THE SECURITIES TO BE ISSUED PURSUANT TO THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR ANY OTHER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD UNLESS REGISTERED THEREUNDER OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

SUBSCRIPTION AGREEMENT $0.40 PER SHARE

Name of Subscriber: ______________________ or ________________________

Rapid Therapeutic Science Laboratories, Inc.

5580 Peterson Lane, Suite 200

Dallas, Texas 75240

 

Ladies and Gentlemen:

1.  Subscription.  I (sometimes referred to herein as the “Investor”) hereby subscribe for and agree to purchase the Securities (as defined below) set forth on the signature page hereto of Rapid Therapeutic Science Laboratories, Inc., a Nevada corporation (the “Company”), on the terms and conditions described herein and in Exhibit A hereto (collectively, the “Offering Documents”). Terms not defined herein are as defined in the Offering Documents. There is no minimum offering. The maximum offering is $1,500,000.  

2.  Description of Securities; Risk Factors.  

a.Description of Securities.  The Company is offering (the “Offering”) to the Investor shares of the Company’s common stock (“Common Stock” or “Securities”) at a purchase price of $0.40 per share. 

b.Warrants: Non-cash Warrants. For additional consideration the Investor is entitled to purchase an addition 1 times the number of shares purchased under 2a. above at a price of $1.00. Such purchase must be made within 180 days of the Company’s 3-day average VWAP above $1.00. Otherwise such warrants are void. The warrants are not cashless and are subject to Rule 144 provisions. 

c.Warrants: Cash-less Warrants. See Separate Agreement, subject to Trading Agreement dated December 22, 2020. These cash-less warrants are under separate form and expressly subject to a mandatory Trading Agreement 

d.Risks Related to the Investment in the Securities.  Investing in the Securities involves a high degree of risk. Before investing, Investors should carefully consider the following risks, together with the other information contained in Offering Documents. 

i.No Minimum Subscription Agreement; No Escrow Arrangement.  Under the terms of this Subscription Agreement, there is no minimum subscription amount to be raised by the Company in this private placement and, upon the Company’s acceptance of the Subscriber’s offer to subscribe for the Securities, the subscription proceeds shall immediately become a part of the working capital of the Company and  

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shall be allocated in the accordance with the Company management’s discretion. Further, the Subscription Agreement does not contemplate any escrow arrangement whereby the subscription proceeds are kept until and unless a certain event triggering the termination of the escrow fund occurs. Absence of such arrangements could result in less protection for the potential investors in the Company.

ii.Discretion in Application of Net Proceeds.  The Company’s management has the sole discretion to determine the application of the net proceeds of this offering.  A substantial portion will be applied to working capital of the Company. Accordingly, the Company’s management will have broad discretion in the application of the net proceeds.   

iii.No Voting Power by Prospective Investors.  The Company’s directors and officers own or control an aggregate of 140,000,000 shares of Common Stock, which represents a super-majority of the shares outstanding and are, and in the foreseeable future will continue to be, in a position to elect a majority of its Board of Directors. The Board of Directors establishes corporate policies and has the sole authority to nominate and elect the company’s officers to carry out those policies. Prospective investors therefore will have no participation in the Company’s affairs. As a result of the current capital structure of the Company, a prospective investor shall not obtain voting control over major corporate decisions and actions. 

iv.Absence of Cash Dividends and No Cash Dividends Anticipated.  The future payment by the Company of cash dividends on its common stock, if any, rests within the discretion of its Board of Directors and will depend, among other things, upon the Company’s earnings, its capital requirements and its financial condition, as well as other relevant factors. The Company does not anticipate making any cash distributions upon its Common Stock in the foreseeable future. 

v.The Company Will Likely Make Future Offerings of Its Securities.  The Company reserves the right to make future offers and sales, either public or private, of its securities including shares of preferred stock, Common Stock or securities convertible into its common stock at prices differing from the offering price of the Common Stock offered hereby. There can be no assurance that the Company will be able to successfully complete any such future offerings; however, in the event that any such future sales of securities are affected, the Investor’s pro rata ownership interest in the Company will be reduced to the extent of any such issuances and, to the extent any such sales are effected at consideration which is less than that paid by the Investor, the Investor may experience dilution. 

vi.New Business Strategy. The Company recently announced it was adopting a new business strategy focused on developing potential commercial opportunities which will involve the rapid application of therapeutics using the RxoidTM and nHāler MDI technology that the Company sublicensed from TMDI, an entity affiliated with the Company’s new director and CEO, Donal R. Schmidt, Jr., with  

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prospective healthcare providers, pharmacies and other parties in the states of Texas, California, Florida and Nevada. Simultaneously, the Company announced it would be exiting from its previous operations in the bitcoin mining business, which has been suspended since the middle of 2018. Due to the change in strategy, the Company’s prior SEC filings will not fully describe the Company’s planned operations and future plans.

3.  Purchase.

a.I hereby tender to the Company a check or wire transfer (information to be provided to me on my request) made payable to “Rapid Therapeutic Science Laboratories, Inc.” for such number of shares of Common Stock indicated on the signature page hereto, an executed copy of this Subscription Agreement and an executed copy of my Investor Questionnaire attached as Exhibit A hereto. 

b.Investor will wire $500,000 USD within 3 days of receiving this document. Upon the earlier of a Closing (defined below) for my subscription or completion of the offering, I will be notified promptly by the Company as to whether my subscription has been accepted by the Company. 

c.Wire Instructions: 

Wells Fargo Bank

Dallas, Texas

ABA Routing # [REDACTED]

Account # [REDACTED]

For the Benefit of Rapid Therapeutic Science Laboratories, Inc,

5580 Peterson Ln., Ste. 200

Dallas, TX 75240

Attn.: Donal R. Schmidt, Jr. CEO, 214-236-1363

4.  Acceptance or Rejection of Subscription.

a.I understand and agree that the Company reserves the right to reject this subscription for the Securities, in whole or in part, for any reason and at any time prior to the Closing (defined below) of my subscription. 

b.In the event of the rejection of this subscription, my subscription payment will be promptly returned to me without interest or deduction and this Subscription Agreement shall have no force or effect.  In the event my subscription is accepted, and the offering is completed, the subscription funds shall be released to the Company. 

c.This subscription can be rejected at the sole decision of the Company prior to issuance of any stock to the Investor. 

5.  Closing. The closing (“Closing”) of this offering may occur any time and from time to time before the Termination Date.  There is no minimum offering.  The Securities subscribed for herein shall not be deemed issued to or owned by me until one copy of this Subscription Agreement has been executed by me and countersigned by the Company and the Closing with respect to such Securities has occurred.

6.  Disclosure. Because this offering is limited to accredited investors as defined in Section 2(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in

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Section 4(a)(2) of the Securities Act and applicable state securities laws, the Securities are being sold without registration under the Securities Act. I acknowledge receipt of the Offering Documents and represent that I have carefully reviewed and understand the Offering Documents, including its exhibit. I have received all information and materials regarding the Company that I have requested. I fully understand that the Company has a limited financial and operating history and that the Securities are speculative investments, which involve a high degree of risk of the loss of my entire investment. I fully understand the nature of the risks involved in purchasing the Securities and I am qualified by my knowledge and experience to evaluate investments of this type. I have carefully considered the potential risks relating to the Company and purchase of its Securities and have reviewed each of the risks set forth in the Offering Documents. Both my advisors and I have had the opportunity to ask questions of and receive answers from representatives of the Company or persons acting on its behalf concerning the Company and the terms and conditions of a proposed investment in the Company and my advisors and I have also had the opportunity to obtain additional information necessary to verify the accuracy of information furnished about the Company. Finally, I have carefully reviewed all of the Company’s filings with the Securities and Exchange Commission, understanding that the Company has recently modified its business strategy. Accordingly, I have independently evaluated the risks of purchasing the Securities.

7.  Investor Representations and Warranties.  I acknowledge, represent, and warrant to, and agree with, the Company as follows:

a.I am aware that my investment involves a high degree of risk as disclosed in the Offering Documents and have read carefully the Offering Documents and the Company’s SEC filings, and I understand that by signing this Subscription Agreement I am agreeing to be bound by all of the terms and conditions of the Offering Documents. 

b.I acknowledge and am aware that there is no assurance as to the future performance of the Company. 

c.I acknowledge that there may be certain adverse tax consequences to me in connection with my purchase of Securities, and the Company has advised me to seek the advice of experts in such areas prior to making this investment. 

d.I am purchasing the Securities for my own account for investment purposes and not with a view to or for sale in connection with the distribution of the Securities,, nor with any present intention of selling or otherwise disposing of all or any part of the foregoing securities.  I agree that I must bear the entire economic risk of my investment for an indefinite period of time because, among other reasons, the Securities have not been registered under the Securities Act or under the securities laws of any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and under applicable securities laws of certain states or an exemption from such registration is available. I hereby authorize the Company to place a legend denoting the restrictions on the Securities that are issued to me. 

e.I recognize that the Securities, as an investment, involve a high degree of risk including, but not limited to, the risk of economic losses from operations of the Company and the total loss of my investment. I believe that the investment in the Securities is suitable for me based upon my investment objectives and financial needs, and I have adequate means for providing for my current financial needs and contingencies and have no need for liquidity with respect to my investment in the Company. 

f.I have been given access to full and complete information regarding the  

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Company and have utilized such access to my satisfaction for the purpose of obtaining information in addition to, or verifying information included in, the Offering Documents, and I have either met with or been given reasonable opportunity to meet with officers of the Company for the purpose of asking questions of, and receiving answers from, such officers concerning the terms and conditions of the offering of the Securities and the business and operations of the Company and to obtain any additional information, to the extent reasonably available.

g.I have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities and have obtained, in my judgment, sufficient information from the Company to evaluate the merits and risks of an investment in the Company.  I have not utilized any person as my purchaser representative as defined in Regulation D under the Securities Act in connection with evaluating such merits and risks. 

h.I have relied solely upon my own investigation in making a decision to invest in the Company.  

i.I have received no representation or warranty from the Company or any of its officers, directors, employees or agents in respect of my investment in the Company and I have received no information (written or otherwise) from them relating to the Company or its business other than as set forth in the Offering Documents. I am not participating in the offer as a result of or subsequent to: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio or (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. 

j.I have had full opportunity to ask questions and to receive satisfactory answers concerning the offering and other matters pertaining to my investment and all such questions have been answered to my full satisfaction. 

k.I have been provided an opportunity to obtain any additional information concerning the offering and the Company and all other information to the extent the Company possesses such information or can acquire it without unreasonable effort or expense. 

l.I am an “accredited investor” as defined in Section 2(15) of the Securities Act and in Rule 501 promulgated thereunder and have attached the completed Accredited Investor Questionnaire to indicate my “accredited investor” category. I can bear the entire economic risk of the investment in the Securities for an indefinite period of time and I am knowledgeable about and experienced in investments in the equity securities of non-publicly traded companies, including early stage companies.  I am not acting as an underwriter or a conduit for sale to the public or to others of unregistered securities, directly or indirectly, on behalf of the Company or any person with respect to such securities. 

m.I understand that (1) the Securities and the underlying securities have not been registered under the Securities Act, or the securities laws of certain states in reliance on specific exemptions from registration, (2) no securities administrator of any state or the federal government has recommended or endorsed this offering or made any finding or determination relating to the fairness of an  

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investment in the Company and (3) the Company is relying on my representations and agreements for the purpose of determining whether this transaction meets the requirements of the exemptions afforded by the Securities Act and certain state securities laws.

n.I understand that since neither the offer nor sale of the Securities has been registered under the Securities Act or the securities laws of any state, the Securities may not be sold, assigned, pledged or otherwise disposed of unless they are so registered or an exemption from such registration is available. 

o.I have been urged to seek independent advice from my professional advisors relating to the suitability of an investment in the Company in view of my overall financial needs and with respect to the legal and tax implications of such investment. 

p.If the Investor is a corporation, company, trust, employee benefit plan, individual retirement account, Keogh Plan, or other tax-exempt entity, it is authorized and qualified to become an Investor in the Company and the person signing this Subscription Agreement on behalf of such entity has been duly authorized by such entity to do so. 

q.The information contained in my Investor Questionnaire, as well as any information which I have furnished to the Company with respect to my financial position and business experience, is correct and complete as of the date of this Subscription Agreement and, if there should be any material change in such information prior to the Closing of the offering, I will furnish such revised or corrected information to the Company. I hereby acknowledge and am aware that except for any rescission rights that may be provided under applicable laws, I am not entitled to cancel, terminate or revoke this subscription and any agreements made in connection herewith shall survive my death or disability. 

r.The Investor acknowledges that (i) the Offering Documents contains material, non-public information concerning the Company within the meaning of Regulation FD promulgated by the SEC, and (ii) the Investor is obtaining such material, non-public information solely for the purpose of considering whether to purchase the Securities pursuant to a private placement that is exempt from registration under the Securities Act.  In accordance with Regulation FD and other applicable provisions of the federal securities laws, the Investor agrees to keep such information confidential and not to disclose it to any other person or entity except the Investor’s legal counsel, other advisors and other representatives who have agreed (i) to keep such information confidential, (ii) to use such information only for the purpose set forth above, and (iii) to comply with applicable securities laws with respect to such information.  In addition, the Investor further acknowledges that the Investor and such legal counsel, other advisors and other representatives are prohibited from trading in the Company's securities while in possession of material, non-public information and agrees to refrain from purchasing or selling securities of the Company until such material, non-public information has been publicly disseminated by the Company. 

8.  Indemnification. I hereby agree to indemnify and hold harmless the Company and its officers, directors, stockholders, employees, agents, and counsel against any and all losses, claims, demands, liabilities, and expenses (including reasonable legal or other expenses, including reasonable attorneys’ fees) incurred by each such person in connection with defending or investigating any such claims or

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liabilities, whether or not resulting in any liability to such person, to which any such indemnified party may become subject under the Securities Act, under any other statute, at common law or otherwise, insofar as such losses, claims, demands, liabilities and expenses (a) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact made by me and contained in this Subscription Agreement or my Investor Questionnaire, or (b) arise out of or are based upon any breach by me of any representation, warranty, or agreement made by me contained herein or therein.

9.  Severability. In the event any parts of this Subscription Agreement are found to be void, the remaining provisions of this Subscription Agreement shall nevertheless be binding with the same effect as though the void parts were deleted.

10.  Choice of Law and Jurisdiction. This Subscription Agreement shall be governed by the laws of the State of Texas as applied to contracts entered into and to be performed entirely within the State of Texas.  Any action arising out of this Subscription Agreement shall be brought exclusively in a court of competent jurisdiction in Dallas, Texas, and the parties hereby irrevocably waive any objections they may have to venue in Dallas, Texas.

11.  Counterparts. This Subscription Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Subscription Agreement may be by actual or facsimile signature.

12.  Benefit. This Subscription Agreement shall be binding upon and inure to the benefit of the parties hereto.

13.  Notices and Addresses. All notices, offers, acceptance and any other acts under this Subscription Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addresses in person, by Federal Express or similar courier delivery, as follows:

Investor:

At the address designated on the signature

page of this Subscription Agreement.

The Company:

Rapid Therapeutic Science Laboratories, Inc.

5580 Peterson Lane, Suite 200

Dallas, Texas 75240

 

or to such other address as any of them, by notice to the others may designate from time to time. The transmission confirmation receipt from the sender’s facsimile machine shall be conclusive evidence of successful facsimile delivery.  Time shall be counted to, or from, as the case may be, the delivery in person or by mailing.

 

14.  Entire Agreement. This Subscription Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. This Subscription Agreement may not be changed, waived, discharged, or terminated orally but, rather, only by a statement in writing signed by the party or parties against which enforcement or the change, waiver, discharge or termination is sought.

15.  Section Headings. Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part, any of the terms or provisions of this Subscription Agreement.

16.  Survival of Representations, Warranties and Agreements. The representations, warranties and agreements contained herein shall survive the delivery of, and the payment for, the Securities.

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17.  Acceptance of Subscription. The Company may accept this Subscription Agreement at any time for all or any portion of the Securities subscribed for by executing a copy hereof as provided and notifying me within a reasonable time thereafter.

 

RESIDENTS OF ALL STATES: THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO REGISTRATIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THI S OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING DOCUMENTS.  ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

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THE AGGREGATE AMOUNT SUBSCRIBED FOR HEREBY IS: 1,250,000 Shares (Total dollar amount times 2)

Share Purchase Price: $500,000 total USD (price is $0.40 per share)

Manner in Which Title is to be Held.  (check one)

—     Individual Ownership	—     Community Property
—     Joint Tenant with Right of Survivorship (both parties must sign)
—     Partnership	—     Tenants in common
—     Corporation Trust	—     IRA or Keogh
—     Other (please indicate)

 

INDIVIDUAL INVESTORS (Not Applicable if Entity)		ENTITY INVESTORS
		Name of entity, if any:
		Exempt Management, LLC
Signature (Individual)		By: _____________________________
		*Signature
		Its: Authorized Signatory
Signature (Joint) (all record holders must sign)		Title: Managing Member
Name(s) Typed or Printed		Name Typed or Printed
Address to Which Correspondence Should be Directed		Address to Which Correspondence Should be Directed
		10440 N. Central Expressway
		Dallas, Texas 75231
City, State and Zip Code		City, State and Zip Code
		84-2386912
Tax Identification or Social Security Number		Tax Identification or Social Security Number

*

If Securities are being subscribed for by any entity, the Certificate of Signatory on the next page must also be completed

The foregoing subscription is accepted, and the Company hereby agrees to be bound by its terms on ______________

Dated:		Rapid Therapeutic Science Laboratories, Inc.
		By: _____________________________________
		Name: Donal R. Schmidt, Jr.
		Its:  Chief Executive Officer

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CERTIFICATE OF SIGNATORY

 

(To be completed if Securities are being subscribed for by an entity)

 

I, ____________________________, the __________________________________

(name of signatory)                                             (title)

 

of ________________________________________ (“Entity”), a ________________________

(name of entity)                                                                 (type of entity)

 

hereby certify that I am empowered and duly authorized by the Entity to execute the Subscription Agreement and to purchase the Securities, and certify further that the Subscription Agreement has been duly and validly executed on behalf of the Entity and constitutes a legal and binding obligation of the Entity.

 

IN WITNESS WHEREOF, I have set my hand this ______ day of ____________, 2021.

		(Signature)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit A

ACCREDITED INVESTOR QUESTIONNAIRE

Purpose of this Questionnaire

The Securities of Rapid Therapeutic Science Laboratories, Inc., a Nevada corporation (the “Company”) are being offered under the Securities Act of 1933, as amended (the “1933 Act”), or the securities laws of any state, in reliance on the exemptions contained in Sections 4(2) and 4(6) and Regulation D Rule 506 of the 1933 Act and on similar exemptions under applicable state laws. Under Sections 4(a)(2) and Regulation D Rule 506 and/or certain state laws, the Company may be required to determine that an individual or each individual equity owner of an investing entity meets certain suitability requirements before selling the Securities to such individual or entity.  THE COMPANY MAY, AT ITS ELECTION, NOT SELL SECURITIES TO A SUBSCRIBER WHO HAS NOT COMPLETELY FILLED OUT THIS QUESTIONNAIRE.  This Questionnaire does not constitute an offer to sell or a solicitation of an offer to buy the Securities or any other security.

Instructions

 

One (1) copy of this Questionnaire should be completed, signed, dated, and delivered to the Company.

Please Answer All Questions

 

If the appropriate answer is “None” or “Not Applicable,” so state.  Please print or type your answers to all questions.  Attach additional sheets if necessary, to complete your answers to any item.

Your answers will be kept strictly confidential at all times; however, the Company may present this Questionnaire to such parties as it deems appropriate, including its counsel, in order to assure itself that the offer and sale of the Securities will not result in a violation of the registration provisions of the 1933 Act or a violation of the securities laws of any state.

(1)  Please provide the following personal information:

 

Name: __________________________________

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(2)  I am an accredited investor (as defined in Rule 501 (a) of Reg. D) because (check each appropriate description):

 

______I am a natural person whose individual net worth, or joint net worth with my spouse, exceeds $1,000,000 (excluding the value of my residence); 

 

_____I am a natural person who had individual income exceeding $200,000 in each of the two most recent years or joint income with my spouse exceeding $300,000 in each of those years and I have a reasonable expectation of reaching the same income level in the current year: 

 

_____I am a broker-dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; 

 

_____I am an organization described in Section 501(c)(3) of the Internal Revenue Code, not formed for the specific purpose of acquiring the Securities, with total assets exceeding $5,000,000; 

 

______I am a corporation, Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Securities, with total assets exceeding $5,000,000; 

 

______I am a trust, not formed for the specific purpose of acquiring the Securities, with total assets exceeding $5,000,000 and whose purchase is directed by a “sophisticated person,” as defined in Rule 506(b)(2)(ii) of Reg. D; 

______An entity in which all of the equity holders are “accredited investors” by virtue of their meeting one or more of the above standards; 

_______A revocable trust that is revocable by its grantors, each of whose grantors is an accredited investor, qualifies as an accredited investor for the purposes of the subscription (each grantor should complete the individual accredited information questionnaire, and describe the fact that they are grantors of the trust on such individual questionnaire below); or 

_______An individual who is a director or executive officer of _________________ 

 

 

(For the purposes of this questionnaire, a “sophisticated person” means any person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment.)

 

_____I am an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 and (i) investment decisions for such plan are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is a bank, savings and loan association, insurance company or registered investment advisor or (ii) such plan has total assets exceeding $5,000,000 or (iii) if a self-directed plan, investment decisions are made solely by accredited investors. 

 

______I am an entity in which all of the equity owners are accredited investors. 

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(3)  Check, if appropriate:

 

_____I hereby represent and warrant that I have such knowledge and experience in financial and business matters that I am capable of evaluating the merits and risks of any prospective investment in the Company. 

 

(4)  By signing this Questionnaire, I hereby confirm the following statements:

 

I am aware that the offering of the Securities will involve securities for which no market currently exists, thereby requiring any investment to be maintained for an indefinite period of time, and I have no need to liquidate the investment.

I acknowledge that any delivery to me of any documentation relating to the Securities prior to the determination by the Company of my suitability as an investor shall not constitute an offer of the Securities until such determination of suitability shall be made, and I agree that I shall promptly return all such documentation to the Company upon request.

My answers to the foregoing questions are true and complete to the best of my information and belief, and I will promptly notify the Company of any changes in the information I have provided.

I also understand and agree that, although the Company will use its best efforts to keep the information provided in answers to this Questionnaire strictly confidential, the Company may present this Questionnaire and the information provided in answers to it to such parties as it may deem advisable if called upon to establish the availability under any federal or state securities laws of an exemption from registration of the private placement or if the contents thereof are relevant to any issue in any action, suit, or proceeding to which the Company is a party or by which it or they are or may be bound.

I realize that this Questionnaire does not constitute an offer by the Company to sell the Securities but is merely a request for information.

 

Printed Name
Signature
Date and Place Executed:
Date: _______________________________		Place: _____________________________

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NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

 

RAPID THERAPEUTIC SCIENCE LABORATORIES, INC.

 

Warrant Shares: 500,000	Initial Exercise Date: January 1, 2021
	Issue Date:  December 22, 2020

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Exempt Management, LLC or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after January 1, 2021 (the “Initial Exercise Date”) and on or prior to the close of business on the 1^st year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Rapid Therapeutic Science Laboratories, Inc., a Nevada corporation (the “Company”), up to 500,000 shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock.  The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.  Definitions.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Subscription Agreement $0.40 per Share (the “Purchase Agreement”), dated December 22, 2020, among the Company and the purchaser’s signatory thereto.

 

Section 2.  Exercise.

 

a)  Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy (or e-mail attachment) of the Notice of Exercise in the form annexed hereto and within three (3) Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or, if available, pursuant to the cashless exercise procedure specified in Section 2(c) below. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased

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all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice.  The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof, but not more.

 

b)  Exercise Price.  The exercise price per share of the Common Stock under this Warrant shall be $0.85, subject to adjustment hereunder (the “Exercise Price”).

 

c)  Cashless Exercise.  If at any time after the twelve month anniversary of the date of the Purchase Agreement, there is no effective Registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) = the VWAP on the Trading Day, limited to immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

 

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares.  The Company agrees not to take any position contrary to this Section 2(c) except to the extent modified by the mandatory accompanying Trading Agreement attached hereto.

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if OTCBB, OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCBB, OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCBB, OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share

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of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

 

d)  Mechanics of Exercise.

 

i.  Delivery of Warrant Shares Upon Exercise.  Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”).   Upon delivery of the Notice of Exercise the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares; provided payment of the aggregate Exercise Price (other than in the case of a Cashless Exercise) is received within three Trading Days of delivery of the Notice of Exercise.

 

ii.  Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii.  Rescission Rights.  If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv.  No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

v.  Charges, Taxes and Expenses.  Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder

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or in such name or names as may be directed by the Holder; provided, however, that in the event Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.  The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

vi.  Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

e)  Holder’s Exercise Limitations.  The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates, such other Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder, its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other  Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.  Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.   To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates or Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates or Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.   In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall

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within two Trading Days confirm orally or in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported.  The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.  The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61^st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

f)  Limitation on Warrant Shares Issued. Regardless of the calculation of VWAP price under Section 2 c) above, all issuances of Common Warrant Shares under this Warrant shall be limited to 500,000 common shares. In other words, the Holder will not receive additional shares above 500,000 common shares even if the calculation under Section 2 c) above results in a value of shares in excess of 500,000 common shares.

 

g)  Any exercise of such Warrants shall be subject to a mandatory Trading Agreement between the Company and the Holder. The Trading Agreement is attached hereto as Exhibit C and must be executed concurrently with the issuance of this warrant.

 

h)  Exercise of Warrants shall be done in compliance with Exhibit A.

 

Section 3.  Certain Adjustments.

 

a)  Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

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b)  [RESERVED]

 

c)  Subsequent Rights Offerings.  In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

d)  Pro Rata Distributions.  During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a "Distribution"), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

e)  Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of

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the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant).  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

f)  Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of

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shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

g)  Notice to Holder.

 

i.  Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii.  Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.  To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.  The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice  except as may otherwise be expressly set forth herein.

 

Section 4.  Transfer of Warrant.

 

a)  Transferability.  Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant

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substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full.  The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.  Any transfer of Warrants shall comply with Exhibit B.

 

b)  New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original Issue Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c)  Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

d)  Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.

 

e)  Representation by the Holder.  The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 5.  Miscellaneous.

 

a)  No Rights as Stockholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

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b)  Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

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

 

d)  Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its articles of incorporation, as amended, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

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Before taking any action, which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e)  Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

 

f)  Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

g)  Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date.  If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

h)  Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

i)  Limitation of Liability.  No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

j)  Remedies.  The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k)  Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l)  Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

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m)  Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n)  Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

 

 

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(Signature Page Follows)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

RAPID THERAPEUTIC SCIENCE LABORATORIES, INC.

 

 

By:__________________________________________

    Name: Donal R. Schmidt, Jr.

    Title: CEO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT A

 

NOTICE OF EXERCISE

 

To:  RAPID THERAPEUTIC SCIENCE LABORATORIES, INC.

 

(1)  The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)  Payment shall take the form of (check applicable box):

 

[  ] in lawful money of the United States; or

 

[ ] [if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)  Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

________________________________

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

(4)  Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ______________________________________________________________________

 

Signature of Authorized Signatory of Investing Entity: ________________________________________________

 

Name of Authorized Signatory: __________________________________________________________________

 

Title of Authorized Signatory: ___________________________________________________________________

 

Date: _______________________________________________________________________________________

 

 

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EXHIBIT B

 

ASSIGNMENT FORM

 

(To assign the foregoing Warrant, execute this form and supply required information.  Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

Name:	_______________________________
	(Please Print)
Address:	_______________________________   _______________________________   _______________________________ (Please Print)
Phone Number:	_______________________________
Email Address:	_______________________________
Dated: _______________ __, ______
Holder’s Signature:	_______________________________
Holder’s Address:	_______________________________   _______________________________   _______________________________

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EMPLOYMENT AGREEMENT

 

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into by and between Rapid Therapeutic Science Laboratories, Inc., a Nevada corporation (the “Company”), and Duane Drinkwine, an individual (“Employee”) and shall be effective as of February 1, 2021 (the “Effective Date”).

 

RECITALS:

 

In conjunction with the Company’s contruction and operation of its isolate lab and the oversight and management of its quatility control systems, the Company desires to employ Employee, and Employee desires to be employed by the Company, on the terms and conditions hereinafter provided. Employee understands and acknowledges that, notwithstanding the terms of this Agreement, Employee’s employment with the Company constitutes “at-will” employment.

 

AGREEMENT:

 

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

 

Section 1. Term of Employment.

 

Subject to earlier termination in accordance with this Agreement, this Agreement will remain in effect for a period of 1 year from the Effective Date (the “Initial Term”). Employee shall work a minimum of five (5) days per week in Dallas, Texas for the first six (6) months of Initial Term. Thereafter the Employee shall be in Dallas at least 20 hours per week or as agreed to by the CEO. Provided that this Agreement has not been terminated prior to the expiration of the Initial Term in accordance with the terms contained herein, subsequent to such time, Employee’s employment hereunder shall be automatically continued for an additional term of one (1) year (the “Secondary Term”) unless written notice of non-renewal is given by either party no less than 60 days prior to the end of the Initial Term (an “Initial Non-Renewal”). Thereafter, and provided that this Agreement has not been terminated prior to the expiration of the Secondary Term in accordance with the terms contained herein, subsequent to such time, Employee’s employment hereunder shall be automatically continued for successive additional terms of one (1) year each unless written notice of non-renewal is given by either party no less than 60 days prior to the end of the Secondary Term or any additional term, as applicable (an “Extension Term Non-Renewal”, and together with the Initial Non-Renewal, a “Non-Renewal”). The period of Employee’s employment hereunder from the Effective Date until the Termination Date (as defined below), shall be referred to herein as th “Employment Period” or the “Term”.

 

 

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Section 2. Responsibilities of Employee.

 

(a)During the Employment Period, Employee shall serve as Chief Science Officer. This position is a non-executive position. Employee shall report directly to the CEO and as otherwise required by the CEO at his sole discretion. Employee shall perform the following duties: 

 

(i)Set up, management and operation of the Production and Isolate lab and all related ancillary operations on a day-to-day basis; 

(ii)Manage all employees of the Isolate Lab; 

(iii)Manage all employees of the Production Lab; 

(iv)Manage and oversee all QMX data for both Production and Isolate Lab and GMP process including, but not limited to, creation, loading, review and oversight related to GMP; 

(v)Maintain all books and records required to maintain oversight of both the Production and Isolate Labs; and 

(vii)All other such duties as may be assigned from time to time by the CEO. 

 

Upon approval by the Board, Employee shall undertake and assume the responsibility of performing for and on behalf of the Company any and all of the above duties and shall have all other duties, functions, responsibilities and authority commensurate with such office as are from time to time delegated to Employee by the Management of the Company.

 

(b)Except for activities permitted in connection with the investments and activities set forth in this Section 2(b), below, during the Employment Period, Employee shall devote his full time, skill, and attention and his best efforts during normal business hours to the business and affairs of the Company to the extent necessary to discharge faithfully and efficiently the duties and responsibilities delegated and assigned to Employee herein or pursuant hereto, except for usual, ordinary, and customary periods of vacation and absence due to illness or other disability, and shall not be engaged (whether or not during normal business hours) in any other business or professional activity, whether or not such activity is pursued for gain, profit, or other pecuniary advantage; provided, however, that Employee may: 

 

(i)serve or continue to serve in any capacity with any not-for-profit business or professional organization, association, or entity,  

 

(ii)serve on the board of directors or comparable governing body of any business entity located in the same community as the Company’s headquarters and not engaged in a business or activity competitive with the business of the Company or any of its subsidiaries or Affiliates; and  

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(iii)deliver lectures, fulfill speaking engagements, or teach at educational institutions, so long as all activities conducted by Employee pursuant to clauses (i) through (iii) of this proviso do not unreasonably interfere with the performance and fulfillment of Employee’s duties and responsibilities as an Employee of the Company in accordance with this Agreement and are not in violation of then non-competition provisions of Section 7 of this Agreement. In the case of the activities described in clause (iii) of this proviso, Employee will give the Board at least ten (10) days prior notice of his intention to engage in any such activity, such notice to describe briefly the activities in which Employee proposes to be engaged. 

 

For the purposes of this Agreement, “Affiliate” means (x) any Person directly or indirectly controlling, controlled by or under common control with another Person, or (y) any manager, director, officer, partner or employee of a Person; a Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through ownership of voting securities, by contract, or otherwise; and “Person” means an individual, partnership, corporation, business trust, limited liability company, limited liability partnership, joint stock company, trust, unincorporated association, joint venture or other entity or governmental authority.

 

(c)All services that Employee may render to the Company or any of its subsidiaries or Affiliates in any capacity during the Employment Period shall be deemed to be services required by this Agreement and consideration for the compensation provided for herein. 

 

Section 3. Compensation.

 

(a)As compensation for the services to be rendered by Employee for the Company under this Agreement, the Company shall pay Employee during the Employment Period an annual salary of $125,000.00 (“Base Pay”). Further, this Base Pay may be adjusted upward by the Management of the Company, in its sole discretion, from time to time. Such Base Pay shall be earned and payable periodically in equal installments in accordance with the Company’s normal payroll practices, including applicable deductions and withholdings. Base Pay will be subject to annual review pursuant to the Company’s normal review policy for other similarly situated Employees of the Company and any changes in Base Pay will be communicated in writing to Employee. 

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(b)With respect to stock options, if any, the Company may issue to Employee Stock Options (“Stock Options”) exercisable, on a cash and/or cashless basis, in an amount determined by the Board under any Stock Incentive or Equity Incentive Plan (the “Stock Plan”).  Any unexercised vested options shall terminate within 30 days of Employee leaving the Company, unless otherwise set forth in an award. 

 

(c)At the sole discretion of the Management of the Company and/or the Board, the Employee may earn additional stock options and cash bonuses.  These additional benefits will be subject to all applicable deductions and withholdings at the discretion of the Management of the Company. 

 

(d)Additional Compensation 

 

a.Convertible Preferred Stock. The Employee shall be due up to 2,000,000 shares of a newly designated series of preferred stock of Purchaser (the “New Preferred” and the “New Preferred Shares”) which provides the right to convert into shares of common stock of Purchaser (as discussed below, and subject to the “Conditions of Issuance” described in Section 4, below), with each conversion share valued at $0.80 per share. These New Preferred Shares, to the extent issued and earned, shall be convertible into Purchaser’s common stock at a ratio of 1:1 (subject to equitable adjustments for stock splits and stock dividends) after two years from the Effective Date. These New Preferred Shares shall not be earned by Employee unless fully employed during the terms of Employment. 

 

b.Employee shall be awarded 500,000 of these New Preferred Shares after the first six (6) months of employment. There after the Employee shall be awarded an addional 500,000 New Preferred Shares every year on the anniversary of his employment for the next three years. If Employee is terminated during a Secondary Term, all shares to be earned during the term are forfeited unless employee is not terminated for cause. 

 

c.These New Preferred Shares are subject to additional lockup and trading restrictions as set forth below. These restrictions are performance based and shall be subject to a separate lockup or trading restriction shall be defined herein as “Preferred Trading Restrictions after Conversion to Common Stock.” The Preferred Trading Restrictions after Conversion to Common Stock are set forth in the form of Trading Agreement attached hereto as Exhibit A (the “Preferred Trading Agreement”). These contingently issuable 2,000,000 restricted convertible preferred shares shall be issued pursuant to the terms of Employment. These New Preferred Shares are not earned and shall not be considered outstanding until or unless Emplyee meets the terms of employment. 

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(e)Preferred Trading Restrictions after Conversion to Restricted Common Stock. 

 

a.Twenty-four (24) Month Minimum Lockup. All restricted New Preferred Shares shall bear a restricted legend that they are not saleable or transferable without the express written consent of Company for 24 months from the date of Closing. 

 

b.After 24 Months. At the end of 24 months all fully earned restricted New Preferred Shares may at the discretion of Employee be converted into restricted common stock of Purchaser pursuant to their terms. Such common stock shall be subject to Rule 144 including, but not limited to, tack back provisions, as applicable. 

 

(f)Employee and Affiliate Restrictions. At all times while employed Employee shall be subject to restrictions related to affiliates and insiders otherwise known as “control persons”. This means that Employee will be subject to yet unknown employee code of conduct rules and manual related to insider sales and applicable Securities and Exchange Commission rules and requirements. Further, at all times, these trading amounts are subject to Federal insider regulations related to control persons and maybe limited by exchange or security regulators or underwriters. 

 

Section 4. Expenses.

 

The Company will advance, pay or reimburse Employee, in accordance with the regular policies of the Company, for all pre-approved reasonable and necessary business expenses incurred by Employee in furtherance of or in connection with performing his obligations under this Agreement during the Term and consistent with the Company’s annual budget.  Such expenses shall be reimbursed to the extent they are incurred and accounted for in accordance with the policies and practices of the Company as in effect from time to time. At all times the CEO shall preapprove expenses.

 

The Company shall provide Employee with an apartment in Dallas and a vehicle for his use in Dallas, TX.

 

Section 5. Vacation and Other Benefits.

 

(a)During the Employment Period, Employee shall be entitled to three (3) weeks of paid vacation during each twelve-month period, commencing during the calendar year beginning January 1, 2021. These three (3) weeks shall vest equally over a 12-month period. Employee shall also be entitled to all paid holidays given by the Company to its employees. Employee agrees to utilize his vacation at such time or times as are: 

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(i)consistent with the proper performance of his duties and responsibilities under this Agreement, and 

 

(ii)mutually convenient for the Company and Employee. 

 

Employee agrees only one (1) week of unused vacation shall carry forward from year to year and all other unused vacation shall expire and be lost.

 

(b)During the Employment Period, Employee shall be entitled to participate in all employee welfare benefit plans, programs, and arrangements provided by the Company from time to time to its employees generally, subject to and on a basis consistent with the terms, conditions, and overall administration (including eligibility and vesting requirements) of such plans, programs, and arrangements.  Such plans may include health, dental, retirement or other such programs which may be to the benefit of the Company’s employees. Notwithstanding the provisions of this Section 5(b), the Company shall not be obligated to make any specific plans, programs or arrangements available to employees. 

 

(c)Medical and Dental Insurance. The Company does not currently provide medical or dental insurance. However, the Company intends to offer such coverage in the 1st Quarter. Once offered, the Company will pay ½ the expense of such coverage and the Employee, if they elect, may pay the other ½. There is no obligation for Employee to participate in any such coverage. 

 

Section 6. Business Opportunities and Intellectual Property.

 

(a)During the Employment Period, Employee shall promptly disclose to the Company all Business Opportunities and Intellectual Property (each as defined herein) Employee becomes aware in any way related to the Company. 

 

(b)Employee hereby assigns and agrees to assign to the Company, its successors, assigns or designees, all of Employee’s right, title and interest in and to all Business Opportunities and Intellectual Property, and further acknowledges and agrees that all Business Opportunities and Intellectual Property constitute the exclusive property of the Company. This includes any Intellectual Property developed by Employee for Razor Jacket, LLC, related to the manufacturing of isolates or terpenes from cannabinoids. 

 

(c)For purposes hereof, “Business Opportunities” shall mean all existing or future business ideas, prospects, proposals or other opportunities pertaining to hemp isolate or terpene business and related aerosol use (aerosol use shall also include prescription and non-prescription delivery of non-hemp related medications and supplements), including, but not limited to the development of isolates or terpenes from L. Sativa or other hemp sub-species and used in aerosol and all other forms of routes of administrations, including, but not limited to oral, nasal, patches and dry powder, which are: 

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(i)developed by Employee: 

 

(A)during the Employment Period; or 

 

(B)before the Employment Period, but only to the extent: 

 

1.Employee’s rights thereto do not conflict or frustrate the Company’s purchase of Assets of Razor Jacket, LLC; 

 

2.it would not breach any duty or obligation of Employee to a third-party during such period (other than Razor Jacet, LLC); and 

 

3.It does not pertain to the Hemp or Aerosol Business interest; or 

 

(ii)originated by any third party and brought to the attention of Employee: 

 

(A)during the Employment Period; or 

 

(B)before the Employment Period, but only to the extent 

 

1.Employee’s rights thereto do not conflict or frustrate the Company’s purchase of Assets from Razor Jacket, LLC; 

 

2.it would not breach any duty or obligation of Employee to a third-party during such period (other than Razor Jacket, LLC); 

 

3.it does not pertain to the Hemp or Aerosol Business; or 

 

4.it does not constitute, and/or is not included in, a Business Record (as defined herein). 

 

(d)For purposes hereof “Intellectual Property” shall mean all ideas, inventions, discoveries, processes, designs, methods, modifications, substances, articles, computer programs and improvements relating to the Hemp or Aerosol Business (including, without limitation, enhancements to or further interpretation or processing of such information), whether or not patentable or copyrightable, which do not fall within the definition of Business Opportunities, which are discovered, conceived, invented, created or developed by Employee, alone or with others: 

 

(i)during the Employment Period if such discovery, conception, invention, creation, or development: 

 

(A)occurs in the course of Employee’s employment with the Company; 

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(B)occurs with the use of any of the Company’s time, materials, facilities or other assets; or 

 

(C)in the opinion of the Board, relates or pertains in any way to the Company’s purposes, activities or affairs, or 

 

(ii)before the Employment Period, but only to the extent: 

 

(A)of Employee’s rights thereto; 

 

(B)it would not breach any duty or obligation of Employee to a third-party during such period (except to Razor Jacket, LLC); and 

 

(C)it does not pertain to the Hemp or Aerosol Business. 

 

(e)In addition to the foregoing assignment of the Intellectual Property to the Company, Employee hereby irrevocably transfers and assigns to the Company: (i) all worldwide patents, patent applications, copyrights, mask works, trade secrets and other intellectual property rights in any Intellectual Property; and (ii) any and all “Moral Rights” (as defined below) that Employee may have in or with respect to any Intellectual Property. Employee also hereby forever waives and agrees never to assert any and all Moral Rights Employee may have in or with respect to any Intellectual Property, even after termination of Employee’s work on behalf of the Company. “Moral Rights” means any rights to claim authorship of any Intellectual Property, to object to or prevent the modification of any Inventions, or to withdraw from circulation or control the publication or distribution of any Intellectual Property, and any similar right, existing under judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as a “moral right”. 

 

Section 7. Restrictive Covenants.

 

(a)Non-Disclosure. Employee acknowledges that the services he is to render in the course of his employment by the Company are of a special and unusual character with unique value to the Company. Employee further acknowledges that during the Employment Period, the Company has agreed to provide him, as one of its employees, special training and knowledge, Business Opportunities, intellectual property, Trade Secrets and Confidential Information (as defined herein).  Employee further acknowledges that the Company has agreed to provide him access to, and simultaneous to the execution of this Agreement he shall receive from the Company, certain Confidential Information (as defined herein). Employee covenants and agrees that he will not at any time, either during or subsequent to his employment, disclose to any third party or directly or indirectly make use of, except for the business of the Company, any special training and knowledge, Business Opportunities, Intellectual Property or Confidential  

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Information received from, or learned as a result of his employment with, the Company or any of its subsidiaries. Ancillary to and in an effort to enforce Employee’s agreement to protect and not to disclose the Company’s or its subsidiaries’ information as set forth in this Section 7, Employee covenants and agrees to the restrictions and obligations set forth in this Section 7.  This subsection is expressly subject to Section 7(f). “Trade Secret” means the Uniform Trade Secrets Act as adopted by the State of Texas under Texas Civil Practices & Remedies Code § 134A.002 which includes information, without regard to form, including technical or non-technical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers that (i) derives economic value, actual or potential, from not being generally known to, and not being generally readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use and (ii) is the subject of reasonable efforts by the Company to maintain its secrecy.

 

(b)Non-Competition During Employment. In consideration for Employee’s agreement under Sections 7(b) and (c), Employee shall receive $1,000.00 per year above his Base Pay which shall be earned and payable periodically in equal installments in accordance with the Company’s normal payroll practices, including applicable deductions and withholdings, plus the Company shall disclose to Employee proprietary information he does not currently have access to and which is not public information including, but not limited to, information about aerosol pMDI, MDI and dry powder manufacturing.  This subsection and following subparts are expressly subject to Section 7(f). 

 

(i)During the Employment Period, Employee shall not directly or indirectly be employed by or render advisory, consulting or other services in connection with any business enterprise or person, other than the Company, that is engaged in activities related to the Hemp or Aerosol Business. 

 

(ii)During the Employment Period, Employee shall not, directly or indirectly, in any capacity (including, without limitation, as a proprietor, investor, director or officer or in any other individual or representative capacity), be financially interested in or engage in the Hemp or Aerosol Business other than through the Company. 

 

(iii)During the Employment Period, all investments made by Employee (whether in his own name or in the name of any Family Member or made by any of Employee’s Affiliates), which relate to the Hemp or Aerosol Business shall be made solely through the Company; and Employee will not (directly or indirectly through any Family Member) in any capacity (including alone, as a  

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member, partner, joint venture, equity holder, lender or in any other capacity), and will not permit any of his Affiliates to:

 

(A)invest or otherwise participate alongside the Company in any Business Opportunities; or 

 

(B)invest or otherwise participate in any business or activity relating to a Business Opportunity, regardless of whether the Company ultimately participates in such business or activity. 

 

“Family Member” means a person who is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive relationships, of the Employee, any person sharing the Employee’s household (other than a tenant or employee), a trust in which any one or more of these persons have more than fifty percent of the beneficial interest, a foundation in which any one or more of these persons (or the Employee) control the management of assets, and any other entity in which one or more of these persons (or the Employee) own more than fifty percent of the voting interests.

 

(c)Non-Competition After Employment. Upon termination of Employee’s employment by the Company pursuant to Sections 8(b) or 8(c), or by Employee without Good Reason, Employee agrees that for a period commencing upon the date of termination of Employee’s employment hereunder (the “Termination Date”) and ending upon the later to occur of: 

 

(i)the second anniversary of the Termination Date; or 

 

(ii)the third anniversary of the date hereof, Employee shall not, directly or indirectly (including, without limitation, as a proprietor, investor, director or officer or in any other individual or representative capacity) 

 

(A)own, acquire, or solicit the acquisition of, or assist any other person to own, acquire or solicit the acquisition of, any Hemp or Aerosol Business; or 

 

(B)engage in or assist any other person to engage in the Hemp or Aerosol Business. 

 

This subsection is expressly subject to Section 7(f).

 

As used in this Section 7, the term:

 

(i)“Hemp or Aerosol Business” means all: activities related to genetics, growing, producing, gathering, transporting, storing,  

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processing, extracting, distilling, creating, distribution, manufacturing of marketing of any legal hemp products including but not limited to, crude, distillate, isolate, terpenes, pMDI, MDI or Dry Powder Inhalers as well as other routes of administration of hemp products such as oral, nasal, dermal, vape or injection.

 

(d)During the Employment Period and thereafter, Employee will not disclose to any third party directly or indirectly or indirectly make use of, except for the business of the Company, any Confidential Information. For purposes of this Section 7, it is agreed that “Confidential Information” means (a) any and all Trade Secrets of the Company under the Uniform Trade Secrets Act as adopted by the State of Texas under Texas Civil Practices & Remedies Code § 134A.002, or otherwise; (b) the identities of all suppliers and customers and their employees and their contact information, and (c) any and all confidential, proprietary or trade secret information of the Company or an affiliate not within the public domain, whether disclosed, directly or indirectly, verbally, in writing (including electronically) or by any other means in tangible or intangible form, including that which is conceived or developed by the Employee, applicable to or in any way related to: (i) the present or future business activities, products and services, and customers of the Company or its affiliates; (ii) the research and development of the Company or its affiliates; or (iii) the business of any client or vendor of the Company or its affiliates. Such Confidential Information includes the following property or information of the Company or its affiliates, by way of example and without limitation, trade secrets, processes, formulas, data, program documentation, customer lists, designs, drawings, algorithms, source code, object code, know-how, improvements, inventions, licenses, techniques, all plans or strategies for marketing, development and pricing, business plans, financial statements, profit margins and all information concerning existing or potential clients, suppliers or vendors. Confidential Information of the Company also means all similar information disclosed to any member of the Company by third parties that is subject to confidentiality obligations . For purposes of this Section 7, it is agreed that Confidential Information includes, without limitation, any information heretofore acquired or acquired during the term hereof, developed or used by the Company relating to Business Opportunities or Intellectual Property or other research, economic, financial or management aspects of the business, operations, properties or developments of the Company whether oral or in written form in a Business Record (as defined in Section 7(g) below). Notwithstanding the foregoing, no information of the Company will be deemed confidential for the purposes of this Section 7(d) if such information is or becomes public knowledge through no wrongful act of Employee or was previously known by Employee prior to entering into this Agreement, with the exception of Trade Secrets and has not been utilized by the Company, provided further that all Intellectual Property acquired by Company from Razor Jacket, LLC shall be deemed Confidential Information hereunder.  This subsection is expressly subject to Section 7(f). 

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(e)Non-Solicitation. Except in the event of the termination of Employee’s employment by Employee for Good Reason, during the period commencing upon the Termination Date and ending upon the later to occur of: 

 

(i)the first anniversary of the Termination Date, or 

 

(ii)the third anniversary of the date hereof, Employee may not: 

 

(A)solicit, raid, entice or induce, directly or indirectly, any employee (or person who was previously an employee within one (1) year of the Termination Date) of the Company (other than secretarial or similarly-positioned personnel) or any other person who is under contract with or rendering services to the Company in an employee-like capacity, to: 

 

1.terminate his employment by, or contractual relationship with, the Company; 

 

2.refrain from extending or renewing the same (upon the same or new terms); 

 

3.refrain from rendering services to or for the Company; 

 

4.become employed by or to enter into contractual relations with any persons other than the Company; or 

 

5.enter into a relationship with a competitor of the Company; or 

 

(B)divert or attempt to divert, any person, concern or entity from doing business with the Company, or attempt to induce any such person, concern or entity to cease being a customer or supplier of the Company. Notwithstanding any other provision of this Agreement. 

 

This subsection is expressly subject to Section 7(f).

 

(f)Remedies for Breach and Injunctive Relief.  Employee acknowledges and agrees that the services to be rendered by him to the Company as one of its employees are of a special, unique and extraordinary character and, in connection with such services, he will have access to Business Opportunities, Trade Secrets, intellectual property and Confidential Information vital to the Company’s businesses. By reason of this, Employee consents and agrees that if he violates any of the provisions of this Section 7, the Company would sustain irreparable harm and, therefore, in addition to any other remedies which the Company may have under this Agreement or otherwise under applicable law, the Company shall be entitled to an injunction restraining Employee from committing or continuing any such violation of this Agreement. Such right to an injunction shall be cumulative and in addition to, and not in lieu of, any other remedies to which the Company may  

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show itself justly entitled.  Further, Employee expressly acknowledges and agrees that such injunction may be obtained without notice to Employee or bond and that in the event a court of competent jurisdiction requires a bond, it shall not exceed One Thousand Dollars ($1,000.00).

 

(g)Return of Business Records. Employee agrees to promptly deliver to the Company, upon the expiration of the Employment Period, or at any other time when the Company so requests, all material relating to the business of the Company, including, without limitation: research files, QMX files, contract files, notes, records, drawings, manuals, correspondence, financial and accounting information, customer lists, statistical data and compilations, patents, copyrights, trademarks, trade names, inventions, formulae, methods, processes, agreements, contracts, manuals or any other materials relating to the business of the Company (in this Section 7, collectively called the “Business Records”), and all copies thereof and therefrom. Employee confirms that all of the Business Records (and all copies thereof and therefrom) that are required to be delivered to the Company pursuant to this Section 7 constitute the property of the Company. The obligation of confidentiality set forth in this Section 7 shall continue notwithstanding Employee’s delivery of any such documents to the Company. This subsection is expressly subject to Section 7(f). 

 

(h)Employee represents and covenants that the execution, delivery and performance by Employee of this Agreement and the services he is to render to the Company as contemplated by this Agreement will not: 

 

(i)be in contravention of or result in any breach or constitute a default under any applicable law, rule, regulation, judgment, license, permit or order or any material loan, note or other agreement or instrument to which Employee is a party or by which he or any of his properties are bound, 

 

(ii)result in the Employee disclosing or utilizing any trade secret or proprietary information or documentation of any Person, or 

 

(iii)violate any confidential relationship which Employee may have had with any Person. 

 

This subsection is expressly subject to Section 7(f).

 

(i)The existence of any claim or cause of action of Employee against the Company or any officer, manager, or member of the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants of Employee contained in this Section 7.  This subsection is expressly subject to Section 7(f).  In addition, the provisions of this Section 7 shall continue to be binding upon  

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Employee in accordance with their terms, notwithstanding the termination of Employee’s employment hereunder for any reason.

 

(j)The parties to this Agreement agree that the limitations contained in this Section 7 with respect to time, geographical area, and scope of activity are reasonable. However, if any court should determine that the time, geographical area, or scope of activity of any restriction contained in this Section 7 is unenforceable, it is the intention of the parties that such restrictive covenants set forth herein shall not thereby be terminated but shall be deemed amended to the extent required to render it valid and enforceable. 

 

(k)Nothing contained in this Section 7 shall be construed to prohibit Employee from investing in stock or other securities listed on a national securities exchange or actively traded in the over-the-counter market of any corporation or other entity engaged in a business or activity competitive with the business of the Company or any of its subsidiaries, provided that Employee, his Family Members and each of their respective Affiliates shall not, directly or indirectly, hold more than a total of three percent (3%) of all such shares of stock or other securities issued and outstanding, and provided further that Employee shall not perform any services on behalf of, or in the operation of the affairs of, such corporation or other entity. 

 

(l)During any period in which Employee is in breach of any of the covenants set forth in this Section 7, the time period with respect to such covenant shall be extended for an amount of time that Employee is in breach thereof. 

 

Section 8. Termination of Employment.

 

(a)Employee’s employment hereunder shall terminate automatically upon his death. 

 

(b)If the Company determines in good faith that the Disability (as defined herein) of Employee has occurred during the Employment Period, the Company may notify Employee of the Company’s intention to terminate Employee’s employment hereunder for Disability. In such event, Employee’s employment hereunder shall terminate effective on the fifth day following the date such notice of termination is given to Employee. For purposes of this Agreement, the “Disability” of Employee shall be deemed to have occurred if Employee shall have been unable to perform his essential duties hereunder for a period consisting of 90 continuous days within any given period of 365 consecutive days, (excluding any leaves of absence approved by the Board and the number of days of accrued vacation of Employee) as a result of his physical or mental incapacity; provided that, if Employee has a physical or mental impairment that substantially limits one or  

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more major life activities, as defined under the Americans with Disabilities Act, the Company may extend the 90-day period to reasonably accommodate Employee’s impairment.

 

(c)The Company may terminate Employee’s employment hereunder at any time for Cause. For purposes of this Agreement, “Cause” shall mean any of the following: 

 

(i)the failure of Employee to substantially perform his duties as an employee after demand for substantial performance is delivered by the Company to Employee that specifically identifies the manner in which the Company believes that Employee has not substantially performed his duties including, but not limited to, failure to appear for work at normal business hours on non-national holiday or vacation days; 

 

(ii)the failure of Employee to comply in any material respect with any written or oral direction of the CEO which reasonably relates to the performance of his duties that he is physically able to perform and which would not require him to perform an illegal act or breach any agreement to which the Company is a party; 

 

(iii)the commission by Employee of any criminal act that constitutes a felony or involves fraud, dishonesty, or moral turpitude (as determined by the reasonable determination of the Board); 

 

(iv)Employee’s failure to render the services to the Company as contemplated under this Agreement as a result of alcohol or drug abuse (as determined by the reasonable determination of the Board); 

 

(v)the willful, material violation by Employee of any employer policies of the Company or its Affiliates that the employee has signed or corporate policies to which the Employee has been given notice of and to which all other employees are subject; or 

 

(vi)the material breach by Employee of any of his material covenants and agreements contained in this Agreement, including but not limited to non-disclosure as set forth in Section 7(a) and non-compete as set forth in Section 7(b). 

 

With respect to clauses (i), (ii), and (iv), Cause shall only exist if Employee fails to cure such matter within ten (10) business days after receiving written notice from the Company.

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(d)Employee may terminate his employment hereunder at any time for Good Reason or without Good Reason upon thirty (30) days advance notice to the Company. For purposes of this Agreement, “Good Reason” means: 

 

(i)the Company’s failure to timely pay any compensation due to Employee under this Agreement, including failure to provide any stock or stock options due under Section 3, if any; 

 

(ii)a reduction in Employee’s compensation without Employee’s written consent; 

 

(iii)the Company’s failure to timely provide resources necessary for the Employee to perform his duties under this agreement, other than (i) a purely monetary failure with respect to an amount less than $5,000, (ii) a failure within Employee’s control or (iii) an isolated, insubstantial or inadvertent failure that is not taken in bad faith and is remedied by the Company within 15 days after receipt of written notice thereof from the Employee; or 

 

(iv)any action by the Company, except as required by law or applicable government regulations, which is specific to the Employee that would or does adversely affect Employee’s ability to perform his duties, or participation in bonus or incentive plans or the Other Benefits. 

 

Notwithstanding anything herein to the contrary, Good Reason shall exist only if the Company fails to cure the matter described in clauses (i), (ii), (iii), and (iv) of this Section 8(d) within 30 days after written notice from Employee.

 

(e)The Company may terminate the Employee’s employment hereunder at any time without Cause. 

 

(f)This Agreement shall terminate in connection with a Non-Renewal. 

 

(g)In the event of the termination of Employee’s employment hereunder (for any reason other than the death of Employee), Employee agrees that if at such time he is a manager or officer of the Company or any of its subsidiaries, or a member of the Board, he will promptly deliver to the Company his written resignation from all such positions, such resignation to be effective as of the date of termination. 

 

Section 9. Obligations of Company Upon Termination of Employment.

 

(a)If Employee’s employment hereunder is terminated pursuant to Sections 8(a), 8(b) or 8(c), or if Employee terminates his employment without Good Reason, or if this Agreement shall terminate as a result of a Non-Renewal, the Company shall pay to Employee, or his estate, trust or similar Person if applicable, on the sixth  

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(6th) day following the Termination Date or the next regularly scheduled payday of the Company following the Termination Date, whichever is later, (i) any accrued but unpaid Base Salary provided for in Section 3 hereof for services rendered through the Termination Date, (ii) any accrued but unpaid expenses required to be reimbursed under Section 4 and (iii) any vacation accrued to the Termination Date (based on a value per accrued vacation day, of the Base Pay divided by 260).

 

(b)If Employee’s employment hereunder is terminated (x) by the Company for any reason other than (A) for death, (B) Disability, (C) Non-Renewal, or (D) pursuant to Section 8(c), with Cause, or (E) by Employee for Good Reason, the Company shall pay to Employee: 

 

(i)on the sixth (6^th) day following the Termination Date or the next regularly scheduled payday of the Company following the Termination Date, respectively; 

 

(A)any accrued but unpaid Base Salary provided for in Section 3 hereof for services rendered through the Termination Date; 

 

(B)any accrued but unpaid expenses required to be reimbursed under Section 4; and 

 

(C) any vacation accrued to the Termination Date (based on a value per accrued vacation day, of the Base Pay divided by 260), and 

 

(ii)severance pay in an amount equal to twelve months of Employee’s Base Pay pursuant to Section 3.  Payments shall be payable in equal monthly installments beginning on the last day of the first month following the Termination Date; provided, however, that none of the benefits payable under Section 9(b)(ii) will be payable unless, and the obligation to pay any severance pursuant to Section 9(b)(ii) shall not accrue until, the Employee has signed and delivered an executed general release, which has become irrevocable, satisfactory to the Company in its reasonable discretion, releasing the Company and its Affiliates and their respective officers, directors, managers, members, partners and employees from any and all claims or potential claims arising from or related to the Employee’s employment or termination of employment. 

 

(iii)For the avoidance of doubt, if Employee is terminated without Cause or Employee terminates his employment for Good Reason (or any of the other reasons for which payment is required to be made under Section 9(b)(ii), and thereafter Employee engages in the activities that are within the scope of the restrictions described  

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in Section 7, Employee shall not be entitled to the severance payment described in clause (ii) of this Section 9(b).

 

Section 10. Withholding Taxes.

 

The Company shall withhold from any payments to be made to Employee hereunder such amounts (including social security contributions and federal income taxes) as shall be required by federal, state, and local withholding tax laws.

 

Section 11. Attorneys’ Fees and Costs.

 

In the event there is any litigation between the parties hereto with respect to this Agreement, the prevailing party in such litigation shall be entitled to recover all attorneys’ fees and costs incurred by such party in connection with such litigation.

 

Section 12. Notices.

 

All notices, requests, or consents provided for or permitted to be given under this Agreement must be in writing and must be given either by depositing that writing in the United States mail, addressed to the recipient, postage paid, and registered or certified with return receipt requested or by delivering that writing to the recipient in person, by courier, by electronic transmission, or by facsimile transmission; and a notice, request, or consent given under this Agreement is effective on receipt by the person to receive it.

 

Section 13. Governing Law, Jurisdiction and Venue and Arbitration.

 

It is understood and agreed that the construction and interpretation of this Agreement shall at all times and in all respects be governed by the laws of the State of Texas. At all times venue shall be Dallas or Colling Counties, Texas.

 

ARBITRATION. IN THE EVENT OF A DISPUTE HEREUNDER, EITHER PARTY MAY AT ITS DISCRETION ELECT BINDING ARBITRATION UNDER THE TEXAS ARBITRATION ACT (THE “ACT”) IN FRONT OF ONE (1) ARBITRATOR. SUCH ARBITRATION SHALL OCCUR THROUGH A DISTRICT COURT UNDER THE ACT OR AT JAMS BY AGREEMENT OF THE PARTIES. THE ARBITRATOR’S SOLE AUTHORITY SHALL BE TO DETERMINE IF A BREACH OF THIS AGREEMENT HAS OCCURRED AND WHAT ACTUAL DAMAGES A PARTY IS ENTITLED TO. THE ARBITRATOR HAS NO OTHER AUTHORITY BUT TO ENTER A TRO OR TEMPORARY OR PERMENANT INJUNCTION TO ENFORCE PROVISIONS OF SECTION 6, 7, OR 8 HEREIN. EITEHR PARTY CAN SEEK INJUNCTIVE RELIEF THROUGH ARBITRATION OR THE DISTRICT COURT IN DALLAS OR COLLIN COUNTIES.

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Section 14. Assistance in Litigation.

 

During the Employment Period and for a period of four (4) years thereafter, Employee shall, upon reasonable notice, furnish such information and proper assistance to the Company as may reasonably be required by the Company in connection with any litigation in which the Company, or any of its subsidiaries or Affiliates is, or may become, a party. The Company shall reimburse Employee for

 

(i)all reasonable, documented out-of-pocket expenses incurred by Employee in rendering such assistance subject to the Company’s reasonable policies regarding the reimbursement of expenses; and 

 

(ii)reasonable compensation for Employee’s time in rendering such assistance if such assistance occurs after the Employment Period. 

 

Section 15. Severability.

 

The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect to the fullest extent permissible by law. Should any one or more of the provisions of this Agreement be held to be excessive, unreasonable, or otherwise unenforceable, then that provision shall be construed by limiting and reducing it so as to be reasonable and enforceable to the fullest extent compatible with applicable law.

 

Section 16. Survival.

 

Neither the expiration nor the termination of the term of Employee’s employment hereunder shall impair the rights or obligations of either party hereto which shall have accrued hereunder prior to such expiration or termination. The provisions of Sections 6, 7, 9, 10, 11, 12, 13, 14, 15 and this Section 16 and the rights and obligations of the parties thereunder, shall survive the expiration or termination of the term of Employee’s employment hereunder.

 

Section 17. Entire Agreement.

 

This Agreement, including the schedules attached hereto, contains the entire agreement and understanding by and between the Company and Employee with respect to the employment of Employee, and no representations, promises, agreements, or understandings, written or oral, not contained herein shall be of any force or effect. No waiver of any provision of this Agreement shall be valid unless it is in writing and signed by the party against whom the waiver is sought to be enforced. No valid waiver of any provision of this Agreement at any time shall be deemed a waiver of any other provision of this Agreement at such time or any other time.

 

Section 18. Modification.

 

No amendment, alteration or modification to any of the provisions of this Agreement shall be valid unless made in writing and signed by both parties.

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Section 19. Binding Effect; Assignment; No Third Party Benefit.

 

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors, and assigns; provided, however, that the duties and responsibilities of Employee hereunder may not be assumed by, or delegated to, any other person. Nothing in this Agreement, express or implied, is intended to or shall confer upon any person other than the parties hereto, and their respective heirs, legal representatives, successors, and permitted assigns, any rights, benefits, or remedies of any nature whatsoever under or by reason of this Agreement.

 

Section 20. Counterparts.

 

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument.

 

Section 21. Voluntary Agreement.

 

Each party to this Agreement has read and fully understands the terms and provisions hereof, has had an opportunity to review this Agreement with legal counsel, has executed this Agreement based upon such party’s own judgment and advice of counsel (if any), and knowingly, voluntarily, and without duress, agrees to all of the terms set forth in this Agreement. The parties have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party because of authorship of any provision of this Agreement.

 

Section 22. Directly or Indirectly.

 

Where any provision of this Agreement refers to action to be taken by any person, or which such person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such person, including actions taken by or on behalf of any Affiliate of such person.

 

 

 

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SIGNATURE PAGE - DRINKWINE EMPLOYMENT AGREEMENT

 

 

IN WITNESS WHEREOF, executed this ______ day of January, 2021.

 

 

COMPANY:

Rapid Therapeutic Science Laboratories, Inc.

 

 

 

 

By: /s/ Donal R. Schmidt, Jr.

Donal R. Schmidt, Jr., CEO

 

 

 

 

EMPLOYEE:

Duane Drinkwine

 

 

 

 

 

By: /s/ Duane Drinkwine

Duane Drinkwine

 

 

 

 

 

 

 

 

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TRADING AGREEMENT

 

THIS TRADING AGREEMENT (this “Agreement”), made as of this 7^th day of January 2021 (the “Effective Date”), by and among the individuals or entities who have signed a form of page 8 of this Agreement below (each a “Signature Page”, each signatory a “Shareholder” and collectively if more than one, the “Shareholders”) and Rapid Therapeutic Science Laboratories, Inc., a Nevada corporation (RTSL) (the “Company”).

 

W I T N E S S E TH:

 

WHEREAS, each Shareholder holds that number of shares of the Company’s convertible preferred stock as are set forth next to his, her or its signature on the Signature Page (which shares, together with any and all other shares of common stock or other securities of the Company which a Shareholder may obtain beneficial or record ownership of until the end of the Trading Period (defined below), the “Shares”) including, but not limited to the shares of common stock issuable upon conversion of such convertible preferred stock and any shares obtained by exercising Warrants, or converting convertible securities and/or preferred stock, which Shares shall be subject to the terms of this Agreement as provided below; and

 

WHEREAS, the parties hereto desire to enter into this Agreement upon the terms and conditions contained hereinafter to set forth conditions pursuant to which the Shareholder may transfer and sell the Shares.

 

NOW, THEREFORE, in consideration of the mutual premises set forth herein, $10 and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each Shareholder, the parties hereto hereby agree as follows.

 

1.  Trading Period. Each Shareholder hereby agrees that:

 

1.1.  Until February 1, 2025, each Shareholder will not, directly or indirectly Transfer any of the Shares; provided that after January 1, 2023, and until October 31, 2025 (such period, the “Trading Period”), each Shareholder shall be authorized to sell a limited number of Shares in connection with an open market sale of the Shares, which number of Shares sold in the open market shall not exceed, on a daily basis, more than:

 

(1) 5.0% of the average aggregate daily number of shares of the Company’s common stock which have traded publicly on the OTC Pink Market, OTCQB, or such other market or exchange on which the Company’s common stock primarily trades, relative to the volume of shares trading during the open market (daily trading volume) (as adjusted for any stock split, recapitalization or combination), as determined by the daily trading volume of the open market for the preceeding rolling thirty days.

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1.2.  Additionally, during the Trading Period:

 

(1) Shareholders will not engage in collectively selling of individual, isolated trades of Shares that total in aggregate more than 5% of the daily trading volume of the Company’s common stock.

 

(2) Each Shareholder will not sell any Shares in the first or last 30 minutes of any trading day.

 

(3) Each Shareholder will trade the Shares in multiple trades and not have the allocated daily volume be placed as a single order placed on a trading desk as block trade in the last hour and 30 minutes of the trading day. The individual trading will be done on a “dripped procedure” relative to the daily trading volume.  An exemption to this requirement will be if a trade is placed early in the day and the volume “vanishes” at the end of the trading day.

 

(4) Each Shareholder may have a standard deviation relative to daily trading volume if the afternoon trading session volume lightens significantly relative to the trading market morning session.  That standard deviation is not to exceed 2% of the daily trading volume.

 

The obligations and restrictions of the Shareholder as set forth in Section 1.1 and Section 1.2 are defined as the “Trading Restrictions”.

 

1.3.  “Transfer” means the direct or indirect, offer for sale, sale, pledge, hypothecation, transfer, assignment or other disposition of (or to enter into any transaction or device that is designed to, or could be expected to, result in the sale, pledge, hypothecation, transfer, assignment or other disposition at any time) (including, without limitation, by operation of law), or the entry into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of the Shares, whether any such transaction is to be settled by delivery of Shares or other securities, in cash or otherwise. This includes private transfers to any beneficial owner. For the sake of clarity, and without limiting any other provision of this Agreement, the Shareholder agrees and confirms that a distribution of any Shares to such Shareholder’s security holders, shareholders, members, or other owners, directly or indirectly, and by the operation of law or otherwise, shall be deemed a Transfer hereunder, and shall be prohibited by the terms of this Agreement.

 

1.4.  Any attempted Transfer of Shares by any Shareholder which is not in compliance with this Agreement or which is in violation of the terms of this Agreement shall be void ab initio.

 

2.  Representations and Warranties of Each Shareholder. Each Shareholder individually, and not jointly or severally, represents, warrants and agrees that:

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2.1.  The Shareholder is the sole record and beneficial owner of the Shares and has good and marketable title to all of the Shares. Shareholder has sole managerial and dispositive authority with respect to the Shares and has not granted any person a proxy or option to buy the Shares that has not expired or been validly withdrawn.

 

2.2.  The Shares and any certificate evidencing such Shares and/or any book-entry notation representing the Shares, may, at the request of the Company, be stamped or otherwise imprinted or noted with a conspicuous legend in substantially the following form:

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF THAT CERTAIN TRADING AGREEMENT (A/K/A A LOCK-UP AND LEAK OUT AGREEMENT) BETWEEN CERTAIN SHAREHOLDERS OF THE COMPANY, INCLUDING THE HOLDER, AND THE COMPANY, DATED AS OF OCTOBER 31, 2020. A COPY OF THE LOCK-UP AGREEMENT MAY BE INSPECTED AT THE PRINCIPAL OFFICE OF THE COMPANY.”

 

3.  Right to Reject Dispositions. In furtherance of the foregoing, the Company and its Transfer Agent are hereby authorized (i) to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Agreement and (ii) to imprint on any certificate representing Shares beneficially owned by a Shareholder (or any book-entry relating to such Shares) with a legend describing the restrictions contained herein.

 

4.  Power and Authority. Each party hereto respectively represents and warrants that such party has full power and authority to enter into this Agreement and that, upon request of the Company, each Shareholder will execute any additional documents necessary in connection with the enforcement hereof.

 

5.  No Assignment; Binding Nature. No party may assign this Agreement in whole or in part, without the written consent of the other parties. This Agreement shall be binding upon the parties and their respective successors and permitted assigns.

 

6.  Inspection of Records. On the first day of each calendar month during the Trading Period, all Shareholders shall produce their prior month’s trading records for inspection by the Company, for all brokerage accounts. Failure to timely produce such trading records shall be a violation of this Agreement and the Company may thereafter, in its sole discretion, cause the transfer agent to suspend further transfers and/or may seek injunctive relief to stop sales of any shares held in a trading account by the applicable Shareholder who has not complied with the terms of this Section 6.

 

7.  Miscellaneous.

 

7.1.  Severability of Invalid Provision. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held

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invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

 

7.2.  Entire Agreement of the Parties. The Agreement constitutes the entire agreement of the parties regarding the matters contemplated herein, or related thereto, and supersedes all prior and contemporaneous agreements, and understandings of the parties in connection therewith. No covenant, representations, or conditions, which are not expressed in the Agreement shall affect, or be effective to interpret, change, or restrict, the express provisions of this Agreement.

 

7.3.  Further Assurances. All parties agree that, from time to time, each of them will take such other action and to execute, acknowledge and deliver such contracts or other documents as may be reasonably requested and necessary or appropriate to carry out the purposes and intent of this Agreement.

 

7.4.  Specific Performance. The parties agree that the covenants and obligations contained in this Agreement relate to special, unique and extraordinary matters and that a violation of any of the terms hereof or thereof would cause irreparable injury in an amount which would be impossible to estimate or determine and for which any remedy at law would be inadequate.  As such, the parties agree that if either party fails or refuses to fulfill any of its obligations under this Agreement, then the other party shall have the remedy of specific performance, which remedy shall be cumulative and nonexclusive and shall be in addition to any other rights and remedies otherwise available under any other contract or at law or in equity and to which such party might be entitled. The Shareholder therefore agrees that, in the event of any such breach or threatened breach of this Agreement or the terms and conditions hereof by the Shareholder, the Company shall be entitled, in addition to all other available remedies, to an injunction restraining any breach or threatened breach, without the necessity of showing economic loss and without any bond or other security being required.

 

7.5.  Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND ENFORCED ACCORDING TO, THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS PROVISIONS THEREOF AND SHALL BE BINDING UPON THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. Any judicial proceeding brought by or any party regarding any dispute arising out of this Agreement or any matter related hereto may be brought in the courts of the State of Texas, or in the United States District Court for the State of Texas and, by execution and delivery of this Agreement, each party hereby submits to the jurisdiction of such courts.

 

7.6.  Construction. When used in this Agreement, unless a contrary intention appears: (i) a term has the meaning assigned to it; (ii) “or” is not exclusive; (iii) “including” means including without limitation; (iv) words in the singular include the plural and words in the plural include the singular, and words importing the masculine gender include the feminine and neuter genders; (v) any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection

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herewith means such agreement, instrument or statute as from time to time amended, modified or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; (vi) the words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision hereof; (vii) references contained herein to Article, Section, Schedule and Exhibit, as applicable, are references to Articles, Sections, Schedules and Exhibits in this Agreement unless otherwise specified; (viii) references to “writing” include printing, typing, lithography and other means of reproducing words in a visible form, including, but not limited to email; (ix) references to “dollars”, “Dollars” or “$” in this Agreement shall mean United States dollars; (x) reference to a particular statute, regulation or law means such statute, regulation or law as amended or otherwise modified from time to time; (xi) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein); (xii) unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”; (xiii) references to “days” shall mean calendar days; and (xiv) the paragraph headings contained in this Agreement are for convenience only, and shall in no manner be construed as part of this Agreement.

 

7.7.  Counterparts, Effect of Facsimile, Emailed and Photocopied Signatures. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, may be executed in one or more counterparts, all of which shall constitute one and the same instrument. Any such counterpart, to the extent delivered by means of a facsimile machine or by .pdf, .tif, .gif, .jpeg or similar attachment to electronic mail (email) or downloaded from a website or data room (any such delivery, an “Electronic Delivery”) shall be treated in all manner and respects as an original executed counterpart and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party, each other party shall re execute the original form of this Agreement and deliver such form to all other parties. No party shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such party forever waives any such defense, except to the extent such defense relates to lack of authenticity.

 

 

[Remainder of page left intentionally blank. Signature pages follow.]

 

 

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Trading Agreement (a/k/a Lock-up and Leak-out Agreement)

Shareholders of Rapid Therapeutic Science Laboratories, Inc.

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IN WITNESS WHEREOF, parties have caused this Agreement to be signed and delivered by their duly authorized representatives as of the date first set forth above.

 

	THE COMPANY:   Rapid Therapeutic Science Laboratories, Inc.     By: /s/ Donal R. Schmidt, Jr. Its: CEO
	Printed Name:  Donal R. Schmidt, Jr.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Pages of Shareholders follow.]

 

 

 

 

 

 

 

 

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Trading Agreement (a/k/a Lock-up and Leak-out Agreement)

Shareholders of Rapid Therapeutic Science Laboratories, Inc.

Page 6 of 7

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SHAREHOLDERS:

 

Duane Drinkwine

By: /s/ Duane Drinkwine

 

Printed Name:

 

Shares Beneficially Owned: 2,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Trading Agreement (a/k/a Lock-up and Leak-out Agreement)

Shareholders of Rapid Therapeutic Science Laboratories, Inc.

Page 7 of 7