Nevada
|
26-2137574
|
|
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
|
Large accelerated filer
¨
|
Accelerated filer
¨
|
Non-accelerated filer
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
x
|
PART I
|
Page
|
|
Item 1.
|
Business
|
4
|
Item 1A.
|
Risk Factors
|
12
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Item 1B.
|
Unresolved Staff Comments
|
16
|
Item 2.
|
Properties
|
16
|
Item 3.
|
Legal Proceedings
|
16
|
PART II
|
||
Item 5.
|
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
17
|
Item 6.
|
Selected Financial Data
|
21
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
21
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Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
25
|
Item 8.
|
Financial Statements and Supplementary Data
|
25
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Item 9.
|
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
|
25
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Item 9A (T)
|
Controls and Procedures
|
26
|
Item 9B.
|
Other Information
|
27
|
PART III
|
||
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
27
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Item 11.
|
Executive Compensation
|
29
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
31
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Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
32
|
Item 14
|
Principal Accounting Fees and Services
|
32
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PART IV
|
||
Item 15.
|
Exhibits, Financial Statement Schedules
|
33
|
·
|
our ability to diversify our operations;
|
·
|
inability to raise additional financing for working capital;
|
·
|
the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require our management to make estimates about matters that are inherently uncertain;
|
·
|
our ability to attract key personnel;
|
·
|
our ability to operate profitably;
|
·
|
deterioration in general or regional economic conditions;
|
·
|
adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;
|
·
|
changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;
|
·
|
the inability of management to effectively implement our strategies and business plan;
|
·
|
inability to achieve future sales levels or other operating results;
|
·
|
the unavailability of funds for capital expenditures;
|
·
|
other risks and uncertainties detailed in this report;
|
·
|
Due to the high temperatures and corrosive aspects of water, a typical water heater has a life span of 10.7 years.
|
·
|
Unless replaced beforehand, more than two thirds of water heaters eventually corrode and leak or burst, often resulting in extensive and costly water and mold related damage.
|
·
|
Due to the large size and other installation requirements often result in the units being installed in garages and utility rooms on the opposite side of the home from the bathroom fixtures. Because of this, an estimated 10,000 gallons of water per household goes down the drain while users wait on the water to get hot at the faucet.
|
·
|
Traditional tank water heaters take up to 6 to 9 square feet of floor space, which can be especially valuable in multi-family or commercial applications.
|
·
|
To reduce operating costs, many people adjust the temperature on their water heaters down. Unfortunately, lower temperatures increase the possibility of unhealthy, water born bacteria growth.
|
·
|
To increase water heating capacity, many people will adjust the temperature of their water heaters up
.
In addition to using more energy, this practice can be dangerous by posing a greater risk of scalding.
|
·
|
Produce a continuous, unlimited supply of hot water
|
·
|
Expend only the energy needed to heat the water used with no “standby” energy loss
|
·
|
Can last more than twice as long as tank heaters
|
·
|
Are small and require very little space.
|
·
|
Are not conducive to bacterial growth
|
·
|
Are considered very “green” by green conscious builders and consumers.
|
1.
|
Regional and national plumbing and electrical wholesalers (also called “distributors”);
|
2.
|
Plumbers and electricians on a direct basis, in those areas where wholesalers have not yet been set up; and,
|
3.
|
Builders on a direct basis, in those areas where wholesalers & mechanical contractors have not yet been set up.
|
·
|
Deliver to the customer, and obtain a written receipt for, a disclosure document;
|
·
|
Disclose certain price information about the stock;
|
·
|
Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;
|
·
|
Send monthly statements to customers with market and price information about the penny stock; and
|
·
|
In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.
|
Year Ending
December 31, 2015
|
Year Ending
December 31, 2014
|
|||||||||||
AVERAGE BID PRICES
|
AVERAGE BID PRICES
|
|||||||||||
High
|
Low
|
High
|
Low
|
|||||||||
1
st
Quarter
|
$
|
2.33
|
$
|
1.68
|
$
|
4.02
|
$
|
2.47
|
||||
2
nd
Quarter
|
$
|
2.38
|
$
|
1.76
|
$
|
3.24
|
$
|
1.95
|
||||
3
rd
Quarter
|
$
|
2.45
|
$
|
1.80
|
$
|
3.31
|
$
|
2.12
|
||||
4
th
Quarter
|
$
|
2.28
|
$
|
1.36
|
$
|
3.07
|
$
|
2.16
|
·
|
our financial condition;
|
·
|
earnings;
|
·
|
need for funds;
|
·
|
capital requirements;
|
·
|
prior claims of preferred stock to the extent issued and outstanding; and
|
·
|
other factors, including any applicable laws.
|
Year ended
December 31,
|
||||
2015
|
2014
|
|||
Net cash used in operating activities – continuing operations
|
$ (2,523,867)
|
$ (2,647,194)
|
||
Net cash used in operating activities – discontinued operations
|
-
|
(85,647)
|
||
Net cash used in operating activities
|
(2,523,867)
|
(2,732,841)
|
||
Net cash used in investing activities – continuing operations
|
(18,424)
|
(12,324)
|
||
Net cash used in investing activities
|
(18,424)
|
(12,324)
|
||
Net cash provided by financing activities – continuing operations
|
2,505,463
|
2,695,635
|
||
Net cash provided by financing activities – discontinued operations
|
-
|
86,013
|
||
Net cash provided by financing activities
|
2,505,463
|
2,781,648
|
||
Net decrease in Cash
|
(36,828)
|
36,483
|
||
Cash, beginning
|
40,446
|
4,329
|
||
Cash, ending
|
3,618
|
40,812
|
||
Less: Cash, discontinued operations
|
-
|
366
|
||
Cash, continuing operations
|
$ 3,618
|
$ 40,446
|
Name
|
Age
|
Title
|
Since
|
Robertson James Orr
|
41
|
Chief Executive Officer, President, Secretary, Treasurer, & Director
|
May 12, 2010
|
1.
|
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
|
2.
|
Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the Commission and in other public communications made by an issuer;
|
3.
|
Compliance with applicable governmental laws, rules and regulations;
|
4.
|
The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
|
5.
|
Accountability for adherence to the code.
|
·
|
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
|
·
|
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
|
·
|
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
|
·
|
been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
|
·
|
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
·
|
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
|
SUMMARY COMPENSATION TABLE
|
|||||||||
Name and Principal Positions
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock Awards
($)
|
Option Awards
($)
|
Non-Equity Incentive Plan Compen-sation
($)
|
Non-qualified Deferred Compensation Earnings
($)
|
All Other Compen-sation
($)
|
Total
($)
|
Robertson James Orr
(1)
,
|
2015
|
76,500
|
-0-
|
190,000
(2)
|
-0-
|
-0-
|
-0-
|
-0-
|
266,500
|
President, Secretary,
|
2014
|
64,500
|
-0-
|
165,000
(3)
|
-0-
|
-0-
|
-0-
|
-0-
|
229,500
|
Treasurer & Director
|
2013
|
12,000
|
-0-
|
111,600
(4)
|
-0-
|
-0-
|
-0-
|
-0-
|
123,600
|
(1)
|
Mr. Orr was appointed President, Secretary, Treasurer, and Director of the Company on May 12, 2010.
|
(2)
|
Amount represents the fair market value of 190,000 shares of common stock issued for services as an employee.
|
(3)
|
Amount represents the fair market value of 165,000 shares of common stock issued for services as an employee.
|
(4)
|
Amount represents the fair market value of 45,000 shares of common stock issued for services as an employee.
|
(5)
|
Amount represents the fair market value of 95,000 shares of common stock issued for services as an employee.
|
Title of Class
|
Name of Beneficial Owner
(1)
|
Number
Of Shares
|
Percent
Beneficially
Owned
|
Common
|
Robertson James Orr – Sole Officer and Director
(2)
|
776,327
|
3.7%
|
Common
|
Jim Burns & Lynn Burns JT TEN
|
1,110,000
|
5.3%
|
All Directors, Officers and Principal Stockholders as a Group
|
1,886,327
|
9.0%
|
1.
|
As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to Common Stock (i.e., the power to dispose of, or to direct the disposition of, a security).
|
2.
|
Robertson James Orr is a natural person directly holding 100% voting power over the shares. Mr. Orr’s address is located at 312 West Macaw Drive, Chandler, AZ 85255.
|
3.
|
Jim & Lynn Burns are natural persons directly holding 100% voting power over the shares. Mr. and Mrs.’s Burns address is located at 146101 W Meadow Ln, Maricopa, AZ 85139
|
1.
|
The financial statements listed in the "Index to Consolidated Financial Statements" on page 34 are filed as part of this report.
|
2.
|
Financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
|
3.
|
Exhibits included or incorporated herein: See index to Exhibits.
|
Exhibit
Number
|
Exhibit Description
|
2.1
|
Acquisition Agreement and Plan of Merger – dated March 3, 2011
(3)
|
2.2
|
Addendum No. 1 to Acquisition Agreement and Plan of Merger – Dated April 27, 2011
(4)
|
3(i)(a)
|
Articles of Incorporation of Bollente Companies, Inc. (Formerly Alcantara Brands Corporation)
(1)
|
3(i)(b)
|
Certificate of Amendment – Name Change – Dated March 2, 2011
(2)
|
3(i)(c)
|
Certificate of Change – 50:1 Reverse Split – Dated September 23, 2010
(2)
|
3(ii)(a)
|
Bylaws of Bollente Companies, Inc. (Formerly Alcantara Brands Corporation)
(1)
|
10.1
|
Sublease Agreement –Perigon - dated January 1, 2014*
|
10.2
|
Sublease Agreement – Templar – dated January 1, 2015*
|
10.3
|
Subscription and Royalty Agreement – Bollente International – S. Bressler*
|
10.4
|
Subscription and Royalty Agreement – Bollente International – Fouts*
|
10.5
|
Subscription and Royalty Agreement – Bollente International – Heroux*
|
10.6
|
Subscription and Royalty Agreement – Bollente International – Hooker*
|
10.7
|
Subscription and Royalty Agreement – Bollente International – R. Fouts*
|
10.8
|
Subscription and Royalty Agreement – Bollente International – Femrite*
|
10.9
|
Subscription and Royalty Agreement – Bollente International – Schutz*
|
10.10
|
Subscription and Royalty Agreement – Bollente International – Slyter*
|
10.11
|
Employment Agreement – RJ dated March 1, 2015
|
10.12
|
Promissory Note $200,000 dated March 3, 2015
|
21.1
|
Subsidiaries of the Company
|
31.1
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act
|
32.1
|
Certification pursuant to 18 U.S.C. Section 350
|
101.INS
|
XBRL Instance
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation
|
101.DEF
|
XBRL Taxonomy Extension Definition
|
101.LAB
|
XBRL Taxonomy Extension Label
|
101.PRE
|
XBRL Taxonomy Extension Presentation
|
(1)
|
Incorporated by reference from the Company’s Registration Statement on Form SB-2 filed on March 19, 2008.
|
(2)
|
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on November 24, 2010.
|
(3)
|
Incorporated by reference from the Company’s Current Report on Form 8-K filed on March 10, 2011.
|
(4)
|
Incorporated by reference from the Company’s Current Report on Form 8-K filed on May 6, 2011.
|
Signature
|
Title
|
Date
|
/s/ Robertson J. Orr
|
Chairman of the Board of Directors,
|
November 2, 2016
|
Robertson James Orr
|
Chief Executive Officer (Principal Executive Officer)
|
|
and Principal Financial Officer
|
||
PAGES
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
37
|
CONSOLIDATED BALANCE SHEETS
|
38
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
39
|
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
|
40
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
41
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
42
|
BOLLENTE COMPANIES, INC.
|
||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||
(audited)
|
||||||||
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash
|
$ | 3,618 | $ | 40,446 | ||||
Accounts receivable
|
72,533 | 54,477 | ||||||
Inventory
|
222,537 | 174,132 | ||||||
Prepaid expenses
|
205,886 | 30,399 | ||||||
Prepaid stock compensation
|
306,217 | 530,000 | ||||||
Total current assets
|
810,791 | 829,454 | ||||||
Fixed assets, net
|
5,885 | 8,768 | ||||||
Other assets:
|
||||||||
Security deposits
|
1,500 | 1,500 | ||||||
Trademarks
|
8,083 | 825 | ||||||
Prepaid stock compensation - long term portion
|
- | 16,667 | ||||||
Software
|
10,000 | - | ||||||
Website
|
21,160 | 40,693 | ||||||
Total other assets
|
40,743 | 59,685 | ||||||
Total assets
|
$ | 857,419 | $ | 897,907 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 620,910 | $ | 338,651 | ||||
Credit cards
|
15,971 | 2,387 | ||||||
Customer deposits
|
600 | 600 | ||||||
Accrued salaries - related party
|
26,040 | 15,278 | ||||||
Accrued payroll taxes
|
11,984 | 12,505 | ||||||
Notes payable - related party
|
600 | 128,637 | ||||||
Notes payable – related party, net of debt discount
|
195,000 | - | ||||||
Line of credit - related party
|
16,000 | - | ||||||
Accrued interest payable
|
4 | 4 | ||||||
Accrued interest payable - related party
|
4,316 | - | ||||||
Total current liabilities
|
891,425 | 498,062 | ||||||
Long-term liabilities:
|
||||||||
Notes payable - related party
|
233,000 | - | ||||||
Total long-term liabilities
|
233,000 | - | ||||||
Total liabilities
|
1,124,425 | 498,062 | ||||||
Stockholders' equity:
|
||||||||
Preferred stock, $0.001 par value, 10,000,000 shares
|
||||||||
authorized, no shares issued and outstanding
|
||||||||
as of December 31, 2015 and December 31, 2014, respectively
|
- | - | ||||||
Common stock, $0.001 par value, 100,000,000 shares
|
||||||||
authorized, 19,350,186 and 16,934,301 shares issued and outstanding
|
||||||||
as of December 31, 2015 and December 31, 2014, respectively
|
19,351 | 16,935 | ||||||
Additional paid-in capital
|
16,763,822 | 13,725,353 | ||||||
Subscriptions payable
|
750,000 | 164,375 | ||||||
Accumulated deficit
|
(17,800,179 | ) | (13,506,818 | ) | ||||
Total stockholders' equity
|
(267,006 | ) | 399,845 | |||||
Total liabilities and stockholders' equity
|
$ | 857,419 | $ | 897,907 |
BOLLENTE COMPANIES, INC.
|
||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
(audited)
|
||||||||
For the year ended
|
||||||||
December 31,
|
||||||||
2015
|
2014
|
|||||||
Revenue
|
$ | 265,504 | $ | 238,912 | ||||
Cost of goods sold
|
(342,999 | ) | (440,330 | ) | ||||
Gross profit
|
(77,495 | ) | (201,418 | ) | ||||
Operating expenses:
|
||||||||
General and administrative
|
1,369,555 | 1,557,015 | ||||||
Executive compensation
|
266,500 | 208,850 | ||||||
Research and development
|
318,720 | 876,777 | ||||||
Professional fees
|
2,499,335 | 3,367,764 | ||||||
Total operating expenses
|
4,454,110 | 6,010,406 | ||||||
Other income(expenses):
|
||||||||
Other income
|
277,969 | 7,182 | ||||||
Interest expense - related party
|
(39,394 | ) | (9,085 | ) | ||||
Interest expense
|
(322 | ) | (205 | ) | ||||
Loss on debt conversion
|
- | (825,000 | ) | |||||
Other expenses
|
(9 | ) | - | |||||
Total other income(expenses)
|
238,244 | (827,108 | ) | |||||
Net loss from continuing operations
|
(4,293,361 | ) | (7,038,932 | ) | ||||
Net loss from discontinued operations
|
- | (179,007 | ) | |||||
Net loss
|
(4,293,361 | ) | (7,217,939 | ) | ||||
Basic earnings per share
|
||||||||
Loss from continuing operations
|
$ | (0.23 | ) | $ | (0.50 | ) | ||
Loss from discontinued operations
|
- | (0.01 | ) | |||||
Net loss per common share - basic
|
$ | (0.23 | ) | $ | (0.51 | ) | ||
Weighted average number of common shares
|
18,434,686 | 14,231,198 | ||||||
outstanding - basic
|
BOLLENTE COMPANIES, INC.
|
||||||||||||||||||||||||||||||||||||
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||||||||||||||||||||||||||||||
(audited)
|
||||||||||||||||||||||||||||||||||||
Deficit
|
||||||||||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||||||||||
Additional
|
During
|
Total
|
||||||||||||||||||||||||||||||||||
Preferred Shares
|
Common Shares
|
Paid-In
|
Subscriptions
|
Subscriptions
|
Development
|
Stockholders'
|
||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Receivable
|
Payable
|
Stage
|
Equity (Deficit)
|
||||||||||||||||||||||||||||
Balance, December 31, 2013
|
- | $ | - | 10,242,456 | $ | 10,243 | $ | 7,010,353 | $ | - | $ | 94,850 | $ | (6,478,386 | ) | $ | 637,060 | |||||||||||||||||||
Spin-off of Nuvola, Inc.
|
||||||||||||||||||||||||||||||||||||
November 24, 2014
|
189,507 | 189,507 | ||||||||||||||||||||||||||||||||||
December 31, 2014
|
||||||||||||||||||||||||||||||||||||
Issuance for cash
|
2,817,999 | 2,818 | 2,815,181 | - | 75,000 | 2,892,999 | ||||||||||||||||||||||||||||||
December 31, 2014
|
||||||||||||||||||||||||||||||||||||
Issuance for employment agreement
|
527,000 | 527 | 556,323 | (14,850 | ) | 542,000 | ||||||||||||||||||||||||||||||
December 31, 2014
|
||||||||||||||||||||||||||||||||||||
Issuance for consulting services
|
2,231,592 | 2,232 | 2,229,360 | 9,375 | 2,240,967 | |||||||||||||||||||||||||||||||
December 31, 2014
|
||||||||||||||||||||||||||||||||||||
Issuance for debt conversion
|
1,115,250 | 1,115 | 1,114,135 | 1,115,250 | ||||||||||||||||||||||||||||||||
December 31, 2014
|
||||||||||||||||||||||||||||||||||||
Net loss
|
(7,217,939 | ) | (7,217,939 | ) | ||||||||||||||||||||||||||||||||
Balance, December 31, 2014
|
- | $ | - | 16,934,297 | $ | 16,935 | $ | 13,725,353 | $ | - | $ | 164,375 | $ | (13,506,818 | ) | $ | 399,845 | |||||||||||||||||||
December 31, 2015
|
||||||||||||||||||||||||||||||||||||
Issuance for cash
|
1,474,500 | 1,475 | 1,473,026 | - | 85,000 | 1,559,500 | ||||||||||||||||||||||||||||||
December 31, 2015
|
||||||||||||||||||||||||||||||||||||
Issuance for employment agreement
|
200,000 | 200 | 199,800 | 10,000 | 210,000 | |||||||||||||||||||||||||||||||
December 31, 2015
|
||||||||||||||||||||||||||||||||||||
Issuance for consulting services
|
720,085 | 730 | 719,355 | 490,625 | 1,210,710 | |||||||||||||||||||||||||||||||
December 31, 2015
|
||||||||||||||||||||||||||||||||||||
Issuance with note payable
|
10,000 | 10 | 9,990 | 10,000 | ||||||||||||||||||||||||||||||||
December 31, 2015
|
||||||||||||||||||||||||||||||||||||
Issuance for settlement of accounts payable
|
11,300 | 11 | 11,289 | 11,300 | ||||||||||||||||||||||||||||||||
December 31, 2015
|
||||||||||||||||||||||||||||||||||||
Proceeds from royalty payments
|
625,000 | 625,000 | ||||||||||||||||||||||||||||||||||
December 31, 2015
|
||||||||||||||||||||||||||||||||||||
Net loss
|
(4,293,361 | ) | (4,293,361 | ) | ||||||||||||||||||||||||||||||||
Balance, December 31, 2015
|
- | $ | - | 19,350,182 | $ | 19,351 | $ | 16,763,822 | $ | - | $ | 750,000 | $ | (17,800,179 | ) | $ | (267,006 | ) |
December 31,
2015
|
December 31, 2014
|
|||||||
Raw materials
|
$ | 42,061 | $ | 174,132 | ||||
Finished goods
|
180,476 | - | ||||||
Total
|
$ | 222,537 | $ | 174,132 |
December 31,
2015
|
December 31, 2014
|
|||||||
Website
|
$ | 58,598 | $ | 58,598 | ||||
Less: Accumulated amortization
|
(37,438 | ) | (17,905 | ) | ||||
Website, net
|
$ | 21,160 | $ | 40,693 |
December 31,
2015
|
December 31, 2014
|
|||||||
Note payable to an officer, director and shareholder, unsecured, 0% interest, due upon demand
|
$ | 600 | $ | 450 | ||||
Note payable from a shareholder, secured, 12% interest, due June 2016
|
195,000 | - | ||||||
Note payable to a related entity, unsecured, 0% interest, due upon demand
|
- | 128,187 | ||||||
Notes Payable – Current
|
$ | 195,600 | $ | 128,637 |
December 31,
2015
|
December 31, 2014
|
|||||||
Note payable from a shareholder, secured, 12% interest, due March 2017
|
$ | 200,000 | $ | - | ||||
Note payable, to an officer, director and shareholder,
secured, 5% interest, due April 2017
|
33,000 | - | ||||||
Notes payable – Long Term
|
$ | 233,000 | $ | - |
1.
|
LEASED SPACE
The office space being leased, located at 8800 N. Gainey Center Dr., Scottsdale, AZ 85258, shall consist of 3 window offices om Suit 270 along with reasonable use of common areas, kitchen/break area, conference room, and two (2) reserved, unassigned, covered parking spaces.
|
2.
|
INCLUDED SERVICES
Tenant shall have access to dedicated phone lines, including 1,250 minutes of domestic long distance calling, shared fax line, wireless broadband internet service, and television services provided through Landlord by Cox Communications, Inc. Tenant shall also have use of office furniture, customary utilities, networked office equipment, and janitorial services, as available.
|
3.
|
LEASE TERM
This Agreement shall commence on the date first written above and shall continue on a month-to-month basis and shall terminate thirty (30) days after receipt of written notice Landlord or Tenant. Occupancy beyond this termination shall be pro-rated and charged and due at one hundred twenty five percent (125%) of the periodic lease rate, as defined below, of the base lease term.
|
4.
|
PERIODIC LEASE RATE
The periodic lease rate shall consist of payments of Four Thousand Dollars ($4,000.00) per month. Payments shall be due in advance on the first business day of the month commencing on the date first written above.
|
5.
|
SECURITY DEPOSIT
A security deposit has already been paid to Landlord pursuant to the Sublease Agreement executed between the parties, January 3, 2011. Such deposit shall be held until tenant departure, subject to the terms and conditions of that agreement.
|
6.
|
LATE PAYMENTS
Payments due under this Agreement shall be considered late if they are not received by 5:00 PM on the fifth (5th) business day after their due date. The amount of such late payments shall be added to the principle sum of the Revolving Credit Grid-Note currently in effect between the parties, under the terms and conditions thereof, and shall thereafter be considered received by Landlord for the purposes of this Agreement.
|
7.
|
HOURS OF OPERATION
Normal hours of operation shall be from 9:00 AM to 6:00 PM, Monday through Friday, except holidays. Access to the building before or after such hours shall be at Tenant option. Tenant shall become versed in security access, and shall accept responsibility for maintaining building security during non-business hours.
|
8.
|
SIGNAGE
Costs related to lobby and suite signage shall be paid in advance by Tenant and shall be coordinated by Landlord and building management. No exterior building sign shall be permitted. Signage shall be approved by Landlord and building management. Tenant agrees and understands signage will be coordinated by building management.
|
9.
|
MISCELLANEOUS FEES
Tenant shall pay no initial setup or administration fees. However, Landlord reserves the right to assess additional charges, at its cost, to Tenant for excessive use of services, if and as appropriate.
|
10.
|
ASSIGNMENT
The Tenant may not assign this Agreement or his or her interest herein without the prior written consent of Landlord.
|
11.
|
AMMENTMENTS
No amendment or extension of this Agreement shall be binding unless in writing and signed by both parties.
|
12.
|
NO WAIVER
Failure to invoke any right, condition, or covenant in this Agreement by either party shall not be deemed to imply or constitute a waiver of any rights, condition, or covenant and neither party may rely on such failure.
|
13.
|
ENFORCEABILITY
If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable, the reminder of the Agreement shall remain in full force and effect and shall be in no way impaired.
|
14.
|
ARBITRATION
Any controversy or claim arising out of or relating to this Agreement, or a breach hereof, shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
|
15.
|
GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of the State of Arizona whose courts shall have exclusive jurisdiction over disputes arising between the parties hereto.
|
16.
|
ENTIRE AGREEMENT
This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof, and replaces and supersedes all other agreements or understandings, whether written or oral.
|
1.
|
LEASED SPACE
The office space being leased, located at 15720 N Greenway Hayden Loop, Scottsdale, AZ 85260, shall consist of approximately 1,800 square feet, including 2 offices, along with reasonable use of common areas, kitchen/break area, classroom and showroom space. Parking shall consist of two (2) reserved, unassigned, covered parking spaces in the rear of the building.
|
2.
|
LEASE TERM AND TERMINATION
This Agreement shall commence on the date first written above and shall be a twelve (12) months and thereafter shall continue on a month-to-month basis and shall terminate thirty (30) days after receipt of written notice Landlord or Tenant. Occupancy beyond this termination shall be pro-rated and charged at one hundred twenty five percent (125%) of the periodic lease rate, as defined below, of the base lease term.
|
3.
|
PERIODIC LEASE RATE
The periodic lease rate shall consist of payments of Four Thousand Dollars ($2,800.00) per month. Payments shall be due in advance on the first business day of the month commencing on the date first written above.
|
4.
|
SECURITY DEPOSIT
No security deposit has been paid to Landlord pursuant to the Sublease Agreement executed between the parties, January 1, 2015.
|
5.
|
TENANT IMPROVEMENTS AND SIGNAGE
Costs related to improvement and suite signage shall be paid by Tenant. Exterior building signage shall be allowed, provided it complies with building local codes and is properly permitted with the authority having jurisdiction. Improvements and signage shall be approved by Landlord prior to installation or modifications.
|
6.
|
ACCESS AND SECURITY
Tenant may elect to install a security system(s) with monitoring service, and shall accept responsibility for taking reasonable steps maintain building security during non-business hours.
|
7.
|
ASSIGNMENT
The Tenant may not assign this Agreement or his or her interest herein without the prior written consent of Landlord.
|
8.
|
AMMENDMENTS
No amendment or extension of this Agreement shall be binding unless in writing and signed by both parties.
|
9.
|
NO WAIVER
Failure to invoke any right, condition, or covenant in this Agreement by either party shall not be deemed to imply or constitute a waiver of any rights, condition, or covenant and neither party may rely on such failure.
|
10.
|
ENFORCEABILITY
If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable, the reminder of the Agreement shall remain in full force and effect and shall be in no way impaired.
|
11.
|
ARBITRATION
Any controversy or claim arising out of or relating to this Agreement, or a breach hereof, shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
|
12.
|
GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of the State of Arizona whose courts shall have exclusive jurisdiction over disputes arising between the parties hereto.
|
13.
|
ENTIRE AGREEMENT
This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof, and replaces and supersedes all other agreements or understandings, whether written or oral.
|
|
1.1
|
The Purchaser, intending to be legally bound hereby, hereby tenders this subscription for the purchase of
|
2
|
Units (“Units”) of
Bollente International, Inc.
, a Nevada corporation, at a price of $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company
on the terms and conditions set forth in subparagraph 1.4 below.
|
|
1.2
|
The Purchaser will deliver payment in cash directly to Bollente International, Inc together with completed copies of all applicable Subscription Documents.
|
|
1.3
|
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAW OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE ARE SPECULATIVE SECURITIES.
|
|
1.4
|
The Company has agreed to sell up to 25% of its prospective gross margin (“Gross Margin”) in exchange for $1 million, in increments of 40 Units, at $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company pursuant to the terms and conditions of the “Royalty Agreement” attached hereto. The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
|
|
1.5
|
The Company has entered into an agreement with Bollente Companies, Inc. to sell, internationally (outside the continental United States) trutankless®, (the “Product”) an electric tankless water heater which is more efficient than traditional water heaters, using less water and less energy, while simultaneously providing an endless supply of hot water. Investors will have the opportunity to review our business plan; copies of which are available from the Company. The Purchaser acknowledges that, even upon the purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of the goals described in the Bollente Companies’ business plan. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described in the Company’s business plan and other relevant documents.
|
|
1.6
|
The Company intends to use the net proceeds from the sale of the Securities, after deduction for legal and other miscellaneous costs related to the sale of the Securities, as working capital to market the Product internationally. The business contemplated by the Company may require additional financings in addition to the proceeds from the sale of the Securities. There can be no assurances that such additional financings will be obtained on terms favorable to the Company or at all, or that the transactions contemplated by these agreements will ever result in revenues to the Company. The Purchaser acknowledged that, even upon the
|
|
purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of its goals. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described concerning the Company.
|
|
1.7
|
The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
|
|
1.8
|
The authorized capital of the Company is One Hundred Million (100,000,000) Shares of Common Stock and Ten Million (10,000,000) Shares of Preferred Stock. As of August 13, 2015, the Company had issued and outstanding approximately One Million (1,000,000) Shares of Common Stock and Zero (0) Shares of Preferred Stock.
|
|
2.1
|
The Purchaser represents and warrants that it comes within one of the categories of “Accredited Investor” marked below, or is not a “U.S. Person” and is purchasing in an “offshore transaction”, and the Purchaser has truthfully initialed the category which applies to the undersigned and has truthfully set forth the factual basis or reason the Purchaser comes within that category. ALL INFORMATION IN RESPONSE TO THIS PARAGRAPH WILL BE KEPT STRICTLY CONFIDENTIAL. The Purchaser agrees to furnish any additional information which the Company deems necessary in order to verify the answers set forth below.
|
|
Accredited Investor (check one below)
|
Category I
X
|
The Purchaser is an individual (not a partnership, corporation) whose individual net worth, or joint net worth with the Purchaser’s spouse, presently exceeds $1,000,000.
|
Category II _____
|
The Purchaser is an individual (not a partnership, corporation) who had an individual income in excess of $200,000 in the two most recent years, or joint income with the Purchaser’s spouse in excess of $300,000 in the two most recent years, and has a reasonable expectation of reaching the same income level in the current year.
|
Category III _____
|
The Purchaser is a bank as defined in Section 3(a)(2) of the Securities Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940, or a business development company as defined in Section 2(a)(48) of that Securities Act; Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by the plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons who are “Accredited Investors” as defined in Section 230.501(a) of the Securities Act.
|
Category IV _____
|
The Purchaser is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.
|
Category V _____
|
The Purchaser is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.
|
Category VII _____
|
The Purchaser is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units offered, whose purchase is directed by a “Sophisticated Person” as described in Section 230.506(b)(2)(ii) of the Securities Act.
|
Category VIII _____
|
The Purchaser is an entity in which all of the equity owners are “accredited investors” as defined in Section 230.501(a) of the Act.
|
Category IX _____
|
The Purchaser is
not
a “
U.S. Person
” (as defined in Rule 902(k) of Regulation S) nor is it purchasing the Units on behalf of a U.S. Person, and is purchasing the Units in an “
offshore transaction
” (as defined in Rule 902(h) of Regulation S).
|
2.2
|
The Purchaser has been given full and complete access to information regarding the Company and has utilized such access to the undersigned’s satisfaction for the purpose of obtaining such information regarding the Company as the undersigned has reasonably requested; and, particularly, the undersigned has been given reasonable opportunity to ask questions of, and receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Units and to obtain any additional information, to the extent reasonably available;
|
2.3
|
The principal amount of the Units subscribed for by the Purchaser, as set forth in Section 14 hereof does not exceed ten percent (10%) of the Purchaser’s net worth.
|
2.4
|
The Purchaser has either a pre-existing personal or business relationship with the Company and its officers, directors and controlling persons or by reason of its business or financial expertise has the capacity to protect its own interest in connection with this transaction.
|
2.5
|
The Purchaser is acquiring the Units solely for the Purchasers own account for investment purposes as a principal and not with a view to resale or distribution of all or any part thereof. The Purchaser is aware that there are legal and practical limits on the Purchaser’s ability to sell or dispose of the Units, and, therefore, that the Purchaser must bear the economic risk of the investment for an indefinite period of time.
|
2.6
|
The Purchaser has reached the age of majority (if an individual) according to the laws of the state in which it resides and has adequate means of providing for the Purchaser’s current needs and possible personal contingencies and has need for only limited liquidity of this investment, The Purchaser’s commitment to liquid investments is reasonable in relation to the Purchaser’s net worth.
|
2.7
|
The Purchaser understands that the Units are being offered and sold in reliance on specific exemptions from the registration requirements of federal and state law and that the representations, warranties, agreements, acknowledgments and understandings set forth herein are required in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire such Units.
|
2.8
|
The Purchaser is not relying on the Company with respect to the tax and other economic considerations relating to this investment. In regard to such considerations, the Purchaser has relied on the advice of, or has consulted with, its own personal tax, investment or other advisors.
|
2.9
|
The Purchaser, if executing this Subscription Agreement in a representative or fiduciary capacity, has full power and authority to execute and deliver this Subscription Agreement and each other document included as an exhibit to this Subscription Agreement for which a signature is required in such capacity and on behalf of the subscribing individual, partnership, trust, estate, corporation or other entity for whom or which the Purchaser is executing this Subscription Agreement.
|
2.10
|
If the Purchaser is a corporation, the Purchaser is duly and validly organized, validly existing and in good tax and corporate standing as a corporation under the laws of the jurisdiction of its incorporation with full power and authority to purchase the Units to be purchased by it and to execute and deliver this Subscription Agreement.
|
2.11
|
If the Purchaser is a partnership, the representations, warranties, agreements and understandings set forth above are true with respect to all partners in the Purchaser (and if any such partner is itself a partnership, all persons holding an interest in such partnership, directly or indirectly, including through one or more partnerships), and the person executing this Subscription Agreement has made due inquiry to determine the truthfulness of the representations and warranties made hereby.
|
2.12
|
If the Purchaser is purchasing in a representative or fiduciary capacity, the above representations and warranties shall be deemed to have been made on behalf of the person or persons for whom the Purchaser is so purchasing.
|
2.13
|
Within five (5) days after receipt of a request from the Company, the Purchaser will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject.
|
2.14
|
The Purchaser or its professional advisor has been granted the opportunity to conduct a full and fair examination of the records, documents and files of the Company, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of this offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or its professional advisor deems necessary to verify the accuracy of the information received.
|
2.15
|
The Units were not offered to the Purchaser through an advertisement in printed media of general and regular circulation, radio or television.
|
2.16
|
The Purchaser has relied completely on the advice of, or has consulted with, its own personal tax, investment, legal or other advisors and has not relied on the Company or any of its affiliates, officers, directors, attorneys, accountants or any affiliates of any thereof and each other person, if any, who controls any thereof, within the meaning of Section 15 of the Securities Act, except to the extent such advisors shall be deemed to be as such.
|
2.17
|
If the Purchaser has consulted a purchaser representative (“Purchaser Representative”) to evaluate the merits and risks of the undersigned’s investment in the Units, the Purchaser Representative has completed a Purchaser Representative Questionnaire in the form supplied to him. The Purchaser or the Purchaser Representative has been granted the opportunity to examine documents and files, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of the Offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or the Purchaser Representative deems necessary to verify the accuracy of the information received.
|
2.18
|
The Purchaser either alone or with its Purchaser Representative has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment.
|
|
3.1
|
The Purchaser recognizes that investment in the Company involves certain risks, including the potential loss by the Purchaser of interest on their investment herein, and the Purchaser has taken full cognizance of and understands all of the risk factors related to the purchase of the Units. The Purchaser recognizes that the information set forth in this Subscription Agreement does not purport to contain all the information, which would be contained in a registration statement under the Securities Act.
|
|
3.2
|
No federal or state agency has passed upon the Units or made any finding or determination as to the fairness of this transaction.
|
|
3.3
|
The Units have not been registered under the Securities Act or any applicable state securities laws by reason of exemptions from the registration requirements of the Securities Act and such laws, and may not be sold, pledged, assigned or otherwise disposed of in the absence of an effective registration statement for the Units and any component thereof under the Securities Act or unless an exemption from such registration is available. Provided there is a market for the Company’s Units, the Units will not be eligible for sale for a period of six months from the date of purchase pursuant to the terms of Rule 144 of the Securities Act of 1933, unless registered pursuant to the terms and conditions of an effective registration statement filed with the Securities and Exchange Commission.
|
|
3.4
|
There currently is limited liquidity in the market for the Company’s Units. An active and liquid market for the Company's Units may not develop. Even if an active and liquid market develops for Bollente International, Inc. Units, the market value of Units may be adversely affected by market volatility. Substantial sales of the Company's Units could cause the price of its Units to decrease.
|
|
3.6
|
The Company may refuse to register any transfer of the Units not made in accordance with the Securities Act and the rules and regulations promulgated thereunder.
|
|
14.1
|
Number of Units subscribed for:
|
2
|
Units against payment in cash in the amount of
$
|
50,000
|
, representing
$25,000
per Unit, each representing 0.625% of Gross Margin.
|
|
|
Email Address
|
|
|
Telephone Number
|
Title
|
Tax Identification or Social Security Number
|
|
Name Typed or Printed
|
Email Address
|
|
(
|
)
|
Email Address
|
Telephone Number
|
|
Signature
|
1.
|
DEFINITIONS
|
1.1.
|
Definitions of capitalized terms used in this Royalty Agreement shall have the meanings given in Appendix A or elsewhere in the Royalty Agreement.
|
2.
|
ROYALTY PAYMENTS
|
2.1.
|
Royalties.
BII shall pay BII royalties on Gross Margins during the Royalty Term to Recipients according to the following rates:
|
a)
|
0.625% of Gross Margin for each $25,000 paid to BII by Recipient; and
|
b)
|
25% of Gross Margins for a maximum of $1 million paid to BII.
|
2.2.
|
Manner of Payment.
Royalty payments due under this Section 2 are due 30 days after the end of each Accounting Period and shall be paid in United States dollars.
|
2.3.
|
Termination of Royalty Obligations.
This royalty payment obligation shall terminate on the expiration of the Royalty Term.
|
3.
|
REPORTS AND PAYMENTS
|
3.1.
|
Recordkeeping
. BII shall, and shall obligate its Affiliates to, keep full and accurate records (prepared in accordance with United States Generally Accepted Accounting Principles consistently applied) of BII’s or its Affiliates’ sales of Products and such other matters as may affect the determination of any amount payable to Recipients hereunder, in sufficient detail to reasonably enable Recipient or Recipients’ representatives to determine any amounts payable to BII under this Royalty Agreement. Such records shall be kept at BII’s or its Affiliates’ principal place of business and, with all necessary supporting data, books and ledgers, shall, during all reasonable times for the 2 years following the end of the Accounting Period to which each shall pertain, be open for inspection at reasonable times during normal business hours (and upon at least 30 days prior written notice) no more than one time per calendar year by an independent audit firm selected by Recipients (reasonably acceptable to BII) for the purpose of verifying the accuracy of any payment report required under this Royalty Agreement or any amount payable hereunder. The results of each inspection shall be binding on both BII and Recipients absent mathematical error. BII shall bear all costs associated with such inspections.
|
3.2.
|
Reports
. Within 30 days after the end of each Accounting Period, BII shall deliver to Recipients a true and accurate report, giving such particulars of the business conducted by BII or its Affiliates during the preceding 4 Accounting Periods under this Royalty Agreement as are reasonably pertinent to an accounting for any royalty or other payments hereunder, along with the amount of royalties payable for such Accounting Period. If no payments are due, it shall be so reported.
|
3.3.
|
Accounting
. With each quarterly payment, BII shall deliver to Recipients the report described in Section 3.2, which shall include, but not be limited to, the following information:
|
a)
|
Quantity of each Product sold by BII or its Affiliates during the applicable Accounting Period;
|
b)
|
The monetary amount, in the national currency of such country, of such sales;
|
c)
|
Actual Gross Margins and Net Sales for each Product (by country);
|
d)
|
The currency conversion rate used and U.S. dollar-equivalent of such sales; and
|
e)
|
Total royalties payable to Recipients including a calculation thereof.
|
4.
|
TERMINATION
|
4.1.
|
Generally
. This Royalty Agreement shall become effective on the Execution Date and shall expire on the expiration of the Royalty Term.
|
4.2.
|
Change in Control, Redemption
. If Bollente Companies, Inc. or BII enter into any agreement resulting in a change in control due to merger or acquisition of greater than 50% of its voting equity, during the Royalty Term, the parties agree as follows:
|
4.3.
|
Post-Expiration Obligations
. Upon the expiration of this Royalty Agreement, BII shall submit all reports required by Section 3 and pay Recipients all royalties due or accrued on the sale of Products up to and including the date of expiration.
|
4.4.
|
Survival.
Upon the expiration of this Royalty Agreement, nothing herein shall be construed to release either party from any obligation that matured prior to the date of such expiration and Section 5 shall survive any such expiration.
|
5.
|
MISCELLANEOUS
|
5.1.
|
Entire Agreement
. This Royalty Agreement (together with the Subscription and Purchase Agreement) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, that may have related in any way to the subject matter hereof. The appendices identified in this Royalty Agreement are incorporated herein by reference and made a part hereof.
|
5.2.
|
Resale
. A Recipient shall have the right to accept offers to buy Recipient’s future rights to Royalty Payments under this Royalty Agreement, provided that such offer and sale are previously approved by BII.
|
5.3.
|
Amendments and Waivers
. No amendment or waiver of any provision of this Royalty Agreement shall be valid unless the same shall be in writing and signed by each Party. No waiver by any Party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
|
5.4.
|
Succession and Assignment.
This Royalty Agreement and all of the provisions hereof shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and permitted assigns. BII may not assign this Royalty Agreement or any of its rights or obligations hereunder without the prior written consent of a majority of Recipients. Recipients may not assign this Royalty Agreement and any of its rights or obligations hereunder without the prior consent of BII.
|
5.5.
|
No Third-Party Beneficiaries
. This Royalty Agreement shall not confer any rights or remedies upon any party other than the Parties and their respective successors and permitted assigns.
|
5.6.
|
Governing Law
. This Royalty Agreement shall be governed by and construed in accordance with the domestic Laws of the State of Arizona, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Arizona or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Arizona. The Recipients agrees that venue for any action, suit, litigation or other proceeding arising out of or in any way relating to this Royalty Agreement, or the matters referred to therein, shall be in Maricopa County, Arizona The Recipients hereby waives and agrees not to assert by way of motion, as a defense, or otherwise, in any suit, action or proceeding, any claim that (A) the suit, action or proceeding is brought in an inconvenient forum or (B) the venue of the suit, action or proceeding is improper.
|
5.7.
|
Severability
. If any provision in this Royalty Agreement shall be invalid, illegal, or unenforceable in any jurisdiction, the validity, legality, and enforceability of the remaining provisions, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
|
5.8.
|
Expenses
. Except as otherwise specifically provided in this Royalty Agreement, each Party will bear its own expenses (including fees and disbursements of legal counsel, accountants, financial advisors and other professional advisors) incurred in connection with the preparation, negotiation, execution, delivery and performance of this Royalty Agreement.
|
5.9.
|
Notices.
All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, mailed or delivered to each party at the respective addresses of the parties as set forth in the Subscription and Purchase Agreement, or at such other address or facsimile number as the Recipients shall have furnished to BII in writing.
|
5.10.
|
Construction
. In the construction of this Royalty Agreement, the rule of construction that a document is to be construed most strictly against a party who prepared the same shall not be applied, it being agreed that all parties have participated in the preparation of the final form of this Royalty Agreement.
|
5.11.
|
Counterparts
. This Royalty Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. This Royalty Agreement may be executed by facsimile, photo or electronic signature and such facsimile, photo or electronic signature shall constitute an original for all purposes.
|
PURCHASER
By:
/S/ Samuel E. Bressler
/S/ Sandra L. Bressler
Name:
Samuel E. Bressler and
Sandra L. Bressler
Title: _________________________
Date: September 1. 2015
|
BOLLENTE INTERNATIONAL, INC., a Nevada corporation
By:
/S/ Robertson J. Orr
Name:
Robertson J. Orr
Title:
President
Date:
September 1, 2015
|
|
1.1
|
The Purchaser, intending to be legally bound hereby, hereby tenders this subscription for the purchase of
|
One (1)
|
Units (“Units”) of
Bollente International, Inc.
, a Nevada corporation, at a price of $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company
on the terms and conditions set forth in subparagraph 1.4 below.
|
|
|
1.2
|
The Purchaser will deliver payment in cash directly to Bollente International, Inc together with completed copies of all applicable Subscription Documents.
|
|
1.3
|
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAW OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE ARE SPECULATIVE SECURITIES.
|
|
1.4
|
The Company has agreed to sell up to 25% of its prospective gross margin (“Gross Margin”) in exchange for $1 million, in increments of 40 Units, at $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company pursuant to the terms and conditions of the “Royalty Agreement” attached hereto. The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
|
|
1.5
|
The Company has entered into an agreement with Bollente Companies, Inc. to sell, internationally (outside the continental United States) trutankless®, (the “Product”) an electric tankless water heater which is more efficient than traditional water heaters, using less water and less energy, while simultaneously providing an endless supply of hot water. Investors will have the opportunity to review our business plan; copies of which are available from the Company. The Purchaser acknowledges that, even upon the purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of the goals described in the Bollente Companies’ business plan. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described in the Company’s business plan and other relevant documents.
|
|
1.6
|
The Company intends to use the net proceeds from the sale of the Securities, after deduction for legal and other miscellaneous costs related to the sale of the Securities, as working capital to market the Product internationally. The business contemplated by the Company may require additional financings in addition to the proceeds from the sale of the Securities. There can be no assurances that such additional financings will be obtained on terms favorable to the Company or at all, or that the transactions contemplated by these agreements will ever result in revenues to the Company. The Purchaser acknowledged that, even upon the
|
|
purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of its goals. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described concerning the Company.
|
|
1.7
|
The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
|
|
1.8
|
The authorized capital of the Company is One Hundred Million (100,000,000) Shares of Common Stock and Ten Million (10,000,000) Shares of Preferred Stock. As of August 13, 2015, the Company had issued and outstanding approximately One Million (1,000,000) Shares of Common Stock and Zero (0) Shares of Preferred Stock.
|
|
2.1
|
The Purchaser represents and warrants that it comes within one of the categories of “Accredited Investor” marked below, or is not a “U.S. Person” and is purchasing in an “offshore transaction”, and the Purchaser has truthfully initialed the category which applies to the undersigned and has truthfully set forth the factual basis or reason the Purchaser comes within that category. ALL INFORMATION IN RESPONSE TO THIS PARAGRAPH WILL BE KEPT STRICTLY CONFIDENTIAL. The Purchaser agrees to furnish any additional information which the Company deems necessary in order to verify the answers set forth below.
|
|
Accredited Investor (check one below)
|
Category I
X
|
The Purchaser is an individual (not a partnership, corporation) whose individual net worth, or joint net worth with the Purchaser’s spouse, presently exceeds $1,000,000.
|
Category II _____
|
The Purchaser is an individual (not a partnership, corporation) who had an individual income in excess of $200,000 in the two most recent years, or joint income with the Purchaser’s spouse in excess of $300,000 in the two most recent years, and has a reasonable expectation of reaching the same income level in the current year.
|
Category III _____
|
The Purchaser is a bank as defined in Section 3(a)(2) of the Securities Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940, or a business development company as defined in Section 2(a)(48) of that Securities Act; Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by the plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons who are “Accredited Investors” as defined in Section 230.501(a) of the Securities Act.
|
Category IV _____
|
The Purchaser is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.
|
Category V _____
|
The Purchaser is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.
|
Category VII _____
|
The Purchaser is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units offered, whose purchase is directed by a “Sophisticated Person” as described in Section 230.506(b)(2)(ii) of the Securities Act.
|
Category VIII _____
|
The Purchaser is an entity in which all of the equity owners are “accredited investors” as defined in Section 230.501(a) of the Act.
|
Category IX _____
|
The Purchaser is
not
a “
U.S. Person
” (as defined in Rule 902(k) of Regulation S) nor is it purchasing the Units on behalf of a U.S. Person, and is purchasing the Units in an “
offshore transaction
” (as defined in Rule 902(h) of Regulation S).
|
2.2
|
The Purchaser has been given full and complete access to information regarding the Company and has utilized such access to the undersigned’s satisfaction for the purpose of obtaining such information regarding the Company as the undersigned has reasonably requested; and, particularly, the undersigned has been given reasonable opportunity to ask questions of, and receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Units and to obtain any additional information, to the extent reasonably available;
|
2.3
|
The principal amount of the Units subscribed for by the Purchaser, as set forth in Section 14 hereof does not exceed ten percent (10%) of the Purchaser’s net worth.
|
2.4
|
The Purchaser has either a pre-existing personal or business relationship with the Company and its officers, directors and controlling persons or by reason of its business or financial expertise has the capacity to protect its own interest in connection with this transaction.
|
2.5
|
The Purchaser is acquiring the Units solely for the Purchasers own account for investment purposes as a principal and not with a view to resale or distribution of all or any part thereof. The Purchaser is aware that there are legal and practical limits on the Purchaser’s ability to sell or dispose of the Units, and, therefore, that the Purchaser must bear the economic risk of the investment for an indefinite period of time.
|
2.6
|
The Purchaser has reached the age of majority (if an individual) according to the laws of the state in which it resides and has adequate means of providing for the Purchaser’s current needs and possible personal contingencies and has need for only limited liquidity of this investment, The Purchaser’s commitment to liquid investments is reasonable in relation to the Purchaser’s net worth.
|
2.7
|
The Purchaser understands that the Units are being offered and sold in reliance on specific exemptions from the registration requirements of federal and state law and that the representations, warranties, agreements, acknowledgments and understandings set forth herein are required in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire such Units.
|
2.8
|
The Purchaser is not relying on the Company with respect to the tax and other economic considerations relating to this investment. In regard to such considerations, the Purchaser has relied on the advice of, or has consulted with, its own personal tax, investment or other advisors.
|
2.9
|
The Purchaser, if executing this Subscription Agreement in a representative or fiduciary capacity, has full power and authority to execute and deliver this Subscription Agreement and each other document included as an exhibit to this Subscription Agreement for which a signature is required in such capacity and on behalf of the subscribing individual, partnership, trust, estate, corporation or other entity for whom or which the Purchaser is executing this Subscription Agreement.
|
2.10
|
If the Purchaser is a corporation, the Purchaser is duly and validly organized, validly existing and in good tax and corporate standing as a corporation under the laws of the jurisdiction of its incorporation with full power and authority to purchase the Units to be purchased by it and to execute and deliver this Subscription Agreement.
|
2.11
|
If the Purchaser is a partnership, the representations, warranties, agreements and understandings set forth above are true with respect to all partners in the Purchaser (and if any such partner is itself a partnership, all persons holding an interest in such partnership, directly or indirectly, including through one or more partnerships), and the person executing this Subscription Agreement has made due inquiry to determine the truthfulness of the representations and warranties made hereby.
|
2.12
|
If the Purchaser is purchasing in a representative or fiduciary capacity, the above representations and warranties shall be deemed to have been made on behalf of the person or persons for whom the Purchaser is so purchasing.
|
2.13
|
Within five (5) days after receipt of a request from the Company, the Purchaser will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject.
|
2.14
|
The Purchaser or its professional advisor has been granted the opportunity to conduct a full and fair examination of the records, documents and files of the Company, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of this offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or its professional advisor deems necessary to verify the accuracy of the information received.
|
2.15
|
The Units were not offered to the Purchaser through an advertisement in printed media of general and regular circulation, radio or television.
|
2.16
|
The Purchaser has relied completely on the advice of, or has consulted with, its own personal tax, investment, legal or other advisors and has not relied on the Company or any of its affiliates, officers, directors, attorneys, accountants or any affiliates of any thereof and each other person, if any, who controls any thereof, within the meaning of Section 15 of the Securities Act, except to the extent such advisors shall be deemed to be as such.
|
2.17
|
If the Purchaser has consulted a purchaser representative (“Purchaser Representative”) to evaluate the merits and risks of the undersigned’s investment in the Units, the Purchaser Representative has completed a Purchaser Representative Questionnaire in the form supplied to him. The Purchaser or the Purchaser Representative has been granted the opportunity to examine documents and files, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of the Offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or the Purchaser Representative deems necessary to verify the accuracy of the information received.
|
2.18
|
The Purchaser either alone or with its Purchaser Representative has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment.
|
|
3.1
|
The Purchaser recognizes that investment in the Company involves certain risks, including the potential loss by the Purchaser of interest on their investment herein, and the Purchaser has taken full cognizance of and understands all of the risk factors related to the purchase of the Units. The Purchaser recognizes that the information set forth in this Subscription Agreement does not purport to contain all the information, which would be contained in a registration statement under the Securities Act.
|
|
3.2
|
No federal or state agency has passed upon the Units or made any finding or determination as to the fairness of this transaction.
|
|
3.3
|
The Units have not been registered under the Securities Act or any applicable state securities laws by reason of exemptions from the registration requirements of the Securities Act and such laws, and may not be sold, pledged, assigned or otherwise disposed of in the absence of an effective registration statement for the Units and any component thereof under the Securities Act or unless an exemption from such registration is available. Provided there is a market for the Company’s Units, the Units will not be eligible for sale for a period of six months from the date of purchase pursuant to the terms of Rule 144 of the Securities Act of 1933, unless registered pursuant to the terms and conditions of an effective registration statement filed with the Securities and Exchange Commission.
|
|
3.4
|
There currently is limited liquidity in the market for the Company’s Units. An active and liquid market for the Company's Units may not develop. Even if an active and liquid market develops for Bollente International, Inc. Units, the market value of Units may be adversely affected by market volatility. Substantial sales of the Company's Units could cause the price of its Units to decrease.
|
|
3.6
|
The Company may refuse to register any transfer of the Units not made in accordance with the Securities Act and the rules and regulations promulgated thereunder.
|
|
14.1
|
Number of Units subscribed for:
|
One (1)
|
Units against payment in cash in the amount of
$
|
25,000
|
, representing
$25,000
per Unit, each representing 0.625% of Gross Margin.
|
|
|
Email Address
|
|
|
Telephone Number
|
Title
|
Tax Identification or Social Security Number
|
|
Name Typed or Printed
|
Email Address
|
|
(
|
)
|
Email Address
|
Telephone Number
|
|
Signature
|
1.
|
DEFINITIONS
|
1.1.
|
Definitions of capitalized terms used in this Royalty Agreement shall have the meanings given in Appendix A or elsewhere in the Royalty Agreement.
|
2.
|
ROYALTY PAYMENTS
|
2.1.
|
Royalties.
BII shall pay BII royalties on Gross Margins during the Royalty Term to Recipients according to the following rates:
|
a)
|
0.625% of Gross Margin for each $25,000 paid to BII by Recipient; and
|
b)
|
25% of Gross Margins for a maximum of $1 million paid to BII.
|
2.2.
|
Manner of Payment.
Royalty payments due under this Section 2 are due 30 days after the end of each Accounting Period and shall be paid in United States dollars.
|
2.3.
|
Termination of Royalty Obligations.
This royalty payment obligation shall terminate on the expiration of the Royalty Term.
|
3.
|
REPORTS AND PAYMENTS
|
3.1.
|
Recordkeeping
. BII shall, and shall obligate its Affiliates to, keep full and accurate records (prepared in accordance with United States Generally Accepted Accounting Principles consistently applied) of BII’s or its Affiliates’ sales of Products and such other matters as may affect the determination of any amount payable to Recipients hereunder, in sufficient detail to reasonably enable Recipient or Recipients’ representatives to determine any amounts payable to BII under this Royalty Agreement. Such records shall be kept at BII’s or its Affiliates’ principal place of business and, with all necessary supporting data, books and ledgers, shall, during all reasonable times for the 2 years following the end of the Accounting Period to which each shall pertain, be open for inspection at reasonable times during normal business hours (and upon at least 30 days prior written notice) no more than one time per calendar year by an independent audit firm selected by Recipients (reasonably acceptable to BII) for the purpose of verifying the accuracy of any payment report required under this Royalty Agreement or any amount payable hereunder. The results of each inspection shall be binding on both BII and Recipients absent mathematical error. BII shall bear all costs associated with such inspections.
|
3.2.
|
Reports
. Within 30 days after the end of each Accounting Period, BII shall deliver to Recipients a true and accurate report, giving such particulars of the business conducted by BII or its Affiliates during the preceding 4 Accounting Periods under this Royalty Agreement as are reasonably pertinent to an accounting for any royalty or other payments hereunder, along with the amount of royalties payable for such Accounting Period. If no payments are due, it shall be so reported.
|
3.3.
|
Accounting
. With each quarterly payment, BII shall deliver to Recipients the report described in Section 3.2, which shall include, but not be limited to, the following information:
|
a)
|
Quantity of each Product sold by BII or its Affiliates during the applicable Accounting Period;
|
b)
|
The monetary amount, in the national currency of such country, of such sales;
|
c)
|
Actual Gross Margins and Net Sales for each Product (by country);
|
d)
|
The currency conversion rate used and U.S. dollar-equivalent of such sales; and
|
e)
|
Total royalties payable to Recipients including a calculation thereof.
|
4.
|
TERMINATION
|
4.1.
|
Generally
. This Royalty Agreement shall become effective on the Execution Date and shall expire on the expiration of the Royalty Term.
|
4.2.
|
Change in Control, Redemption
. If Bollente Companies, Inc. or BII enter into any agreement resulting in a change in control due to merger or acquisition of greater than 50% of its voting equity, during the Royalty Term, the parties agree as follows:
|
4.3.
|
Post-Expiration Obligations
. Upon the expiration of this Royalty Agreement, BII shall submit all reports required by Section 3 and pay Recipients all royalties due or accrued on the sale of Products up to and including the date of expiration.
|
4.4.
|
Survival.
Upon the expiration of this Royalty Agreement, nothing herein shall be construed to release either party from any obligation that matured prior to the date of such expiration and Section 5 shall survive any such expiration.
|
5.
|
MISCELLANEOUS
|
5.1.
|
Entire Agreement
. This Royalty Agreement (together with the Subscription and Purchase Agreement) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, that may have related in any way to the subject matter hereof. The appendices identified in this Royalty Agreement are incorporated herein by reference and made a part hereof.
|
5.2.
|
Resale
. A Recipient shall have the right to accept offers to buy Recipient’s future rights to Royalty Payments under this Royalty Agreement, provided that such offer and sale are previously approved by BII.
|
5.3.
|
Amendments and Waivers
. No amendment or waiver of any provision of this Royalty Agreement shall be valid unless the same shall be in writing and signed by each Party. No waiver by any Party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
|
5.4.
|
Succession and Assignment.
This Royalty Agreement and all of the provisions hereof shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and permitted assigns. BII may not assign this Royalty Agreement or any of its rights or obligations hereunder without the prior written consent of a majority of Recipients. Recipients may not assign this Royalty Agreement and any of its rights or obligations hereunder without the prior consent of BII.
|
5.5.
|
No Third-Party Beneficiaries
. This Royalty Agreement shall not confer any rights or remedies upon any party other than the Parties and their respective successors and permitted assigns.
|
5.6.
|
Governing Law
. This Royalty Agreement shall be governed by and construed in accordance with the domestic Laws of the State of Arizona, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Arizona or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Arizona. The Recipients agrees that venue for any action, suit, litigation or other proceeding arising out of or in any way relating to this Royalty Agreement, or the matters referred to therein, shall be in Maricopa County, Arizona The Recipients hereby waives and agrees not to assert by way of motion, as a defense, or otherwise, in any suit, action or proceeding, any claim that (A) the suit, action or proceeding is brought in an inconvenient forum or (B) the venue of the suit, action or proceeding is improper.
|
5.7.
|
Severability
. If any provision in this Royalty Agreement shall be invalid, illegal, or unenforceable in any jurisdiction, the validity, legality, and enforceability of the remaining provisions, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
|
5.8.
|
Expenses
. Except as otherwise specifically provided in this Royalty Agreement, each Party will bear its own expenses (including fees and disbursements of legal counsel, accountants, financial advisors and other professional advisors) incurred in connection with the preparation, negotiation, execution, delivery and performance of this Royalty Agreement.
|
5.9.
|
Notices.
All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, mailed or delivered to each party at the respective addresses of the parties as set forth in the Subscription and Purchase Agreement, or at such other address or facsimile number as the Recipients shall have furnished to BII in writing.
|
5.10.
|
Construction
. In the construction of this Royalty Agreement, the rule of construction that a document is to be construed most strictly against a party who prepared the same shall not be applied, it being agreed that all parties have participated in the preparation of the final form of this Royalty Agreement.
|
5.11.
|
Counterparts
. This Royalty Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. This Royalty Agreement may be executed by facsimile, photo or electronic signature and such facsimile, photo or electronic signature shall constitute an original for all purposes.
|
PURCHASER
Fouts Management, Inc.
By:
/S/ Michael H. Fouts
Name:
Michael H. Fouts for
Fouts Management, Inc.
Title:
President
Date: October 21. 2015
|
BOLLENTE INTERNATIONAL, INC., a Nevada corporation
By:
/S/ Robertson J. Orr
Name:
Robertson J. Orr
Title:
President
Date:
October 21, 2015
|
|
1.1
|
The Purchaser, intending to be legally bound hereby, hereby tenders this subscription for the purchase of
|
One (1)
|
Units (“Units”) of
Bollente International, Inc.
, a Nevada corporation, at a price of $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company
on the terms and conditions set forth in subparagraph 1.4 below.
|
|
|
1.2
|
The Purchaser will deliver payment in cash directly to Bollente International, Inc together with completed copies of all applicable Subscription Documents.
|
|
1.3
|
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAW OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE ARE SPECULATIVE SECURITIES.
|
|
1.4
|
The Company has agreed to sell up to 25% of its prospective gross margin (“Gross Margin”) in exchange for $1 million, in increments of 40 Units, at $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company pursuant to the terms and conditions of the “Royalty Agreement” attached hereto. The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
|
|
1.5
|
The Company has entered into an agreement with Bollente Companies, Inc. to sell, internationally (outside the continental United States) trutankless®, (the “Product”) an electric tankless water heater which is more efficient than traditional water heaters, using less water and less energy, while simultaneously providing an endless supply of hot water. Investors will have the opportunity to review our business plan; copies of which are available from the Company. The Purchaser acknowledges that, even upon the purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of the goals described in the Bollente Companies’ business plan. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described in the Company’s business plan and other relevant documents.
|
|
1.6
|
The Company intends to use the net proceeds from the sale of the Securities, after deduction for legal and other miscellaneous costs related to the sale of the Securities, as working capital to market the Product internationally. The business contemplated by the Company may require additional financings in addition to the proceeds from the sale of the Securities. There can be no assurances that such additional financings will be obtained on terms favorable to the Company or at all, or that the transactions contemplated by these agreements will ever result in revenues to the Company. The Purchaser acknowledged that, even upon the
|
|
purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of its goals. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described concerning the Company.
|
|
1.7
|
The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
|
|
1.8
|
The authorized capital of the Company is One Hundred Million (100,000,000) Shares of Common Stock and Ten Million (10,000,000) Shares of Preferred Stock. As of August 13, 2015, the Company had issued and outstanding approximately One Million (1,000,000) Shares of Common Stock and Zero (0) Shares of Preferred Stock.
|
|
2.1
|
The Purchaser represents and warrants that it comes within one of the categories of “Accredited Investor” marked below, or is not a “U.S. Person” and is purchasing in an “offshore transaction”, and the Purchaser has truthfully initialed the category which applies to the undersigned and has truthfully set forth the factual basis or reason the Purchaser comes within that category. ALL INFORMATION IN RESPONSE TO THIS PARAGRAPH WILL BE KEPT STRICTLY CONFIDENTIAL. The Purchaser agrees to furnish any additional information which the Company deems necessary in order to verify the answers set forth below.
|
|
Accredited Investor (check one below)
|
Category I
X
|
The Purchaser is an individual (not a partnership, corporation) whose individual net worth, or joint net worth with the Purchaser’s spouse, presently exceeds $1,000,000.
|
Category II _____
|
The Purchaser is an individual (not a partnership, corporation) who had an individual income in excess of $200,000 in the two most recent years, or joint income with the Purchaser’s spouse in excess of $300,000 in the two most recent years, and has a reasonable expectation of reaching the same income level in the current year.
|
Category III _____
|
The Purchaser is a bank as defined in Section 3(a)(2) of the Securities Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940, or a business development company as defined in Section 2(a)(48) of that Securities Act; Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by the plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons who are “Accredited Investors” as defined in Section 230.501(a) of the Securities Act.
|
Category IV _____
|
The Purchaser is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.
|
Category V _____
|
The Purchaser is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.
|
Category VII _____
|
The Purchaser is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units offered, whose purchase is directed by a “Sophisticated Person” as described in Section 230.506(b)(2)(ii) of the Securities Act.
|
Category VIII _____
|
The Purchaser is an entity in which all of the equity owners are “accredited investors” as defined in Section 230.501(a) of the Act.
|
Category IX _____
|
The Purchaser is
not
a “
U.S. Person
” (as defined in Rule 902(k) of Regulation S) nor is it purchasing the Units on behalf of a U.S. Person, and is purchasing the Units in an “
offshore transaction
” (as defined in Rule 902(h) of Regulation S).
|
2.2
|
The Purchaser has been given full and complete access to information regarding the Company and has utilized such access to the undersigned’s satisfaction for the purpose of obtaining such information regarding the Company as the undersigned has reasonably requested; and, particularly, the undersigned has been given reasonable opportunity to ask questions of, and receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Units and to obtain any additional information, to the extent reasonably available;
|
2.3
|
The principal amount of the Units subscribed for by the Purchaser, as set forth in Section 14 hereof does not exceed ten percent (10%) of the Purchaser’s net worth.
|
2.4
|
The Purchaser has either a pre-existing personal or business relationship with the Company and its officers, directors and controlling persons or by reason of its business or financial expertise has the capacity to protect its own interest in connection with this transaction.
|
2.5
|
The Purchaser is acquiring the Units solely for the Purchasers own account for investment purposes as a principal and not with a view to resale or distribution of all or any part thereof. The Purchaser is aware that there are legal and practical limits on the Purchaser’s ability to sell or dispose of the Units, and, therefore, that the Purchaser must bear the economic risk of the investment for an indefinite period of time.
|
2.6
|
The Purchaser has reached the age of majority (if an individual) according to the laws of the state in which it resides and has adequate means of providing for the Purchaser’s current needs and possible personal contingencies and has need for only limited liquidity of this investment, The Purchaser’s commitment to liquid investments is reasonable in relation to the Purchaser’s net worth.
|
2.7
|
The Purchaser understands that the Units are being offered and sold in reliance on specific exemptions from the registration requirements of federal and state law and that the representations, warranties, agreements, acknowledgments and understandings set forth herein are required in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire such Units.
|
2.8
|
The Purchaser is not relying on the Company with respect to the tax and other economic considerations relating to this investment. In regard to such considerations, the Purchaser has relied on the advice of, or has consulted with, its own personal tax, investment or other advisors.
|
2.9
|
The Purchaser, if executing this Subscription Agreement in a representative or fiduciary capacity, has full power and authority to execute and deliver this Subscription Agreement and each other document included as an exhibit to this Subscription Agreement for which a signature is required in such capacity and on behalf of the subscribing individual, partnership, trust, estate, corporation or other entity for whom or which the Purchaser is executing this Subscription Agreement.
|
2.10
|
If the Purchaser is a corporation, the Purchaser is duly and validly organized, validly existing and in good tax and corporate standing as a corporation under the laws of the jurisdiction of its incorporation with full power and authority to purchase the Units to be purchased by it and to execute and deliver this Subscription Agreement.
|
2.11
|
If the Purchaser is a partnership, the representations, warranties, agreements and understandings set forth above are true with respect to all partners in the Purchaser (and if any such partner is itself a partnership, all persons holding an interest in such partnership, directly or indirectly, including through one or more partnerships), and the person executing this Subscription Agreement has made due inquiry to determine the truthfulness of the representations and warranties made hereby.
|
2.12
|
If the Purchaser is purchasing in a representative or fiduciary capacity, the above representations and warranties shall be deemed to have been made on behalf of the person or persons for whom the Purchaser is so purchasing.
|
2.13
|
Within five (5) days after receipt of a request from the Company, the Purchaser will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject.
|
2.14
|
The Purchaser or its professional advisor has been granted the opportunity to conduct a full and fair examination of the records, documents and files of the Company, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of this offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or its professional advisor deems necessary to verify the accuracy of the information received.
|
2.15
|
The Units were not offered to the Purchaser through an advertisement in printed media of general and regular circulation, radio or television.
|
2.16
|
The Purchaser has relied completely on the advice of, or has consulted with, its own personal tax, investment, legal or other advisors and has not relied on the Company or any of its affiliates, officers, directors, attorneys, accountants or any affiliates of any thereof and each other person, if any, who controls any thereof, within the meaning of Section 15 of the Securities Act, except to the extent such advisors shall be deemed to be as such.
|
2.17
|
If the Purchaser has consulted a purchaser representative (“Purchaser Representative”) to evaluate the merits and risks of the undersigned’s investment in the Units, the Purchaser Representative has completed a Purchaser Representative Questionnaire in the form supplied to him. The Purchaser or the Purchaser Representative has been granted the opportunity to examine documents and files, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of the Offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or the Purchaser Representative deems necessary to verify the accuracy of the information received.
|
2.18
|
The Purchaser either alone or with its Purchaser Representative has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment.
|
|
3.1
|
The Purchaser recognizes that investment in the Company involves certain risks, including the potential loss by the Purchaser of interest on their investment herein, and the Purchaser has taken full cognizance of and understands all of the risk factors related to the purchase of the Units. The Purchaser recognizes that the information set forth in this Subscription Agreement does not purport to contain all the information, which would be contained in a registration statement under the Securities Act.
|
|
3.2
|
No federal or state agency has passed upon the Units or made any finding or determination as to the fairness of this transaction.
|
|
3.3
|
The Units have not been registered under the Securities Act or any applicable state securities laws by reason of exemptions from the registration requirements of the Securities Act and such laws, and may not be sold, pledged, assigned or otherwise disposed of in the absence of an effective registration statement for the Units and any component thereof under the Securities Act or unless an exemption from such registration is available. Provided there is a market for the Company’s Units, the Units will not be eligible for sale for a period of six months from the date of purchase pursuant to the terms of Rule 144 of the Securities Act of 1933, unless registered pursuant to the terms and conditions of an effective registration statement filed with the Securities and Exchange Commission.
|
|
3.4
|
There currently is limited liquidity in the market for the Company’s Units. An active and liquid market for the Company's Units may not develop. Even if an active and liquid market develops for Bollente International, Inc. Units, the market value of Units may be adversely affected by market volatility. Substantial sales of the Company's Units could cause the price of its Units to decrease.
|
|
3.6
|
The Company may refuse to register any transfer of the Units not made in accordance with the Securities Act and the rules and regulations promulgated thereunder.
|
|
14.1
|
Number of Units subscribed for:
|
One (1)
|
Units against payment in cash in the amount of
$
|
25,000
|
, representing
$25,000
per Unit, each representing 0.625% of Gross Margin.
|
|
|
Email Address
|
|
|
Telephone Number
|
Title
|
Tax Identification or Social Security Number
|
|
Name Typed or Printed
|
Email Address
|
|
(
|
)
|
Email Address
|
Telephone Number
|
|
Signature
|
1.
|
DEFINITIONS
|
1.1.
|
Definitions of capitalized terms used in this Royalty Agreement shall have the meanings given in Appendix A or elsewhere in the Royalty Agreement.
|
2.
|
ROYALTY PAYMENTS
|
2.1.
|
Royalties.
BII shall pay BII royalties on Gross Margins during the Royalty Term to Recipients according to the following rates:
|
a)
|
0.625% of Gross Margin for each $25,000 paid to BII by Recipient; and
|
b)
|
25% of Gross Margins for a maximum of $1 million paid to BII.
|
2.2.
|
Manner of Payment.
Royalty payments due under this Section 2 are due 30 days after the end of each Accounting Period and shall be paid in United States dollars.
|
2.3.
|
Termination of Royalty Obligations.
This royalty payment obligation shall terminate on the expiration of the Royalty Term.
|
3.
|
REPORTS AND PAYMENTS
|
3.1.
|
Recordkeeping
. BII shall, and shall obligate its Affiliates to, keep full and accurate records (prepared in accordance with United States Generally Accepted Accounting Principles consistently applied) of BII’s or its Affiliates’ sales of Products and such other matters as may affect the determination of any amount payable to Recipients hereunder, in sufficient detail to reasonably enable Recipient or Recipients’ representatives to determine any amounts payable to BII under this Royalty Agreement. Such records shall be kept at BII’s or its Affiliates’ principal place of business and, with all necessary supporting data, books and ledgers, shall, during all reasonable times for the 2 years following the end of the Accounting Period to which each shall pertain, be open for inspection at reasonable times during normal business hours (and upon at least 30 days prior written notice) no more than one time per calendar year by an independent audit firm selected by Recipients (reasonably acceptable to BII) for the purpose of verifying the accuracy of any payment report required under this Royalty Agreement or any amount payable hereunder. The results of each inspection shall be binding on both BII and Recipients absent mathematical error. BII shall bear all costs associated with such inspections.
|
3.2.
|
Reports
. Within 30 days after the end of each Accounting Period, BII shall deliver to Recipients a true and accurate report, giving such particulars of the business conducted by BII or its Affiliates during the preceding 4 Accounting Periods under this Royalty Agreement as are reasonably pertinent to an accounting for any royalty or other payments hereunder, along with the amount of royalties payable for such Accounting Period. If no payments are due, it shall be so reported.
|
3.3.
|
Accounting
. With each quarterly payment, BII shall deliver to Recipients the report described in Section 3.2, which shall include, but not be limited to, the following information:
|
a)
|
Quantity of each Product sold by BII or its Affiliates during the applicable Accounting Period;
|
b)
|
The monetary amount, in the national currency of such country, of such sales;
|
c)
|
Actual Gross Margins and Net Sales for each Product (by country);
|
d)
|
The currency conversion rate used and U.S. dollar-equivalent of such sales; and
|
e)
|
Total royalties payable to Recipients including a calculation thereof.
|
4.
|
TERMINATION
|
4.1.
|
Generally
. This Royalty Agreement shall become effective on the Execution Date and shall expire on the expiration of the Royalty Term.
|
4.2.
|
Change in Control, Redemption
. If Bollente Companies, Inc. or BII enter into any agreement resulting in a change in control due to merger or acquisition of greater than 50% of its voting equity, during the Royalty Term, the parties agree as follows:
|
4.3.
|
Post-Expiration Obligations
. Upon the expiration of this Royalty Agreement, BII shall submit all reports required by Section 3 and pay Recipients all royalties due or accrued on the sale of Products up to and including the date of expiration.
|
4.4.
|
Survival.
Upon the expiration of this Royalty Agreement, nothing herein shall be construed to release either party from any obligation that matured prior to the date of such expiration and Section 5 shall survive any such expiration.
|
5.
|
MISCELLANEOUS
|
5.1.
|
Entire Agreement
. This Royalty Agreement (together with the Subscription and Purchase Agreement) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, that may have related in any way to the subject matter hereof. The appendices identified in this Royalty Agreement are incorporated herein by reference and made a part hereof.
|
5.2.
|
Resale
. A Recipient shall have the right to accept offers to buy Recipient’s future rights to Royalty Payments under this Royalty Agreement, provided that such offer and sale are previously approved by BII.
|
5.3.
|
Amendments and Waivers
. No amendment or waiver of any provision of this Royalty Agreement shall be valid unless the same shall be in writing and signed by each Party. No waiver by any Party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
|
5.4.
|
Succession and Assignment.
This Royalty Agreement and all of the provisions hereof shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and permitted assigns. BII may not assign this Royalty Agreement or any of its rights or obligations hereunder without the prior written consent of a majority of Recipients. Recipients may not assign this Royalty Agreement and any of its rights or obligations hereunder without the prior consent of BII.
|
5.5.
|
No Third-Party Beneficiaries
. This Royalty Agreement shall not confer any rights or remedies upon any party other than the Parties and their respective successors and permitted assigns.
|
5.6.
|
Governing Law
. This Royalty Agreement shall be governed by and construed in accordance with the domestic Laws of the State of Arizona, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Arizona or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Arizona. The Recipients agrees that venue for any action, suit, litigation or other proceeding arising out of or in any way relating to this Royalty Agreement, or the matters referred to therein, shall be in Maricopa County, Arizona The Recipients hereby waives and agrees not to assert by way of motion, as a defense, or otherwise, in any suit, action or proceeding, any claim that (A) the suit, action or proceeding is brought in an inconvenient forum or (B) the venue of the suit, action or proceeding is improper.
|
5.7.
|
Severability
. If any provision in this Royalty Agreement shall be invalid, illegal, or unenforceable in any jurisdiction, the validity, legality, and enforceability of the remaining provisions, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
|
5.8.
|
Expenses
. Except as otherwise specifically provided in this Royalty Agreement, each Party will bear its own expenses (including fees and disbursements of legal counsel, accountants, financial advisors and other professional advisors) incurred in connection with the preparation, negotiation, execution, delivery and performance of this Royalty Agreement.
|
5.9.
|
Notices.
All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, mailed or delivered to each party at the respective addresses of the parties as set forth in the Subscription and Purchase Agreement, or at such other address or facsimile number as the Recipients shall have furnished to BII in writing.
|
5.10.
|
Construction
. In the construction of this Royalty Agreement, the rule of construction that a document is to be construed most strictly against a party who prepared the same shall not be applied, it being agreed that all parties have participated in the preparation of the final form of this Royalty Agreement.
|
5.11.
|
Counterparts
. This Royalty Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. This Royalty Agreement may be executed by facsimile, photo or electronic signature and such facsimile, photo or electronic signature shall constitute an original for all purposes.
|
PURCHASER
By:
/S/ David Heroux
Name:
David Heroux
Title: _________________________
Date: September 28. 2015
|
BOLLENTE INTERNATIONAL, INC., a Nevada corporation
By:
/S/ Robertson J. Orr
Name:
Robertson J. Orr
Title:
President
Date:
September 28, 2015
|
|
1.1
|
The Purchaser, intending to be legally bound hereby, hereby tenders this subscription for the purchase of
|
One (1)
|
Units (“Units”) of
Bollente International, Inc.
, a Nevada corporation, at a price of $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company
on the terms and conditions set forth in subparagraph 1.4 below.
|
|
|
1.2
|
The Purchaser will deliver payment in cash directly to Bollente International, Inc together with completed copies of all applicable Subscription Documents.
|
|
1.3
|
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAW OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE ARE SPECULATIVE SECURITIES.
|
|
1.4
|
The Company has agreed to sell up to 25% of its prospective gross margin (“Gross Margin”) in exchange for $1 million, in increments of 40 Units, at $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company pursuant to the terms and conditions of the “Royalty Agreement” attached hereto. The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
|
|
1.5
|
The Company has entered into an agreement with Bollente Companies, Inc. to sell, internationally (outside the continental United States) trutankless®, (the “Product”) an electric tankless water heater which is more efficient than traditional water heaters, using less water and less energy, while simultaneously providing an endless supply of hot water. Investors will have the opportunity to review our business plan; copies of which are available from the Company. The Purchaser acknowledges that, even upon the purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of the goals described in the Bollente Companies’ business plan. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described in the Company’s business plan and other relevant documents.
|
|
1.6
|
The Company intends to use the net proceeds from the sale of the Securities, after deduction for legal and other miscellaneous costs related to the sale of the Securities, as working capital to market the Product internationally. The business contemplated by the Company may require additional financings in addition to the proceeds from the sale of the Securities. There can be no assurances that such additional financings will be obtained on terms favorable to the Company or at all, or that the transactions contemplated by these agreements will ever result in revenues to the Company. The Purchaser acknowledged that, even upon the
|
|
purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of its goals. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described concerning the Company.
|
|
1.7
|
The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
|
|
1.8
|
The authorized capital of the Company is One Hundred Million (100,000,000) Shares of Common Stock and Ten Million (10,000,000) Shares of Preferred Stock. As of August 13, 2015, the Company had issued and outstanding approximately One Million (1,000,000) Shares of Common Stock and Zero (0) Shares of Preferred Stock.
|
|
2.1
|
The Purchaser represents and warrants that it comes within one of the categories of “Accredited Investor” marked below, or is not a “U.S. Person” and is purchasing in an “offshore transaction”, and the Purchaser has truthfully initialed the category which applies to the undersigned and has truthfully set forth the factual basis or reason the Purchaser comes within that category. ALL INFORMATION IN RESPONSE TO THIS PARAGRAPH WILL BE KEPT STRICTLY CONFIDENTIAL. The Purchaser agrees to furnish any additional information which the Company deems necessary in order to verify the answers set forth below.
|
|
Accredited Investor (check one below)
|
Category I
X
|
The Purchaser is an individual (not a partnership, corporation) whose individual net worth, or joint net worth with the Purchaser’s spouse, presently exceeds $1,000,000.
|
Category II _____
|
The Purchaser is an individual (not a partnership, corporation) who had an individual income in excess of $200,000 in the two most recent years, or joint income with the Purchaser’s spouse in excess of $300,000 in the two most recent years, and has a reasonable expectation of reaching the same income level in the current year.
|
Category III _____
|
The Purchaser is a bank as defined in Section 3(a)(2) of the Securities Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940, or a business development company as defined in Section 2(a)(48) of that Securities Act; Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by the plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons who are “Accredited Investors” as defined in Section 230.501(a) of the Securities Act.
|
Category IV _____
|
The Purchaser is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.
|
Category V _____
|
The Purchaser is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.
|
Category VII _____
|
The Purchaser is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units offered, whose purchase is directed by a “Sophisticated Person” as described in Section 230.506(b)(2)(ii) of the Securities Act.
|
Category VIII _____
|
The Purchaser is an entity in which all of the equity owners are “accredited investors” as defined in Section 230.501(a) of the Act.
|
Category IX _____
|
The Purchaser is
not
a “
U.S. Person
” (as defined in Rule 902(k) of Regulation S) nor is it purchasing the Units on behalf of a U.S. Person, and is purchasing the Units in an “
offshore transaction
” (as defined in Rule 902(h) of Regulation S).
|
2.2
|
The Purchaser has been given full and complete access to information regarding the Company and has utilized such access to the undersigned’s satisfaction for the purpose of obtaining such information regarding the Company as the undersigned has reasonably requested; and, particularly, the undersigned has been given reasonable opportunity to ask questions of, and receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Units and to obtain any additional information, to the extent reasonably available;
|
2.3
|
The principal amount of the Units subscribed for by the Purchaser, as set forth in Section 14 hereof does not exceed ten percent (10%) of the Purchaser’s net worth.
|
2.4
|
The Purchaser has either a pre-existing personal or business relationship with the Company and its officers, directors and controlling persons or by reason of its business or financial expertise has the capacity to protect its own interest in connection with this transaction.
|
2.5
|
The Purchaser is acquiring the Units solely for the Purchasers own account for investment purposes as a principal and not with a view to resale or distribution of all or any part thereof. The Purchaser is aware that there are legal and practical limits on the Purchaser’s ability to sell or dispose of the Units, and, therefore, that the Purchaser must bear the economic risk of the investment for an indefinite period of time.
|
2.6
|
The Purchaser has reached the age of majority (if an individual) according to the laws of the state in which it resides and has adequate means of providing for the Purchaser’s current needs and possible personal contingencies and has need for only limited liquidity of this investment, The Purchaser’s commitment to liquid investments is reasonable in relation to the Purchaser’s net worth.
|
2.7
|
The Purchaser understands that the Units are being offered and sold in reliance on specific exemptions from the registration requirements of federal and state law and that the representations, warranties, agreements, acknowledgments and understandings set forth herein are required in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire such Units.
|
2.8
|
The Purchaser is not relying on the Company with respect to the tax and other economic considerations relating to this investment. In regard to such considerations, the Purchaser has relied on the advice of, or has consulted with, its own personal tax, investment or other advisors.
|
2.9
|
The Purchaser, if executing this Subscription Agreement in a representative or fiduciary capacity, has full power and authority to execute and deliver this Subscription Agreement and each other document included as an exhibit to this Subscription Agreement for which a signature is required in such capacity and on behalf of the subscribing individual, partnership, trust, estate, corporation or other entity for whom or which the Purchaser is executing this Subscription Agreement.
|
2.10
|
If the Purchaser is a corporation, the Purchaser is duly and validly organized, validly existing and in good tax and corporate standing as a corporation under the laws of the jurisdiction of its incorporation with full power and authority to purchase the Units to be purchased by it and to execute and deliver this Subscription Agreement.
|
2.11
|
If the Purchaser is a partnership, the representations, warranties, agreements and understandings set forth above are true with respect to all partners in the Purchaser (and if any such partner is itself a partnership, all persons holding an interest in such partnership, directly or indirectly, including through one or more partnerships), and the person executing this Subscription Agreement has made due inquiry to determine the truthfulness of the representations and warranties made hereby.
|
2.12
|
If the Purchaser is purchasing in a representative or fiduciary capacity, the above representations and warranties shall be deemed to have been made on behalf of the person or persons for whom the Purchaser is so purchasing.
|
2.13
|
Within five (5) days after receipt of a request from the Company, the Purchaser will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject.
|
2.14
|
The Purchaser or its professional advisor has been granted the opportunity to conduct a full and fair examination of the records, documents and files of the Company, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of this offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or its professional advisor deems necessary to verify the accuracy of the information received.
|
2.15
|
The Units were not offered to the Purchaser through an advertisement in printed media of general and regular circulation, radio or television.
|
2.16
|
The Purchaser has relied completely on the advice of, or has consulted with, its own personal tax, investment, legal or other advisors and has not relied on the Company or any of its affiliates, officers, directors, attorneys, accountants or any affiliates of any thereof and each other person, if any, who controls any thereof, within the meaning of Section 15 of the Securities Act, except to the extent such advisors shall be deemed to be as such.
|
2.17
|
If the Purchaser has consulted a purchaser representative (“Purchaser Representative”) to evaluate the merits and risks of the undersigned’s investment in the Units, the Purchaser Representative has completed a Purchaser Representative Questionnaire in the form supplied to him. The Purchaser or the Purchaser Representative has been granted the opportunity to examine documents and files, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of the Offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or the Purchaser Representative deems necessary to verify the accuracy of the information received.
|
2.18
|
The Purchaser either alone or with its Purchaser Representative has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment.
|
|
3.1
|
The Purchaser recognizes that investment in the Company involves certain risks, including the potential loss by the Purchaser of interest on their investment herein, and the Purchaser has taken full cognizance of and understands all of the risk factors related to the purchase of the Units. The Purchaser recognizes that the information set forth in this Subscription Agreement does not purport to contain all the information, which would be contained in a registration statement under the Securities Act.
|
|
3.2
|
No federal or state agency has passed upon the Units or made any finding or determination as to the fairness of this transaction.
|
|
3.3
|
The Units have not been registered under the Securities Act or any applicable state securities laws by reason of exemptions from the registration requirements of the Securities Act and such laws, and may not be sold, pledged, assigned or otherwise disposed of in the absence of an effective registration statement for the Units and any component thereof under the Securities Act or unless an exemption from such registration is available. Provided there is a market for the Company’s Units, the Units will not be eligible for sale for a period of six months from the date of purchase pursuant to the terms of Rule 144 of the Securities Act of 1933, unless registered pursuant to the terms and conditions of an effective registration statement filed with the Securities and Exchange Commission.
|
|
3.4
|
There currently is limited liquidity in the market for the Company’s Units. An active and liquid market for the Company's Units may not develop. Even if an active and liquid market develops for Bollente International, Inc. Units, the market value of Units may be adversely affected by market volatility. Substantial sales of the Company's Units could cause the price of its Units to decrease.
|
|
3.6
|
The Company may refuse to register any transfer of the Units not made in accordance with the Securities Act and the rules and regulations promulgated thereunder.
|
|
14.1
|
Number of Units subscribed for:
|
One (1)
|
Units against payment in cash in the amount of
$
|
25,000
|
, representing
$25,000
per Unit, each representing 0.625% of Gross Margin.
|
|
|
Email Address
|
|
|
Telephone Number
|
Title
|
Tax Identification or Social Security Number
|
|
Name Typed or Printed
|
Email Address
|
|
(
|
)
|
Email Address
|
Telephone Number
|
|
Signature
|
1.
|
DEFINITIONS
|
1.1.
|
Definitions of capitalized terms used in this Royalty Agreement shall have the meanings given in Appendix A or elsewhere in the Royalty Agreement.
|
2.
|
ROYALTY PAYMENTS
|
2.1.
|
Royalties.
BII shall pay BII royalties on Gross Margins during the Royalty Term to Recipients according to the following rates:
|
a)
|
0.625% of Gross Margin for each $25,000 paid to BII by Recipient; and
|
b)
|
25% of Gross Margins for a maximum of $1 million paid to BII.
|
2.2.
|
Manner of Payment.
Royalty payments due under this Section 2 are due 30 days after the end of each Accounting Period and shall be paid in United States dollars.
|
2.3.
|
Termination of Royalty Obligations.
This royalty payment obligation shall terminate on the expiration of the Royalty Term.
|
3.
|
REPORTS AND PAYMENTS
|
3.1.
|
Recordkeeping
. BII shall, and shall obligate its Affiliates to, keep full and accurate records (prepared in accordance with United States Generally Accepted Accounting Principles consistently applied) of BII’s or its Affiliates’ sales of Products and such other matters as may affect the determination of any amount payable to Recipients hereunder, in sufficient detail to reasonably enable Recipient or Recipients’ representatives to determine any amounts payable to BII under this Royalty Agreement. Such records shall be kept at BII’s or its Affiliates’ principal place of business and, with all necessary supporting data, books and ledgers, shall, during all reasonable times for the 2 years following the end of the Accounting Period to which each shall pertain, be open for inspection at reasonable times during normal business hours (and upon at least 30 days prior written notice) no more than one time per calendar year by an independent audit firm selected by Recipients (reasonably acceptable to BII) for the purpose of verifying the accuracy of any payment report required under this Royalty Agreement or any amount payable hereunder. The results of each inspection shall be binding on both BII and Recipients absent mathematical error. BII shall bear all costs associated with such inspections.
|
3.2.
|
Reports
. Within 30 days after the end of each Accounting Period, BII shall deliver to Recipients a true and accurate report, giving such particulars of the business conducted by BII or its Affiliates during the preceding 4 Accounting Periods under this Royalty Agreement as are reasonably pertinent to an accounting for any royalty or other payments hereunder, along with the amount of royalties payable for such Accounting Period. If no payments are due, it shall be so reported.
|
3.3.
|
Accounting
. With each quarterly payment, BII shall deliver to Recipients the report described in Section 3.2, which shall include, but not be limited to, the following information:
|
a)
|
Quantity of each Product sold by BII or its Affiliates during the applicable Accounting Period;
|
b)
|
The monetary amount, in the national currency of such country, of such sales;
|
c)
|
Actual Gross Margins and Net Sales for each Product (by country);
|
d)
|
The currency conversion rate used and U.S. dollar-equivalent of such sales; and
|
e)
|
Total royalties payable to Recipients including a calculation thereof.
|
4.
|
TERMINATION
|
4.1.
|
Generally
. This Royalty Agreement shall become effective on the Execution Date and shall expire on the expiration of the Royalty Term.
|
4.2.
|
Change in Control, Redemption
. If Bollente Companies, Inc. or BII enter into any agreement resulting in a change in control due to merger or acquisition of greater than 50% of its voting equity, during the Royalty Term, the parties agree as follows:
|
4.3.
|
Post-Expiration Obligations
. Upon the expiration of this Royalty Agreement, BII shall submit all reports required by Section 3 and pay Recipients all royalties due or accrued on the sale of Products up to and including the date of expiration.
|
4.4.
|
Survival.
Upon the expiration of this Royalty Agreement, nothing herein shall be construed to release either party from any obligation that matured prior to the date of such expiration and Section 5 shall survive any such expiration.
|
5.
|
MISCELLANEOUS
|
5.1.
|
Entire Agreement
. This Royalty Agreement (together with the Subscription and Purchase Agreement) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, that may have related in any way to the subject matter hereof. The appendices identified in this Royalty Agreement are incorporated herein by reference and made a part hereof.
|
5.2.
|
Resale
. A Recipient shall have the right to accept offers to buy Recipient’s future rights to Royalty Payments under this Royalty Agreement, provided that such offer and sale are previously approved by BII.
|
5.3.
|
Amendments and Waivers
. No amendment or waiver of any provision of this Royalty Agreement shall be valid unless the same shall be in writing and signed by each Party. No waiver by any Party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
|
5.4.
|
Succession and Assignment.
This Royalty Agreement and all of the provisions hereof shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and permitted assigns. BII may not assign this Royalty Agreement or any of its rights or obligations hereunder without the prior written consent of a majority of Recipients. Recipients may not assign this Royalty Agreement and any of its rights or obligations hereunder without the prior consent of BII.
|
5.5.
|
No Third-Party Beneficiaries
. This Royalty Agreement shall not confer any rights or remedies upon any party other than the Parties and their respective successors and permitted assigns.
|
5.6.
|
Governing Law
. This Royalty Agreement shall be governed by and construed in accordance with the domestic Laws of the State of Arizona, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Arizona or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Arizona. The Recipients agrees that venue for any action, suit, litigation or other proceeding arising out of or in any way relating to this Royalty Agreement, or the matters referred to therein, shall be in Maricopa County, Arizona The Recipients hereby waives and agrees not to assert by way of motion, as a defense, or otherwise, in any suit, action or proceeding, any claim that (A) the suit, action or proceeding is brought in an inconvenient forum or (B) the venue of the suit, action or proceeding is improper.
|
5.7.
|
Severability
. If any provision in this Royalty Agreement shall be invalid, illegal, or unenforceable in any jurisdiction, the validity, legality, and enforceability of the remaining provisions, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
|
5.8.
|
Expenses
. Except as otherwise specifically provided in this Royalty Agreement, each Party will bear its own expenses (including fees and disbursements of legal counsel, accountants, financial advisors and other professional advisors) incurred in connection with the preparation, negotiation, execution, delivery and performance of this Royalty Agreement.
|
5.9.
|
Notices.
All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, mailed or delivered to each party at the respective addresses of the parties as set forth in the Subscription and Purchase Agreement, or at such other address or facsimile number as the Recipients shall have furnished to BII in writing.
|
5.10.
|
Construction
. In the construction of this Royalty Agreement, the rule of construction that a document is to be construed most strictly against a party who prepared the same shall not be applied, it being agreed that all parties have participated in the preparation of the final form of this Royalty Agreement.
|
5.11.
|
Counterparts
. This Royalty Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. This Royalty Agreement may be executed by facsimile, photo or electronic signature and such facsimile, photo or electronic signature shall constitute an original for all purposes.
|
PURCHASER
By:
/S/ Russell J. Hooker
/S/ Sadie A. Hooker
Name:
Russell J. Hooker and
Sadie A. Hooker
Title: _________________________
Date: October 13. 2015
|
BOLLENTE INTERNATIONAL, INC., a Nevada corporation
By:
/S/ Robertson J. Orr
Name:
Robertson J. Orr
Title:
President
Date:
October 13, 2015
|
|
1.1
|
The Purchaser, intending to be legally bound hereby, hereby tenders this subscription for the purchase of
|
One (1)
|
Units (“Units”) of
Bollente International, Inc.
, a Nevada corporation, at a price of $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company
on the terms and conditions set forth in subparagraph 1.4 below.
|
|
|
1.2
|
The Purchaser will deliver payment in cash directly to Bollente International, Inc together with completed copies of all applicable Subscription Documents.
|
|
1.3
|
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAW OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE ARE SPECULATIVE SECURITIES.
|
|
1.4
|
The Company has agreed to sell up to 25% of its prospective gross margin (“Gross Margin”) in exchange for $1 million, in increments of 40 Units, at $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company pursuant to the terms and conditions of the “Royalty Agreement” attached hereto. The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
|
|
1.5
|
The Company has entered into an agreement with Bollente Companies, Inc. to sell, internationally (outside the continental United States) trutankless®, (the “Product”) an electric tankless water heater which is more efficient than traditional water heaters, using less water and less energy, while simultaneously providing an endless supply of hot water. Investors will have the opportunity to review our business plan; copies of which are available from the Company. The Purchaser acknowledges that, even upon the purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of the goals described in the Bollente Companies’ business plan. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described in the Company’s business plan and other relevant documents.
|
|
1.6
|
The Company intends to use the net proceeds from the sale of the Securities, after deduction for legal and other miscellaneous costs related to the sale of the Securities, as working capital to market the Product internationally. The business contemplated by the Company may require additional financings in addition to the proceeds from the sale of the Securities. There can be no assurances that such additional financings will be obtained on terms favorable to the Company or at all, or that the transactions contemplated by these agreements will ever result in revenues to the Company. The Purchaser acknowledged that, even upon the
|
|
purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of its goals. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described concerning the Company.
|
|
1.7
|
The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
|
|
1.8
|
The authorized capital of the Company is One Hundred Million (100,000,000) Shares of Common Stock and Ten Million (10,000,000) Shares of Preferred Stock. As of August 13, 2015, the Company had issued and outstanding approximately One Million (1,000,000) Shares of Common Stock and Zero (0) Shares of Preferred Stock.
|
|
2.1
|
The Purchaser represents and warrants that it comes within one of the categories of “Accredited Investor” marked below, or is not a “U.S. Person” and is purchasing in an “offshore transaction”, and the Purchaser has truthfully initialed the category which applies to the undersigned and has truthfully set forth the factual basis or reason the Purchaser comes within that category. ALL INFORMATION IN RESPONSE TO THIS PARAGRAPH WILL BE KEPT STRICTLY CONFIDENTIAL. The Purchaser agrees to furnish any additional information which the Company deems necessary in order to verify the answers set forth below.
|
|
Accredited Investor (check one below)
|
Category I
|
The Purchaser is an individual (not a partnership, corporation) whose individual net worth, or joint net worth with the Purchaser’s spouse, presently exceeds $1,000,000.
|
Category II
X
|
The Purchaser is an individual (not a partnership, corporation) who had an individual income in excess of $200,000 in the two most recent years, or joint income with the Purchaser’s spouse in excess of $300,000 in the two most recent years, and has a reasonable expectation of reaching the same income level in the current year.
|
Category III _____
|
The Purchaser is a bank as defined in Section 3(a)(2) of the Securities Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940, or a business development company as defined in Section 2(a)(48) of that Securities Act; Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by the plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons who are “Accredited Investors” as defined in Section 230.501(a) of the Securities Act.
|
Category IV _____
|
The Purchaser is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.
|
Category V _____
|
The Purchaser is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.
|
Category VII _____
|
The Purchaser is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units offered, whose purchase is directed by a “Sophisticated Person” as described in Section 230.506(b)(2)(ii) of the Securities Act.
|
Category VIII _____
|
The Purchaser is an entity in which all of the equity owners are “accredited investors” as defined in Section 230.501(a) of the Act.
|
Category IX _____
|
The Purchaser is
not
a “
U.S. Person
” (as defined in Rule 902(k) of Regulation S) nor is it purchasing the Units on behalf of a U.S. Person, and is purchasing the Units in an “
offshore transaction
” (as defined in Rule 902(h) of Regulation S).
|
2.2
|
The Purchaser has been given full and complete access to information regarding the Company and has utilized such access to the undersigned’s satisfaction for the purpose of obtaining such information regarding the Company as the undersigned has reasonably requested; and, particularly, the undersigned has been given reasonable opportunity to ask questions of, and receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Units and to obtain any additional information, to the extent reasonably available;
|
2.3
|
The principal amount of the Units subscribed for by the Purchaser, as set forth in Section 14 hereof does not exceed ten percent (10%) of the Purchaser’s net worth.
|
2.4
|
The Purchaser has either a pre-existing personal or business relationship with the Company and its officers, directors and controlling persons or by reason of its business or financial expertise has the capacity to protect its own interest in connection with this transaction.
|
2.5
|
The Purchaser is acquiring the Units solely for the Purchasers own account for investment purposes as a principal and not with a view to resale or distribution of all or any part thereof. The Purchaser is aware that there are legal and practical limits on the Purchaser’s ability to sell or dispose of the Units, and, therefore, that the Purchaser must bear the economic risk of the investment for an indefinite period of time.
|
2.6
|
The Purchaser has reached the age of majority (if an individual) according to the laws of the state in which it resides and has adequate means of providing for the Purchaser’s current needs and possible personal contingencies and has need for only limited liquidity of this investment, The Purchaser’s commitment to liquid investments is reasonable in relation to the Purchaser’s net worth.
|
2.7
|
The Purchaser understands that the Units are being offered and sold in reliance on specific exemptions from the registration requirements of federal and state law and that the representations, warranties, agreements, acknowledgments and understandings set forth herein are required in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire such Units.
|
2.8
|
The Purchaser is not relying on the Company with respect to the tax and other economic considerations relating to this investment. In regard to such considerations, the Purchaser has relied on the advice of, or has consulted with, its own personal tax, investment or other advisors.
|
2.9
|
The Purchaser, if executing this Subscription Agreement in a representative or fiduciary capacity, has full power and authority to execute and deliver this Subscription Agreement and each other document included as an exhibit to this Subscription Agreement for which a signature is required in such capacity and on behalf of the subscribing individual, partnership, trust, estate, corporation or other entity for whom or which the Purchaser is executing this Subscription Agreement.
|
2.10
|
If the Purchaser is a corporation, the Purchaser is duly and validly organized, validly existing and in good tax and corporate standing as a corporation under the laws of the jurisdiction of its incorporation with full power and authority to purchase the Units to be purchased by it and to execute and deliver this Subscription Agreement.
|
2.11
|
If the Purchaser is a partnership, the representations, warranties, agreements and understandings set forth above are true with respect to all partners in the Purchaser (and if any such partner is itself a partnership, all persons holding an interest in such partnership, directly or indirectly, including through one or more partnerships), and the person executing this Subscription Agreement has made due inquiry to determine the truthfulness of the representations and warranties made hereby.
|
2.12
|
If the Purchaser is purchasing in a representative or fiduciary capacity, the above representations and warranties shall be deemed to have been made on behalf of the person or persons for whom the Purchaser is so purchasing.
|
2.13
|
Within five (5) days after receipt of a request from the Company, the Purchaser will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject.
|
2.14
|
The Purchaser or its professional advisor has been granted the opportunity to conduct a full and fair examination of the records, documents and files of the Company, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of this offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or its professional advisor deems necessary to verify the accuracy of the information received.
|
2.15
|
The Units were not offered to the Purchaser through an advertisement in printed media of general and regular circulation, radio or television.
|
2.16
|
The Purchaser has relied completely on the advice of, or has consulted with, its own personal tax, investment, legal or other advisors and has not relied on the Company or any of its affiliates, officers, directors, attorneys, accountants or any affiliates of any thereof and each other person, if any, who controls any thereof, within the meaning of Section 15 of the Securities Act, except to the extent such advisors shall be deemed to be as such.
|
2.17
|
If the Purchaser has consulted a purchaser representative (“Purchaser Representative”) to evaluate the merits and risks of the undersigned’s investment in the Units, the Purchaser Representative has completed a Purchaser Representative Questionnaire in the form supplied to him. The Purchaser or the Purchaser Representative has been granted the opportunity to examine documents and files, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of the Offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or the Purchaser Representative deems necessary to verify the accuracy of the information received.
|
2.18
|
The Purchaser either alone or with its Purchaser Representative has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment.
|
|
3.1
|
The Purchaser recognizes that investment in the Company involves certain risks, including the potential loss by the Purchaser of interest on their investment herein, and the Purchaser has taken full cognizance of and understands all of the risk factors related to the purchase of the Units. The Purchaser recognizes that the information set forth in this Subscription Agreement does not purport to contain all the information, which would be contained in a registration statement under the Securities Act.
|
|
3.2
|
No federal or state agency has passed upon the Units or made any finding or determination as to the fairness of this transaction.
|
|
3.3
|
The Units have not been registered under the Securities Act or any applicable state securities laws by reason of exemptions from the registration requirements of the Securities Act and such laws, and may not be sold, pledged, assigned or otherwise disposed of in the absence of an effective registration statement for the Units and any component thereof under the Securities Act or unless an exemption from such registration is available. Provided there is a market for the Company’s Units, the Units will not be eligible for sale for a period of six months from the date of purchase pursuant to the terms of Rule 144 of the Securities Act of 1933, unless registered pursuant to the terms and conditions of an effective registration statement filed with the Securities and Exchange Commission.
|
|
3.4
|
There currently is limited liquidity in the market for the Company’s Units. An active and liquid market for the Company's Units may not develop. Even if an active and liquid market develops for Bollente International, Inc. Units, the market value of Units may be adversely affected by market volatility. Substantial sales of the Company's Units could cause the price of its Units to decrease.
|
|
3.6
|
The Company may refuse to register any transfer of the Units not made in accordance with the Securities Act and the rules and regulations promulgated thereunder.
|
|
14.1
|
Number of Units subscribed for:
|
One (1)
|
Units against payment in cash in the amount of
$
|
25,000
|
, representing
$25,000
per Unit, each representing 0.625% of Gross Margin.
|
|
|
Email Address
|
|
|
Telephone Number
|
Title
|
Tax Identification or Social Security Number
|
|
Name Typed or Printed
|
Email Address
|
|
(
|
)
|
Email Address
|
Telephone Number
|
|
Signature
|
1.
|
DEFINITIONS
|
1.1.
|
Definitions of capitalized terms used in this Royalty Agreement shall have the meanings given in Appendix A or elsewhere in the Royalty Agreement.
|
2.
|
ROYALTY PAYMENTS
|
2.1.
|
Royalties.
BII shall pay BII royalties on Gross Margins during the Royalty Term to Recipients according to the following rates:
|
a)
|
0.625% of Gross Margin for each $25,000 paid to BII by Recipient; and
|
b)
|
25% of Gross Margins for a maximum of $1 million paid to BII.
|
2.2.
|
Manner of Payment.
Royalty payments due under this Section 2 are due 30 days after the end of each Accounting Period and shall be paid in United States dollars.
|
2.3.
|
Termination of Royalty Obligations.
This royalty payment obligation shall terminate on the expiration of the Royalty Term.
|
3.
|
REPORTS AND PAYMENTS
|
3.1.
|
Recordkeeping
. BII shall, and shall obligate its Affiliates to, keep full and accurate records (prepared in accordance with United States Generally Accepted Accounting Principles consistently applied) of BII’s or its Affiliates’ sales of Products and such other matters as may affect the determination of any amount payable to Recipients hereunder, in sufficient detail to reasonably enable Recipient or Recipients’ representatives to determine any amounts payable to BII under this Royalty Agreement. Such records shall be kept at BII’s or its Affiliates’ principal place of business and, with all necessary supporting data, books and ledgers, shall, during all reasonable times for the 2 years following the end of the Accounting Period to which each shall pertain, be open for inspection at reasonable times during normal business hours (and upon at least 30 days prior written notice) no more than one time per calendar year by an independent audit firm selected by Recipients (reasonably acceptable to BII) for the purpose of verifying the accuracy of any payment report required under this Royalty Agreement or any amount payable hereunder. The results of each inspection shall be binding on both BII and Recipients absent mathematical error. BII shall bear all costs associated with such inspections.
|
3.2.
|
Reports
. Within 30 days after the end of each Accounting Period, BII shall deliver to Recipients a true and accurate report, giving such particulars of the business conducted by BII or its Affiliates during the preceding 4 Accounting Periods under this Royalty Agreement as are reasonably pertinent to an accounting for any royalty or other payments hereunder, along with the amount of royalties payable for such Accounting Period. If no payments are due, it shall be so reported.
|
3.3.
|
Accounting
. With each quarterly payment, BII shall deliver to Recipients the report described in Section 3.2, which shall include, but not be limited to, the following information:
|
a)
|
Quantity of each Product sold by BII or its Affiliates during the applicable Accounting Period;
|
b)
|
The monetary amount, in the national currency of such country, of such sales;
|
c)
|
Actual Gross Margins and Net Sales for each Product (by country);
|
d)
|
The currency conversion rate used and U.S. dollar-equivalent of such sales; and
|
e)
|
Total royalties payable to Recipients including a calculation thereof.
|
4.
|
TERMINATION
|
4.1.
|
Generally
. This Royalty Agreement shall become effective on the Execution Date and shall expire on the expiration of the Royalty Term.
|
4.2.
|
Change in Control, Redemption
. If Bollente Companies, Inc. or BII enter into any agreement resulting in a change in control due to merger or acquisition of greater than 50% of its voting equity, during the Royalty Term, the parties agree as follows:
|
4.3.
|
Post-Expiration Obligations
. Upon the expiration of this Royalty Agreement, BII shall submit all reports required by Section 3 and pay Recipients all royalties due or accrued on the sale of Products up to and including the date of expiration.
|
4.4.
|
Survival.
Upon the expiration of this Royalty Agreement, nothing herein shall be construed to release either party from any obligation that matured prior to the date of such expiration and Section 5 shall survive any such expiration.
|
5.
|
MISCELLANEOUS
|
5.1.
|
Entire Agreement
. This Royalty Agreement (together with the Subscription and Purchase Agreement) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, that may have related in any way to the subject matter hereof. The appendices identified in this Royalty Agreement are incorporated herein by reference and made a part hereof.
|
5.2.
|
Resale
. A Recipient shall have the right to accept offers to buy Recipient’s future rights to Royalty Payments under this Royalty Agreement, provided that such offer and sale are previously approved by BII.
|
5.3.
|
Amendments and Waivers
. No amendment or waiver of any provision of this Royalty Agreement shall be valid unless the same shall be in writing and signed by each Party. No waiver by any Party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
|
5.4.
|
Succession and Assignment.
This Royalty Agreement and all of the provisions hereof shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and permitted assigns. BII may not assign this Royalty Agreement or any of its rights or obligations hereunder without the prior written consent of a majority of Recipients. Recipients may not assign this Royalty Agreement and any of its rights or obligations hereunder without the prior consent of BII.
|
5.5.
|
No Third-Party Beneficiaries
. This Royalty Agreement shall not confer any rights or remedies upon any party other than the Parties and their respective successors and permitted assigns.
|
5.6.
|
Governing Law
. This Royalty Agreement shall be governed by and construed in accordance with the domestic Laws of the State of Arizona, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Arizona or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Arizona. The Recipients agrees that venue for any action, suit, litigation or other proceeding arising out of or in any way relating to this Royalty Agreement, or the matters referred to therein, shall be in Maricopa County, Arizona The Recipients hereby waives and agrees not to assert by way of motion, as a defense, or otherwise, in any suit, action or proceeding, any claim that (A) the suit, action or proceeding is brought in an inconvenient forum or (B) the venue of the suit, action or proceeding is improper.
|
5.7.
|
Severability
. If any provision in this Royalty Agreement shall be invalid, illegal, or unenforceable in any jurisdiction, the validity, legality, and enforceability of the remaining provisions, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
|
5.8.
|
Expenses
. Except as otherwise specifically provided in this Royalty Agreement, each Party will bear its own expenses (including fees and disbursements of legal counsel, accountants, financial advisors and other professional advisors) incurred in connection with the preparation, negotiation, execution, delivery and performance of this Royalty Agreement.
|
5.9.
|
Notices.
All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, mailed or delivered to each party at the respective addresses of the parties as set forth in the Subscription and Purchase Agreement, or at such other address or facsimile number as the Recipients shall have furnished to BII in writing.
|
5.10.
|
Construction
. In the construction of this Royalty Agreement, the rule of construction that a document is to be construed most strictly against a party who prepared the same shall not be applied, it being agreed that all parties have participated in the preparation of the final form of this Royalty Agreement.
|
5.11.
|
Counterparts
. This Royalty Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. This Royalty Agreement may be executed by facsimile, photo or electronic signature and such facsimile, photo or electronic signature shall constitute an original for all purposes.
|
PURCHASER
By:
/S/ Jean A. Fouts
/S/ Jean A. Fouts
Name:
Randall S. Fouts and
Jean A. Fouts
Title: _________________________
Date: October 12. 2015
|
BOLLENTE INTERNATIONAL, INC., a Nevada corporation
By:
/S/ Robertson J. Orr
Name:
Robertson J. Orr
Title:
President
Date:
October 12, 2015
|
|
1.1
|
The Purchaser, intending to be legally bound hereby, hereby tenders this subscription for the purchase of
|
Four (4)
|
Units (“Units”) of
Bollente International, Inc.
, a Nevada corporation, at a price of $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company
on the terms and conditions set forth in subparagraph 1.4 below.
|
|
|
1.2
|
The Purchaser will deliver payment in cash directly to Bollente International, Inc together with completed copies of all applicable Subscription Documents.
|
|
1.3
|
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAW OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE ARE SPECULATIVE SECURITIES.
|
|
1.4
|
The Company has agreed to sell up to 25% of its prospective gross margin (“Gross Margin”) in exchange for $1 million, in increments of 40 Units, at $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company pursuant to the terms and conditions of the “Royalty Agreement” attached hereto. The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
|
|
1.5
|
The Company has entered into an agreement with Bollente Companies, Inc. to sell, internationally (outside the continental United States) trutankless®, (the “Product”) an electric tankless water heater which is more efficient than traditional water heaters, using less water and less energy, while simultaneously providing an endless supply of hot water. Investors will have the opportunity to review our business plan; copies of which are available from the Company. The Purchaser acknowledges that, even upon the purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of the goals described in the Bollente Companies’ business plan. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described in the Company’s business plan and other relevant documents.
|
|
1.6
|
The Company intends to use the net proceeds from the sale of the Securities, after deduction for legal and other miscellaneous costs related to the sale of the Securities, as working capital to market the Product internationally. The business contemplated by the Company may require additional financings in addition to the proceeds from the sale of the Securities. There can be no assurances that such additional financings will be obtained on terms favorable to the Company or at all, or that the transactions contemplated by these agreements will ever result in revenues to the Company. The Purchaser acknowledged that, even upon the
|
|
purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of its goals. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described concerning the Company.
|
|
1.7
|
The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
|
|
1.8
|
The authorized capital of the Company is One Hundred Million (100,000,000) Shares of Common Stock and Ten Million (10,000,000) Shares of Preferred Stock. As of August 13, 2015, the Company had issued and outstanding approximately One Million (1,000,000) Shares of Common Stock and Zero (0) Shares of Preferred Stock.
|
|
2.1
|
The Purchaser represents and warrants that it comes within one of the categories of “Accredited Investor” marked below, or is not a “U.S. Person” and is purchasing in an “offshore transaction”, and the Purchaser has truthfully initialed the category which applies to the undersigned and has truthfully set forth the factual basis or reason the Purchaser comes within that category. ALL INFORMATION IN RESPONSE TO THIS PARAGRAPH WILL BE KEPT STRICTLY CONFIDENTIAL. The Purchaser agrees to furnish any additional information which the Company deems necessary in order to verify the answers set forth below.
|
|
Accredited Investor (check one below)
|
Category I
|
The Purchaser is an individual (not a partnership, corporation) whose individual net worth, or joint net worth with the Purchaser’s spouse, presently exceeds $1,000,000.
|
Category II
|
The Purchaser is an individual (not a partnership, corporation) who had an individual income in excess of $200,000 in the two most recent years, or joint income with the Purchaser’s spouse in excess of $300,000 in the two most recent years, and has a reasonable expectation of reaching the same income level in the current year.
|
Category III _____
|
The Purchaser is a bank as defined in Section 3(a)(2) of the Securities Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940, or a business development company as defined in Section 2(a)(48) of that Securities Act; Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by the plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons who are “Accredited Investors” as defined in Section 230.501(a) of the Securities Act.
|
Category IV _____
|
The Purchaser is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.
|
Category V _____
|
The Purchaser is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.
|
Category VII
X
|
The Purchaser is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units offered, whose purchase is directed by a “Sophisticated Person” as described in Section 230.506(b)(2)(ii) of the Securities Act.
|
Category VIII _____
|
The Purchaser is an entity in which all of the equity owners are “accredited investors” as defined in Section 230.501(a) of the Act.
|
Category IX _____
|
The Purchaser is
not
a “
U.S. Person
” (as defined in Rule 902(k) of Regulation S) nor is it purchasing the Units on behalf of a U.S. Person, and is purchasing the Units in an “
offshore transaction
” (as defined in Rule 902(h) of Regulation S).
|
2.2
|
The Purchaser has been given full and complete access to information regarding the Company and has utilized such access to the undersigned’s satisfaction for the purpose of obtaining such information regarding the Company as the undersigned has reasonably requested; and, particularly, the undersigned has been given reasonable opportunity to ask questions of, and receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Units and to obtain any additional information, to the extent reasonably available;
|
2.3
|
The principal amount of the Units subscribed for by the Purchaser, as set forth in Section 14 hereof does not exceed ten percent (10%) of the Purchaser’s net worth.
|
2.4
|
The Purchaser has either a pre-existing personal or business relationship with the Company and its officers, directors and controlling persons or by reason of its business or financial expertise has the capacity to protect its own interest in connection with this transaction.
|
2.5
|
The Purchaser is acquiring the Units solely for the Purchasers own account for investment purposes as a principal and not with a view to resale or distribution of all or any part thereof. The Purchaser is aware that there are legal and practical limits on the Purchaser’s ability to sell or dispose of the Units, and, therefore, that the Purchaser must bear the economic risk of the investment for an indefinite period of time.
|
2.6
|
The Purchaser has reached the age of majority (if an individual) according to the laws of the state in which it resides and has adequate means of providing for the Purchaser’s current needs and possible personal contingencies and has need for only limited liquidity of this investment, The Purchaser’s commitment to liquid investments is reasonable in relation to the Purchaser’s net worth.
|
2.7
|
The Purchaser understands that the Units are being offered and sold in reliance on specific exemptions from the registration requirements of federal and state law and that the representations, warranties, agreements, acknowledgments and understandings set forth herein are required in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire such Units.
|
2.8
|
The Purchaser is not relying on the Company with respect to the tax and other economic considerations relating to this investment. In regard to such considerations, the Purchaser has relied on the advice of, or has consulted with, its own personal tax, investment or other advisors.
|
2.9
|
The Purchaser, if executing this Subscription Agreement in a representative or fiduciary capacity, has full power and authority to execute and deliver this Subscription Agreement and each other document included as an exhibit to this Subscription Agreement for which a signature is required in such capacity and on behalf of the subscribing individual, partnership, trust, estate, corporation or other entity for whom or which the Purchaser is executing this Subscription Agreement.
|
2.10
|
If the Purchaser is a corporation, the Purchaser is duly and validly organized, validly existing and in good tax and corporate standing as a corporation under the laws of the jurisdiction of its incorporation with full power and authority to purchase the Units to be purchased by it and to execute and deliver this Subscription Agreement.
|
2.11
|
If the Purchaser is a partnership, the representations, warranties, agreements and understandings set forth above are true with respect to all partners in the Purchaser (and if any such partner is itself a partnership, all persons holding an interest in such partnership, directly or indirectly, including through one or more partnerships), and the person executing this Subscription Agreement has made due inquiry to determine the truthfulness of the representations and warranties made hereby.
|
2.12
|
If the Purchaser is purchasing in a representative or fiduciary capacity, the above representations and warranties shall be deemed to have been made on behalf of the person or persons for whom the Purchaser is so purchasing.
|
2.13
|
Within five (5) days after receipt of a request from the Company, the Purchaser will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject.
|
2.14
|
The Purchaser or its professional advisor has been granted the opportunity to conduct a full and fair examination of the records, documents and files of the Company, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of this offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or its professional advisor deems necessary to verify the accuracy of the information received.
|
2.15
|
The Units were not offered to the Purchaser through an advertisement in printed media of general and regular circulation, radio or television.
|
2.16
|
The Purchaser has relied completely on the advice of, or has consulted with, its own personal tax, investment, legal or other advisors and has not relied on the Company or any of its affiliates, officers, directors, attorneys, accountants or any affiliates of any thereof and each other person, if any, who controls any thereof, within the meaning of Section 15 of the Securities Act, except to the extent such advisors shall be deemed to be as such.
|
2.17
|
If the Purchaser has consulted a purchaser representative (“Purchaser Representative”) to evaluate the merits and risks of the undersigned’s investment in the Units, the Purchaser Representative has completed a Purchaser Representative Questionnaire in the form supplied to him. The Purchaser or the Purchaser Representative has been granted the opportunity to examine documents and files, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of the Offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or the Purchaser Representative deems necessary to verify the accuracy of the information received.
|
2.18
|
The Purchaser either alone or with its Purchaser Representative has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment.
|
|
3.1
|
The Purchaser recognizes that investment in the Company involves certain risks, including the potential loss by the Purchaser of interest on their investment herein, and the Purchaser has taken full cognizance of and understands all of the risk factors related to the purchase of the Units. The Purchaser recognizes that the information set forth in this Subscription Agreement does not purport to contain all the information, which would be contained in a registration statement under the Securities Act.
|
|
3.2
|
No federal or state agency has passed upon the Units or made any finding or determination as to the fairness of this transaction.
|
|
3.3
|
The Units have not been registered under the Securities Act or any applicable state securities laws by reason of exemptions from the registration requirements of the Securities Act and such laws, and may not be sold, pledged, assigned or otherwise disposed of in the absence of an effective registration statement for the Units and any component thereof under the Securities Act or unless an exemption from such registration is available. Provided there is a market for the Company’s Units, the Units will not be eligible for sale for a period of six months from the date of purchase pursuant to the terms of Rule 144 of the Securities Act of 1933, unless registered pursuant to the terms and conditions of an effective registration statement filed with the Securities and Exchange Commission.
|
|
3.4
|
There currently is limited liquidity in the market for the Company’s Units. An active and liquid market for the Company's Units may not develop. Even if an active and liquid market develops for Bollente International, Inc. Units, the market value of Units may be adversely affected by market volatility. Substantial sales of the Company's Units could cause the price of its Units to decrease.
|
|
3.6
|
The Company may refuse to register any transfer of the Units not made in accordance with the Securities Act and the rules and regulations promulgated thereunder.
|
|
14.1
|
Number of Units subscribed for:
|
Four (4)
|
Units against payment in cash in the amount of
$
|
100,000
|
, representing
$25,000
per Unit, each representing 0.625% of Gross Margin.
|
|
|
Email Address
|
|
|
Telephone Number
|
Title
|
Tax Identification or Social Security Number
|
|
Duane L. Femrite
|
Name Typed or Printed
|
Email Address
|
|
(
|
)
|
Email Address
|
Telephone Number
|
|
Signature
|
1.
|
DEFINITIONS
|
1.1.
|
Definitions of capitalized terms used in this Royalty Agreement shall have the meanings given in Appendix A or elsewhere in the Royalty Agreement.
|
2.
|
ROYALTY PAYMENTS
|
2.1.
|
Royalties.
BII shall pay BII royalties on Gross Margins during the Royalty Term to Recipients according to the following rates:
|
a)
|
0.625% of Gross Margin for each $25,000 paid to BII by Recipient; and
|
b)
|
25% of Gross Margins for a maximum of $1 million paid to BII.
|
2.2.
|
Manner of Payment.
Royalty payments due under this Section 2 are due 30 days after the end of each Accounting Period and shall be paid in United States dollars.
|
2.3.
|
Termination of Royalty Obligations.
This royalty payment obligation shall terminate on the expiration of the Royalty Term.
|
3.
|
REPORTS AND PAYMENTS
|
3.1.
|
Recordkeeping
. BII shall, and shall obligate its Affiliates to, keep full and accurate records (prepared in accordance with United States Generally Accepted Accounting Principles consistently applied) of BII’s or its Affiliates’ sales of Products and such other matters as may affect the determination of any amount payable to Recipients hereunder, in sufficient detail to reasonably enable Recipient or Recipients’ representatives to determine any amounts payable to BII under this Royalty Agreement. Such records shall be kept at BII’s or its Affiliates’ principal place of business and, with all necessary supporting data, books and ledgers, shall, during all reasonable times for the 2 years following the end of the Accounting Period to which each shall pertain, be open for inspection at reasonable times during normal business hours (and upon at least 30 days prior written notice) no more than one time per calendar year by an independent audit firm selected by Recipients (reasonably acceptable to BII) for the purpose of verifying the accuracy of any payment report required under this Royalty Agreement or any amount payable hereunder. The results of each inspection shall be binding on both BII and Recipients absent mathematical error. BII shall bear all costs associated with such inspections.
|
3.2.
|
Reports
. Within 30 days after the end of each Accounting Period, BII shall deliver to Recipients a true and accurate report, giving such particulars of the business conducted by BII or its Affiliates during the preceding 4 Accounting Periods under this Royalty Agreement as are reasonably pertinent to an accounting for any royalty or other payments hereunder, along with the amount of royalties payable for such Accounting Period. If no payments are due, it shall be so reported.
|
3.3.
|
Accounting
. With each quarterly payment, BII shall deliver to Recipients the report described in Section 3.2, which shall include, but not be limited to, the following information:
|
a)
|
Quantity of each Product sold by BII or its Affiliates during the applicable Accounting Period;
|
b)
|
The monetary amount, in the national currency of such country, of such sales;
|
c)
|
Actual Gross Margins and Net Sales for each Product (by country);
|
d)
|
The currency conversion rate used and U.S. dollar-equivalent of such sales; and
|
e)
|
Total royalties payable to Recipients including a calculation thereof.
|
4.
|
TERMINATION
|
4.1.
|
Generally
. This Royalty Agreement shall become effective on the Execution Date and shall expire on the expiration of the Royalty Term.
|
4.2.
|
Change in Control, Redemption
. If Bollente Companies, Inc. or BII enter into any agreement resulting in a change in control due to merger or acquisition of greater than 50% of its voting equity, during the Royalty Term, the parties agree as follows:
|
4.3.
|
Post-Expiration Obligations
. Upon the expiration of this Royalty Agreement, BII shall submit all reports required by Section 3 and pay Recipients all royalties due or accrued on the sale of Products up to and including the date of expiration.
|
4.4.
|
Survival.
Upon the expiration of this Royalty Agreement, nothing herein shall be construed to release either party from any obligation that matured prior to the date of such expiration and Section 5 shall survive any such expiration.
|
5.
|
MISCELLANEOUS
|
5.1.
|
Entire Agreement
. This Royalty Agreement (together with the Subscription and Purchase Agreement) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, that may have related in any way to the subject matter hereof. The appendices identified in this Royalty Agreement are incorporated herein by reference and made a part hereof.
|
5.2.
|
Resale
. A Recipient shall have the right to accept offers to buy Recipient’s future rights to Royalty Payments under this Royalty Agreement, provided that such offer and sale are previously approved by BII.
|
5.3.
|
Amendments and Waivers
. No amendment or waiver of any provision of this Royalty Agreement shall be valid unless the same shall be in writing and signed by each Party. No waiver by any Party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
|
5.4.
|
Succession and Assignment.
This Royalty Agreement and all of the provisions hereof shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and permitted assigns. BII may not assign this Royalty Agreement or any of its rights or obligations hereunder without the prior written consent of a majority of Recipients. Recipients may not assign this Royalty Agreement and any of its rights or obligations hereunder without the prior consent of BII.
|
5.5.
|
No Third-Party Beneficiaries
. This Royalty Agreement shall not confer any rights or remedies upon any party other than the Parties and their respective successors and permitted assigns.
|
5.6.
|
Governing Law
. This Royalty Agreement shall be governed by and construed in accordance with the domestic Laws of the State of Arizona, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Arizona or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Arizona. The Recipients agrees that venue for any action, suit, litigation or other proceeding arising out of or in any way relating to this Royalty Agreement, or the matters referred to therein, shall be in Maricopa County, Arizona The Recipients hereby waives and agrees not to assert by way of motion, as a defense, or otherwise, in any suit, action or proceeding, any claim that (A) the suit, action or proceeding is brought in an inconvenient forum or (B) the venue of the suit, action or proceeding is improper.
|
5.7.
|
Severability
. If any provision in this Royalty Agreement shall be invalid, illegal, or unenforceable in any jurisdiction, the validity, legality, and enforceability of the remaining provisions, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
|
5.8.
|
Expenses
. Except as otherwise specifically provided in this Royalty Agreement, each Party will bear its own expenses (including fees and disbursements of legal counsel, accountants, financial advisors and other professional advisors) incurred in connection with the preparation, negotiation, execution, delivery and performance of this Royalty Agreement.
|
5.9.
|
Notices.
All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, mailed or delivered to each party at the respective addresses of the parties as set forth in the Subscription and Purchase Agreement, or at such other address or facsimile number as the Recipients shall have furnished to BII in writing.
|
5.10.
|
Construction
. In the construction of this Royalty Agreement, the rule of construction that a document is to be construed most strictly against a party who prepared the same shall not be applied, it being agreed that all parties have participated in the preparation of the final form of this Royalty Agreement.
|
5.11.
|
Counterparts
. This Royalty Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. This Royalty Agreement may be executed by facsimile, photo or electronic signature and such facsimile, photo or electronic signature shall constitute an original for all purposes.
|
PURCHASER
Duane L. Femrite Revocable Family Trust
By:
/S/ Duane L. Femrite
Name:
Duane L. Femrite
Title:
Trustee
Date: September 1. 2015
|
BOLLENTE INTERNATIONAL, INC., a Nevada corporation
By:
/S/ Robertson J. Orr
Name:
Robertson J. Orr
Title:
President
Date:
September 1, 2015
|
|
1.1
|
The Purchaser, intending to be legally bound hereby, hereby tenders this subscription for the purchase of
|
Two (2)
|
Units (“Units”) of
Bollente International, Inc.
, a Nevada corporation, at a price of $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company
on the terms and conditions set forth in subparagraph 1.4 below.
|
|
|
1.2
|
The Purchaser will deliver payment in cash directly to Bollente International, Inc together with completed copies of all applicable Subscription Documents.
|
|
1.3
|
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAW OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE ARE SPECULATIVE SECURITIES.
|
|
1.4
|
The Company has agreed to sell up to 25% of its prospective gross margin (“Gross Margin”) in exchange for $1 million, in increments of 40 Units, at $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company pursuant to the terms and conditions of the “Royalty Agreement” attached hereto. The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
|
|
1.5
|
The Company has entered into an agreement with Bollente Companies, Inc. to sell, internationally (outside the continental United States) trutankless®, (the “Product”) an electric tankless water heater which is more efficient than traditional water heaters, using less water and less energy, while simultaneously providing an endless supply of hot water. Investors will have the opportunity to review our business plan; copies of which are available from the Company. The Purchaser acknowledges that, even upon the purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of the goals described in the Bollente Companies’ business plan. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described in the Company’s business plan and other relevant documents.
|
|
1.6
|
The Company intends to use the net proceeds from the sale of the Securities, after deduction for legal and other miscellaneous costs related to the sale of the Securities, as working capital to market the Product internationally. The business contemplated by the Company may require additional financings in addition to the proceeds from the sale of the Securities. There can be no assurances that such additional financings will be obtained on terms favorable to the Company or at all, or that the transactions contemplated by these agreements will ever result in revenues to the Company. The Purchaser acknowledged that, even upon the
|
|
purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of its goals. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described concerning the Company.
|
|
1.7
|
The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
|
|
1.8
|
The authorized capital of the Company is One Hundred Million (100,000,000) Shares of Common Stock and Ten Million (10,000,000) Shares of Preferred Stock. As of August 13, 2015, the Company had issued and outstanding approximately One Million (1,000,000) Shares of Common Stock and Zero (0) Shares of Preferred Stock.
|
|
2.1
|
The Purchaser represents and warrants that it comes within one of the categories of “Accredited Investor” marked below, or is not a “U.S. Person” and is purchasing in an “offshore transaction”, and the Purchaser has truthfully initialed the category which applies to the undersigned and has truthfully set forth the factual basis or reason the Purchaser comes within that category. ALL INFORMATION IN RESPONSE TO THIS PARAGRAPH WILL BE KEPT STRICTLY CONFIDENTIAL. The Purchaser agrees to furnish any additional information which the Company deems necessary in order to verify the answers set forth below.
|
|
Accredited Investor (check one below)
|
Category I
X
|
The Purchaser is an individual (not a partnership, corporation) whose individual net worth, or joint net worth with the Purchaser’s spouse, presently exceeds $1,000,000.
|
Category II _____
|
The Purchaser is an individual (not a partnership, corporation) who had an individual income in excess of $200,000 in the two most recent years, or joint income with the Purchaser’s spouse in excess of $300,000 in the two most recent years, and has a reasonable expectation of reaching the same income level in the current year.
|
Category III _____
|
The Purchaser is a bank as defined in Section 3(a)(2) of the Securities Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940, or a business development company as defined in Section 2(a)(48) of that Securities Act; Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by the plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons who are “Accredited Investors” as defined in Section 230.501(a) of the Securities Act.
|
Category IV _____
|
The Purchaser is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.
|
Category V _____
|
The Purchaser is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.
|
Category VII _____
|
The Purchaser is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units offered, whose purchase is directed by a “Sophisticated Person” as described in Section 230.506(b)(2)(ii) of the Securities Act.
|
Category VIII _____
|
The Purchaser is an entity in which all of the equity owners are “accredited investors” as defined in Section 230.501(a) of the Act.
|
Category IX _____
|
The Purchaser is
not
a “
U.S. Person
” (as defined in Rule 902(k) of Regulation S) nor is it purchasing the Units on behalf of a U.S. Person, and is purchasing the Units in an “
offshore transaction
” (as defined in Rule 902(h) of Regulation S).
|
2.2
|
The Purchaser has been given full and complete access to information regarding the Company and has utilized such access to the undersigned’s satisfaction for the purpose of obtaining such information regarding the Company as the undersigned has reasonably requested; and, particularly, the undersigned has been given reasonable opportunity to ask questions of, and receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Units and to obtain any additional information, to the extent reasonably available;
|
2.3
|
The principal amount of the Units subscribed for by the Purchaser, as set forth in Section 14 hereof does not exceed ten percent (10%) of the Purchaser’s net worth.
|
2.4
|
The Purchaser has either a pre-existing personal or business relationship with the Company and its officers, directors and controlling persons or by reason of its business or financial expertise has the capacity to protect its own interest in connection with this transaction.
|
2.5
|
The Purchaser is acquiring the Units solely for the Purchasers own account for investment purposes as a principal and not with a view to resale or distribution of all or any part thereof. The Purchaser is aware that there are legal and practical limits on the Purchaser’s ability to sell or dispose of the Units, and, therefore, that the Purchaser must bear the economic risk of the investment for an indefinite period of time.
|
2.6
|
The Purchaser has reached the age of majority (if an individual) according to the laws of the state in which it resides and has adequate means of providing for the Purchaser’s current needs and possible personal contingencies and has need for only limited liquidity of this investment, The Purchaser’s commitment to liquid investments is reasonable in relation to the Purchaser’s net worth.
|
2.7
|
The Purchaser understands that the Units are being offered and sold in reliance on specific exemptions from the registration requirements of federal and state law and that the representations, warranties, agreements, acknowledgments and understandings set forth herein are required in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire such Units.
|
2.8
|
The Purchaser is not relying on the Company with respect to the tax and other economic considerations relating to this investment. In regard to such considerations, the Purchaser has relied on the advice of, or has consulted with, its own personal tax, investment or other advisors.
|
2.9
|
The Purchaser, if executing this Subscription Agreement in a representative or fiduciary capacity, has full power and authority to execute and deliver this Subscription Agreement and each other document included as an exhibit to this Subscription Agreement for which a signature is required in such capacity and on behalf of the subscribing individual, partnership, trust, estate, corporation or other entity for whom or which the Purchaser is executing this Subscription Agreement.
|
2.10
|
If the Purchaser is a corporation, the Purchaser is duly and validly organized, validly existing and in good tax and corporate standing as a corporation under the laws of the jurisdiction of its incorporation with full power and authority to purchase the Units to be purchased by it and to execute and deliver this Subscription Agreement.
|
2.11
|
If the Purchaser is a partnership, the representations, warranties, agreements and understandings set forth above are true with respect to all partners in the Purchaser (and if any such partner is itself a partnership, all persons holding an interest in such partnership, directly or indirectly, including through one or more partnerships), and the person executing this Subscription Agreement has made due inquiry to determine the truthfulness of the representations and warranties made hereby.
|
2.12
|
If the Purchaser is purchasing in a representative or fiduciary capacity, the above representations and warranties shall be deemed to have been made on behalf of the person or persons for whom the Purchaser is so purchasing.
|
2.13
|
Within five (5) days after receipt of a request from the Company, the Purchaser will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject.
|
2.14
|
The Purchaser or its professional advisor has been granted the opportunity to conduct a full and fair examination of the records, documents and files of the Company, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of this offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or its professional advisor deems necessary to verify the accuracy of the information received.
|
2.15
|
The Units were not offered to the Purchaser through an advertisement in printed media of general and regular circulation, radio or television.
|
2.16
|
The Purchaser has relied completely on the advice of, or has consulted with, its own personal tax, investment, legal or other advisors and has not relied on the Company or any of its affiliates, officers, directors, attorneys, accountants or any affiliates of any thereof and each other person, if any, who controls any thereof, within the meaning of Section 15 of the Securities Act, except to the extent such advisors shall be deemed to be as such.
|
2.17
|
If the Purchaser has consulted a purchaser representative (“Purchaser Representative”) to evaluate the merits and risks of the undersigned’s investment in the Units, the Purchaser Representative has completed a Purchaser Representative Questionnaire in the form supplied to him. The Purchaser or the Purchaser Representative has been granted the opportunity to examine documents and files, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of the Offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or the Purchaser Representative deems necessary to verify the accuracy of the information received.
|
2.18
|
The Purchaser either alone or with its Purchaser Representative has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment.
|
|
3.1
|
The Purchaser recognizes that investment in the Company involves certain risks, including the potential loss by the Purchaser of interest on their investment herein, and the Purchaser has taken full cognizance of and understands all of the risk factors related to the purchase of the Units. The Purchaser recognizes that the information set forth in this Subscription Agreement does not purport to contain all the information, which would be contained in a registration statement under the Securities Act.
|
|
3.2
|
No federal or state agency has passed upon the Units or made any finding or determination as to the fairness of this transaction.
|
|
3.3
|
The Units have not been registered under the Securities Act or any applicable state securities laws by reason of exemptions from the registration requirements of the Securities Act and such laws, and may not be sold, pledged, assigned or otherwise disposed of in the absence of an effective registration statement for the Units and any component thereof under the Securities Act or unless an exemption from such registration is available. Provided there is a market for the Company’s Units, the Units will not be eligible for sale for a period of six months from the date of purchase pursuant to the terms of Rule 144 of the Securities Act of 1933, unless registered pursuant to the terms and conditions of an effective registration statement filed with the Securities and Exchange Commission.
|
|
3.4
|
There currently is limited liquidity in the market for the Company’s Units. An active and liquid market for the Company's Units may not develop. Even if an active and liquid market develops for Bollente International, Inc. Units, the market value of Units may be adversely affected by market volatility. Substantial sales of the Company's Units could cause the price of its Units to decrease.
|
|
3.6
|
The Company may refuse to register any transfer of the Units not made in accordance with the Securities Act and the rules and regulations promulgated thereunder.
|
|
14.1
|
Number of Units subscribed for:
|
Two (2)
|
Units against payment in cash in the amount of
$
|
50,000
|
, representing
$25,000
per Unit, each representing 0.625% of Gross Margin.
|
|
|
Email Address
|
|
|
Telephone Number
|
Title
|
Tax Identification or Social Security Number
|
|
Name Typed or Printed
|
Email Address
|
|
(
|
)
|
Email Address
|
Telephone Number
|
|
Signature
|
1.
|
DEFINITIONS
|
1.1.
|
Definitions of capitalized terms used in this Royalty Agreement shall have the meanings given in Appendix A or elsewhere in the Royalty Agreement.
|
2.
|
ROYALTY PAYMENTS
|
2.1.
|
Royalties.
BII shall pay BII royalties on Gross Margins during the Royalty Term to Recipients according to the following rates:
|
a)
|
0.625% of Gross Margin for each $25,000 paid to BII by Recipient; and
|
b)
|
25% of Gross Margins for a maximum of $1 million paid to BII.
|
2.2.
|
Manner of Payment.
Royalty payments due under this Section 2 are due 30 days after the end of each Accounting Period and shall be paid in United States dollars.
|
2.3.
|
Termination of Royalty Obligations.
This royalty payment obligation shall terminate on the expiration of the Royalty Term.
|
3.
|
REPORTS AND PAYMENTS
|
3.1.
|
Recordkeeping
. BII shall, and shall obligate its Affiliates to, keep full and accurate records (prepared in accordance with United States Generally Accepted Accounting Principles consistently applied) of BII’s or its Affiliates’ sales of Products and such other matters as may affect the determination of any amount payable to Recipients hereunder, in sufficient detail to reasonably enable Recipient or Recipients’ representatives to determine any amounts payable to BII under this Royalty Agreement. Such records shall be kept at BII’s or its Affiliates’ principal place of business and, with all necessary supporting data, books and ledgers, shall, during all reasonable times for the 2 years following the end of the Accounting Period to which each shall pertain, be open for inspection at reasonable times during normal business hours (and upon at least 30 days prior written notice) no more than one time per calendar year by an independent audit firm selected by Recipients (reasonably acceptable to BII) for the purpose of verifying the accuracy of any payment report required under this Royalty Agreement or any amount payable hereunder. The results of each inspection shall be binding on both BII and Recipients absent mathematical error. BII shall bear all costs associated with such inspections.
|
3.2.
|
Reports
. Within 30 days after the end of each Accounting Period, BII shall deliver to Recipients a true and accurate report, giving such particulars of the business conducted by BII or its Affiliates during the preceding 4 Accounting Periods under this Royalty Agreement as are reasonably pertinent to an accounting for any royalty or other payments hereunder, along with the amount of royalties payable for such Accounting Period. If no payments are due, it shall be so reported.
|
3.3.
|
Accounting
. With each quarterly payment, BII shall deliver to Recipients the report described in Section 3.2, which shall include, but not be limited to, the following information:
|
a)
|
Quantity of each Product sold by BII or its Affiliates during the applicable Accounting Period;
|
b)
|
The monetary amount, in the national currency of such country, of such sales;
|
c)
|
Actual Gross Margins and Net Sales for each Product (by country);
|
d)
|
The currency conversion rate used and U.S. dollar-equivalent of such sales; and
|
e)
|
Total royalties payable to Recipients including a calculation thereof.
|
4.
|
TERMINATION
|
4.1.
|
Generally
. This Royalty Agreement shall become effective on the Execution Date and shall expire on the expiration of the Royalty Term.
|
4.2.
|
Change in Control, Redemption
. If Bollente Companies, Inc. or BII enter into any agreement resulting in a change in control due to merger or acquisition of greater than 50% of its voting equity, during the Royalty Term, the parties agree as follows:
|
4.3.
|
Post-Expiration Obligations
. Upon the expiration of this Royalty Agreement, BII shall submit all reports required by Section 3 and pay Recipients all royalties due or accrued on the sale of Products up to and including the date of expiration.
|
4.4.
|
Survival.
Upon the expiration of this Royalty Agreement, nothing herein shall be construed to release either party from any obligation that matured prior to the date of such expiration and Section 5 shall survive any such expiration.
|
5.
|
MISCELLANEOUS
|
5.1.
|
Entire Agreement
. This Royalty Agreement (together with the Subscription and Purchase Agreement) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, that may have related in any way to the subject matter hereof. The appendices identified in this Royalty Agreement are incorporated herein by reference and made a part hereof.
|
5.2.
|
Resale
. A Recipient shall have the right to accept offers to buy Recipient’s future rights to Royalty Payments under this Royalty Agreement, provided that such offer and sale are previously approved by BII.
|
5.3.
|
Amendments and Waivers
. No amendment or waiver of any provision of this Royalty Agreement shall be valid unless the same shall be in writing and signed by each Party. No waiver by any Party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
|
5.4.
|
Succession and Assignment.
This Royalty Agreement and all of the provisions hereof shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and permitted assigns. BII may not assign this Royalty Agreement or any of its rights or obligations hereunder without the prior written consent of a majority of Recipients. Recipients may not assign this Royalty Agreement and any of its rights or obligations hereunder without the prior consent of BII.
|
5.5.
|
No Third-Party Beneficiaries
. This Royalty Agreement shall not confer any rights or remedies upon any party other than the Parties and their respective successors and permitted assigns.
|
5.6.
|
Governing Law
. This Royalty Agreement shall be governed by and construed in accordance with the domestic Laws of the State of Arizona, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Arizona or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Arizona. The Recipients agrees that venue for any action, suit, litigation or other proceeding arising out of or in any way relating to this Royalty Agreement, or the matters referred to therein, shall be in Maricopa County, Arizona The Recipients hereby waives and agrees not to assert by way of motion, as a defense, or otherwise, in any suit, action or proceeding, any claim that (A) the suit, action or proceeding is brought in an inconvenient forum or (B) the venue of the suit, action or proceeding is improper.
|
5.7.
|
Severability
. If any provision in this Royalty Agreement shall be invalid, illegal, or unenforceable in any jurisdiction, the validity, legality, and enforceability of the remaining provisions, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
|
5.8.
|
Expenses
. Except as otherwise specifically provided in this Royalty Agreement, each Party will bear its own expenses (including fees and disbursements of legal counsel, accountants, financial advisors and other professional advisors) incurred in connection with the preparation, negotiation, execution, delivery and performance of this Royalty Agreement.
|
5.9.
|
Notices.
All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, mailed or delivered to each party at the respective addresses of the parties as set forth in the Subscription and Purchase Agreement, or at such other address or facsimile number as the Recipients shall have furnished to BII in writing.
|
5.10.
|
Construction
. In the construction of this Royalty Agreement, the rule of construction that a document is to be construed most strictly against a party who prepared the same shall not be applied, it being agreed that all parties have participated in the preparation of the final form of this Royalty Agreement.
|
5.11.
|
Counterparts
. This Royalty Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. This Royalty Agreement may be executed by facsimile, photo or electronic signature and such facsimile, photo or electronic signature shall constitute an original for all purposes.
|
PURCHASER
By:
/S/ Jon F. Schutz
Name:
Jon F. Schutz
Title: _________________________
Date: September 1. 2015
|
BOLLENTE INTERNATIONAL, INC., a Nevada corporation
By:
/S/ Robertson J. Orr
Name:
Robertson J. Orr
Title:
President
Date:
September 1, 2015
|
|
1.1
|
The Purchaser, intending to be legally bound hereby, hereby tenders this subscription for the purchase of
|
One (1)
|
Units (“Units”) of
Bollente International, Inc.
, a Nevada corporation, at a price of $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company
on the terms and conditions set forth in subparagraph 1.4 below.
|
|
|
1.2
|
The Purchaser will deliver payment in cash directly to Bollente International, Inc together with completed copies of all applicable Subscription Documents.
|
|
1.3
|
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAW OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE ARE SPECULATIVE SECURITIES.
|
|
1.4
|
The Company has agreed to sell up to 25% of its prospective gross margin (“Gross Margin”) in exchange for $1 million, in increments of 40 Units, at $25,000 per Unit, each Unit representing 0.625% royalty interest in the gross profit margin of the Company pursuant to the terms and conditions of the “Royalty Agreement” attached hereto. The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
|
|
1.5
|
The Company has entered into an agreement with Bollente Companies, Inc. to sell, internationally (outside the continental United States) trutankless®, (the “Product”) an electric tankless water heater which is more efficient than traditional water heaters, using less water and less energy, while simultaneously providing an endless supply of hot water. Investors will have the opportunity to review our business plan; copies of which are available from the Company. The Purchaser acknowledges that, even upon the purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of the goals described in the Bollente Companies’ business plan. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described in the Company’s business plan and other relevant documents.
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1.6
|
The Company intends to use the net proceeds from the sale of the Securities, after deduction for legal and other miscellaneous costs related to the sale of the Securities, as working capital to market the Product internationally. The business contemplated by the Company may require additional financings in addition to the proceeds from the sale of the Securities. There can be no assurances that such additional financings will be obtained on terms favorable to the Company or at all, or that the transactions contemplated by these agreements will ever result in revenues to the Company. The Purchaser acknowledged that, even upon the
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purchase of the Securities, there can be no assurances that the Company will be able to accomplish any of its goals. The Purchaser assumes all the obligations and risks of investigating and conducting due diligence on the matters described concerning the Company.
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1.7
|
The Purchaser acknowledges that an investment in the Units is extremely speculative and that there is a substantial likelihood that the investor will lose their entire investment.
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1.8
|
The authorized capital of the Company is One Hundred Million (100,000,000) Shares of Common Stock and Ten Million (10,000,000) Shares of Preferred Stock. As of August 13, 2015, the Company had issued and outstanding approximately One Million (1,000,000) Shares of Common Stock and Zero (0) Shares of Preferred Stock.
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2.1
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The Purchaser represents and warrants that it comes within one of the categories of “Accredited Investor” marked below, or is not a “U.S. Person” and is purchasing in an “offshore transaction”, and the Purchaser has truthfully initialed the category which applies to the undersigned and has truthfully set forth the factual basis or reason the Purchaser comes within that category. ALL INFORMATION IN RESPONSE TO THIS PARAGRAPH WILL BE KEPT STRICTLY CONFIDENTIAL. The Purchaser agrees to furnish any additional information which the Company deems necessary in order to verify the answers set forth below.
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Accredited Investor (check one below)
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Category I
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The Purchaser is an individual (not a partnership, corporation) whose individual net worth, or joint net worth with the Purchaser’s spouse, presently exceeds $1,000,000.
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Category II
X
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The Purchaser is an individual (not a partnership, corporation) who had an individual income in excess of $200,000 in the two most recent years, or joint income with the Purchaser’s spouse in excess of $300,000 in the two most recent years, and has a reasonable expectation of reaching the same income level in the current year.
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Category III _____
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The Purchaser is a bank as defined in Section 3(a)(2) of the Securities Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940, or a business development company as defined in Section 2(a)(48) of that Securities Act; Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by the plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons who are “Accredited Investors” as defined in Section 230.501(a) of the Securities Act.
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Category IV _____
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The Purchaser is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.
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Category V _____
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The Purchaser is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.
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Category VII _____
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The Purchaser is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units offered, whose purchase is directed by a “Sophisticated Person” as described in Section 230.506(b)(2)(ii) of the Securities Act.
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Category VIII _____
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The Purchaser is an entity in which all of the equity owners are “accredited investors” as defined in Section 230.501(a) of the Act.
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Category IX _____
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The Purchaser is
not
a “
U.S. Person
” (as defined in Rule 902(k) of Regulation S) nor is it purchasing the Units on behalf of a U.S. Person, and is purchasing the Units in an “
offshore transaction
” (as defined in Rule 902(h) of Regulation S).
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2.2
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The Purchaser has been given full and complete access to information regarding the Company and has utilized such access to the undersigned’s satisfaction for the purpose of obtaining such information regarding the Company as the undersigned has reasonably requested; and, particularly, the undersigned has been given reasonable opportunity to ask questions of, and receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Units and to obtain any additional information, to the extent reasonably available;
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2.3
|
The principal amount of the Units subscribed for by the Purchaser, as set forth in Section 14 hereof does not exceed ten percent (10%) of the Purchaser’s net worth.
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2.4
|
The Purchaser has either a pre-existing personal or business relationship with the Company and its officers, directors and controlling persons or by reason of its business or financial expertise has the capacity to protect its own interest in connection with this transaction.
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2.5
|
The Purchaser is acquiring the Units solely for the Purchasers own account for investment purposes as a principal and not with a view to resale or distribution of all or any part thereof. The Purchaser is aware that there are legal and practical limits on the Purchaser’s ability to sell or dispose of the Units, and, therefore, that the Purchaser must bear the economic risk of the investment for an indefinite period of time.
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2.6
|
The Purchaser has reached the age of majority (if an individual) according to the laws of the state in which it resides and has adequate means of providing for the Purchaser’s current needs and possible personal contingencies and has need for only limited liquidity of this investment, The Purchaser’s commitment to liquid investments is reasonable in relation to the Purchaser’s net worth.
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2.7
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The Purchaser understands that the Units are being offered and sold in reliance on specific exemptions from the registration requirements of federal and state law and that the representations, warranties, agreements, acknowledgments and understandings set forth herein are required in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire such Units.
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2.8
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The Purchaser is not relying on the Company with respect to the tax and other economic considerations relating to this investment. In regard to such considerations, the Purchaser has relied on the advice of, or has consulted with, its own personal tax, investment or other advisors.
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2.9
|
The Purchaser, if executing this Subscription Agreement in a representative or fiduciary capacity, has full power and authority to execute and deliver this Subscription Agreement and each other document included as an exhibit to this Subscription Agreement for which a signature is required in such capacity and on behalf of the subscribing individual, partnership, trust, estate, corporation or other entity for whom or which the Purchaser is executing this Subscription Agreement.
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2.10
|
If the Purchaser is a corporation, the Purchaser is duly and validly organized, validly existing and in good tax and corporate standing as a corporation under the laws of the jurisdiction of its incorporation with full power and authority to purchase the Units to be purchased by it and to execute and deliver this Subscription Agreement.
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2.11
|
If the Purchaser is a partnership, the representations, warranties, agreements and understandings set forth above are true with respect to all partners in the Purchaser (and if any such partner is itself a partnership, all persons holding an interest in such partnership, directly or indirectly, including through one or more partnerships), and the person executing this Subscription Agreement has made due inquiry to determine the truthfulness of the representations and warranties made hereby.
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2.12
|
If the Purchaser is purchasing in a representative or fiduciary capacity, the above representations and warranties shall be deemed to have been made on behalf of the person or persons for whom the Purchaser is so purchasing.
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2.13
|
Within five (5) days after receipt of a request from the Company, the Purchaser will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject.
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2.14
|
The Purchaser or its professional advisor has been granted the opportunity to conduct a full and fair examination of the records, documents and files of the Company, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of this offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or its professional advisor deems necessary to verify the accuracy of the information received.
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2.15
|
The Units were not offered to the Purchaser through an advertisement in printed media of general and regular circulation, radio or television.
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2.16
|
The Purchaser has relied completely on the advice of, or has consulted with, its own personal tax, investment, legal or other advisors and has not relied on the Company or any of its affiliates, officers, directors, attorneys, accountants or any affiliates of any thereof and each other person, if any, who controls any thereof, within the meaning of Section 15 of the Securities Act, except to the extent such advisors shall be deemed to be as such.
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2.17
|
If the Purchaser has consulted a purchaser representative (“Purchaser Representative”) to evaluate the merits and risks of the undersigned’s investment in the Units, the Purchaser Representative has completed a Purchaser Representative Questionnaire in the form supplied to him. The Purchaser or the Purchaser Representative has been granted the opportunity to examine documents and files, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of the Offering, the Company and its business and prospects, and to obtain any additional information which the Purchaser or the Purchaser Representative deems necessary to verify the accuracy of the information received.
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2.18
|
The Purchaser either alone or with its Purchaser Representative has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment.
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3.1
|
The Purchaser recognizes that investment in the Company involves certain risks, including the potential loss by the Purchaser of interest on their investment herein, and the Purchaser has taken full cognizance of and understands all of the risk factors related to the purchase of the Units. The Purchaser recognizes that the information set forth in this Subscription Agreement does not purport to contain all the information, which would be contained in a registration statement under the Securities Act.
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3.2
|
No federal or state agency has passed upon the Units or made any finding or determination as to the fairness of this transaction.
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3.3
|
The Units have not been registered under the Securities Act or any applicable state securities laws by reason of exemptions from the registration requirements of the Securities Act and such laws, and may not be sold, pledged, assigned or otherwise disposed of in the absence of an effective registration statement for the Units and any component thereof under the Securities Act or unless an exemption from such registration is available. Provided there is a market for the Company’s Units, the Units will not be eligible for sale for a period of six months from the date of purchase pursuant to the terms of Rule 144 of the Securities Act of 1933, unless registered pursuant to the terms and conditions of an effective registration statement filed with the Securities and Exchange Commission.
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3.4
|
There currently is limited liquidity in the market for the Company’s Units. An active and liquid market for the Company's Units may not develop. Even if an active and liquid market develops for Bollente International, Inc. Units, the market value of Units may be adversely affected by market volatility. Substantial sales of the Company's Units could cause the price of its Units to decrease.
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3.6
|
The Company may refuse to register any transfer of the Units not made in accordance with the Securities Act and the rules and regulations promulgated thereunder.
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14.1
|
Number of Units subscribed for:
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One (1)
|
Units against payment in cash in the amount of
$
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25,000
|
, representing
$25,000
per Unit, each representing 0.625% of Gross Margin.
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|
Email Address
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|
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Telephone Number
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Title
|
Tax Identification or Social Security Number
|
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Name Typed or Printed
|
Email Address
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(
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)
|
Email Address
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Telephone Number
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Signature
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1.
|
DEFINITIONS
|
1.1.
|
Definitions of capitalized terms used in this Royalty Agreement shall have the meanings given in Appendix A or elsewhere in the Royalty Agreement.
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2.
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ROYALTY PAYMENTS
|
2.1.
|
Royalties.
BII shall pay BII royalties on Gross Margins during the Royalty Term to Recipients according to the following rates:
|
a)
|
0.625% of Gross Margin for each $25,000 paid to BII by Recipient; and
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b)
|
25% of Gross Margins for a maximum of $1 million paid to BII.
|
2.2.
|
Manner of Payment.
Royalty payments due under this Section 2 are due 30 days after the end of each Accounting Period and shall be paid in United States dollars.
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2.3.
|
Termination of Royalty Obligations.
This royalty payment obligation shall terminate on the expiration of the Royalty Term.
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3.
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REPORTS AND PAYMENTS
|
3.1.
|
Recordkeeping
. BII shall, and shall obligate its Affiliates to, keep full and accurate records (prepared in accordance with United States Generally Accepted Accounting Principles consistently applied) of BII’s or its Affiliates’ sales of Products and such other matters as may affect the determination of any amount payable to Recipients hereunder, in sufficient detail to reasonably enable Recipient or Recipients’ representatives to determine any amounts payable to BII under this Royalty Agreement. Such records shall be kept at BII’s or its Affiliates’ principal place of business and, with all necessary supporting data, books and ledgers, shall, during all reasonable times for the 2 years following the end of the Accounting Period to which each shall pertain, be open for inspection at reasonable times during normal business hours (and upon at least 30 days prior written notice) no more than one time per calendar year by an independent audit firm selected by Recipients (reasonably acceptable to BII) for the purpose of verifying the accuracy of any payment report required under this Royalty Agreement or any amount payable hereunder. The results of each inspection shall be binding on both BII and Recipients absent mathematical error. BII shall bear all costs associated with such inspections.
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3.2.
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Reports
. Within 30 days after the end of each Accounting Period, BII shall deliver to Recipients a true and accurate report, giving such particulars of the business conducted by BII or its Affiliates during the preceding 4 Accounting Periods under this Royalty Agreement as are reasonably pertinent to an accounting for any royalty or other payments hereunder, along with the amount of royalties payable for such Accounting Period. If no payments are due, it shall be so reported.
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3.3.
|
Accounting
. With each quarterly payment, BII shall deliver to Recipients the report described in Section 3.2, which shall include, but not be limited to, the following information:
|
a)
|
Quantity of each Product sold by BII or its Affiliates during the applicable Accounting Period;
|
b)
|
The monetary amount, in the national currency of such country, of such sales;
|
c)
|
Actual Gross Margins and Net Sales for each Product (by country);
|
d)
|
The currency conversion rate used and U.S. dollar-equivalent of such sales; and
|
e)
|
Total royalties payable to Recipients including a calculation thereof.
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4.
|
TERMINATION
|
4.1.
|
Generally
. This Royalty Agreement shall become effective on the Execution Date and shall expire on the expiration of the Royalty Term.
|
4.2.
|
Change in Control, Redemption
. If Bollente Companies, Inc. or BII enter into any agreement resulting in a change in control due to merger or acquisition of greater than 50% of its voting equity, during the Royalty Term, the parties agree as follows:
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4.3.
|
Post-Expiration Obligations
. Upon the expiration of this Royalty Agreement, BII shall submit all reports required by Section 3 and pay Recipients all royalties due or accrued on the sale of Products up to and including the date of expiration.
|
4.4.
|
Survival.
Upon the expiration of this Royalty Agreement, nothing herein shall be construed to release either party from any obligation that matured prior to the date of such expiration and Section 5 shall survive any such expiration.
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5.
|
MISCELLANEOUS
|
5.1.
|
Entire Agreement
. This Royalty Agreement (together with the Subscription and Purchase Agreement) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, that may have related in any way to the subject matter hereof. The appendices identified in this Royalty Agreement are incorporated herein by reference and made a part hereof.
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5.2.
|
Resale
. A Recipient shall have the right to accept offers to buy Recipient’s future rights to Royalty Payments under this Royalty Agreement, provided that such offer and sale are previously approved by BII.
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5.3.
|
Amendments and Waivers
. No amendment or waiver of any provision of this Royalty Agreement shall be valid unless the same shall be in writing and signed by each Party. No waiver by any Party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
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5.4.
|
Succession and Assignment.
This Royalty Agreement and all of the provisions hereof shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and permitted assigns. BII may not assign this Royalty Agreement or any of its rights or obligations hereunder without the prior written consent of a majority of Recipients. Recipients may not assign this Royalty Agreement and any of its rights or obligations hereunder without the prior consent of BII.
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5.5.
|
No Third-Party Beneficiaries
. This Royalty Agreement shall not confer any rights or remedies upon any party other than the Parties and their respective successors and permitted assigns.
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5.6.
|
Governing Law
. This Royalty Agreement shall be governed by and construed in accordance with the domestic Laws of the State of Arizona, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Arizona or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Arizona. The Recipients agrees that venue for any action, suit, litigation or other proceeding arising out of or in any way relating to this Royalty Agreement, or the matters referred to therein, shall be in Maricopa County, Arizona The Recipients hereby waives and agrees not to assert by way of motion, as a defense, or otherwise, in any suit, action or proceeding, any claim that (A) the suit, action or proceeding is brought in an inconvenient forum or (B) the venue of the suit, action or proceeding is improper.
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5.7.
|
Severability
. If any provision in this Royalty Agreement shall be invalid, illegal, or unenforceable in any jurisdiction, the validity, legality, and enforceability of the remaining provisions, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
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5.8.
|
Expenses
. Except as otherwise specifically provided in this Royalty Agreement, each Party will bear its own expenses (including fees and disbursements of legal counsel, accountants, financial advisors and other professional advisors) incurred in connection with the preparation, negotiation, execution, delivery and performance of this Royalty Agreement.
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5.9.
|
Notices.
All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, mailed or delivered to each party at the respective addresses of the parties as set forth in the Subscription and Purchase Agreement, or at such other address or facsimile number as the Recipients shall have furnished to BII in writing.
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5.10.
|
Construction
. In the construction of this Royalty Agreement, the rule of construction that a document is to be construed most strictly against a party who prepared the same shall not be applied, it being agreed that all parties have participated in the preparation of the final form of this Royalty Agreement.
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5.11.
|
Counterparts
. This Royalty Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. This Royalty Agreement may be executed by facsimile, photo or electronic signature and such facsimile, photo or electronic signature shall constitute an original for all purposes.
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PURCHASER
The Slyter Family Trust dated June 16, 2005
By:
/S/ Mathew H. Slyter
Name:
Mathew H. Slyter
Title:
Trustee
Date: October 6. 2015
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BOLLENTE INTERNATIONAL, INC., a Nevada corporation
By:
/S/ Robertson J. Orr
Name:
Robertson J. Orr
Title:
President
Date:
October 6, 2015
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1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Robertson J. Orr
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Robertson J. Orr
|
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Principal Executive Officer and
|
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Principal Financial Officer
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November 2, 2016
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