. Such Purchaser has such knowledge and experience in financial and business matters that such Purchaser is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment without impairing such Purchaser’s financial condition and is able to bear the economic risk of such investment for an indefinite period of time. Such Purchaser is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act and shall submit to the Company such further assurances of such status as may be reasonably requested by the Company. The residency of the Purchaser (or, in the case of a partnership or corporation, such entity’s principal place of business) is correctly set forth beneath such Purchaser’s name on the signature page hereto.

(c)        Access to Information . Such Purchaser acknowledges that the Company has given such Purchaser access to the corporate records and accounts of the Company and to all information in its possession relating to the Company, has made its officers and representatives available for interview by such Purchaser, and has furnished such Purchaser with all documents and other information required for such Purchaser to make an informed decision with respect to the purchase of the Shares and the Warrant .

(d)        Tax Advisors . Such Purchaser has reviewed with its own tax advisors the U.S. federal, state and local and non-U.S. tax consequences of this investment and the transactions contemplated by this Agreement. With respect to such matters, such Purchaser relies solely on any such advisors and not on any statements or representations of the Company or any of its agents, written or oral. Such Purchaser understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment and the transactions contemplated by this Agreement.

4.                    Conditions to Closing of the Purchaser . Purchaser’s obligations at the Closing are subject to the fulfillment, on or prior to the Closing Date, of all of the following conditions, any of which may be waived in whole or in part by the applicable Purchaser:

(a)        Representations and Warranties . The representations and warranties made by the Company in Section 2 shall be true and correct in all material respects on the Closing Date.

(b)        Governmental Approvals and Filings . Except for any notices required or permitted to be filed after the Closing Date with certain federal and state securities commissions, the Company shall have obtained all governmental approvals required in connection with the lawful sale and issuance of the Shares and Warrant .

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(c)        Legal Requirements . At the Closing, the sale and issuance by the Company, and the purchase by the Purchaser, of the Shares and Warrant shall be legally permitted by all laws and regulations to which the Purchaser or the Company are subject.

(d)        Proceedings and Documents . All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Purchasers.

(e)        Transaction Documents . The Company shall have duly executed and delivered to the Purchaser the following documents:

(i)             This Agreement; and

(ii)             The Certificate and Warrant issued hereunder;

5.                    Conditions to Obligations of the Company . The Company’s obligation to issue and sell the Shares and the Warrant at the Closing is subject to the fulfillment, on or prior to the Closing Date, of the following conditions, any of which may be waived in whole or in part by the Company:

(a)        Representations and Warranties . The representations and warranties made by the Purchaser in Section 3 hereof shall be true and correct on the Closing Date.

(b)        Governmental Approvals and Filings . Except for any notices required or permitted to be filed after the Closing Date with certain federal and state securities commissions, the Company shall have obtained all governmental approvals required in connection with the lawful sale and issuance of the Shares and the Warrants .

(c)        Legal Requirements . At the Closing, the sale and issuance by the Company, and the purchase by the Purchaser, of the Shares and the Warrant shall be legally permitted by all laws and regulations to which such Purchaser or the Company are subject.

(d)        Purchase Price . Purchaser shall have delivered to the Company the Purchase Price for the Shares and Warrant being purchased by such Purchaser.

6.                    Miscellaneous .

(a)        Registration Rights .

(i)             Piggy-Back Registration . Company shall give Purchaser at least 30 days’ prior written notice of each filing by Company of a registration statement (other than a registration statement on Form S-4 or Form S-8 or on any successor forms thereto) with the SEC. If requested by the Purchaser in writing within 20 days after receipt of any such notice, Company shall, at Company’s sole expense (other than the underwriting discounts, if any, payable in respect of the shares sold by the Purchaser), register all or, at Purchaser’s option, any portion of the Shares and the Warrant Shares (collectively, the “ Registrable Securities ”) concurrently with the registration of such other securities, all to the extent requisite to permit the public offering and sale of the Registrable Securities through the securities exchange, if any, on which the Common Stock is being sold or on the over-the-counter market, and will use its reasonable best efforts through its officers, directors, auditors, and counsel to cause such registration statement to become effective as promptly as practicable. If the managing underwriter of any such offering shall determine and advise Company that, in its opinion, the distribution of all or a portion of the Registrable Securities requested to be included in the registration concurrently with the securities

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being registered by Company would materially adversely affect the distribution of such securities by Company then Company will include in such registration first, the securities that Company proposes to sell and second, the Registrable Securities requested to be included in such registration, to the extent permitted by the managing underwriter.

(ii)             In the event of a registration pursuant to these provisions, Company shall use its reasonable best efforts to cause the Registrable Securities so registered to be registered or qualified for sale under the securities or blue sky laws of such jurisdictions as the Purchaser may reasonably request; provided, however, that Company shall not be required to qualify to do business in any state by reason of this section in which it is not otherwise required to qualify to do business.

(iii)             Company shall keep effective any registration or qualification contemplated by this section and shall from time to time amend or supplement each applicable registration statement, preliminary prospectus, final prospectus, application, document and communication for such period of time as shall be required to permit the Purchaser to complete the offer and sale of the Registrable Securities covered thereby.

(iv)             In the event of a registration pursuant to the provisions of this section, Company shall furnish to the Purchaser such reasonable number of copies of the registration statement and of each amendment and supplement thereto (in each case, including all exhibits), of each prospectus contained in such registration statement and each supplement or amendment thereto (including each preliminary prospectus), all of which shall conform to the requirements of the Act and the rules and regulations thereunder, and such other documents, as the Purchaser may reasonably request to facilitate the disposition of the Registrable Securities included in such registration.

(v)             Company shall notify the Purchaser within three (3) business days after such registration statement has become effective or a supplement to any prospectus forming a part of such registration statement has been filed.

(vi)             Company shall advise the Purchaser within three (3) business days after it shall receive notice or obtain knowledge of the issuance of any stop order by the Commission suspending the effectiveness of such registration statement, or the initiation or threatening of any proceeding for that purpose and within three (3) business days take action using its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued.

(vii)             Company shall within three (3) business days notify the Purchaser at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the reasonable request of the Purchaser prepare and furnish to it such number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities or securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made. The Purchaser shall suspend all sales of the Registrable Securities upon receipt of such notice from Company and shall not re-commence sales until they receive copies of any necessary amendment or supplement to such prospectus, which shall be delivered to the Purchaser within 30 days of the date of such notice from Company.

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(viii)             If requested by the underwriter for any underwritten offering of Registrable Securities, Company and the Purchaser will enter into an underwriting agreement with such underwriter for such offering, which shall be reasonably satisfactory in substance and form to Company, Company’s counsel and the Purchaser’ counsel, and the underwriter, and such agreement shall contain such representations and warranties by Company and the Purchaser and such other terms and provisions as are customarily contained in an underwriting agreement with respect to secondary distributions solely by selling stockholders, including, without limitation, indemnities substantially to the effect and to the extent provided below.

(ix)             The rights of the Purchaser under this Section 6(a) shall apply equally to the filing by Company of an offering statement on Form 1-A under Regulation A promulgated under the Act and, if Company files such an offering statement instead of a registration statement, all references to (A) registration statement shall be deemed to be references to offering statement, (B) prospectus shall be deemed to be references to offering circular, and (C) effective date of a registration statement shall be deemed to be references to qualification date of an offering statement. The Purchaser’s rights under this Section 6(a) shall automatically terminate once the Purchaser has sold all of the Registrable Securities or all of the Registrable Securities may be resold by the Purchaser under Rule 144 of the Act without limitation as to the volume of Registrable Securities to be sold.

(b)        Waivers and Amendments . Any provision of this Agreement and/or the Warrant may be amended, waived or modified only upon the written consent of the Company and Purchaser.

(c)        Governing Law . This Agreement and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to the conflicts of law provisions of the State of Texas or of any other state.

(d)        Jurisdiction and Venue . Each of the parties irrevocably consents to the exclusive jurisdiction of, and venue in, the state and federal courts in Dallas County in the State of Texas, in connection with any matter based upon or arising out of this Agreement or the matters contemplated herein, and agrees that process may be served upon them in any manner authorized by the laws of the State of Texas for such persons.

(e)        Survival . The representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement.

(f)         Successors and Assigns . Subject to the restrictions on transfer described herein or in the other Transaction Documents, the rights and obligations of the Company and the Purchaser shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

(g)        Entire Agreement . This Agreement together with the other Transaction Documents constitute and contain the entire agreement among the Company and Purchaser and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof.

(h)        Notices . All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by electronic mail (if to a Purchaser or any other holder of Company securities) or otherwise delivered by hand, messenger or courier service addressed:

(i)             if to Purchaser, to the Purchaser’s address or electronic mail address as shown in the Company’s records, as may be updated in accordance with the provisions hereof;

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(ii)             if to any other holder of any Shares , the Warrant or shares issuable upon exercise thereof, to such address or electronic mail address as shown in the Company’s records, or, until any such holder so furnishes an address or electronic mail address to the Company, then to the address or electronic mail address of the last holder of such Shares , the Warrant or shares issuable upon exercise thereof for which the Company has contact information in its records; or

(iii)             if to the Company, to the attention of Gust Kepler at Blackboxstocks Inc., Lincoln Centre Three, 5430 LBJ Freeway, Suite 1485, Dallas, Texas 75240, or at such other current address as the Company shall have furnished to the Purchasers.

Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day. In the event of any conflict between the Company’s books and records and this Agreement or any notice delivered hereunder, the Company’s books and records will control absent fraud or error.

(i)         Counterparts . This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. This Agreement and any signed agreement entered into in connection herewith or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by facsimile, by electronic mail in “portable document format” (“.pdf”) form, or any other electronic transmission, shall be treated in all manner and respects as an original contract and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such contract, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties.

[signature page follows]

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The parties have caused this Securities Purchase Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

 

  BLACKBOXSTOCKS INC.
  A Nevada corporation
   
By:  
Name: Gust Kepler
Title: President and Chief Executive Officer

 

  PURCHASER:
   
By:  
Name: Steven Kuhn
Title:  
   
Address: 5102 Lauderdale Avenue
  La Crescenta, CA 91214

 

 

 

 

 

 

 

 

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Disclosure Schedules

Schedule 2(b)

 

Under the terms of the Company’s Investors’ Rights Agreement with Stephen Chiang, a citizen of Singapore, dated October 26, 2016, Mr. Chiang has the right to notice of any proposed offering and a right to purchase Common Stock on the same terms as the Offering. If Mr. Chiang elects to exercise his right to participate in the offering, he is entitled to purchase up to 13% of the shares at the same price established in the offering.

 

On April 10, 2019 the Company entered into a Securities Purchase Agreement with an investor for the purchase of 153,847 shares of Common Stock and a Warrant, exercisable for a period of 5 years, to purchase 100,000 shares of Common Stock at an exercise price of $0.65 per share. None of the shares have been issued as of May 16, 2019.

 

On or about May 7, 2019 the Company entered into a Securities Purchase Agreement with an investor for the purchase of 76,924 shares of Common Stock. None of the shares have been issued as of May 16, 2019.

 

Schedule 2(l)

 

Under the terms of the Company’s Investors’ Rights Agreement with Stephen Chiang, a citizen of Singapore, dated October 26, 2016, Mr. Chiang has piggy back registration rights with respect to shares of Common Stock held by him.

 

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Exhibit A

 

Form of Warrant

 

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO.

No. 00__ [______], 2019

BLACKBOXSTOCKS, INC.

 

Warrant for the Purchase of Common Stock

FOR VALUE RECEIVED, BLACKBOXSTOCKS, INC., a Nevada corporation (the “ Company ”), hereby certifies that [_________________], or [his/its] permitted transferees or assigns (the “ Holder ”), is entitled, subject to the provisions of this Warrant (this “ Warrant ”), to purchase from the Company, at any time during the Exercise Period (defined below), [___________________] ([____]) shares of common stock, $0.001 par value per share (the “ Common Stock ”), subject to adjustment from time to time as hereinafter set forth, at a purchase price equal to $0.65 per share, subject to adjustment from time to time as hereinafter set forth (as may be so adjusted, the “ Exercise Price ”). This Warrant has been granted pursuant to the terms of that certain Securities Purchase Agreement dated [______], 2019, by and between the Company and the Purchasers thereunder (the “ Agreement ”). Capitalized terms used but not defined herein shall have the meanings given such terms as set forth in the Agreement.

1.                    Exercise of Warrant .

(a)       This Warrant shall be exercisable for a period beginning on the date first set forth above (the “ Issuance Date ”) and ending [___________], [2024] [1] (the “ Exercise Period ”). This Warrant may be exercised in whole or in part during the Exercise Period by presentation and surrender hereof to the Company at its principal office, with the Purchase Form annexed hereto (the “ Purchase Form ”) duly executed and accompanied by proper payment in cash or check in an amount equal to the aggregate Exercise Price of this Warrant, as specified in such form.

(b)       Upon receipt by the Company of this Warrant and the Purchase Form, together with the aggregate Exercise Price, at such office, in proper form for exercise, the Holder shall be deemed to be the holder of record of the Common Stock specified in the Purchase Form (the “ Warrant Shares ”), notwithstanding that the transfer books of the Company shall then be closed or that certificates (if any) representing the Warrant Shares shall not then be actually delivered to the Holder. The Company shall pay any and all documentary, stamp, or similar issue taxes payable in respect of the issuance of the Warrant Shares. The Company shall not, however, be required to pay any tax that may be payable in respect of any transfer involved in the issuance or

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delivery of certificates (if any) representing Warrants or the Warrant Shares in a name other than that of the Holder at the time of surrender for exercise, and, until the payment of such tax, shall not be required to issue such Warrant Shares. In the event of a partial exercise of this Warrant, the Company shall execute and deliver a warrant to Holder for the remaining unexercised portion of this Warrant.

2.                    Transfer, Assignment, or Loss of Warrant .  The Holder of this Warrant shall be entitled to transfer or assign its interest in this Warrant subject only to the applicable securities laws. Upon such assignment and surrender of this Warrant to the Company, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be cancelled. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant (which may be an affidavit of the Holder in the case of loss, theft, destruction), and (in the case of loss, theft, or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like term and date.

3.                    Reclassification, Reorganization, Conversion, Consolidation, or Merger .  In the case of any Reorganization Transaction (defined below), the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that the Holder shall have the right thereafter, by exercising this Warrant, to purchase the kind and amount of securities and property receivable upon such Reorganization Transaction by a holder of the number of shares of Common Stock that would have been received upon exercise in full of this Warrant immediately prior to such Reorganization Transaction. Any such provision shall (a) be binding upon the Holder without the Holder’s further consent and (b) include provision for adjustments in respect of such securities and property that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The foregoing provisions of this Section 3 shall similarly apply to successive Reorganization Transactions. For purposes of this Section 3 , “ Reorganization Transaction ” means any reclassification, conversion, or any consolidation or merger of the Company with or into another Person or any sale, lease, transfer, or conveyance to another Person of the property and assets of the Company as an entirety.

4.                    Stock Splits, Combinations and Other Adjustments.

(a)        Splits and Subdivisions; Dividends . In the event the Company should at any time or from time to time effectuate a split or subdivision of the outstanding shares of Common Stock or pay a dividend in or make a distribution payable in additional shares of Common Stock or any capital stock or other security of the Company that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company (including, without limitation, Common Stock) (“Common Stock Equivalents”) without payment of any consideration by such holder for the additional shares of Common Stock or Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of the applicable record date (or the date of such distribution, split or subdivision if no record date is fixed), the per share Exercise Price shall be appropriately decreased and the number of Warrant Shares shall be appropriately increased in proportion to such increase (or potential increase) of outstanding shares; provided, however, that no adjustment shall be made in the event the split, subdivision, dividend or distribution is not effectuated.

(b)        Combination of Shares . If the number of shares of Common Stock outstanding at any time after the date hereof is decreased by a combination of the outstanding shares of Common Stock, the per share Exercise Price shall be appropriately increased and the number of

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shares of Warrant Shares shall be appropriately decreased in proportion to such decrease in outstanding shares.

(c)        Adjustments for Other Distributions . In the event the Company shall declare a distribution payable in securities of other Persons, evidences of indebtedness issued by the Company or other Persons, assets (excluding cash dividends or distributions to the holders of Common Stock paid out of current or retained earnings and declared by the Company’s board of directors) or options or rights not referred to in Section 3 or in this Section 4, then, in each such case for the purpose of this Section 4, upon exercise of this Warrant, the Holder shall be entitled to a proportionate share of any such distribution as though the Holder was the actual record holder of the number of Warrant Shares as of the record date fixed for the determination of the holders of Common Stock of the Company entitled to receive such distribution.

5.                    Rights .  This Warrant shall not entitle the Holder to any of the rights of a holder of Common Stock until this Warrant is exercised in the manner provided herein.

6.                    Securities Laws .  The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are being acquired solely for the Holder’s own account for investment, and that the Holder will not offer, sell, or otherwise dispose of this Warrant or the Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of any federal or state securities laws. Upon exercise of this Warrant, the Holder shall, if requested by the Company, confirm in writing, in a form reasonably satisfactory to the Company, that the Warrant Shares so purchased are being acquired for investment, and not with a view toward distribution or resale in violation of applicable securities laws. Certificates (if any) representing Warrant Shares issued upon exercise hereof shall be stamped or imprinted with a legend in substantially the form set forth at the heading of this Warrant.

7.                    Reservation of Stock . The Company covenants that during the term this Warrant is exercisable, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the exercise of this Warrant and, from time to time, will take all steps necessary to amend its articles of incorporation as amended to provide sufficient reserves of shares of Common Stock issuable upon exercise of the Warrant. The Company further covenants that all shares that may be issued upon the exercise of rights represented by this Warrant and payment of the Exercise Price, all as set forth herein, will be free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein). The Company agrees that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the exercise of this Warrant.

8.                    Net Cash Settlement . Notwithstanding anything herein to the contrary, in no event will the Holder hereof be entitled to receive a net-cash settlement as liquidated damages in lieu of physical settlement in shares of Common Stock, regardless of whether the Common Stock underlying this Warrant is registered pursuant to an effective registration statement; provided, however, that the foregoing will not preclude the Holder from seeking other remedies at law or equity for breaches by the Company of its registration obligations hereunder.

9.                    Miscellaneous . This Warrant and any term hereof may be changed, waived, discharged, or terminated only in accordance with the Purchase Agreement. This Warrant and all actions arising out of or in connection with this Warrant shall be governed by and construed in accordance with the laws of the State of Texas, without regard to the conflicts of law provisions of the State of Texas or of any other state. Each of the parties irrevocably consents to the exclusive jurisdiction of, and venue in, the state and

14  
 

federal courts in Dallas County in the State of Texas, in connection with any matter based upon or arising out of this Agreement or the matters contemplated herein, and agrees that process may be served upon them in any manner authorized by the laws of the State of Texas for such persons. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.

IN WITNESS WHEREOF, the undersigned has executed this Warrant to be effective as of the date first written above.

  BLACKBOXSTOCKS INC.
  A Nevada corporation
   
By:  
Name: Gust Kepler
Title: President and Chief Executive Officer

 

 

 

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PURCHASE FORM

Date: _______________

The undersigned hereby irrevocably elects to exercise the attached Warrant hereby purchasing ___________ shares of Common Stock of BLACKBOXSTOCKS, INC., a Nevada corporation, thereunder and hereby makes payment of $________ in payment of the exercise price thereof.

 

  Holder Name:  
  Holder Address:  
   
   
  Signature / By:  
  Name (if applicable):  
  Title (if applicable):