Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
This
SECURITIES PURCHASE AGREEMENT (this “Agreement”), is dated as of May 14, 2021, entered into by and among
Puradigm LLC, a Nevada limited liability company (the “Company”), and DSS PureAir, Inc., a Texas corporation
(the “Investor”).
WITNESSETH:
WHEREAS,
the Company and Investor are executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and rule 506(b)
of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the
“SEC”) under the Securities Act;
WHEREAS,
the Company has authorized a new secured convertible note of the Company in the form attached hereto as Exhibit B
(the “Note”), which Note shall be convertible into membership interests (the “Membership Interests”)
of the Company (such interests issuable pursuant to the terms of the Note upon conversion or otherwise, collectively, the “Note
Conversion Units”) (together with the Note, the “Securities”), in accordance with the terms of the
Note;
WHEREAS,
the Investor wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, a Note
in the maximum principal amount of $5,000,000.00 (the “Loan Commitment Amount”); and
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.
PURCHASE AND SALE OF NOTE
(a)
Purchase of Note. Subject to the terms and conditions of this Agreement, the Company shall issue and sell to the Investor,
and the Investor agrees to purchase from the Company the Note. The Note shall be substantially in the form attached as Exhibit
B to this Agreement.
(b)
Commitment Amount Limits. The maximum principal amount of the Note that is offered for purchase shall not exceed the Loan
Commitment Amount.
(c)
Advances. Subject to the terms and conditions of Section 6 of this Agreement, Investor agrees to advance funds under the
Note in such amounts as may be advanced from time to time by Investor to or for the account of the Company under the Note (each
such amount being an “Advance” and more than one such amounts being “Advances”), for the
account of the Company.
(d)
Closing. The initial closing of the purchase and sale of the Note (the “Closing”) shall take place on
the date when all of the Transaction Documents (as defined below) have been executed and delivered by the applicable parties and
the other conditions to the Closing set forth herein and in Sections 4 and 5 below have been satisfied or waived (or such later
date as is mutually agreed to by the Company and the Investor) (the “Closing Date”).
(e)
Security. The Note shall be secured by the Note Conversion Units and a Security Agreement among the parties in the form
attached hereto as Exhibit C (the “Security Agreement”).
(f)
Delivery of Note. On the Closing Date, the Company shall deliver to the Investor the Note to be issued at such Closing,
duly executed on behalf of the Company.
(g)
Use of Note Proceeds. Pursuant to the terms of the Note, the Company agrees that it not use any proceeds of the Note to
pay employee bonuses, shareholder dividends, nontrade payable debt retirement or other similar expenses. Except for aforementioned,
such proceeds will be used for the primary purpose of inventory financing, including manufacturing, marketing, research and development,
and shipping. In addition, the Company may use the proceeds of the Note for reasonable working capital expense, including payment
of legal fees, interest carry on the Note, the Origination Fee (as defined below) and other business-related expenses as the parties
shall agree.
(h)
Origination Fee. Subject to the terms and conditions of this Agreement, at the Closing (as defined herein) the Company
hereby agrees to pay to the Investor an origination fee equal of $75,000.00 (the “Origination Fee”). The Company
intends to pay the Origination Fee from a portion of funds from its first Advance hereunder, and shall deliver to the Investor
the Origination Fee by wire transfer of immediately available funds within ten (10) days of the Closing.
2.
REPRESENTATIONS AND WARRANTIES.
(a)
Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to
the Investor:
(i)
Organization and Authority. The Company is an entity duly incorporated or otherwise organized, validly existing, and, if
applicable under the laws of the jurisdiction in which it is formed, in good standing under the laws of the jurisdiction of its
incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on
its business as currently conducted. Company has full corporate power and authority to enter into this Transactions Documents,
to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery, and performance
by Company of this Agreement and the documents to be delivered hereunder and the consummation of the transactions contemplated
hereby have been duly authorized by all requisite corporate action on the part of Company, including the approval of the Company’s
managing members. This Agreement and the documents to be delivered hereunder have been duly executed and delivered by Company,
and this Agreement and the documents to be delivered hereunder constitute legal, valid, and binding obligations of the Company,
enforceable against Company, except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance,
or other similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity. “Transaction
Documents” means, collectively, this Agreement, the Note, the Security Agreement, the Distribution Agreement and each
of the other agreements and instruments entered into or delivered by any of the parties hereto in connection with the transaction
contemplated hereby and thereby, as may be amended from time to time.
(ii)
Legal Proceedings. Except as set forth on Schedule 2(a)(ii), there is no claim, action, suit, proceeding
or governmental investigation (“Action”) of any nature pending or, to Company’s knowledge, threatened
against or by Company (a) relating to or affecting the Securities; or (b) that challenges or seeks to prevent, enjoin, or otherwise
delay the transactions contemplated by this Agreement, except any Actions that would not, individually or in the aggregate, have
a material adverse effect on the Company’s ability to consummate the transactions contemplated hereby on a timely basis.
To Company’s knowledge, no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any
such Action.
(iii)
Financial Statements. Copies of financial statements of the Company as of and for the fiscal year ended December 31, 2020
are attached as Exhibit E hereto. To Company’s knowledge, the Financial Statements are true, correct, and
complete.] Beginning for the year-ended December 31, 2021, the Company will deliver to the Investor CPA reviewed financial statements
within ninety (90) days after the fiscal year end. In addition, the Company will provide and deliver to the Investor internally
prepared interim financial statements of the Company within thirty (30) days upon Investor’s requests. The Company will
be responsible for reviewing its results and data and for informing Investor immediately of any post-closing adjustments that
come to its attention.
(iv)
No Material Adverse Effect. The Company is not in violation nor default of any of the provisions of its respective certificate
or articles of incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Documents , (ii) a material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company , or (iii) a material adverse effect on the Company’s ability
to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”) and no Action has been instituted in any such jurisdiction revoking, limiting
or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
(v)
Issuance of Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the Transaction Documents. Upon issuance or conversion or conversion
in accordance with the Note, the Note Conversion Units when issued and payment is made, if required, will be validly issued, fully
paid and non-assessable and free from all preemptive or similar rights or Liens with respect to the issuance thereof, with the
holder being entitled to all rights accorded to a holder of Membership Interests. Subject to the accuracy of the representations
and warranties of the Investor in this Agreement, the offer and issuance by the Company of the Securities is exempt from registration
under the Securities Act. For purposes of this Agreement, “Liens” means any and all liens, encumbrances, pledges,
security interests or other restrictions on transfer; provided, however, that the Securities will be subject to all restrictions
on transfer set forth in the Company’s internal governing documents, with the express exception that Investor may transfer
the Securities to an Affiliate of Investor without regard to any restriction in the Company’s internal governing documents
(a “Permitted Transfer”), so long as such Permitted Transfer complies with all relevant securities laws.
(vi)
No Conflicts. The execution, delivery and performance by the Company of this Agreement, and the other Transaction Documents
to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not (i) conflict with or violate any provision of the Company’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets
of the Company, or give to others any rights of termination, amendment, anti-dilution or similar adjustments, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing
a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company
is bound or affected, or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state
securities laws and regulations), or by which any property or asset of the Company is bound or affected; except in the case of
each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(vii)
Capitalization. The capitalization of the Company is as set forth on Schedule 2(a)(vii), which Schedule
2(a)(vii), shall also include the number and percentage of Membership Interests owned beneficially, and of record, by
Affiliates of the Company as of the date hereof. Except as set forth on Schedule 2(a)(vii), (x) no person or entity
has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents; (y) the issuance and sale of the Securities will not obligate the Company to issue
Membership Interests or other securities to any person or entity (other than the Investor); and (z) there are no outstanding securities
or instruments of the Company with any provision that adjusts the exercise, conversion or reset price of such security or instrument
upon an issuance of the Securities by the Company. For purposes of this Agreement, “Affiliate” means, with respect
to any Person, any other Person who is an “affiliate” (as defined in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act), and “control” for purposes of that
definition shall mean the
possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or
entity, whether through ownership of voting securities, by contract or otherwise.)
of such Person. “Person” means any individual, firm, corporation, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, limited liability company, governmental authority or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
(viii)
Compliance. Except as set forth in Schedule 2(a)(viii), the Company is not: (i) in default under or in violation
of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by
the Company under), nor has the received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any
court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation
of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case of
(i), (ii) and (iii) as could not have or reasonably be expected to result in a Material Adverse Effect.
(b)
Representations and Warranties of the Investor. Investor hereby makes the following representations and warranties to the
Company:
(i)
Investment Purpose. Investor is acquiring the Securities for its own account for investment only and not with a view towards,
or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under
the Securities Act; provided, however, that by making the representations herein, such Investor reserves the right to dispose
of the Securities at any time in accordance with or pursuant to an effective registration statement covering such Securities,
or an available exemption under the Securities Act. The Buyer agrees not to sell, hypothecate or otherwise transfer the Securities
unless such Securities are registered under the federal and applicable state securities laws or unless, in the opinion of counsel
satisfactory to the Company, an exemption from such law is available.
(ii)
Investor Status. At the time such Investor was offered the Securities, it was, and at the date hereof it is, an “accredited
investor” as defined in Rule 501(a) under the Securities Act or a “qualified institutional buyer” as defined
in Rule 144A(a) under the Securities Act. Such Investor is not a registered broker dealer registered under Section 15(a) of the
Exchange Act, or a member of the Financial Industry Regulatory Authority, Inc. or an entity engaged in the business of being a
broker dealer. Such Investor is not affiliated with any broker dealer registered under Section 15(a) of the Exchange Act, or a
member of the Financial Industry Regulatory Authority, Inc. or an entity engaged in the business of being a broker dealer.
(iii)
General Solicitation. Investor is not purchasing the Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or similar media, broadcast over television or radio,
disseminated over the Internet or presented at any seminar or any other general solicitation or general advertisement.
(iv)
Experience of Investor. Investor, either alone or together with its representatives has such knowledge, sophistication
and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Investor understands that it must bear the
economic risk of this investment in the Securities indefinitely, and is able to bear such risk and is able to afford a complete
loss of such investment.
(v)
Access to Information. Investor acknowledges that it has been afforded: (i) the opportunity to ask such questions as it
has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company
and each Subsidiary and their respective financial condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with
respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of such Investor or its
representatives or counsel shall modify, amend or affect such Investor’s right to rely on the truth, accuracy and completeness
of the Company’s representations and warranties contained in the Transaction Documents.
(vi)
Due Execution of the Delivery. The Transaction Documents constitute a legal, valid and binding obligation of the Investor
and, when executed and enforced in accordance with their terms; no consent approval, authorization, order, filing, registration
or qualification of or with any court, governmental authority or third person is required to obtained by the Company in connection
with the execution and delivery of the, or the performance of the Company’s obligations thereunder.
(vii)
Acknowledgment. The Investor acknowledges the legal proceeding(s) as set forth in Schedule 2(a)(ii) and Schedule
2(a)(viii).
3.
OTHER AGREEMENTS OF THE PARTIES
(a)
Transfer Restrictions. The Securities may only be disposed of in compliance with state and federal securities laws. In
connection with any transfer of Securities other than pursuant to an effective registration statement, or Rule 144, the Company
may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable
to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any
such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of
an Investor under this Agreement.
(b)
Legends. The Investor agree to the imprinting, so long as is required by this Section 4, of a legend on any of the Securities
in substantially the following form:
[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE] HAS [NOT] BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THESE SECURITIES [AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY] MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) IN COMPLIANCE WITH RULE 144 UNDER
THE SECURITIES ACT, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (C) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN
EITHER CASE REASONABLY SATISFACTORY TO THE COMPANY.
(c)
Right of First Refusal. Upon the Closing, the Investor shall have an irrevocable right of first refusal (the “Right
of First Refusal”), for a period of thirty (30) months after the Closing Date to act as an advisor and/or sponsor for
each and every future public or private equity or equity convertible offering of the Company (each, a “Subject Transaction”).
If the Company receives an offer from a third party with regard to a public or private equity or equity convertible offering,
whether as an investor, or an advisor or sponsor of a proposed Subject Transaction, or the Company of its own volition intends
to pursue a Subject Transaction pursuant to terms which it has internally developed, the Company shall notify the Investor of
its intention to pursue a Subject Transaction, including the material terms thereof, by providing written notice thereof to the
Investor. If the Investor fails to exercise its Right of First Refusal with respect to any Subject Transaction within ten (10)
Business Days after the receipt of such written notice, then the Investor shall have no further claim or right with respect to
such Subject Transaction. If, thereafter, such proposal is modified in any Material respect, the Company will adopt the same procedure
as with respect to the original Subject Transaction and the Investor shall have the right of first refusal with respect to such
revised proposal; for purposes of the foregoing, “Material” shall mean either a change in total valuation of the Subject
Transaction of greater than ten percent (10%) or a change in the form of equity being offered. The Investor may elect, in its
sole and absolute discretion, not to exercise its Right of First Refusal with respect to any Subject Transaction; provided that
any such election by the Investor shall not adversely affect the Investor’s Right of First Refusal with respect to any other
Subject Transaction. The Investor shall not have more than one opportunity to waive or terminate the right of first refusal in
consideration of any Subject Transaction. The terms and conditions of any such engagements shall be set forth in separate agreements
and may be subject to, among other things, satisfactory completion of due diligence by the Investor, market conditions, the absence
of a material adverse change to the Company’s business, financial condition and prospects, approval of the Investor’s
board of directors and any other conditions that the Investor may deem appropriate for transactions of such nature.
(d)
Tag along Rights. If any holder of Membership Interests of the Company or the Investor, whether alone or in combination
which hold a majority of the outstanding Membership Interests (the “Tag-Along Seller”), proposes to sell, assign,
dispose of, exchange, pledge, encumber, hypothecate or otherwise transfer such Membership Interests or any participation or interest
therein, whether directly or indirectly, or agree or commit to do any of the foregoing (“Transfer”) to any
third party (a “Tag-Along Sale”), the Tag-along (i) the Tag-Along Seller shall provide the Investor and other
holders of Membership Interests a written notice of the terms and conditions of such proposed Transfer (“Tag-Along Notice”)
and offer the Investor or such other holder the opportunity to participate in such Transfer in accordance with this Section 3(d),
and (ii) the Investor or other holder of Membership Interests may elect, at its option, to participate in the proposed Transfer
in accordance with this Section 3(d). The Tag-Along Notice shall identify the number of Membership Interests proposed to be sold
by the Tag-Along Seller and all other securities of the Company subject to the offer (“Tag-Along Offer”), the
consideration for which the Transfer is proposed to be made, and all other material terms and conditions of the Tag-Along Offer,
including the form of the proposed agreement, if any, and a firm offer by the proposed third party transferee to purchase the
securities from the Tag-Along Seller in accordance with this Section 3(d). Notwithstanding the foregoing, the Investor may at
any time Transfer any or all of its Membership Interests to an Affiliate without the consent of the Company and without compliance
with this Section 3(d), as the case may be; provided, however, that any such transfer shall comply with Section 3(a).
(e)
Board Seat. Subject to the Investor’s continuous ownership of any equity interest in the Company or as long as Investor
is the holder of the Note, the Investor shall have the right, and the Company shall be required upon the Investor’s request,
to place a member on the board of directors of the Company. In the event the Company does not have a board of directors then the
Company shall designate the Investor as a Managing Member, as requested.
(f)
Access to Products. The Company will provide to the Investor access to purchase its products at a pricing of cost of product
plus 5% and up to 2,000 units annually.
(g)
Distribution Agreement. As an inducement for the Investor to consummate the transactions contemplated by this Agreement,
the Company and Investor are entering into the MOU attached hereto as Exhibit F concurrently with the Closing, and the parties
shall use best efforts to enter into (or shall have entered into) a distribution agreement consistent with the MOU within 15 days
from the date this Agreement is signed. The distribution agreement will include a minimum term of five (5) years.
4.
CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL
(a)
The obligations of the Company hereunder to issue and sell the Securities to the Investor at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided that these conditions are for the sole benefit and
may be waived by the Company at any time in its sole discretion by providing the Investor with prior written notice thereof:
(i)
The Investor shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.
(ii)
The representations and warranties of the Investor are true and accurate in all material respects (or, to the extent representations
or warranties are qualified by materiality or Material Adverse Effect, in all respects) when made and on the Closing Date in (unless
as of a specific date therein in which case they shall be accurate as of such date).
5.
CONDITIONS TO THE INVESTOR’S OBLIGATION TO PURCHASE
(a)
The obligations of the Investor hereunder to purchase the Securities at the Closing
is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions
are for the sole benefit and may be waived by the Investor at any time in its sole discretion by providing the Investor with prior
written notice thereof:
(i)
The Company shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.
(ii)
The Company shall have delivered to the Investor the Origination Fee and Note.
(iii)
The representations and warranties of the Company are true and accurate in all material respects (or, to the extent representations
or warranties are qualified by materiality or Material Adverse Effect, in all respects) when made and on the Closing Date in (unless
as of a specific date therein in which case they shall be accurate as of such date).
(iv)
There shall have been no Material Adverse Effect with respect to the Company and no material change in the capital stock or debt
of the Company since the date hereof.
(v)
The Investor shall have received such documents, instruments and agreements, including UCC financing statements or amendments
to UCC financing statements, as Investor shall reasonably request to evidence the perfection and priority of the security interests
granted to Investor pursuant to the Security Agreement. Pursuant to the terms of the Security Agreement, the Company authorizes
Investor to file any UCC financing statements, continuations of or amendments to UCC financing statements it deems necessary to
perfect its security interest in the Collateral as defined therein.
6.
ADVANCES
(a)
Advance Requests. The Investor shall make Advances under the Note in the amounts, at the times, and to the accounts requested
by the Company from time to time, in each case upon delivery to Investor of a written request by the Company for an Advance under
the Note, in the form of request attached as Exhibit A hereto (each such request being an “Advance Request”);
provided, however, that the aggregate principal amount of all Advances made under this Note may not exceed the Loan Commitment
Amount.
(b)
Timing. To be effective, an Advance Request must be received by the Investor on or before the third business day before
the particular calendar date specified in such Advance Request that the Company requests to be the date on which the respective
Advance is to be made.
(c)
Authority. The Company hereby agrees that Investor, for its purposes, may consider any Advance Request approved by or on
behalf of the authorized officers of the Company and delivered to Investor in accordance with the terms of this Agreement to be
an accurate representation of the Company’s request for an Advance under the Note and the Company’s approval of that
Advance Request.
(d)
Conditions to Making Advances. Investor shall be under no obligation to make any Advance under the Note unless and until
each of the conditions specified in this section 6(d) is satisfied. For each Advance, the Borrower shall have delivered to the
Investor an Advance Request, which Advance Request shall specify, among other things:
(i)
the particular amount of funds that the Company requests to be advanced (such amount being the “Requested Advance Amount”
for the respective Advance);
(ii)
the particular calendar date that the Company requests to be the date on which the respective Advance is to be made (such date
being the “Requested Advance Date” for such Advance), which date: (A) must be a business day; and (B) shall
not be earlier than the third business day to occur after the date on which the Investor shall have received the respective Advance
Request; and
(iii)
the particular bank account or accounts to which the Borrower requests that the respective Advance be made;
(e)
Means of Advance. Each Advance shall be made in immediately available funds by electronic funds transfer to such bank account(s)
as shall have been specified in the respective Advance Request.
7.
MISCELLANEOUS
(a)
Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, the Company shall pay Investor
for all costs of preparing the Transaction Documents and recordation of any Transaction Document or exhibit thereto, payable up
to $10,000.00.
(b)
Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding
of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. There
are no promises, representations or warranties between the Parties with regard to the Transaction Documents except as expressly
set forth in the Transaction Documents. At or after the Closing, and without further consideration, the Company will execute and
deliver to the Investors such further documents as may be reasonably requested in order to give practical effect to the intention
of the parties under the Transaction Documents.
(c)
Notices. Any notice, consents, waivers or other communication required or permitted to be given hereunder shall be in writing
and will be deemed to have been delivered: (i) upon receipt, when personally delivered; (ii) upon receipt when sent by certified
mail, return receipt requested, postage prepaid; (iii) when sent, if by e-mail, (provided that such sent e-mail is kept on file
(whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated message
from the recipient’s e-mail server that such e-mail could not be delivered to such recipient); or (iv) one (1) business
day after deposit with a nationally recognized overnight courier service with next day delivery specified, in each case, properly
addressed to the party to receive the same. The addresses and email addresses for such communications shall be:
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If
to the Company, to:
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Puradigm,
LLC
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111
C Street, Encinitas, CA 92024
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Attention:
Padraig Lawlor, Chief Operating Officer
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Email:
plawlor@puradigm.com
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If
to the Investor, to:
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DSS
PureAir, Inc.
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1400
Broadfield, Suite 100
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Houston,
Texas 77084
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Attention:
President
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Email:
fheuszel@dsssecure.com
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(d)
Waivers. Either hereto may by written notice to the other: (i) extend the time for the performance of any of the obligations
or other actions of the other party under this Agreement; (ii) waive compliance with any of the conditions or covenants of the
other party contained in this Agreement; and (iii) waive or modify performance of any of the obligations of the other party under
this Agreement. Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, without any
limitations, any investigation by or on behalf of either party, shall be deemed to constitute a wavier by the party taking such
action of compliance with any representations, warranties, covenants or agreements contained herein. The wavier by the either
party hereof of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or
succeeding breach and no failure by either party to exercise any right or privilege hereunder shall be deemed a waiver of such
party’s rights or privileges hereunder or shall be deemed a waiver of such party’s rights to exerciser the same at
any subsequent time or times hereunder.
(e)
Conflicts of Interest. The Company and the Investor, for themselves and on behalf of their Affiliates, successors and assigns,
expressly waive any conflicts of interest or potential conflicts of interest and agree that the each of the Company and the Investor,
and its Affiliates, respectively, shall have no liability to the other party or their Affiliates, successors and assigns with
respect to such conflicts of interest or potential conflicts of interest; provided, however, that nothing in the foregoing shall
waive or excuse any party from a breach of any contractual obligations between the parties, including, but not limited to, this
Agreement or the distribution agreement to be entered into by the parties.
(f)
Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
(g)
Assignability. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable by either the Company or Investor without the prior written consent of the other parties hereto, which may
not be unreasonably withheld provided that such Assignment is to an Affiliate.
(h)
Amendments. Neither this Agreement nor any term or provision hereof may be amended, modified, waived or supplemented orally,
but only by a written consent executed by the parties hereto.
(i)
Publicity. The Company and the Investor shall have the right to review a reasonable period of time before issuance of any
press releases, SEC, Trading Market or FINRA filings, or any other public statements with respect to the transactions contemplated
hereby; provided, however, that (i) the Company and Investor shall make a joint announcement with respect to the Note with such
announcement to include only the material economic terms of the Note or such other terms as may is required by applicable law
and regulations; and (ii) each of the Company and Investor shall be entitled, without the prior approval of the other party, to
make any press release or SEC, Trading Market or FINRA filings with respect to such transactions as is required by applicable
law and regulations (although the other party shall be consulted by the disclosing party in connection with any such press release
prior to its release and shall be provided with a copy thereof and be given an opportunity to comment thereon). It is intended
that the Company and Investor shall make a joint.
(j)
Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Texas without
regard to the principles of conflict of laws. The parties further agree that any action between them shall be heard exclusively
in federal or state court sitting in the Harris County, Texas.
(k)
Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or
the validity or enforceability of any provision of this Agreement in any other jurisdiction.
(l)
Survival. Unless this Agreement is terminated under Section 7(n), the representations and warranties of the Company and
the Investor and the agreements and covenants set forth in this Agreement shall survive the Closing for a period of twelve (12)
months following the later of the date on which the Note is repaid in full or converted into Note Conversion Units in their entirety
as provided in the Transaction Documents; provided, however, that such representations and warranties shall in no way be affected
by any investigation or knowledge of the subject matter thereof made by or on behalf of the Investor or the Company.
(m)
Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.
(n)
Termination. In the event that the Closing shall not have occurred on or before May 17, 2021 due to the Company’s
or the Investor’s failure to satisfy the conditions set forth in Sections 4 and 5 above (and the non-breaching party’s
failure to waive such unsatisfied condition(s)), the non-breaching party shall have the option to terminate this Agreement with
respect to such breaching party by providing five (5) days’ written notice to such breaching party of the non-breaching
party’s intent to terminate this Agreement (and if the non-breaching party is the Investor, to also withdraw its subscription)
at the close of business on such date without liability of any party to any other party.
(o)
No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.
(p)
Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of
damages, the Investor and the Company will be entitled to specific performance under this Agreement. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agree to waive in any action for specific performance of any such obligation the defense that a remedy at
law would be adequate.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the Investor and the Company have caused this Securities Purchase Agreement to be duly executed as
of the date first written above.
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COMPANY:
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PURADIGM,
LLC.
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By:
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Name:
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Title:
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Managing
Member
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INVESTOR:
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DSS PUREAIR, INC.
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By:
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Name:
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Frank
D. Heuszel
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Title:
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President
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EXHIBIT
A
Advance
Request
EXHIBIT
B
Convertible
Promissory Note
EXHIBIT
C
Security
Agreement
EXHIBIT
D
Distribution
Agreement
EXHIBIT
E
Financial
Statements
EXHIBIT
F
Memorandum
of Understanding
Exhibit
10.2
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, (D) IN COMPLIANCE WITH RULE 144 OR 144A THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS, OR (E) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAWS, AND, IN THE CASE OF (D) or (E) ABOVE, THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION
OF COUNSEL AND/OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE COMPANY. HEDGING TRANSACTIONS INVOLVING
THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.
$5,000,000
SECURED CONVERTIBLE NOTE
PURADIGM,
LLC
DUE:
May 14, 2023
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Original
Issue Date: May 14, 2021
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US$5,000,000.00
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Article
I.
Section
1.01 Principal and Interest. `
(a)
FOR VALUE RECEIVED, Puradigm, LLC, a Nevada limited liability company (the “Borrower”) hereby
promises to pay to the order of DSS PureAir, Inc., a Texas corporation (together with its successors and assigns, the “Holder”),
in lawful money of the United States of America and in immediately available funds, the principal sum of Five Million 00/100
Dollars ($5,000,000.00) (the “Maximum Principal Amount”),
or such amounts as may be advanced from time to time by Holder to or for the account of the Borrower under this Note (each
such amount being an “Advance” and more than one such amounts being “Advances”), with such
principal amounts and accrued interest to be due on May 14, 2023 (the “Maturity Date”), subject to earlier
conversion of this Note as provided herein. The Borrower authorizes and appoints the Holder to enter each borrowing and repayment
of principal under this Note on Schedule A without any further authorization on the part of the Borrower or any endorser or guarantor
of this Note, and to the extent interest is not paid when due, the Holder is authorized and directed to enter the amount of such
interest as an additional borrowing of principal under this Note on the Schedule A, and the Borrower agrees that such entries
shall be conclusive evidence of the principal balance due under this Note at any time, absent manifest error. The Holder’s
failure to make an entry, however, shall not limit or otherwise affect the obligations of the Borrower or any endorser or guarantor
of this Note.
(b)
Advances; Advance Requests; Advance Form.
(i)
Subject to the terms and conditions of the Purchase Agreement, Holder shall make Advances under this Note in the amounts,
at the times, and to the accounts requested by the Borrower from time to time, in each case upon delivery to Holder of a written
request by the Borrower for an Advance under this Note, in the form of request attached to the Purchase Agreement as Exhibit A
thereto (each such request being an “Advance Request”), completed as prescribed in the Purchase Agreement;
provided, however, that the aggregate principal amount of all Advances made under this Note
may not exceed the Maximum Principal Amount.
(ii)
To be effective, an Advance Request must be received by Holder on or before the third Business Day before the particular calendar
date specified in such Advance Request that the Borrower requests to be the date on which the respective Advance is to be made.
(iii)
The Borrower hereby agrees that Holder, for its purposes, may consider any Advance Request approved by or on behalf of the authorized
officers of the Borrower and delivered to Holder in accordance with the terms of the Purchase Agreement to be an accurate representation
of the Borrower’s request for an Advance under this Note and the Borrower’s approval of that Advance Request
(c)
Interest Rate: Interest on the outstanding principal of each Advance shall accrue from the date on which the respective Advance
is made to the date on which such principal is due. Interest on each Advance shall be computed on the basis of (1) actual days
elapsed from (but not including) the date on which the respective Advance is made (for the first payment of interest due under
this Note for the respective Advance) or the date on which the payment of interest was last due (for all other payments of interest
due under this Note for the respective Advance), to (and including) the date on which payment is next due, and (2) a year of 360
days. The interest rate applicable to each Advance shall bear interest at six and sixty-five hundredths percent (6.65%) per annum.
(d)
Maximum Lawful Interest: The term “Maximum Lawful Rate” means the maximum rate of interest and the term “Maximum
Lawful Amount” means the maximum amount of interest that is permissible under applicable state or federal law for the type
of loan evidenced by this Note. If applicable state or federal law does not permit a higher interest rate, the “weekly ceiling”
(as defined in Chapter 303 of the Texas Finance Code) shall be the interest rate ceiling applicable to this Note and shall be
the basis for determining the Maximum Lawful Rate in effect from time to time during the term of this Note. If applicable state
or federal law allows a higher interest rate or federal law preempts the state law limiting the rate of interest, then the foregoing
interest rate ceiling shall not be applicable to this Note. If the interest rate ceiling is increased by statute or other governmental
action subsequent to the date of this Note, then the new interest rate ceiling shall be applicable to this Note from the effective
date thereof, unless otherwise prohibited by applicable law.
(e)
Spreading of Interest: Holder does not intend to contract for, charge or receive more than the Maximum Lawful Rate or Maximum
Lawful Amount permitted by applicable state or federal law, and to prevent such an occurrence Holder and Borrower agree that all
amounts of interest, whenever contracted for, charged or received by Holder, with respect to the loan of money evidenced by this
Note, shall be spread, prorated or allocated over the full period of time this Note is unpaid, including the period of any renewal
or extension of this Note. If demand for payment of this Note is made by Holder prior to the full stated term, the total amount
of interest contracted for, charged or received to the time of such demand shall be spread, prorated or allocated along with any
interest thereafter accruing over the full period of time that this Note thereafter remains unpaid for the purpose of determining
if such interest exceeds the Maximum Lawful Amount.
(f)
Excess Interest: At Maturity or on earlier final payment of this Note, Holder shall compute the total amount of interest that
has been contracted for, charged or received by Holder or payable by Borrower under this Note and compare such amount to the Maximum
Lawful Amount that could have been contracted for, charged or received by Holder. If such computation reflects that the total
amount of interest that has been contracted for, charged or received by Holder or payable by Borrower exceeds the Maximum Lawful
Amount, then Holder shall apply such excess to the reduction of the principal balance and not to the payment of interest; or if
such excess interest exceeds the unpaid principal balance, such excess shall be refunded to Borrower. This provision concerning
the crediting or refund of excess interest shall control and take precedence over all other agreements between Borrower and Holder
so that under no circumstances shall the total interest contracted for, charged or received by Holder exceed the Maximum Lawful
Amount.
(g)
Interest After Default: At Holder’s option, and to the extent permitted by applicable law, the unpaid principal balance
shall bear interest after default and after maturity (whether by acceleration or otherwise) at the Default Interest Rate. The
“Default Interest Rate” shall be, at Holder’s option, a) eighteen percent (18%) per annum, or b) such lesser
rate of interest as Holder in its sole discretion may choose to charge; but never more than the Maximum Lawful Rate or at a rate
that would cause the total interest contracted for, charged or received by Holder to exceed the Maximum Lawful Amount.
(h)
Daily Computation of Interest: To the extent permitted by applicable law, Holder at its option may either c) calculate the per
diem interest rate or amount based on the actual number of days in the year (365 or 366, as the case may be), and charge that
per diem interest rate or amount each day, or d) calculate the per diem interest rate or amount as if each year has only 360 days,
and charge that per diem interest rate or amount each day for the actual number of days of the year (365 or 366 as the case may
be). If this Note calls for monthly or quarterly payments, Holder at its option may determine the payment amount based on the
assumption that each year has only 360 days and each month has 30 days. In no event shall Holder compute the interest in a manner
that would cause Holder to contract for, charge or receive interest that would exceed the Maximum Lawful Rate or the Maximum Lawful
Amount.
(i)
Except as otherwise set forth in this Note, the Borrower may prepay any portion of the principal amount of this Note any time
following but not prior to the one year anniversary of the Original Issue Date (the “Prepayment Period”). During the
Prepayment Period, the Borrower shall have the right to prepay this Note in whole or in part at any time for cash on 10 business
days’ written notice, subject to the right of Holder to convert this Note in accordance with Section 1.03. The Borrower
shall honor any Conversion Notice (as defined in Section 1.03) delivered by the Holder up to 10 business days following the notice
of prepayment.
Section
1.02 Reference to Certain Agreements. The obligations of the Borrower under this Note are secured pursuant to the Security
Agreement of even date herewith (“Security Agreement”) among the Borrower and the Holder. In addition, this
Note is the “Note” referred to in, and entitled to the benefits of, the Securities
Purchase Agreement dated as of even date herewith, made by and among Holder and the Borrower (such agreement, as it may be amended,
supplemented, and restated from time to time in accordance with its terms, being the “Purchase Agreement”).
Section
1.03 Optional Conversion. At any time, before or after the occurrence of an Event of Default, the Holder shall be entitled,
at its option, to convert all, or a portion of all, of the outstanding principal amount of this Note, plus accrued but unpaid
interest thereon, into a number of newly issued membership units of the Borrower (the “Borrower Securities”),
with the Maximum Principal Amount and all outstanding interest equal to eighteen percent (18%) of the total number of Borrower
Securities that will be outstanding upon such conversion, calculated on a fully-diluted basis, giving effect to the exercise,
exchange or conversion of all options, warrants, convertible debt and any other securities or instruments exercisable or exchangeable
for or convertible into Borrower Securities, whether or not then vest or immediately exercisable or exchangeable for or convertible.
Any partial conversion shall use the same eighteen percent (18%) ratio and percentage based on the amount of the outstanding principal
amount being converted as compared to Maximum Principal Amount. The Membership Units
issuable from time to time by the Borrower upon a conversion hereunder are referred to herein as the “Conversion Units.”
Upon any conversion pursuant to this Note, Holder shall execute a joinder to the Borrower’s Operating Agreement, or any
similar successor document to the Operating Agreement, and shall hold the Conversion Units subject to all the terms and conditions
of the Operating Agreement, except for the express exceptions to same set forth in the Transaction Documents
In
the event the Borrower changes it corporate structure to a corporation than all references in this Note to units and membership
units shall be deemed to mean to shares.
The
Borrower shall provide to the Holder in writing from time to time promptly upon request a calculation of the then number of Conversion
Units in a format in in detail reasonably satisfactory to the Holder, provided that any error in such calculation by the Borrower
shall not limit or otherwise affect the obligations of the Borrower or any endorser or guarantor of this Note.
To
convert this Note, the Holder hereof shall deliver written notice thereof, substantially in the form of Exhibit B to this
Note, with appropriate insertions (the “Conversion Notice”), to the Borrower at its address as set forth herein.
The date upon which the conversion shall be effective (the “Conversion Date”) shall be deemed to be the date
set forth in the Conversion Notice.
The
Borrower shall deliver, or cause to be delivered, a certificate or certificates representing the Conversion Units, registered
in the name of the Holder, to the address specified in the Conversion Notice, within five (5) business days after the Conversion
Date. The Holder shall be deemed to be the holder of record of the Conversion Units for all purposes as of the Conversion Date.
Section
1.04 Reservation of Borrower Securities. The Borrower shall reserve and keep available solely for the purpose of conversion
of this Note that number of Borrower Securities to which this Note is convertible from time to time.
Section
1.05 Absolute Obligation/Ranking. Except as expressly provided herein, no provision of this Note shall alter or impair the
obligation of the Borrower, which is absolute and unconditional, to pay the unpaid principal of this Note and accrued but unpaid
interest thereon, at the time, place and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation
of the Borrower.
Section
1.06 Different Denominations. This Note is exchangeable for an equal aggregate unpaid principal amount of Notes of like tenor
of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such
registration of transfer or exchange.
Section
1.07 Use of Note Proceeds. The Company’s use of proceeds from this Note is subject to the restrictions set forth in
the Purchase Agreement.
Section
1.08 Events of Default. Each of the following events shall constitute a default under this Note (each an “Event of
Default”):
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(a)
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failure
by the Borrower to pay any principal or interest amount due hereunder when due;
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(b)
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failure
by the Borrower to issue and deliver certificates representing the appropriate number of Conversion Units to the Holder within
five (5) business days after the Conversion Date set forth in a Conversion Notice from Holder; provided, however, that Holder’s
refusal to sign Borrower’s Operating Agreement or similar successor agreement in order to receive the Conversion Units
shall not give rise to an Event of Default;
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(c)
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a
default shall occur and be continuing under the Security Agreement after any time provided therein for curing the same shall
have expired, or the Security Agreement shall fail to remain in full force and effect or to create a valid and perfected first
priority security interest in and to the Collateral (as defined therein) (subject to the conditions and exceptions provided
therein), or any action shall be taken to discontinue the Security Agreement or to assert the invalidity thereof;
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(d)
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the
Borrower shall: (1) make a general assignment for the benefit of its creditors; (2) apply for or consent to the appointment
of a receiver, trustee, assignee, custodian, sequestrator, liquidator or similar official for itself or any of its assets
and properties; (3) commence a voluntary case for relief as a debtor under the United States Bankruptcy Code; (4) file with
or otherwise submit to any governmental authority any petition, answer or other document seeking: (A) reorganization based
on any insolvency of Borrower, (B) an arrangement with creditors or (C) to take advantage of any other present or future applicable
law respecting bankruptcy, reorganization based on insolvency, insolvency, readjustment of debts, relief of debtors, dissolution
or liquidation; (5) file or otherwise submit any answer or other document admitting or failing to contest the material allegations
of a petition or other document filed or otherwise submitted against it in any proceeding under any applicable law cited in
subsection 1.08(d)(4), or (6) be adjudicated a bankrupt or insolvent by a court of competent jurisdiction;
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(e)
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any
case, proceeding or other action shall be commenced against the Borrower for the purpose of effecting, or an order, judgment
or decree shall be entered by any court of competent jurisdiction approving (in whole or in part) anything specified in Section
1.08(d) hereof, or any receiver, trustee, assignee, custodian, sequestrator, liquidator or other official shall be appointed
with respect to the Borrower, or shall be appointed to take or shall otherwise acquire possession or control of all or a substantial
part of the assets and properties of the Borrower, and any of the foregoing shall continue unstayed and in effect for any
period of sixty (60) days; or
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(f)
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any
default, whether in whole or in part, shall occur in the due observance or performance of any other material obligations or
covenants, terms or provisions to be performed under this Note which is not cured by the Borrower within ten (10) days after
receipt of written notice thereof.
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Section
1.09 If any Event of Default specified in clauses (d) or (e) of Section 1.08 occurs, the full unpaid principal amount of this
Note, together with any interest and other amounts owing in respect hereof, shall become immediately due and payable in cash without
any action on the part of the Holder; or if any other Event of Default occurs, the Holder may by written notice to the Borrower
declare the full unpaid principal amount of this Note, together with any interest and other amounts owing in respect hereof, to
be immediately due and payable in cash, whereupon the same shall become immediately due and payable in cash; and, in any case,
except for the notices specified in this sentence, Borrower waives demand, presentment, protest, notice of protest, dishonor,
notice of dishonor or any other notice of any kind. Such declaration may be rescinded and annulled by the Holder at any time prior
to payment hereunder, and the Holder shall continue to have all rights as a Note holder until such time, if any, as the full payment
under this Section shall have been received by it. Any notice specified in this paragraph by the Holder to the Borrower of the
occurrence of a failure to pay or other default must be delivered as specified in Section 2.01 and must clearly specify that it
is a notice of default under this paragraph
Section
1.10 Change in Control; Closing Payment. For the purposes of this Note, a “Change in Control” shall be
deemed to occur upon (i) the sale, lease, license or transfer, in a single transaction or a series of transactions, of all or
substantially all of the Borrower’s assets; (ii) the sale or transfer, in a single transaction or a series of transactions,
of 50% or more of the presently outstanding Membership Units of the Borrower, or (iii) the issuance by the Borrower of Membership
Units, whether in one or more transactions, which individually or in the aggregate results in the ownership, following such transaction
or transactions, by the present stockholders of the Borrower of less than 50% of the Membership Units of the Borrower. In the
event of a Change in Control, the Borrower shall pay to the Holder the outstanding principal balance under the Note and all accrued
and unpaid interest hereunder, which payments shall be paid to the Holder on or before the closing of such Change in Control.
Notwithstanding the foregoing, in no event shall a Change of Control result from a debt or equity financing where the purpose
of such transaction is raising capital for the Borrower.
Section
1.11 Adjustments to Note; Payment Schedule. The Payment Schedule attached hereto shall reflect, at all times while
any amounts are outstanding under this Note, the total principal amount outstanding under this Note and the amounts and dates
of all Advances made under this Note. Adjustments to the Payment Schedule shall be made as follows:
(a)
Additional Advances. To request an Advance under the terms of the Note, the Borrower shall submit shall complete, execute and
submit a “Loan Advance Request Form” in substantially the form attached hereto as Exhibit A. Each such Loan
Advance Request Form shall state the amount, date of the Advance, and purpose of the Advance. Within 3 days of the receipt of
the properly completed Loan Advance Request Form, the Holder shall acknowledge receipt and approval/denial of the Advance request,
and if approved shall fund the Advance within two business days.
(b)
The Holder shall track all loan advances, loan payments, interest accrual and other amounts that may be owing on the Note on a
frequency of no less than on a monthly basis. Further, upon the Borrower’s two business days’ notice and request,
the Holder shall provide the Borrower with a calculation of the outstanding balance of the amount owing under the terms of the
Note, and/or a Note advance and payment history.
(c)
Prepayment Adjustment. Subject to Section 1.01(i), promptly upon the Holder’s receipt of any repayment by the Borrower of
principal and interest on any Advance, the Holder shall make the appropriate adjustment to the total principal amount outstanding
under this Note on its books and records...
Article
II.
Section
2.01 Notice. Notices regarding this Note shall be sent to the parties at the following addresses, unless a party notifies
the other parties, in writing, of a change of address, in which case to such new address:
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If
to the Borrower, to:
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Puradigm,
LLC
111
C Street, Encinitas, CA 92024
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E-mail:
plawlor@puradigm.com
Attention:
Padraig Lawlor, Chief Operating Officer
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If
to the Holder:
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DSS
PureAir, Inc.
1400
Broadfield Blvd., Suite 100, Houston, Texas 77084
E-mail:
fheuszel@dsssecure.com
Attention:
Frank D. Heuszel, President
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Section
2.02 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall
be governed by and construed and enforced in accordance with the internal laws of the State of Texas. Each party agrees that all
legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Note (whether
brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be
commenced only in the state and federal courts sitting in Harris County (the “Harris County Courts”). Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the Harris Co. Courts for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement
of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, or such Harris County Courts are improper or
inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service
shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law.
Section
2.03 WAIVER OF JURY TRIAL.
BORROWER
AND HOLDER HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY WITH REGARDS TO ANY “DISPUTE” AND ANY ACTION
ON SUCH “DISPUTE”. THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY BORROWER(S) AND HOLDER, AND BORROWER
AND HOLDER HEREBY REPRESENT THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON OR ENTITY TO INDUCE THIS WAIVER
OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING
INTO THIS AGREEMENT. BORROWER AND HOLDER ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION HEREOF IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER OF JURY TRIAL. BORROWER FURTHER REPRESENTS AND WARRANTS THAT (1) IT HAS BEEN REPRESENTED IN
THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR (2) HAS HAD THE OPPORTUNITY TO
BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND (3) EACH HAVE HAD THE OPPORTUNITY TO DISCUSS THIS
WAIVER WITH COUNSEL.
Section
2.04 Severability. The invalidity of any of the provisions of this Note shall not invalidate or otherwise affect any of the
other provisions of this Note, which shall remain in full force and effect.
Section
2.05 Assignment. This Note may not be sold, transferred or assigned by the Holder without consent of the Borrower; provided,
however, that the Holder may assign the Note, Security Agreement, Securities Purchase Agreement and perfecting documents to an
Affiliate without Borrower’s consent. For purposes of this Section 2.05, “Affiliate” means, with respect to
any Person, any other Person who is an “affiliate” (as defined in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act), and “control” for purposes of that
definition shall mean the
possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or
entity, whether through ownership of voting securities, by contract or otherwise.)
of such Person. “Person” means any individual, firm, corporation, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, limited liability company, governmental authority or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
Section
2.06 . The Borrower may not assign any of its obligations hereunder.
Section
2.07 Entire Agreement and Amendments. This Note, together with the Security Agreement and Purchase Agreement, represents the
entire agreement between the parties hereto with respect to the subject matter hereof and there are no representations, warranties
or commitments, except as set forth herein. This Note may be amended only by an instrument in writing executed by each of the
parties hereto.
Article
III.
Section
3.01 Other Provisions.
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(a)
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Non-Waiver
by Holder: Any previous extension of time, forbearance, failure to pursue any remedy, acceptance of late payments, or
acceptance of partial payment by Holder, before or after Maturity, does not constitute a waiver by Holder of its subsequent
right to strictly enforce the collection of this Note according to its terms.
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(b)
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No
Duty or Special Relationship: Borrower acknowledges that Holder has no duty of good faith to Borrower, and acknowledges
that no fiduciary, trust or other special relationship exists between Holder and Borrower.
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(c)
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Other
Remedies Not Required: Borrower may be required to pay this Note in full without the assistance of any other party, or
any collateral or security for this Note. Holder shall not be required to mitigate damages, file suit, or take any action
to foreclose, proceed against or exhaust any collateral or security in order to enforce payment of this Note.
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(d)
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Attorney’s
Fees: If Holder requires the services of an attorney to enforce the payment of this Note, or if this Note is collected
through any lawsuit, probate, bankruptcy, or other judicial proceeding, Borrower agrees to pay Holder all court costs, reasonable
attorney’s fees and expenses, and other collection costs incurred by Holder. This provision shall be limited by any
applicable statutory restrictions relating to the collection of attorney’s fees.
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(e)
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No
Oral Agreements: This Note represents the final agreement between the parties and may not be contradicted by evidence
of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten oral agreements between the
parties, nor are there any promises, representations or warranties with regard to the Note except as set forth herein and
in the Purchase Agreement and Security Agreement.
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[Remainder
of Page Intentionally Left Blank]
IN
WITNESS WHEREOF, with the intent to be legally bound hereby, the Borrower as executed this Note as of the date first written
above.
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PURADIGM,
LLC
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By:
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Name:
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Title:
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[SIGNATURE
PAGE TO $5,000,000 SECURED CONVERTIBLE NOTE]
EXHIBIT
A
LOAN
ADVANCE REQUEST FORM
EXHIBIT
B
NOTICE
OF CONVERSION
`PURADIGM,
LLC
$5,000,000.00
SECURED CONVERTIBLE NOTE
(To
be executed by the Holder in order to convert the Note)
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Original
Issue Date of Note:
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TO:
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The
undersigned hereby irrevocably elects to convert the principal amount of the above Note in whole or in part specified below into
Borrower Securities of Puradigm, LLC, according to the conditions stated therein, as of the Conversion Date written below.
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Conversion
Date:
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Principal
amount to be converted:
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$
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Please
deliver the Conversion Units to the following address:
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Name
of Holder (as shown on Note):
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Signature
of Holder or authorized officer or representative of Holder:
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Name:
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Title:
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Exhibit
99.1
DSS
Launches DSS PureAir, Inc. and Makes Investment into Innovative Proactive Air and Surface Purification Solutions Technology from
Puradigm LLC
A
study done by the University of Florida using the SARS-CoV-2 virus showed a significant decrease in infectivity of the virus
immediately after exposure to Puradigm’s technology
The
SARS-CoV-2 virus was undetectable after 24 hours of exposure to Puradigm’s technology in the study
ROCHESTER,
N.Y., May xx, 2021 (GLOBE NEWSWIRE) — Document Security Systems, Inc. (“DSS” or the “Company”) (NYSE American:
DSS), a multinational company operating businesses in consumer packaging, brand protection technology, blockchain security, direct marketing,
healthcare, real estate, renewable energy, and securitized digital assets, today announced the launch of DSS PureAir, Inc. (“DSS
PureAir”), the Company’s new wholly owned subsidiary targeting commercial and residential air purification markets, following
a significant investment into Puradigm LLC, a manufacturer of proactive air and surface purification solutions that have proven to be
safe, scalable and provide 24/7 protection to all indoor environments.
“We
are excited to launch our newest division, DSS PureAir, to further our vision of securing healthy living,” stated Frank D. Heuszel,
CEO of DSS. “Before COVID-19, the market for air purifiers was strong, and now growth is accelerating even more. We are excited
to support and partner with Puradigm to enable us to rapidly enter this growing global market with best-in-class products.”
The
global air purifier market was valued at $10.7 billion in 2020 and is forecasted to grow at a 10% compound annual growth rate (CAGR)
from 2021 through 2028, according to data from Grandview Research.
Puradigm’s
patented, scalable purification products actively and safely purify both air and surfaces in any room. They can be customized
for indoor spaces of all sizes, including homes, offices, schools, restaurants, gyms, hospitals, assisted living facilities, food processing
facilities, and more, and include free standing, wall mounted, HVAC and personal protection devices.
Puradigm
is unique from other disinfection technologies (chemical cleaning, UV light, vaporized hydrogen peroxide) because it produces Non-Thermal
Plasma (NTP) particles in very large quantities, which actively purify both air and surfaces safely, while people are present.
These highly energized plasma molecules kill bacteria and viruses by piercing their cell walls, similar to a pin pricking a balloon.
There are no downtime periods, chemical handling procedures, harmful residues, room clearance protocols, manpower requirements or adverse
side effects.
Puradigm’s
proactive technology has been shown to be effective against a wide variety of pathogens, including SARS-CoV-2, H1N1, E. coli, MRSA, Listeria,
C. difficile, staph, and many more. It is the most validated purifier on the market.
A
new study from the University of Florida (“UF”) confirms the efficacy of Puradigm in inactivating SARS-CoV-2, the virus that
causes COVID-19. Researchers at UF’s Department of Medicine found that Puradigm’s proactive air and surface purification
technology inactivates 73.33% of infectious high levels of SARS-CoV-2 on stainless steel surfaces within only 15 minutes of exposure
to the technology, 93.3% after 60 minutes, and 97.7% after 4 hours. After 24 hours of exposure to Puradigm’s proactive technology
the study shows the SARS-CoV-2 was undetectable.
These
results are consistent with those of an independent study done by Central Michigan University and Insight Research Institute which tested
the effectiveness of Puradigm’s technology on S. aureus, C. difficile and Dengue virus type 2 (DenV-2) used as a surrogate for
SARS-CoV-2. Their results showed that Puradigm’s technology caused a > 99% average
reduction in bacterial growth and a 98.5% average reduction in viral infectivity. These findings were published in the March 2021
edition of Infectious Disease Reports, an international, open access peer-reviewed journal
that publishes scientific papers about infectious diseases.
“We
are thrilled to be working with DSS PureAir as our strategic partner for global expansion. Puradigm has seen its sales pipeline increase
more than 500% in the past 12 months and this investment will allow us to accelerate our product rollout to multiple key markets around
the world,” added James Gabriel, CEO of Puradigm. “We believe our technology is critical to contain current as well as future
pandemics and can dramatically minimize contamination in indoor spaces. Most importantly, our technology can run safely on a continuous
basis even in fully occupied spaces.”
About
Puradigm LLC
Puradigm
offers proactive air and surface purification solutions that have proven to be safe and scalable and provide 24/7 protection for any
indoor environment. Puradigm’s technology is patented around the world and has been validated by many testing organizations in
the reduction of mold, bacteria, virus, and other harmful pathogens. Puradigm’s technology is the most validated in the industry
and can be customized for any indoor environment.
For
more information on Puradigm visit http://www.puradigm.com.
About
Document Security Systems, Inc.
DSS
is a multinational company operating businesses focused on brand protection technology, blockchain security, direct marketing, healthcare,
real estate, and securitized digital assets. Its business model is based on a distribution sharing system in which shareholders will
receive shares in its subsidiaries as DSS strategically spins them out into IPOs. Its historic business revolves around counterfeit deterrent
and authentication technologies, smart packaging, and consumer product engagement. DSS is led by its Chairman and largest shareholder,
Mr. Fai Chan, a highly successful global business veteran of more than 40 years specializing in corporate transformation while managing
risk. He has successfully restructured more than 35 corporations with a combined value of $25 billion.
For
more information on DSS visit http://www.dsssecure.com.
Investor
Contact:
Dave
Gentry, CEO
RedChip
Companies Inc.
407-491-4498
Dave@redchip.com
Safe
Harbor Disclosure
This
press release contains forward-looking statements that are made pursuant to the safe harbor provisions within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements include, but are not limited to, statements related to the Company’s intended use of proceeds and other statements that
are not historical facts. Forward-looking statements are based on management’s current expectations and are subject to risks and
uncertainties that may cause actual results or events to differ materially from those projected. These risks and uncertainties, many
of which are beyond our control, include: risks relating to our growth strategy; our ability to obtain, perform under and maintain financing
and strategic agreements and relationships; risks relating to the results of development activities; our ability to attract, integrate
and retain key personnel; our need for substantial additional funds; patent and intellectual property matters; competition; as well as
other risks described in the section entitled “Risk Factors” in the prospectus and in our other filings with the SEC, including,
without limitation, our reports on Forms 8-K and 10-Q, all of which can be obtained on the SEC website at www.sec.gov. Readers are cautioned
not to place undue reliance on the forward-looking statements, which speak only as of the date on which they are made and reflect management’s
current estimates, projections, expectations, and beliefs. We expressly disclaim any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any changes in events,
conditions, or circumstances on which any such statement is based, except as required by law.
