UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): March 7, 2019

 

IIOT-OXYS, Inc.

(Exact name of registrant as specified in its charter)

 

         
Nevada   000-50773   56-2415252
(State or Other Jurisdiction   (Commission File   (I.R.S. Employer
of Incorporation)   Number)   Identification Number)

 

705 Cambridge Street

Cambridge, MA 02141

(Address of principal executive offices, including zip code)

 

(617) 500-5101

(Registrant’s telephone number,

including area code)

 

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

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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

 

Emerging growth company    ☒

 

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

 

 

     

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

Settlement Agreement with Adam Casey

 

On March 7, 2019, the Board of Directors of IIOT-OXYS, Inc., a Nevada corporation (the “ Company ”), approved the Settlement Agreement dated effective October 5, 2018 with Adam Casey (the “ Casey Agreement ”) pursuant to which the Company agreed to issue to Mr. Casey 65,000 shares of the Company’s Common Stock (the “ Casey Shares ”) in exchange for payment, in full, for consulting services provided by Mr. Casey to the Company in 2018. The Casey Agreement is attached hereto as Exhibit 99.1.

 

Draco Financial Consulting Agreement

 

On March 7, 2019, the Board of Directors of the Company approved the Financial Consulting Agreement dated effective March 4, 2019 (the “ Draco Agreement ”) with Draco Financial LLC, a Florida limited liability company (“ Draco ”) pursuant to which the Company agreed to issue to Draco 500,000 shares of the Company’s Common Stock (the “ Draco Shares ”) in exchange for consulting services provided by Draco to the Company. The term of the Draco Agreement is six months, unless terminated earlier. The Draco Agreement is attached hereto as Exhibit 99.2.

 

Amendments to Loan Documents

 

On March 7, 2019, the Board of Directors of the Company approved Amendments No. 1 to the 12% Senior Secured Convertible Promissory Note and the Warrant Agreement, each issued January 22, 2018, respectively, to Sergey Gogin. The amendments (i) extend the maturity date of the note to March 1, 2021 and extend the term of the warrants to March 6, 2024, (ii) lower the conversion price of the note and the exercise price of the warrants to $0.20 and $0.30, respectively, and (iii) add an adjustment to the conversion and exercise price of the note and warrants, respectively, in the event the Company does not achieve certain milestones during calendar 2019. The Amendments are attached hereto as exhibits 99.3 and 99.4.

 

The disclosure contained in Item 5.02 herein is incorporated by reference into this Item 1.01.

 

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

 

On March 7, 2019, the Board of Directors of the Company approved a non-public offering of up to $500,000 aggregate principal amount (the “ Offering ”) of its 12% Senior Secured Convertible Notes (the “ Notes ”). The Notes are convertible, in whole or in part, into shares of the Company’s Common Stock, at any time at a rate of $0.20 per share with fractions rounded up to the nearest whole share, unless paid in cash at the Company’s election. The Notes bear interest at a rate of 12% per annum and interest payments will be made on a quarterly basis. The Notes mature March 1, 2021. The conversion price of the Notes is also subject to adjustments if the Company does not achieve certain milestones during the calendar year 2019.

 

The Notes are governed by a Securities Purchase Agreement (the “ SPA ”) and are secured by all the assets of the Company pursuant to a Security and Pledge Agreement. Funding is subject to the occurrence of certain milestones, as stated in the SPA. In addition to the issuance of the Notes in the Offering, the Company’s Board of Directors approved, as part of the Offering, the issuance of warrants to purchase one share of the Company’s Common Stock for 50% of the number of shares of Common Stock issuable upon conversion of each Note (the “ Warrants ”). Each Warrant is immediately exercisable at $0.30 per share and expires five years from the issuance date.

 

Forms of the Note, SPA, Security and Pledge Agreement, and Warrant Agreement are attached hereto as Exhibits 99.5, 99.6, 99.7, and 99.8, respectively.

 

On March 6, 2019, the Company entered into SPAs and Security and Pledge Agreements with its first two investors (the “ Investors ”) in the Offering and issued Notes to the Investors in the aggregate principal amount of $100,000. Subscription funds were received by the Company from the Investors on March 6, 2019. In addition to the Note, the Company issued to the Investors an aggregate of 250,000 Warrants.

 

 

 

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Item 3.02 Unregistered Sales of Equity Securities.

 

The disclosure contained in Items 1.01 and 5.02 herein is incorporated into this Item 3.02.

 

The Mr. Casey, Draco, and the Investors each delivered appropriate investment representations with respect to the Casey Shares, the Draco Shares, the Notes, and the Warrants and consented to the imposition of restrictive legends upon the stock certificates representing the Casey Shares, the Draco Shares, the Notes, the Warrants, and the conversion shares. Mr. Casey, Draco, and the Investors did not enter into their respective transactions with the Company as a result of or subsequent to any advertisement, article, notice, or other communication published in any newspaper, magazine, or similar media or broadcast on television or radio, or presented at any seminar or meeting. Each of Mr. Casey, Draco, and the Investors was also afforded the opportunity to ask questions of management and to receive answers concerning the terms and conditions of the transaction. The Casey Shares, the Draco Shares, the Notes, and the Warrants were issued without registration under the Securities Act of 1933, as amended, by reason of the exemption from registration afforded by the provisions of Section 4(a)(2) thereof, and Rule 506(b) promulgated thereunder, as a transaction by an issuer not involving any public offering. No selling commissions were paid in connection with the issuance of the Casey Shares, the Draco Shares, the Notes, and the Warrants.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Consulting Agreement with Clifford L. Emmons (CEO/Interim CFO/Director)

 

On March 11, 2019, the Company’s Board of Directors (with Mr. Emmons abstaining) approved the Consulting Agreement dated effective June 4, 2018 with Clifford L. Emmons, the Company’s Chief Executive Officer, Interim Chief Financial Officer, and director (the “ Emmons Agreement ”). The term of the Emmons Agreement is for three years beginning as of the effective date, unless terminated earlier pursuant to the agreement and is automatically renewable for one-year terms upon the consent of the parties. The services to be provided by Mr. Emmons pursuant to the Emmons Agreement are those customary for the positions in which he is serving.

 

Mr. Emmons shall receive a monthly fee of $15,000 which accrues unless converted into shares of Common Stock of the Company at a conversion rate specified in the Emmons Agreement. Until the Company closes a minimum $500,000 capital raise, the monthly fee accrues and, upon the closing of such a capital raise, $5,000 of the monthly fee will be paid to Mr. Emmons in cash and the remainder will continue to accrue. Upon the closing of a capital raise of at least $2,000,000, the entire monthly fee will be paid to Mr. Emmons in cash and all accrued and unpaid monthly fees will be paid by the Company within one year of the closing of such a capital raise.

 

As of the effective date, the Company shall issue to Mr. Emmons an aggregate of 3,060,000 shares of the Company’s Common Stock which vest as follows:

 

1. 560,000 shares on the first-year anniversary of the effective date;
2. 1,000,000 shares on the second-year anniversary of the effective date; and
3. 1,500,000 shares on the third-year anniversary of the effective date.

 

The shares are issued under the Plan (as defined below). Vesting of the shares is subject to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as defined in the Emmons Agreement) or the listing of the Company’s Common Stock on a senior exchange. A copy of the Emmons Agreement is attached hereto as Exhibit 99.9.

 

Consulting Agreement with Karen McNemar (COO)

 

On March 11, 2019, the Company’s Board of Directors approved the Consulting Agreement dated effective October 1, 2018 with Karen McNemar, the Company’s Chief Operating Officer (the “ McNemar Agreement ”). The term of the McNemar Agreement is for three years beginning as of the effective date, unless terminated earlier pursuant to the agreement and is automatically renewable for one-year terms upon the consent of the parties. The services to be provided by Ms. McNemar pursuant to the McNemar Agreement are those customary for the position in which she is serving.

 

 

 

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Ms. McNemar shall receive a monthly fee of $12,750 which accrues unless converted into shares of Common Stock of the Company at a conversion rate specified in the McNemar Agreement. Until the Company closes a minimum $500,000 capital raise, the monthly fee accrues and, upon the closing of such a capital raise, $4,250 of the monthly fee will be paid to Ms. McNemar in cash and the remainder will continue to accrue. Upon the closing of a capital raise of at least $2,000,000, the entire monthly fee will be paid to Ms. McNemar in cash and all accrued and unpaid monthly fees will be paid by the Company within one year of the closing of such a capital raise.

 

As of the effective date, the Company shall issue to Ms. McNemar an aggregate of 2,409,000 shares of the Company’s Common Stock which vest as follows:

 

1. 409,000 shares on the first-year anniversary of the effective date;
2. 800,000 shares on the second-year anniversary of the effective date; and
3. 1,200,000 shares on the third-year anniversary of the effective date.

 

The shares are issued under the 2017 Stock Incentive Plan. Vesting of the shares is subject to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as defined in the McNemar Agreement) or the listing of the Company’s Common Stock on a senior exchange. A copy of the McNemar Agreement is attached hereto as Exhibit 99.10.

 

Amended and Restated Consulting Agreement with Antony Coufal (CTO)

 

On March 11, 2019, the Company’s Board of Directors approved the Amended and Restated Consulting Agreement dated effective April 23, 2018 with Antony Coufal, the Company’s Chief Technology Officer (the “ Coufal Agreement ”). The term of the Coufal Agreement is for three years beginning as of the effective date, unless terminated earlier pursuant to the agreement and is automatically renewable for one-year terms upon the consent of the parties. The services to be provided by Mr. Coufal pursuant to the Coufal Agreement are those customary for the position in which he is serving.

 

Mr. Coufal shall receive a monthly fee of $9,375 which accrues unless converted into shares of Common Stock of the Company at a conversion rate specified in the Coufal Agreement. Until the Company closes a minimum $500,000 capital raise, the monthly fee accrues and, upon the closing of such a capital raise, $3,125 of the monthly fee will be paid to Mr. Coufal in cash and the remainder will continue to accrue. Upon the closing of a capital raise of at least $2,000,000, the entire monthly fee will be paid to Mr. Coufal in cash and all accrued and unpaid monthly fees will be paid by the Company within one year of the closing of such a capital raise.

 

As of the effective date, the Company shall issue to Mr. Coufal an aggregate of 1,800,000 shares of the Company’s Common Stock which vest as follows:

 

1. 300,000 shares on the first-year anniversary of the effective date;
2. 600,000 shares on the second-year anniversary of the effective date; and
3. 900,000 shares on the third-year anniversary of the effective date.

 

The shares are issued under the 2017 Stock Incentive Plan. Vesting of the shares is subject to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as defined in the Coufal Agreement) or the listing of the Company’s Common Stock on a senior exchange. A copy of the Coufal Agreement is attached hereto as Exhibit 99.11.

 

2019 Stock Incentive Plan

 

On March 11, 2019 (the “ Effective Date ”) the Board of Directors of the Company approved the 2019 Stock Incentive Plan (the “ Plan ”). Awards may be made under the Plan for up to 5,000,000 shares of common stock of the Company. All of the Company’s employees, officers and directors, as well as consultants and advisors to the Company are eligible to be granted awards under the Plan. No awards can be granted under the Plan after the expiration of 10 years from the Effective Date but awards previously granted may extend beyond that date. Awards may consist of both incentive and non-statutory options, restricted stock units, stock appreciation rights, and restricted stock awards. A copy of the Plan is attached hereto as Exhibit 4.1.

 

 

 

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Item 8.01 Other Events.

 

On March 12, 2019, the Company issued a press release announcing the first closing of the Offering, as disclosed above.

 

The Press Release, furnished as Exhibit 99.12 to this Form 8-K, may contain forward-looking statements. Such forward-looking statements are based on information presently available to the Company’s management and are current only as of the date made. Actual results could also differ materially from those anticipated as a result of a number of factors, including, but not limited to, those discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, and subsequent reports filed by the Company with the Securities and Exchange Commission (the “ Commission ”). For those reasons, undue reliance should not be placed on any forward-looking statement. The Company assumes no duty or obligation to update or revise any forward-looking statement, although it may do so from time to time as management believes is warranted or as may be required by applicable securities law. Any such updates or revisions may be made by the registrant by filing reports with the Commission, through the issuance of press releases or by other methods of public disclosure.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.   Description
4.1   2019 Stock Incentive Plan
99.1   Settlement Agreement dated effective October 5, 2018 with Adam Casey
99.2   Financial Consulting Agreement dated effective March 4, 2019 with Draco Financial LLC
99.3   Amendment No. 1 to the 12% Senior Secured Convertible Promissory Note Issued to SergeyGogin on January 22, 2018
99.4   Amendment No. 1 to the Warrant Agreement Issued to Sergey Gogin on January 22, 2018
99.5   Form of 12% Senior Secured Convertible Promissory Note
99.6   Form of Securities Purchase Agreement
99.7   Form of Security and Pledge Agreement
99.8   Form of Warrant Agreement
99.9   Consulting Agreement dated effective June 4, 2018 with Clifford L. Emmons
99.10   Consulting Agreement dated effective October 1, 2018 with Karen McNemar
99.11   Amended and Restated Consulting Agreement dated effective April 23, 2018 with Antony Coufal
99.12   Press Release dated March 12, 2019

 

 

 

 

 

 

 

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  IIOT-OXYS, Inc.
   
Date: March 12, 2019 By: /s/ Clifford L. Emmons
    Clifford L. Emmons, Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

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Exhibit 4.1

 

IIOT-OXYS, Inc.

 

2019 STOCK INCENTIVE PLAN

 

THE 2019 STOCK INCENTIVE PLAN (the “ Plan ”) of IIOT-OXYS, Inc., a Nevada corporation, is hereby adopted by its Board of Directors as of March 11, 2019 (the “ Effective Date ”).

 

Article 1.

PURPOSES OF THE PLAN

 

Section 1.01          Purposes . The purposes of the Plan are (a) to enhance the Company’s ability to attract and retain the services of qualified employees, officers, directors, consultants, and other service providers upon whose judgment, initiative and efforts the successful conduct and development of the Company’s business largely depends, and (b) to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of the Company, by providing them an opportunity to participate in the ownership of the Company and thereby have an interest in the success and increased value of the Company.

 

Article 2.

DEFINITIONS

 

For purposes of this Plan, terms not otherwise defined herein shall have the meanings indicated below:

 

Section 2.01          Administrator . “Administrator” means the Board or, if the Board delegates responsibility for any matter to the Committee, the term Administrator shall mean the Committee.

 

Section 2.02          Affiliated Company . “Affiliated Company” means:

 

a)                 with respect to Incentive Options, any “parent corporation” or “subsidiary corporation” of the Company, whether now existing or hereafter created or acquired, as those terms are defined in Sections 424(e) and 424(f) of the Code, respectively; and

 

b)                with respect to Nonqualified Options, Restricted Stock Units, Stock Appreciation Rights, and Restricted Stock Grants any entity described in paragraph (a) of this Section 2.02 above, plus any other corporation, limited liability company (“ LLC ”), partnership or joint venture, whether now existing or hereafter created or acquired, with respect to which the Company beneficially owns more than fifty percent (50%) of: (1) the total combined voting power of all outstanding voting securities, or (2) the capital or profits interests of an LLC, partnership or joint venture.

 

Section 2.03          Base Price . “Base Price” means the price per share of Common Stock for purposes of computing the amount payable to a Participant who holds a Stock Appreciation Right upon exercise thereof.

 

Section 2.04          Board . “Board” means the Board of Directors of the Company.

 

Section 2.05          Change in Control . Except as set forth below, “Change in Control” means:

 

a)                 The acquisition, directly or indirectly, in one (1) transaction or a series of related transactions, by any person or group (within the meaning of Section 13(d)(3) of the Exchange Act) of the beneficial ownership of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of all outstanding securities of the Company;

 

b)                A merger or consolidation in which the Company is not the surviving entity, except for a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such merger or consolidation hold as a result of holding the Company securities prior to such transaction, in the aggregate, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the surviving entity (or the parent of the surviving entity) immediately after such merger or consolidation;

 

 

 

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c)                 A reverse merger in which the Company is the surviving entity but in which the holders of the outstanding voting securities of the Company immediately prior to such merger hold, in the aggregate, securities possessing less than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the Company or of the acquiring entity immediately after such merger; or

 

d)                The sale, transfer or other disposition (in one (1) transaction or a series of related transactions) of all or substantially all of the assets of the Company, except for a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such transaction(s) receive as a distribution with respect to securities of the Company, in the aggregate, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the acquiring entity immediately after such transaction(s).

 

e)                 In addition, a Change in Control will be deemed to have occurred if, at any time during any period of twelve (12) consecutive months during the term of any Option, as stated in the Option Exercise Documents, Restricted Stock Award Agreement, Restricted Stock Unit Agreement or Stock Appreciation Right Agreement under this Plan, individuals who at the beginning of such period constituted the entire Board do not for any reason constitute a majority of the Board, unless the election, or the nomination for election by the Company’s stockholders, of each new director was approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of the period (but not including any new director whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors of the Company).

 

Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Section 409A of the Code.

 

Section 2.06          Code . “Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

Section 2.07          Committee . “Committee” means a committee of two (2) or more members of the Board appointed to administer the Plan, as set forth in Section 9.01.

 

Section 2.08          Common Stock . “Common Stock” means the Common Stock of the Company, subject to adjustment pursuant to Section 4.02.

 

Section 2.09          Company . “Company” means IIOT-OXYS, Inc., a Nevada corporation, or any entity that is a successor to the Company. Except where the context otherwise requires, the term “ Company ” shall include any of the Company’s present or future parent or subsidiary corporations.

 

Section 2.10          Disability . “Disability” means permanent and total disability as defined in Section 22(e)(3) of the Code. The Administrator’s determination of a Disability or the absence thereof shall be conclusive and binding on all interested parties.

 

Section 2.11          Effective Date . “Effective Date” means the date on which the Plan was originally adopted by the Board, as set forth on the first page hereof.

 

Section 2.12          Exchange Act . “Exchange Act” means the Securities and Exchange Act of 1934, as amended.

 

Section 2.13          Exercise Price . “Exercise Price” means the purchase price per share of Common Stock payable by the Optionee to the Company upon exercise of an Option.

 

Section 2.14          Fair Market Value . “Fair Market Value” on any given date means the value of one (1) share of Common Stock, determined as follows: (i) the last sale before or the first sale after the grant date; (ii) the closing price on the trading day before or on the grant date; (iii) the arithmetic mean (average) of the high and low prices on the trading day before or the trading day of the grant; (iv) an average of the stock price (determined either based on the arithmetic mean or the average of such selling price, weighted based on the volume of trading on each trading day during the period) over a fixed period occurring within 30 days before or after the grant; or (v) any other reasonable valuation method using actual transactions. If there is no public trading market for the Common Stock, the Administrator may determine the fair market value in good faith using any reasonable method of evaluation in a manner consistent with the valuation principles under Section 409A of the Code, which determination shall be conclusive and binding on all interested parties.

 

 

 

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Section 2.15          FINRA Dealer . “FINRA Dealer” means a broker-dealer that is a member of the Financial Industry Regulatory Authority.

 

Section 2.16          Grant Form . “Grant Form” means the Grant of Stock Option form signed by both parties with respect to either an Incentive Option or a Nonqualified Option, the form of which is set forth in Attachment 1 to this Plan.

 

Section 2.17          Incentive Option . “Incentive Option” means any Option designated and qualified as an “incentive stock option” as defined in Section 422 of the Code.

 

Section 2.18          Nonqualified Option . “Nonqualified Option” means any Option that is not an Incentive Option.  To the extent that any Option designated as an Incentive Option fails in whole or in part to qualify as an Incentive Option, including, without limitation, for failure to meet the limitations applicable to a 10% Stockholder or because it exceeds the annual limit provided for in Section 5.07 below, it shall to that extent constitute a Nonqualified Option.

 

Section 2.19          Option . “Option” means any option to purchase Common Stock granted pursuant to this Plan.

 

Section 2.20          Option Exercise Documents. “Option Exercise Documents” means and includes the Option Exercise Form, the Grant Form, the forms of which are set forth in Attachments 1 and 2 to this Plan, and any other agreements the Optionee is required to enter into to exercise options.

 

Section 2.21          Option Exercise Form . “Option Exercise Form” means the form identified as Exhibit A to the Grant Form.

 

Section 2.22          Optionee . “Optionee” means any Participant who holds an Option.

 

Section 2.23          Participant . “Participant” means an individual or entity that holds Options, Restricted Stock Units, Stock Appreciation Rights, or Restricted Stock Awards under this Plan.

 

Section 2.24          Performance Criteria . “Performance Criteria” means one (1) or more of the following as established by the Administrator, which may be stated as a target percentage or dollar amount, a percentage increase over a base period percentage or dollar amount or the occurrence of a specific event or events:

 

a)                 Revenue;

b)                Gross profit;

c)                 Operating income;

d)                Pre-tax income;  

e)                 Earnings before interest, taxes, depreciation and amortization (“ EBITDA ”);

f)                 Earnings per common share on a fully diluted basis (“ EPS ”);

g)                Consolidated net income of the Company divided by the average consolidated common stockholders’ equity (“ ROE ”);

h)                Cash and cash equivalents derived from either (i) net cash flow from operations, or (ii) net cash flow from operations, financings and investing activities (“ Cash Flow ”);

i)                  Adjusted operating cash flow return on income;

j)                  Cost containment or reduction;

k)                The percentage increase in the market price of the Company’s common stock over a stated period; and

l)                  Individual business objectives.

 

Section 2.25          Restricted Stock Award . “Restricted Stock Award” means shares issued pursuant to the Restricted Stock Award Program in Article 8.

 

 

 

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Section 2.26          Restricted Stock Award Agreement . “Restricted Stock Award Agreement” means the written agreement entered into between the Company and a Participant evidencing the grant of Restricted Stock Awards under the Plan, the form of which is set forth in Attachment 3 to this Plan.

 

Section 2.27          Restricted Stock Award Program . “Restricted Stock Award Program” means the program to issue restricted shares pursuant to Article 8.

 

Section 2.28          Restricted Stock Unit . “Restricted Stock Unit” means a right to receive an amount equal to the Fair Market Value of one (1) share of Common Stock, issued pursuant to Article 6, subject to any restrictions and conditions as are established pursuant to Article 6.

 

Section 2.29          Restricted Stock Unit Agreement . “Restricted Stock Unit Agreement” means the written agreement entered into between the Company and a Participant evidencing the grant of Restricted Stock Units under the Plan, the form of which is set forth in Attachment 4 to this Plan.

 

Section 2.30          Service . “Service” means the provision of services to the Company or any Affiliated Company by a person in the capacity of an employee, a non-employee member of the board of directors, officer, or a Service Provider, except to the extent otherwise specifically provided in the documents evidencing the grant of an award under this Plan.

 

Section 2.31          Service Provider . “Service Provider” means a consultant or other person or entity the Administrator authorizes to become a Participant in the Plan and who provides services to (i) the Company, (ii) an Affiliated Company, or (iii) any other business venture designated by the Administrator in which the Company or an Affiliated Company has a significant ownership interest.

 

Section 2.32          Stock Appreciation Right . “Stock Appreciation Right” means a right issued pursuant to Article 7, subject to any restrictions and conditions as are established pursuant to Article 7 that is designated as a Stock Appreciation Right.

 

Section 2.33          Stock Appreciation Right Agreement . “Stock Appreciation Right Agreement” means the written agreement entered into between the Company and a Participant evidencing the grant of Stock Appreciation Rights under the Plan, the form of which is set forth in Attachment 5 to this Plan.

 

Section 2.34          10% Stockholder . “10% Stockholder” means a person who, as of a relevant date, owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of an Affiliated Company.

 

Article 3.

ELIGIBILITY

 

Section 3.01          Incentive Options . Only employees of the Company or of an Affiliated Company (including members of the Board if they are employees of the Company or of an Affiliated Company) are eligible to receive Incentive Options under the Plan.

 

Section 3.02          Nonqualified Options; Restricted Stock Units and Stock Appreciation Rights . Employees and officers of the Company or of an Affiliated Company, members of the Board (whether or not employed by the Company or an Affiliated Company), and Service Providers are eligible to receive Nonqualified Options, Restricted Stock Units, and Stock Appreciation Rights under the Plan.

 

Section 3.03          Section 162(m) Limitation . Subject to adjustment as to the number and kind of shares pursuant to Section 4.02, in no event shall any Participant be granted in any one (1) calendar year any award that does not qualify as “performance-based compensation” under Section 162(m) of the Code. In granting awards which are intended to qualify under Section 162(m) of the Code, the Administrator shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the award under Section 162(m) of the Code (e.g., in determining the Performance Criteria), provided that no action by the Company or the Administrator shall be deemed to be a promise that any such award will be “performance-based compensation” under such section.

 

 

 

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Article 4.

PLAN SHARES

 

Section 4.01          Shares Subject to the Plan . The number of shares of Common Stock that may be issued under this Plan shall be 5,000,000 shares of Common Stock, subject to adjustment as to the number and kind of shares pursuant to Section 4.02. For purposes of this limitation, in the event that (a) all or any portion of any Options or Stock Appreciation Rights granted under the Plan can no longer under any circumstances be exercised, (b) any shares of Common Stock are reacquired by the Company pursuant to the Option Exercise Documents, or (c) all or any portion of any Restricted Stock Units or Restricted Stock Awards granted under the Plan are forfeited or can no longer under any circumstances vest, the shares of Common Stock allocable to or covered by the unexercised or unvested portion of such Options, Stock Appreciation Rights, Restricted Stock Units, or Restricted Stock Awards, or the shares of Common Stock so reacquired shall again be available for grant or issuance under the Plan. The following shares of Common Stock may not again be made available for issuance as awards under the Plan: (i) shares of Common Stock not issued or delivered as a result of the net settlement of outstanding Stock Appreciation Rights or Options, (ii) shares of Common Stock used to pay the Exercise Price related to outstanding Options, (iii) shares of Common Stock used to pay withholding taxes related to outstanding Options, Stock Appreciation Rights, Restricted Stock Units, or Restricted Stock Awards, or (iv) shares of Common Stock repurchased on the open market with the proceeds of the Option Exercise Price.

 

Section 4.02          Changes in Capital Structure . In the event that the outstanding shares of Common Stock are hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of a recapitalization, stock split, reverse stock split, reclassification, stock dividend, or other change in the capital structure of the Company, then appropriate adjustments shall be made by the Administrator to the aggregate number and kind of shares subject to this Plan, the number and kind of shares and the price per share subject to or covered by outstanding Option Exercise Documents, Restricted Stock Award Agreement, Restricted Stock Unit Agreement or Stock Appreciation Right Agreement and the limit on the number of shares under Section 3.03, all in order to preserve, as nearly as practical, but not to increase, the benefits to Participants.

 

Section 4.03          Limitation on Number of Shares . The total number of shares of Common Stock issuable under this Plan shall not exceed 30% of the then outstanding shares of Common Stock (with convertible preferred or convertible senior common shares counted on an as if converted basis), unless a percentage higher than 30% is approved by at least two-thirds (2/3) of the outstanding securities entitled to vote.

 

Article 5.

OPTIONS

 

Section 5.01          Grant of Stock Options .  The Administrator shall have the right to grant pursuant to this Plan, Options subject to such terms, restrictions, and conditions as the Administrator may determine at the time of grant.  Such conditions may include, but are not limited to, continued provision of Service or the achievement of specified performance goals or objectives established by the Administrator with respect to one (1) or more Performance Criteria, which require the Administrator to certify in writing whether and the extent to which such Performance Criteria were achieved.

 

Section 5.02          Option Exercise Documents . Each Option granted pursuant to this Plan shall be evidenced by Option Exercise Documents which shall specify the number of shares subject thereto, vesting provisions relating to such Option, the Exercise Price per share, and whether the Option is an Incentive Option or Nonqualified Option. As soon as is practical following the grant of an Option, Option Exercise Documents shall be duly executed and delivered by or on behalf of the Company to the Optionee to whom such Option was granted.  Each Option Exercise Document shall be in such form and contain such additional terms and conditions, not inconsistent with the provisions of this Plan, as the Administrator shall, from time to time, deem desirable.

 

Section 5.03          Exercise Price . The Exercise Price per share of Common Stock covered by each Option shall be determined by the Administrator, subject to the following:  (a) the Exercise Price of an Incentive Option shall not be less than 100% of Fair Market Value on the date the Incentive Option is granted, (b) the Exercise Price of a Nonqualified Option shall not be less than 100% of Fair Market Value on the date the Nonqualified Option is granted, and (c) if the person to whom an Incentive Option is granted is a 10% Stockholder on the date of grant, the Exercise Price shall not be less than 110% of Fair Market Value on the date the Incentive Option is granted. However, an Option may be granted with an Exercise Price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Sections 409A and 424 of the Code.

 

 

 

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Section 5.04          Payment of Exercise Price . Payment of the Exercise Price shall be made upon exercise of an Option and may be made, in the discretion of the Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c) the surrender of shares of Common Stock owned by the Optionee (provided that shares acquired pursuant to the exercise of options granted by the Company must have been held by the Optionee for the requisite period necessary to avoid a charge to the Company’s earnings for financial reporting purposes), which surrendered shares shall be valued at Fair Market Value as of the date of such exercise; (d) the cancellation of indebtedness of the Company to the Optionee; (e) the waiver of compensation due or accrued to the Optionee for services rendered; (f) provided that a public market for the Common Stock exists, a “same day sale” commitment from the Optionee and a FINRA Dealer whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the shares so purchased to pay for the Exercise Price and whereby the FINRA Dealer irrevocably commits upon receipt of such shares to forward the Exercise Price directly to the Company; (g) provided that a public market for the Common Stock exists, a “margin” commitment from the Optionee and a FINRA Dealer whereby the Optionee irrevocably elects to exercise the Option and to pledge the shares so purchased to the FINRA Dealer in a margin account as security for a loan from the FINRA Dealer in the amount of the Exercise Price, and whereby the FINRA Dealer irrevocably commits upon receipt of such shares to forward the Exercise Price directly to the Company; or (h) any combination of the foregoing methods of payment or any other consideration or method of payment as shall be permitted by applicable law and approved by the Administrator.

 

Section 5.05          Term and Termination of Options . The term and provisions for termination of each Option shall be as fixed by the Administrator, but no Option may be exercisable more than ten (10) years after the date it is granted.  An Incentive Option granted to a person who is a 10% Stockholder on the date of grant shall not be exercisable more than five (5) years after the date it is granted.

 

Section 5.06          Vesting and Exercise of Options . Each Option shall vest and become exercisable in one (1) or more installments at such time or times and subject to such conditions, including without limitation the achievement of specified performance goals or objectives established with respect to one (1) or more Performance Criteria, as shall be determined by the Administrator.

 

Section 5.07          Annual Limit on Incentive Options . To the extent required for “incentive stock option” treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the Common Stock with respect to which Incentive Options granted under this Plan and any other plan of the Company or any Affiliated Company become exercisable for the first time by an Optionee during any calendar year shall not exceed $100,000.

 

Section 5.08          Restrictions. Options may not be sold, pledged or otherwise encumbered or disposed of and shall not be assignable or transferable except by will, the laws of descent and distribution or pursuant to a domestic relations order entered by a court in settlement of marital property rights, except as specifically provided in the Stock Option Agreement or as authorized by the Administrator, and subject to Section 13.01 of this Plan.

 

Section 5.09          Effect of Termination of Service, Death, or Disability .

 

a)                 Unless otherwise provided by the Administrator, any unvested Options held by the Optionee at the time of termination of Service, Disability or death, will expire immediately upon the occurrence of any such event.

 

b)                The following provisions shall govern the exercise of any vested Options held by the Optionee at the time of termination of Service, Disability, or death:

 

(1)              Should the Optionee’s Service be terminated for cause, then the Options shall terminate on the date Service is terminated.

 

(2)              Should the Optionee’s Service be terminated for Disability, then the Optionee shall have a period of six (6) months following the date of such termination during which to exercise each outstanding Option held by such Optionee at the time of Disability.

 

(3)              If the Optionee dies while holding an outstanding Option, then the personal representative of his or her estate or the person or persons to whom the Option is transferred pursuant to the Optionee’s will or the laws of inheritance shall have six (6) months following the date of the Optionee’s death to exercise such Option.

 

(4)              Should Optionee’s Service be terminated by reason other than for cause, Disability, or death, then the Optionee shall have a period of thirty (30) days following the date of such termination during which to exercise each outstanding Option held by such Optionee.

 

 

 

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(5)              Under no circumstances, however, shall any such Option be exercisable after the specified expiration of the Option term.

 

(6)              During the applicable post-Service exercise period, the Option may not be exercised in the aggregate for more than the number of vested shares for which the Option is exercisable on the date of the Optionee’s termination of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the Option term, the Option shall terminate and cease to be outstanding for any Option which has not been exercised.

 

c)                 The Administrator shall have the discretion, exercisable either at the time an Option is granted or at any time while the Option remains outstanding, to provide either or both of the following, in whole or in part as to any Options:

 

(1)              extend the period of time for which the Option is to remain exercisable following Optionee’s termination of Service or death from the limited period otherwise in effect for that Option to such greater period of time as the Administrator shall deem appropriate, but in no event beyond the expiration of the Option term;

 

(2)              permit the Option to be exercised, during the applicable post-termination exercise period, not only with respect to the number of vested shares of Common Stock for which such Option is exercisable at the time of the Optionee’s termination of Service but also with respect to one (1) or more additional installments in which the Optionee would have vested under the Option had the Optionee continued Service.

 

Section 5.10          Rights as a Stockholder . An Optionee or permitted transferee of an Option shall have no rights or privileges as a stockholder with respect to any shares covered by an Option until such Option has been duly exercised and certificates representing shares purchased upon such exercise have been issued to such person.

 

Article 6.

RESTRICTED STOCK UNITS

 

Section 6.01          Grants of Restricted Stock Units . The Administrator shall have the right to grant pursuant to this Plan Restricted Stock Units subject to such terms, restrictions, and conditions as the Administrator may determine at the time of grant.  Such conditions may include, but are not limited to, continued employment or the achievement of specified performance goals or objectives established by the Administrator with respect to one (1) or more Performance Criteria, which require the Administrator to certify in writing whether and the extent to which such Performance Criteria were achieved.

 

Section 6.02            Restricted Stock Unit Agreements . A Participant shall have no rights with respect to the Restricted Stock Units covered by a Restricted Stock Unit Agreement until the Participant has executed and delivered to the Company the applicable Restricted Stock Unit Agreement. Each Restricted Stock Unit Agreement shall be in such form, and shall set forth such other terms, conditions, and restrictions of the Restricted Stock Unit Agreement, not inconsistent with the provisions of this Plan, as the Administrator shall, from time to time, deem desirable. Each such Restricted Stock Unit Agreement may be different from each other Restricted Stock Unit Agreement.

 

Section 6.03          Vesting of Restricted Stock Units . The Restricted Stock Unit Agreement shall specify the date or dates, the performance goals, if any, established by the Administrator with respect to one (1) or more Performance Criteria that must be achieved, and any other conditions on which the Restricted Stock Units may vest. Except as otherwise provided by the Administrator, should the Participant cease to remain in Service while holding one (1) or more unvested Restricted Stock Units, should the performance objectives not be attained with respect to one (1) or more such unvested Restricted Stock Units, or in the event of the death or Disability of the Participant, then those Restricted Stock Units shall be immediately surrendered to the Company for cancellation, and the Participant shall have no further shareholder rights with respect to those Restricted Stock Units.

 

Section 6.04          Form and Timing of Settlement . Settlement in respect of vested Restricted Stock Units will be automatic upon vesting thereof.  Payment in respect thereof will be made no later than thirty (30) days thereafter and may, in the discretion of the Administrator, be in cash, shares of Common Stock of equivalent Fair Market Value as of the date of exercise, or a combination of both, except as specifically provided in the Restricted Stock Unit Agreement.

 

 

 

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Section 6.05          Rights as a Stockholder . Holders of Restricted Stock Units shall have no rights or privileges as a stockholder with respect to any shares of Common Stock covered thereby unless and until they become owners of shares of Common Stock following settlement in respect of such Restricted Stock Units, in whole or in part, in shares of Common Stock pursuant to their respective Restricted Stock Unit Agreements and the terms and conditions of the Plan.

 

Section 6.06          Restrictions . Restricted Stock Units may not be sold, pledged or otherwise encumbered or disposed of and shall not be assignable or transferable except by will, the laws of descent and distribution or pursuant to a domestic relations order entered by a court in settlement of marital property rights, except as specifically provided in the Restricted Stock Unit Agreement or as authorized by the Administrator, and subject to Section 13.01 of this Plan.

 

Article 7.

STOCK APPRECIATION RIGHTS

 

Section 7.01          Grants of Stock Appreciation Rights . The Administrator shall have the right to grant pursuant to this Plan, Stock Appreciation Rights subject to such terms, restrictions and conditions as the Administrator may determine at the time of grant. Such conditions may include, but are not limited to, continued employment or the achievement of specified performance goals or objectives established by the Administrator with respect to one (1) or more Performance Criteria, which require the Administrator to certify in writing whether and the extent to which such Performance Criteria were achieved.

 

Section 7.02          Stock Appreciation Right Agreements . A Participant shall have no rights with respect to the Stock Appreciation Rights covered by a Stock Appreciation Right Agreement until the Participant has executed and delivered to the Company the applicable Stock Appreciation Right Agreement. Each Stock Appreciation Right Agreement shall be in such form, and shall set forth the Base Price and such other terms, conditions and restrictions of the Stock Appreciation Right Agreement, not inconsistent with the provisions of this Plan, as the Administrator shall, from time to time, deem desirable. Each such Stock Appreciation Right Agreement may be different from each other Stock Appreciation Right Agreement.

 

Section 7.03          Base Price . The Base Price per share of Common Stock covered by each Stock Appreciation Right shall be determined by the Administrator and will be not less than 100% of Fair Market Value on the date the Stock Appreciation Right is granted.  However, a Stock Appreciation Right may be granted with a Base Price lower than that set forth in the preceding sentence if such Stock Appreciation Right is granted pursuant to an assumption or substitution for another stock appreciation right in a manner satisfying the provisions of Section 409A of the Code.

 

Section 7.04          Term and Termination of Stock Appreciation Rights . The term and provisions for termination of each Stock Appreciation Right shall be as fixed by the Administrator, but no Stock Appreciation Right may be exercisable more than ten (10) years after the date it is granted.

 

Section 7.05          Vesting and Exercise of Stock Appreciation Rights . Each Stock Appreciation Right shall vest and become exercisable in one (1) or more installments at such time or times and subject to such conditions, including without limitation the achievement of specified performance goals or objectives established with respect to one (1) or more Performance Criteria, as shall be determined by the Administrator.

 

Section 7.06          Effect of Termination of Service, Death, or Disability .

 

a)                 Unless otherwise provided by the Administrator, any unvested Stock Appreciation Right held by the Participant at the time of termination of Service, Disability or death, will expire immediately upon the occurrence of any such event.

 

b)                The following provisions shall govern the exercise of any vested Stock Appreciation Right held by the Participant at the time of termination of Service, Disability, or death:

 

(1)              Should the Participant’s Service be terminated for cause, then the Stock Appreciation Rights shall terminate on the date Service is terminated.

 

(2)              Should the Participant’s Service be terminated for Disability, then the Participant shall have a period of six (6) months following the date of such termination during which to exercise each outstanding Stock Appreciation Right held by such Participant at the time of Disability.

 

 

 

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(3)              If the Participant dies while holding an outstanding Stock Appreciation Right, then the personal representative of his or her estate or the person or persons to whom the Stock Appreciation Right is transferred pursuant to the Participant’s will or the laws of inheritance shall have six (6) months following the date of the Participant’s death to exercise such Stock Appreciation Right.

 

(4)              Should Participant’s Service be terminated by reason other than for cause, Disability, or death, then the Participant shall have a period of thirty (30) days following the date of such termination during which to exercise each outstanding Stock Appreciation Right held by such Participant.

 

(5)              Under no circumstances, however, shall any such Stock Appreciation Right be exercisable after the specified expiration of the Stock Appreciation Right term.

 

c)                 The Administrator shall have the discretion, exercisable either at the time a Stock Appreciation Right is granted or at any time while the Stock Appreciation Right remains outstanding, to extend the period of time for which the Stock Appreciation Right is to remain exercisable following Participant’s termination of Service or death from the limited period otherwise in effect for that Stock Appreciation Right to such greater period of time as the Administrator shall deem appropriate, but in no event beyond the expiration of the Stock Appreciation Right term;

 

Section 7.07          Amount, Form and Timing of Settlement . Upon exercise of a Stock Appreciation Right, the Participant who holds such Stock Appreciation Right will be entitled to receive payment from the Company in an amount equal to the product of (a) the difference between the Fair Market Value of a share of Common Stock on the date of exercise over the Base Price per share of Common Stock covered by such Stock Appreciation Right and (b) the number of shares of Common Stock with respect to which such Stock Appreciation Right is being exercised. Payment in respect thereof will be made no later than thirty (30) days after such exercise, provided that such payment will be made in a manner such that no amount of compensation will be treated as deferred under Treasury Regulation Section 1.409A-1(b)(5)(i)(D).  Such payment may, in the discretion of the Administrator, be in cash, shares of Common Stock of equivalent Fair Market Value as of the date of exercise, or a combination of both, except as specifically provided in the Stock Appreciation Right Agreement.

 

Section 7.08          Rights as a Stockholder . Holders of Stock Appreciation Rights shall have no rights or privileges as a stockholder with respect to any shares of Common Stock covered thereby unless and until they become owners of shares of Common Stock following settlement in respect of such Stock Appreciation Rights, in whole or in part, in shares of Common Stock pursuant to their respective Stock Appreciation Right Agreements and the terms and conditions of the Plan.

 

Section 7.09          Restrictions . Stock Appreciation Rights may not be sold, pledged or otherwise encumbered or disposed of and shall not be assignable or transferable except by will, the laws of descent and distribution or pursuant to a domestic relations order entered by a court in settlement of marital property rights, except as specifically provided in the Stock Appreciation Right Agreement or as authorized by the Administrator, and subject to Section 13.01 of this Plan.

 

Article 8.  

RESTRICTED STOCK AWARDS PROGRAM

 

Section 8.01          Restricted Stock Award Terms . Shares of Common Stock may be issued under the Restricted Stock Awards Program through direct and immediate issuances of Restricted Stock Awards without any intervening option grants. Each such stock grant shall be evidenced by a Restricted Stock Awards Agreement which complies with the terms specified below.

 

Section 8.02          Cost of Shares . Grants of Restricted Stock Awards under the Restricted Stock Awards Program shall be made at such cost as the Administrator shall determine and may be issued for no monetary consideration, subject to applicable state law.

 

 

 

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Section 8.03          Vesting Provisions .

 

a)                 Each Restricted Stock Award shall vest and become exercisable in one (1) or more installments at such time or times and subject to such conditions, including without limitation the achievement of specified performance goals or objectives established with respect to one (1) or more Performance Criteria, as shall be determined by the Administrator.

 

a)                 Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s unvested Restricted Stock Awards by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Company’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested Restricted Stock Awards and (ii) such escrow arrangements as the Administrator shall deem appropriate.

 

b)                Unless specified otherwise in the Restricted Stock Awards Agreement, the Participant shall have full shareholder rights with respect to any Restricted Stock Awards issued to the Participant under the Restricted Stock Awards Program, whether or not the Participant’s interest in those shares is vested, and accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.

 

c)                 Should the Participant cease to remain in Service while holding one (1) or more unvested Restricted Stock Awards issued under the Restricted Stock Awards Program or should the performance objectives not be attained with respect to one (1) or more such unvested Restricted Stock Awards, then those shares shall be immediately surrendered to the Company for cancellation, and the Participant shall have no further shareholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent (including the Participant’s purchase-money indebtedness), the Company shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel the unpaid principal balance of any outstanding purchase-money note of the Participant attributable to such surrendered shares.

 

d)                The Administrator may in its discretion waive the surrender and cancellation of one (1) or more unvested Restricted Stock Awards (or other assets attributable thereto) which would otherwise occur upon the non-completion of the vesting schedule applicable to such shares. Such waiver shall result in the immediate vesting of the Participant’s interest in the Restricted Stock Awards as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives.

 

Section 8.04          Restrictions . Unvested Restricted Stock Awards may not be sold, pledged or otherwise encumbered or disposed of and shall not be assignable or transferable except by will, the laws of descent and distribution or pursuant to a domestic relations order entered by a court in settlement of marital property rights, except as specifically provided in the Restricted Stock Award Agreement or as authorized by the Administrator, and subject to Section 13.01 of this Plan.

 

Section 8.05          Share Escrow/Legends . Stock certificates evidencing any unvested Restricted Stock Awards may, in the Administrator’s discretion, be held in escrow by the Company until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.

 

Article 9.

ADMINISTRATION OF THE PLAN

 

Section 9.01          Administrato r. Authority to control and manage the operation and administration of the Plan shall be vested in the Board, which may delegate such responsibilities in whole or in part to a committee consisting of two (2) or more members of the Board (the “ Committee ”), each of whom shall meet the independence requirements under the then applicable rules, regulations or listing requirements of the principal exchange on which the Company’s shares of Common Stock are then listed or admitted to trading or as otherwise determined by the Board.  Members of the Committee may be appointed from time to time by, and shall serve at the pleasure of, the Board. The Board may limit the composition of the Committee to those persons necessary to comply with the requirements of Section 162(m) of the Code and Section 16 of the Exchange Act. As used herein, the term “Administrator” means the Board or, with respect to any matter as to which responsibility has been delegated to the Committee, the term Administrator shall mean the Committee.

 

 

 

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Section 9.02          Powers of the Administrator . In addition to any other powers or authority conferred upon the Administrator elsewhere in this Plan or by law, the Administrator shall have full power and authority:  (a) to determine the persons to whom, and the time or times at which, Incentive Options, Nonqualified Options, Restricted Stock Units, Stock Appreciation Rights, or Restricted Stock Awards shall be granted, the number of shares to be represented by Option Exercise Documents, and the Exercise Price of such Options and the Base Price of such Stock Appreciation Rights; (b) to interpret the Plan; (c) to create, amend or rescind rules and regulations relating to the Plan; (d) to determine the terms, conditions and restrictions contained in, and the form of, Option Exercise Documents, Restricted Stock Awards Agreement, Restricted Stock Unit Agreement, or Stock Appreciation Right Agreement; (e) to determine the identity or capacity of any persons who may be entitled to exercise a Participant’s rights under any Option Exercise Documents, Restricted Stock Awards Agreement, Restricted Stock Unit Agreement, or Stock Appreciation Right Agreement under the Plan; (f) to correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Option Exercise Documents, Restricted Stock Awards Agreement, Restricted Stock Unit Agreement, or Stock Appreciation Right Agreement; (g) to accelerate the vesting of any Option, Restricted Stock Unit, Stock Appreciation Right, or Restricted Stock Award; (h) to extend the expiration date of any Option Exercise Documents, Restricted Stock Awards Agreement, Restricted Stock Unit Agreement, or Stock Appreciation Right Agreement; (i) subject to Section 9.03, to amend outstanding Option Exercise Documents, Restricted Stock Awards Agreement, Restricted Stock Unit Agreement, or Stock Appreciation Right Agreement to provide for, among other things, any change or modification which the Administrator could have included in the original agreement or in furtherance of the powers provided for herein; and (j) to make all other determinations necessary or advisable for the administration of this Plan, but only to the extent not contrary to the express provisions of this Plan.  Any action, decision, interpretation or determination made in good faith by the Administrator in the exercise of its authority conferred upon it under this Plan shall be final and binding on the Company and all Participants.  Notwithstanding any term or provision in this Plan, the Administrator shall not have the power or authority, by amendment or otherwise to extend the expiration date of an Option, Restricted Stock Unit or Stock Appreciation Right beyond the tenth (10th) anniversary of the date such Option or Stock Appreciation Right was granted.

 

Section 9.03          Repricing Prohibited . Subject to Section 4.02, and except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), neither the Committee nor the Board shall amend the terms of outstanding awards to reduce the Exercise Price of outstanding Options or the Base Price of outstanding Stock Appreciation Rights or cancel outstanding Options, Stock Appreciation Rights, or Restricted Stock Awards in exchange for cash, other awards or Options with an Exercise Price that is less than the Exercise Price of the original Options or Stock Appreciation Rights with a Base Price that is less than the Base Price of the original Stock Appreciation Rights, without approval of the Company’s stockholders, evidenced by a majority of votes cast.

 

Section 9.04          Limitation on Liability; Indemnification .  No employee of the Company or member of the Board or Committee shall be subject to any liability with respect to duties under the Plan unless the person acts fraudulently or in bad faith.  To the extent permitted by law, the Company shall indemnify each member of the Board or Committee, and any employee of the Company with duties under the Plan, who was or is a party, or is threatened to be made a party, to any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, by reason of such person’s conduct in the performance of duties under the Plan.

 

Article 10.

CHANGE IN CONTROL

 

Section 10.01       Options and Stock Appreciation Rights . Vesting of all outstanding Options or Stock Appreciation Rights shall accelerate automatically effective as of immediately prior to the consummation of the Change in Control. In connection with such acceleration, the Administrator in its discretion may provide, in connection with the Change in Control transaction, for the purchase or exchange of each Option or Stock Appreciation Right for an amount of cash or other property having a value equal to (i) with respect to each Option, the amount (or “spread”) by which, (x) the value of the cash or other property that the Optionee would have received pursuant to the Change in Control transaction in exchange for the shares issuable upon exercise of the Option had the Option been exercised immediately prior to the Change in Control, exceeds (y) the Exercise Price of the Option, and (ii) with respect to each Stock Appreciation Right, the value of the cash or other property that the Participant would have received had the Stock Appreciation Right been exercised immediately prior to the Change in Control. The Administrator shall have the discretion to provide in each Option Exercise Document other terms and conditions that relate to vesting of such Option or Stock Appreciation Right in the event of a Change in Control. The aforementioned terms and conditions may vary in each Option Exercise Document and may be different from and have precedence over the provisions set forth in this Section 10.01.

 

 

 

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Section 10.02       Restricted Stock Units and Restricted Stock Awards . All Restricted Stock Units and unvested Restricted Stock Awards shall vest in full effective as of immediately prior to the consummation of the Change in Control. In connection with such acceleration, the Administrator in its discretion may provide, in connection with the Change in Control transaction, for the purchase or exchange of each Restricted Stock Unit or Restricted Share for an amount of cash or other property having a value equal to the value of the cash or other property that the Participant would have received had the Restricted Stock Unit or Restricted Share vested immediately prior to the Change in Control. The Administrator shall have the discretion to provide in each agreement other terms and conditions that relate to vesting of such Restricted Stock Units and Restricted Stock Awards in the event of a Change in Control. The aforementioned terms and conditions may vary in each agreement, and may be different from and have precedence over the provisions set forth in this Section 10.02.

 

Article 11.

AMENDMENT AND TERMINATION OF THE PLAN

 

Section 11.01       Amendments . The Board may from time to time alter, amend, suspend or terminate this Plan in such respects as the Board may deem advisable. No such alteration, amendment, suspension or termination shall be made which shall substantially affect or impair the rights of any Participant under an outstanding Option Exercise Documents, Restricted Stock Awards Agreement, Restricted Stock Unit Agreement, and Stock Appreciation Right Agreement without such Participant’s consent. Shareholder approval is required for any amendment which increases the number of shares that may be issued under the Plan. The Board may alter or amend the Plan to comply with requirements under the Code relating to Incentive Options or other types of options which gives Optionees more favorable tax treatment than that applicable to Options granted under this Plan as of the date of its adoption. Upon any such alteration or amendment, any outstanding Option granted hereunder may, if the Administrator so determines and if permitted by applicable law, be subject to the more favorable tax treatment afforded to an Optionee pursuant to such terms and conditions. The Plan Administrator may revise or amend the grant forms attached to this Plan.

 

Section 11.02       Plan Termination . Unless this Plan shall theretofore have been terminated, the Plan shall terminate on the tenth (10th) anniversary of the Effective Date and no Options, Restricted Stock Units, Stock Appreciation Rights, or Restricted Stock Awards may be granted under the Plan thereafter, but Option Exercise Documents, Restricted Stock Awards Agreement, Restricted Stock Unit Agreements, and Stock Appreciation Right Agreements then outstanding shall continue in effect in accordance with their respective terms.

 

Article 12.

TAXES

 

Section 12.01       Withholding . The Company shall have the power to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any applicable Federal, state, and local tax withholding requirements with respect to any Options, Restricted Stock Units, Stock Appreciation Rights, or Restricted Stock Awards. To the extent permissible under applicable tax, securities and other laws, the Administrator may, in its sole discretion and upon such terms and conditions as it may deem appropriate, permit a Participant to satisfy his or her obligation to pay any such tax, in whole or in part, up to an amount determined on the basis of the highest marginal tax rate applicable to such Participant, by (a) directing the Company to apply shares of Common Stock to which the Participant is entitled as a result of the exercise of an Option or Stock Appreciation Right or vesting of a Restricted Stock Unit or Restricted Share, or (b) delivering to the Company shares of Common Stock owned by the Participant. The shares of Common Stock so applied or delivered in satisfaction of the Participant’s tax withholding obligation shall be valued at their Fair Market Value as of the date of measurement of the amount of income subject to withholding.

 

Section 12.02       Compliance with Section 409A of the Code . Options, Restricted Stock Units, Stock Appreciation Rights, and Restricted Stock Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A of the Code such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A of the Code, except as otherwise determined in the sole discretion of the Administrator. The Plan and each Option Exercise Document, Restricted Stock Awards Agreement, Restricted Stock Unit Agreement, and Stock Appreciation Right Agreement is intended to meet the requirements of Section 409A of the Code and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator. To the extent that an Option, Restricted Stock Unit, Stock Appreciation Right, or Restricted Stock Award, or grant, payment, settlement or deferral thereof is subject to Section 409A of the Code such Option, Restricted Stock Unit, Stock Appreciation Right, or Restricted Share will be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A of the Code, such that the grant, payment, settlement or deferral thereof will not be subject to the additional tax or interest applicable under Section 409A of the Code.

 

 

 

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Article 13.

MISCELLANEOUS

 

Section 13.01       Involuntary Transfer . In the event of any transfer by operation of law or other involuntary transfer (including divorce or death) of all or a portion of any awards or shares granted pursuant to this Plan, whether vested or unvested, held by the record holder thereof, the Company shall have the right to purchase all of the awards or shares transferred at the greater of the purchase price paid by purchaser or the Fair Market Value of the awards or shares (as determined by the Board of Directors) on the date of transfer. Upon such a transfer, the person acquiring the awards or shares shall promptly notify the Secretary of the Company of such transfer. The right to purchase such awards or shares shall be provided to the Company for a period of thirty (30) days following receipt by the Company of written notice by the person acquiring the awards or shares. Within thirty (30) days of receiving notice of the transfer or proposed transfer, the Company shall notify the purchaser/acquirer or his or her executor of the price. If the purchaser/acquirer does not agree with the Company’s valuation, the purchaser/acquirer may have the valuation determined by an independent appraiser to be mutually agreed upon and paid for by the purchaser/acquirer and the Company.

 

Section 13.02       Shareholder Approval of the Plan . The Plan shall be approved by a majority of the outstanding securities entitled to vote at a duly called meeting or by majority written consent by the later of (i) within twelve (12) months before or after the date the Plan is adopted, or (ii) prior to or within twelve (12) months of the granting of any Incentive Options or Nonqualified Options, or the issuance of any Restricted Stock Units, Stock Appreciation Rights, or Restricted Stock Awards. If any Incentive Options or Nonqualified Options is exercised, or any Restricted Stock Units, Stock Appreciation Rights, or Restricted Stock Awards is issued before security holder approval is obtained, the award shall be rescinded if security holder approval is not obtained in the manner described in the preceding sentence.

 

Section 13.03       Excess Awards . Awards may be granted under the Plan which are in each instance in excess of the number of shares of Common Stock then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in escrow until there is obtained shareholder approval of an amendment or increase pursuant to Section 4.01 sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such shareholder approval is not obtained within twelve (12) months after the date the first such excess issuances are made, then (i) any unexercised options granted on the basis of such excess shares shall terminate and cease to be outstanding and (ii) the Company shall promptly refund to the Participants the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares shall thereupon be automatically canceled and cease to be outstanding.

 

Section 13.04       Benefits Not Alienable . Other than as provided above, benefits under this Plan may not be assigned or alienated, whether voluntarily or involuntarily. Any unauthorized attempt at assignment, transfer, pledge or other disposition shall be without effect.

 

Section 13.05       No Enlargement of Employee Rights . This Plan is strictly a voluntary undertaking on the part of the Company and shall not be deemed to constitute a contract between the Company and any Participant to be consideration for, or an inducement to, or a condition of, the employment of any Participant. Nothing contained in the Plan shall be deemed to give the right to any Participant to be retained as an employee of the Company or any Affiliated Company or to interfere with the right of the Company or any Affiliated Company to discharge any Participant at any time.

 

Section 13.06       Application of Funds . The proceeds received by the Company from the sale of Common Stock pursuant to Option Exercise Documents, except as otherwise provided herein, will be used for general corporate purposes.

 

Section 13.07       Annual Reports . During the term of this Plan, the Company will furnish to each Participant who does not otherwise receive such materials, copies of all reports, proxy statements and other communications that the Company distributes generally to its stockholders, including, but not limited to, annual financial statements.

 

Section 13.08       Choice of Law and Venue .  The Plan and all related documents shall be governed by, and construed in accordance with, the laws of the State of Nevada.  Acceptance of an award shall be deemed to constitute consent to the jurisdiction and venue of the courts located in the State of Nevada for all purposes in connection with any suit, action or other proceeding relating to such award, including the enforcement of any rights under the Plan or any agreement or other document, and shall be deemed to constitute consent to any process or notice of motion in connection with such proceeding being served by certified or registered mail or personal service within or without the State of Nevada, provided a reasonable time for appearance is allowed.

 

 

 

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Section 13.09       Rule 16b-3. With respect to Participants subject to Rule 16b-3 of the Exchange Act, transactions under the Plan are intended to comply with all applicable provisions of Rule 16b-3. To the extent any provision of the Plan or action by the Plan Administrator fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Plan Administrator.

 

Section 13.10       Relationship to Other Plans . Nothing in this Plan shall prevent the Company or any Affiliated Company from adopting or continuing other or additional compensation arrangements, including without limitation plans providing for the granting of options, restricted stock units, stock appreciation rights, restricted stock awards, or other equity awards. Grants under the Plan may form a part of or otherwise be related to such other or additional compensation arrangements.

 

 

Attachments:

 

1. Grant of Stock Option Form

 

2. Option Exercise Form and the Grant Form

 

3. Restricted Stock Award Agreement Form

 

4. Restricted Stock Unit Agreement Form

 

5. Stock Appreciation Right Agreement Form

 

 

 

 

 

 

 

 

 

 

  14  

Exhibit 99.1

 

SETTLEMENT AGREEMENT

 

This Settlement Agreement (the “ Agreement ”), entered into effective the 5 th day of October 2018, is by and between IIOT-OXYS, Inc., a Nevada corporation (hereinafter the “ Client ”), and Adam Casey, an individual located at 173 Pine Street, Whitman, MA 02382 (the “ Consultant ”). The Client and the Consultant, individually are referred to as a “party,” and, together, as the “parties.”

 

RECITALS:

 

WHEREAS , beginning in 2017, the Consultant began to perform consulting services for the Client;

 

WHEREAS , no written agreement was executed by the parties and the consulting services were performed by the Consultant for the Client at an hourly rate;

 

WHEREAS , during February 2018, the Consultant and the Client reached a verbal agreement that a portion of the fees for the services performed by the Consultant would be paid in shares of Common Stock of the Client; however, the number of shares to be awarded to the Consultant was not expressly agreed to;

 

WHEREAS , on October 5, 2018, the Consultant ceased to perform services for the Client;

 

WHEREAS , as of the date of this Agreement, the Client has paid in full to the Consultant all fees to be paid in cash; however, the Consultant has not been issued the shares of the Client’s Common Stock as had been verbally agreed to in February 2018;

 

WHEREAS , pursuant to the verbal agreement in February 2018, the Client is obligated to award equity compensation to the Consultant; however, the amount of equity compensation to be granted to the Consultant is uncertain; and

 

WHEREAS , the Client is willing to issue restricted shares of its Common Stock in satisfaction of its obligations to the Consultant under all agreements with the Consultant.

 

NOW, THEREFORE , in consideration of the terms and conditions of this Agreement, the parties hereto agree as follows:

 

1.                 Issuance of Restricted Shares . The Client hereby issues to the Consultant and the Consultant hereby agrees to accept the issuance of Sixty-Five Thousand (65,000) shares of Common Stock of the Client (the “ Settlement Shares ”) as full and complete satisfaction of all obligations of the Client (and any of its subsidiaries) to the Consultant arising pursuant to any agreements with the Consultant. Within ten (10) days of the date of this Agreement, the Client shall direct the Client’s transfer agent to issue the Settlement Shares and deliver the stock certificate representing such Settlement Shares to the Consultant at the address set forth above.

 

2.                 Full Release by Consultant . The Consultant, for himself, and for his heirs, executors, administrators, and assigns, shall, and does, accept, receive, and take the Settlement Shares from the Client as full and complete satisfaction of any and all monetary debts or other obligations owed to him by the Client or its subsidiaries and hereby forever fully releases and discharges the Client and its subsidiaries and their officers, directors, successors, assigns, attorneys, agents and affiliates from any and all claims, causes of actions, damages, liabilities or costs (including attorney’s fees and legal costs), whether known or unknown, relating in any way to any agreement or any other issues or disputes that are the subject matter of or relating to any agreement with the Client.

 

3.                 Representations and Warranties of Consultant . The Consultant represents and warrants to the Client as follows:

 

a.                 Investment Knowledge and Experience; Sophistication (Regulation D; Blue Sky) . The Consultant (together with his, her and/or its Advisors (as defined below) has such knowledge and experience in business, financial and tax matters including, in particular, investing in private placements of securities in companies similar to the Client, so as to enable the Consultant to utilize the information made available in connection with the issuance of the Settlement Shares to: (i) evaluate the merits and risks of an investment in the Client and to make an informed investment decision with respect thereto; and (ii) to reasonably be assumed to have the capacity to protect the Consultant’s own interests in connection with the transaction contemplated by this Agreement.

 

 

 

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b.                 Independent Review of Investment Merits; Due Diligence . During the course of the transaction contemplated by this Agreement, and before receipt of the Settlemnet Shares: (i) the Consultant had the opportunity to engage such investment professionals and advisors including, without limitation, accountants, appraisers, investment, tax and legal advisors (collectively, the “ Advisors ”), each of whom are independent of the Client and its advisors and agents (including its legal counsel) to: (1) review the terms and conditions of this Agreement and the information and disclosures contained herein and therein; (2) conduct such due diligence review as the Consultant and/or such Advisors deemed necessary or advisable, and (3) to provide such opinions as to (A) the investment merits of a proposed investment in the Settlement Shares; (B) the tax consequences of the receipt of the Settlement Shares and the subsequent disposition of all or any portion of the Settlement Shares; and (C) the effect of same upon the Consultant’s personal financial circumstances, as the Consultant and/or such Advisors may deem advisable; and (ii) to the extent the Consultant availed himself, herself or itself of this opportunity, received satisfactory information and answers from such Advisors.

 

c.                 Acceptance of Investment Risks . The Consultant understands and acknowledges that: (i) an investment in the Settlement Shares: (1) is a speculative investment with a high degree of risk of loss and the Consultant must, therefore, be able to presently afford a complete loss of this investment; (2) the Consultant must be able to hold the Settlement Shares indefinitely ; and (3) it may not be possible for the Consultant to liquidate the Settlement Shares in the case of emergency and/or other need and the Consultant must, therefore, have adequate means of providing for the Consultant’s current and future needs and personal contingencies, and have no need for liquidity in this investment; and (ii) the Consultant has evaluated the Consultant’s financial resources and investment position in view of the foregoing, and is able to bear the economic risk of an investment in the Settlement Shares.

 

d.                 Restricted Securities . The Consultant understands that the Settlement Shares have not been registered pursuant to the Securities Act, or any state securities act, and thus will be restricted securities as defined in Rule 144 promulgated by the SEC. Therefore, under current interpretations and applicable rules, he will probably have to retain such Settlement Shares for a period of at least six (6) months from the date this Agreement is executed by the Consultant and at the expiration of such holding period his sales may be confined to brokerage transactions of limited amounts requiring certain notification filings with the SEC and such disposition may be available only if the Client is current in its filings with the SEC under the Exchange Act, or other public disclosure requirements.

 

e.                 Non-distributive Intent . The Consultant acknowledges that the Settlement Shares are being acquired for his own account, for investment, and not with the present view towards the distribution thereof and he will not dispose of any of the Settlement Shares except (i) pursuant to an effective registration statement under the Securities Act, or (ii) in any other transaction which, in the opinion of counsel acceptable to the Client, is exempt from registration under the Securities Act, or the rules and regulations of the SEC thereunder.

 

f.                  Evidence of Compliance with Private Offering Exemption . The Consultant represents and warrants that he, either individually or together with his purchaser representative, has such knowledge and experience in business and financial matters that he is capable of evaluating the risks of the prospective investment, and that the financial capacity of the Consultant is of such proportion that the total cost of the Consultant’s commitment in the Settlement Shares would not be material when compared with his total financial capacity. The Consultant has adequate means of providing for current needs and personal contingencies and has no need to sell the Settlement Shares in the foreseeable future.

 

g.                 Access to Information . The Consultant confirms that all documents, records, and books pertaining to this proposed transaction have been made available to him. In addition, the Consultant has reviewed or had access to the Client’s annual report on Form 10-K for the year ended December 31, 2017, and each filing made by the Client with the SEC since the filing of such annual report.

 

h.                 Opportunity to Ask Questions . The Consultant has had an opportunity to ask questions of and receive answers from duly designated representatives of the Client concerning the terms and conditions of this transaction and has been afforded an opportunity to examine such documents and other information which the Consultant or his representative, if any, has requested for the purpose of verifying the information set forth in this Agreement and for the purpose of answering any questions the Consultant may have concerning the business and affairs of the Client. In addition, the Consultant has received all requested additional information and documents.

 

 

 

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i.                  Limitations on Transfer of Settlement Shares . The Consultant acknowledges that he is aware that there are substantial restrictions on the transferability of the Settlement Shares. Since these Settlement Shares will not be registered under the Securities Act or any applicable state securities laws, the Settlement Shares may not be, and the Consultant agrees that they shall not be, transferred unless they are registered under the Securities Act and state securities laws, or unless such sale is exempt from such registration under the Securities Act and any other applicable state securities laws or regulations. The Consultant further acknowledges that the Client is under no obligation to aid in obtaining any exemption from the registration requirements. The Consultant also acknowledges that he will be responsible for compliance with all conditions on transfer imposed by any securities administrator of any state and for any expenses incurred by the Client for legal or accounting services in connection with reviewing such a proposed transfer and/or issuing opinions in connection therewith. The Consultant also acknowledges that an appropriate legend will be placed upon each of the certificate(s) representing the Settlement Shares stating that they have not been registered under the Securities Act and setting forth or referring to the restrictions on transferability and sale of the Settlement Shares.

 

j.                  No Awareness of Public Advertising . The Consultant is unaware of, is in no way relying on, and did not become aware of this offering, through or as a result of any form of public advertising including, without limitation, any advertisement, article, notice, leaflet or other communication (whether published in any newspaper, magazine, or similar media or broadcast over television, internet or radio, or otherwise generally disseminated or distributed).

 

k.                 No General Solicitation . The Consultant did not subscribe to purchase the Settlement Shares, or become aware of this offering, through or as the result of any public or promotional seminar or meeting to which the Consultant was invited by, or any solicitation of a subscription by, a person not previously known to the Consultant in connection with investments in securities generally.

 

l.                  Pre-Existing Relationship with Client . The Consultant represents that he, she or it has a significant pre-existing personal or business relationship with the Client or any of its directors, officers or controlling persons.

 

m.                Enforceability . This Agreement has been duly executed by the Consultant and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Consultant enforceable against the Consultant in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

 

4.                 Representations and Warranties of the Client . The Client represents and warrants to the Consultant as follows:

 

a.                 Authorization; Enforceability . The Client has the requisite corporate power and authority to enter into this Agreement. The Client has the requisite corporate power and authority to issue the Settlement Shares as contemplated by this Agreement. The execution and delivery of this Agreement by the Client has been duly authorized by all necessary action on the part of the Client and no further action is required by the Client in connection herewith. The issuance of the Settlement Shares contemplated hereby have been duly authorized by all necessary action on the part of the Client and no further action is required by the Client in connection herewith. This Agreement has been duly executed by the Client and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Client enforceable against the Client in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

 

b.                 Issuance of the Settlement Shares . The Settlement Shares have been duly authorized and, when issued in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all encumbrances and restrictions (other than those created by the Consultant), except for restrictions on transfer imposed by applicable securities laws.

 

5.                 Miscellaneous .

 

a.                 Attorneys’ Fees . If any legal action or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party or parties will be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or he may be entitled.

 

 

 

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b.                 Entire Agreement; Modification; Waiver . This Agreement constitutes the entire agreement between or among the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties. No supplement, modification, or amendment of this Agreement will be binding unless executed in writing by all the parties or the applicable parties to be bound by such amendment. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision, whether or not similar, nor will any waiver constitute a continuing waiver. No waiver will be binding unless executed in writing by the party making the waiver.

 

c.                 Survival of Covenants, Etc. All covenants, representations and warranties made herein shall survive the making of this Agreement and shall continue in full force and effect for a period of two (2) years from the dated of this Agreement, at the end of which period no claim may be made with respect to any such covenant, representation, or warranty unless such claim shall have been asserted in writing to the indemnifying party during such period.

 

d.                 Binding on Successors . This Agreement will be binding on, and will inure to the benefit of, the parties to it and their respective successors, and assigns.

 

e.                 Governing Law . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Nevada applicable to contracts made and to be performed in such State, without reference to the choice of law principals thereof.

 

f.                  Severability . If any provision of this Agreement is held invalid or unenforceable by any court of final jurisdiction, it is the intent of the parties that all other provisions of this Agreement be construed to remain fully valid, enforceable, and binding on the parties if the essential terms and conditions of this Agreement for each party remain valid, binding and enforceable.

 

g.                 Headings . The descriptive headings of the various paragraphs or parts of this Agreement are for convenience only and shall not affect the meaning or construction of any of the provisions hereof.

 

h.                 Number and Gender . Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, the feminine, or the neuter gender shall include the masculine, feminine, and neuter.

 

i.                  Counterparts; Facsimile Execution . This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one instrument. Delivery of an executed counterpart of this Agreement by facsimile or email shall be equally as effective as delivery of a manually executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by facsimile or email also shall deliver a manually executed counterpart of this Agreement, but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, or binding effect of this Agreement.

 

j.                  Full Knowledge . By their signatures, the parties acknowledge that they have carefully read and fully understand the terms and conditions of this Agreement, that each party has had the benefit of counsel, or has been advised to obtain counsel, and that each party has freely agreed to be bound by the terms and conditions of this Agreement.

 

SIGNATURE PAGE FOLLOWS

 

 

 

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SIGNATURE PAGE

 

IN WITNESS WHEREOF, each of the undersigned has executed this Agreement the respective day and year set forth below.

 

THE CLIENT: IIOT-OXYS, Inc.
   
   
   
Date: February 15, 2019 By: /s/ Cliff L. Emmons
        Cliff L. Emmons, CEO
   
THE CONSULTANT  
   
   
   
Date: February 28, 2019 By: /s/ Adam Casey
        Adam Casey, an individual

 

 

 

 

 

 

 

 

 

 

 

 

 

  5  

Exhibit 99.2

 

 

 

DRACO FINANCIAL CONSULTING AGREEMENT

 

This consulting agreement (this “Agreement”) is effective as of March 4 , 2019 and is entered by and between IIOT-OXYS, Inc., a Nevada corporation (the “Company”), and Draco Financial LLC, a Florida Limited Liability Company (“Consultant”), together the Parties (the “Parties”).

 

RECITALS

 

WHEREAS, Consultant has experience in the area of corporate finance, investor communications, and financial and investor public relations;

 

WHEREAS, the Company desires to formalize its existing business relationship with the consultant and to enter an agreement to further engage the service of the Consultant to assist and consult with the Company in matters concerning corporate finance, investor communications and public relations with existing shareholders, broker, dealers, and other investment professionals as to the company’s current and proposed activities;

 

NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth, and intending to be legally bound, the Company and Consultant agree as follows:

 

1. Term of Consultancy. The Company engages Consultant to act in a consulting capacity to the Company, and the Consultant agrees to provide services to the Company commencing on the date first set forth above and ending 6 months later (the “term of this Agreement.”). The Company may terminate this Agreement at any time, with or without cause however not withstanding the foregoing, if the consultant is terminated by the company, the company shall continue to be obligated to pay to the consultant the compensation set forth in the Remuneration paragraph of this agreement for the remainder of the term of this agreement.

 

2. Duties of Consultant. The Consultant will generally provide the following specified consulting services (the “Services”) through its officers and employees during the term of this Agreement:

 

A. Advise and assist the Company in developing and implementing appropriate plans and material for presenting the Company and its business plans, strategy and personnel to the financial community, and creating the foundations for subsequent financial public relations efforts;
B. Introduce the Company to the financial community;
C. With the cooperation of the Company, maintain awareness during the term of this Agreement of the Company’s plans, strategy, and personnel, as they may evolve during such period, and advise and assist the Company in communicating appropriate information regarding such plans, and personnel to the financial community;
D. Assist and advise the company with respect to its (i) stockholder and investor relations, (ii) relations with brokers dealers, analysts, and other investment professionals, and (iii) financial and media public relations;

 

 

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E. Perform the functions generally assigned to investor/stockholder relations departments in major corporations, including responding to telephone and written inquiries (which may be referred to the Consultant by the Company); assisting in the preparation of press releases for the Company with the Company’s involvement and approval for reviewing press releases, reports, and other communications with or to shareholders, the investment community, and the general public; advising with respect to the timing, form, distribution, and other matters related to such releases, reports communications, and consulting with respect to corporate symbols, logos, names, the presentation of such symbols, logos, and names, and other matter relating to corporate image.
F. Upon receipt of the Company’s approval, conduct meeting in person or by telephone, with brokers, dealers, analysts, other investment professionals and the general investing public. The Consultant will report in writing a summary of the activities (meetings and calls) performed on a monthly basis.
G. At the Company’s request, review business plans, strategies, mission statements, budgets, proposed transactions and other plans for the purpose of advising the Company of the investment community implications thereof; and
H. In addition to the other duties stated herein, the Consultant will also:
· On or before March 31, 2019: Facilitate a face-to-face meeting with at least one key prospective investor;
· Within 15 days of Q2 FY19 10Q release: Conduct a Call with Company’s leadership and Consultant’s Investor Network; and
· Within 15 days of Q3 FY19 10Q release: Conduct a Call with Company’s leadership and Consultant’s Investor Network.

 

I. Otherwise perform as the Company’s financial relations and public relations consultant.

 

 

3. Allocation of Time and Energies. The Consultant will perform the Services in a professional manner in accordance with accepted industry standards and in compliance with applicable securities laws and regulations. It is explicitly understood that Consultant’s performance of its duties hereunder will in no way be measured by the price of the Company’s common stock, nor the trading volume of the Company’s common stock.

 

  4. Remuneration . As full and complete compensation for the Consultant’s agreement to perform the Services, the Company shall compensate the Consultant as follows:

 

A. For undertaking this engagement and of other good and valuable consideration, the Company agrees to issue and deliver to the Consultant a “Commencement Bonus” payable in the form of 500,000 common shares (the “Shares”) of the Company’s common stock (“Common Stock”). The shares commencement bonus will be payable as follows: 500,000 shares of restricted stock issued within 5 business days of the execution of this Agreement. The shares of Common Stock issued as a “Commencement Bonus” shall be deemed to be fully vested and paid for on the date of the delivery of the shares to the Consultant by the company.

 

 

B. All shares of the Common Stock issued pursuant to this Agreement shall be issued in the name of Consultant.

 

C. During the term of this Agreement, and for a period of 6 months after the termination or expiration of this Agreement, the Consultant shall not, directly or indirectly, engage in any short selling activities of the Company’s Common Stock.

 

D. The Consultant shall enter into such trading restrictions as the parties shall agree will not adversely affect the trading price of the Company’s Common Stock.

 

5. Expenses. Consultant agrees to pay for all its expenses (phone, labor, etc.), other then extraordinary items for which the Company will reimburse Consultant. Such extraordinary items include travel and entertainment required by/or specifically requested by the Company, luncheons or dinners for large groups of investment professionals, mass faxing to a sizable percentage of the company’s constituents, investor conference call, print advertisement in publications and like expenses approved by the Company prior to its incurring an obligation for reimbursement.

 

 

 

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6. Indemnification. The Company agrees to indemnify and hold Consultant harmless from and against any losses, damages, or liabilities related to or arising out of Consultant’s engagement, and will reimburse Consultant for all reasonable expenses (including reasonable counsel fees) as they are incurred by Consultant in connection with investigating, preparing for, or defending any action or claim related thereto, whether or not in connection with pending or threatened litigation in which Consultant is a party. The Company will not, however, be responsible for any actions, claims, liabilities, losses, damages, liabilities related to, and other equitable considerations; provided, however, that in no event shall the amount to be contributed by the Consultant exceed the amounts actually received by Consultant. The foregoing shall be in addition to any rights that Consultant may have at common law or otherwise and shall extend upon the same terms to the benefit or and director, officer, employee, agent or controlling person Consultant.

 

7. Representation. The Company warrants and represents that all oral communications, written documents or materials furnished to Consultant are accurate, and the Consultant warrants and represents that all communications by Consultant with the public with respect to the financial affairs, operations, profitability, and strategic planning of the Company will be in accordance with information provided to it by the Company. The Consultant may rely upon the accuracy of the information provided by the Company without independent investigation. Consultant represents that it is not requires to maintain any licenses and registrations under federal or any state regulations necessary to perform the services set forth herein. Consultant acknowledges that to the best of its knowledge consultant, its officers and directors are not the subject of any investigation, claim decree, or judgment involving any violations of the SEC or securities laws.

 

8. Statues as Independent Contractor. Consultant’s engagement pursuant to the Agreement shall be as independent contractor, and not as employee, office or other against the Company. Neither party to this Agreement shall represent or hold itself out to be the employer or employee of the other. Consultant further acknowledges the consideration provided herein above is a gross amount of consideration and that the Company will not withhold from such consideration in any amount as to income taxes and other such payments shall be made or provided for by Consultant and the Company shall have no responsibility or duties regarding such matters. Neither the Company nor the Consultant possesses the authority to bind each other in any agreements without the express written consent on the entity to be bound.

 

9. Waiver. The waiver by either party of a breach of any provision of this agreement by the other party shall not operate or be construed as a waiver of any subsequent breach by such other party.

 

10. Notices. All notices, requests, and other communications hereunder shall be deemed to be duly given if sent by U.S. mail, postage, prepaid, addressed to the other party at the address set forth herein below:

 

  Draco Financial, LLC. ________________    
  2572 W. State Rd. 426 ________________    
  Suite 2024 ________________    
  Oviedo, FL 32765 ________________    

 

Either party may change address to which notices for it shall be addressed by providing notice of such change to the other party in the manner set forth in this paragraph.

 

11. Choice of Law, Jurisdiction, and Venue. This Agreement shall be governed by, construed, and enforced in accordance with the internal laws of the State of Florida, without giving the effect to its conflict of laws choice of law principals.

 

12. Disputes . The parties agree that all disputes between them of any nature whatsoever shall be resolved in Orlando, FL via binding arbitrations before either the American Arbitration Association ( www.adr.org ) or JAMS ( www.jamsadr.org ), whichever the Company prefers. The arbitrator shall have the power to decide all matters but must decide all disputes in accordance with Florida Law. The Parties choose arbitration because it is usually faster and less expensive than litigations, and it will allow the parties to resolve their disputes privately. The arbitrator shall allow limited discovery to allow the Parties to present our respective cases but shall be mindful of out desire to avoid the expense of broad discovery typically allowed in litigation.

 

 

 

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13. Complete Agreement. Except for the Confidentiality Agreement dated October 2, 2018 between the parties, which agreement shall not be affected by the terms of this Agreement, this Agreement contains the entire agreement of the parties relations to the subject matter hereof. This Agreement and its terms may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought.

 

14. Consultant Not a Broker-Dealer/ Prohibition from Participation in the Sale of Securities . The Company acknowledges that the Consultant is not licensed as a broker-dealer under applicable federal and state securities laws. Consequently, none of the Services hereunder are intended to be those of a broker-dealer. Pursuant to Rule 3a4-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Consultant agrees not to perform, and the Company expressly prohibits the Consultant from performing the following services: (a) making any sales of Company securities; (b) discussing the price of any Company securities; (c) delivering any offering materials for Company securities; (d) discussing the terms, rights or characteristics of any Company securities; and (e) discussing any investment in the business or securities of Company, except to direct any inquiries regarding the foregoing to authorized representatives of Company. Consultant hereby represents and warrants to the Company that Consultant is not an associated person of a broker or dealer as defined in Rule 3a4-1 of the Exchange Act. At no time shall the Consultant provide services which would require the Consultant to be registered or licensed with any federal or state regulatory body or self-regulating agency.

 

15. Statutory Disqualification . Neither the Consultant nor any of its officers, directors, controlling persons, employees, representatives, agents, affiliates, or any other person providing services to the Company for or on behalf of the Consultant hereunder is or shall be during the term subject to statutory disqualification as defined in Section 3(a)(39) of the Exchange Act of 1934, as amended.

 

16. Accredited Investor Status . The Consultant hereby represents that it is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated by the Securities and Exchange Commission (the “SEC”). The Consultant has initialed below each of the categories which apply to the Consultant and has furnished to the Company any requested reasonable evidence of the Consultant’s status as an “accredited investor.” ( Please indicate and initial all applicable categories )

 

  _____ a corporation, limited liability company, partnership, or a Massachusetts or similar business trust, which was not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5,000,000;
  _____ an entity in which all of the equity owners are “accredited investors.” 1

 

17. Representations of the Consultant . The Consultant represents and warrants to the Company as set forth below.

 

a.        Restricted Securities . The Consultant understands that the Shares have not been registered pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or any state securities act, and thus are “restricted securities” as defined in Rule 144 promulgated by the SEC. Accordingly, the Consultant hereby acknowledges that it is prepared to hold the Shares for an indefinite period.

 

b.        Investment Purpose . The Consultant acknowledges that the Shares are being acquired for its own account, for investment, and not with the present view towards the distribution, assignment, or resale to others or fractionalization in whole or in part. The Consultant further acknowledges that no other person has, and the Consultant currently intends that no person will have in the future, a direct or indirect beneficial or pecuniary interest in the Shares.

 

c.        Limitations on Resale; Restrictive Legend . The Consultant acknowledges that it will not sell, assign, hypothecate, or otherwise transfer any rights to, or any interest in, the Shares except (i) pursuant to an effective registration statement under the Securities Act, or (ii) in any other transaction which, in the opinion of counsel acceptable to the Company, is exempt from registration under the Securities Act, or the rules and regulations of the SEC thereunder. The Consultant also acknowledges that an appropriate legend will be placed upon each of the certificates representing the Shares stating that the securities have not been registered under the Securities Act and setting forth or referring to the restrictions on transferability and sale of these securities.

__________

1 For purposes of Rule 501(a), an individual is an “accredited investor” if he or she (i) had individual net worth (i.e., excess of total assets over total liabilities, but excluding the principal residence) on the date of the Agreement was at least $1,000,000, and/or (ii) had an individual income in excess of $200,000 in each of the two most recent calendar years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year. Individual income is defined for this purpose as adjusted gross income as determined for federal income tax purposes under the Internal Revenue Code (the “Code”), plus (i) any deductions for long-term capital gains under Section 1202 of the Code, (ii) any depletion deductions under Section 611, et seq. , of the Code, (iii) any interest income excluded under Section 103 of the Code, and (iv) any partnership losses allocated to the Consultant as reported on Schedule E of Form 1040.

 

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d.        Information Furnished . Prior to making its decision to enter into this Agreement, the Consultant had access to the following documents: (i) the Company’s 2017 annual report on Form 10-K for the year ended December 31, 2017; (ii) the Company’s quarterly reports on Form 10-Q for the quarters ended March 31, 2018, June 30, 2018, and September 30, 2018; (iii) each of the Company’s reports on Form 8-K filed with the SEC since the filing of its most recent annual report; and (iv) each other filing made with the SEC since the filing of the Company’s most recent annual report. The Consultant has relied upon the information contained therein and has not been furnished any other documents, literature, memorandum, or prospectus.

 

e.        Opportunity to Ask Questions . The Consultant has had the opportunity to question and receive answers from the Company concerning the terms and conditions of the proposed stock transaction and the business of the Company.

 

g.        No Advertisements . Prior to entering into this Agreement, the Consultant had a significant preexisting relationship with the Company or its management. The Consultant did not enter into the Agreement as a result of or subsequent to any advertisement, article, notice, or other communication published in any newspaper, magazine, or similar media or broadcast on television or radio, or presented at any seminar or meeting.

 

SIGNATURE PAGE FOLLOWS

 

 

 

 

 

 

 

 

 

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AGREED TO:

 

 

 

“The Company” IIOT-OXYS, Inc.
   
   
Date: February 28, 2019 By: /s/ Clifford L. Emmons               
         Clifford L. Emmons, CEO
   
“Consultant” Draco Financial, LLC.
   
   
   
Date: March 1, 2019 By: /s/ Rick Esquivel                       
         Rick Esquivel, CEO
         & Its Duly Authorized Officer

 

 

 

 

 

 

 

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Exhibit 99.3

 

AMENDMENT No. 1 TO 12% SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

 

This Amendment No. 1 to the 12% Senior Secured Convertible Promissory Note (this “ Amendment ”), dated effective March 6, 2019 (the “ Effective Date ”), is by and between IIOT-OXYS, Inc., a Nevada corporation (the “ Borrower ”), on the one hand, and Sergey Gogin (the “ Holder ”), on the other hand. The Borrower and the Holder will be referred to individually as a “ Party ” and collectively as the “ Parties .” Any capitalized terms not defined in this Amendment will have the meaning set forth in the 12% Senior Secured Convertible Promissory Note dated January 22, 2018 issued by the Borrower to the Holder (the “ Note ”), attached hereto as Exhibit A .

 

RECITALS

 

WHEREAS , on January 22, 2018, the Borrower issued to the Holder the Note in the principal amount of $500,000 (the “ Principal Amount ”);

 

WHEREAS , the Note matures on January 22, 2020 (the “ Maturity Date ”);

 

WHEREAS , the Note is convertible into shares of Common Stock of the Borrower at a rate of $0.65 per share (the “ Conversion Price ”); and

 

WHEREAS , the Parties wish to amend the Note to extend the Maturity Date to March 1, 2021 and to change the Conversion Price to $0.20 per share.

 

THEREFORE , in consideration of the foregoing recitals, mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as set forth below.

 

AGREEMENT

 

1.                 Extended Maturity Date . Pursuant to Section 7(i) of the Note, the definition of “Maturity Date” in the Note shall be March 1, 2021.

 

2.                 Revised Conversion Price . Pursuant to Section 7(i) of the Note, Section 4(b) of the Note is hereby amended so that, as amended, Section 4(b) of the Note reads as follows:

 

(b)        Conversion Price . The Conversion Price of the Common Stock into which the Principal Amount, or the then outstanding interest due thereon, of this Note is convertible shall be $0.20 per share (subject to adjustments as described herein). In the event the Company (i) makes a distribution or distributions on Common Shares payable in Common Shares or any Common Share Equivalents(which, for avoidance of doubt, shall not include any Common Shares issued by the Company upon conversion of, or payment of interest on, the Notes), (ii) subdivides outstanding Common Shares into a larger number of Common Shares, (iii) combines (including by way of a reverse split) outstanding Common Shares into a smaller number of Common Shares or (iv) issues, in the event of a reclassification of Common Shares, any Common Shares of the Company, then the Conversion Price shall be adjusted by multiplying the Conversion Price by a fraction of which the numerator shall be the number of Common Shares outstanding immediately before such event, and of which the denominator shall be the number of Common Shares outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of members entitled to receive such distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

3.                 Revised Conversion Price . Pursuant to Section 7(i) of the Note, Section 4(e) is added to the Note so that, as amended, Section 4(e) of the Note reads as follows:

 

e)        Adjustments for Annual Milestones . If the Year-End Milestones are not completed by the end of calendar year 2019, the Conversion Price shall be reduced to $0.10. The “Year-End Milestones” are the following:

 

i.                  Revenue of at least $800,000 for 2019;

 

 

 

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ii.                At least eight (8) Biotech, Pharma, MedDev companies under the MSA & 1st PO for $25,000;

 

iii.               At least four (4) follow-on contracts after the initial PO from Biotech, Pharma, MedDev companies;

 

iv.               At least three (3) monitoring contracts (recurring revenue) from Biotech, Pharma, MedDev companies;

 

v.                 Follow-on contract from the first Automotive customer or a new contract from the Automotive Manufacturing vertical of at least $25,000; and

 

vi.               At least three (3) more bridge monitoring installations for a state in the New England region or a subway related contract from a state in the New England region.

 

4.                 Waiver of Prior Defaults . Upon entering into this Amendment, the Holder hereby waives all Events of Default, known or unknown to the Holder, by Borrower prior to the Effective Date.

 

5.                 No Other Changes . Except as amended hereby, the Note will continue to be, and will remain, in full force and effect. Except as provided herein, this Amendment will not be deemed (i) to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of the Note or (ii) to prejudice any right or rights which the Parties may now have or may have in the future under or in connection with the Note or any of the instruments or agreements referred to therein, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

6.                 Authority; Binding on Successors . The Parties represent that they each have the authority to enter into this Amendment. This Amendment will be binding on, and will inure to the benefit of, the Parties to it and their respective heirs, legal representatives, successors, and assigns.

 

7.                 Governing Law and Venue . This Amendment and the rights and duties of the Parties hereto will be construed and determined in accordance with the terms of the Note.

 

8.                 Incorporation by Reference . The terms of the Note, except as amended by this Amendment, are incorporated herein by reference and will form a part of this Amendment as if set forth herein in their entirety.

 

9.                 Counterparts; Facsimile Execution . This Amendment may be executed in any number of counterparts and all such counterparts taken together will be deemed to constitute one instrument. Delivery of an executed counterpart of this Amendment by facsimile or email will be equally as effective as delivery of a manually executed counterpart of this Amendment.

 

[ Signature Page to Follow ]

 

 

 

 

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IN WITNESS WHEREOF , each of the undersigned has executed this Amendment the respective day and year set forth below:

 

BORROWER: IIOT-OXYS, Inc.
     
     
Date:  March 11, 2019 By /s/ Clifford L. Emmons
    Clifford L. Emmons, CEO
     
     
HOLDER:  
     
     
Date:  March 11, 2019 By /s/ Sergey Gogin
    Sergey Gogin

 

 

 

 

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EXHIBIT A

 

12% Senior Secured Convertible Promissory Note dated January 22, 2018

 

[See Attached]

 

 

 

 

 

 

 

 

 

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Exhibit 99.4

 

AMENDMENT No. 1 TO COMMON STOCK PURCHASE WARRANT

 

This Amendment No. 1 to the Common Stock Purchase Warrant (this “ Amendment ”), dated effective March 6, 2019 (the “ Effective Date ”), is by and between IIOT-OXYS, Inc., a Nevada corporation (the “ Company ”), on the one hand, and Sergey Gogin (the “ Holder ”), on the other hand. The Company and the Holder will be referred to individually as a “ Party ” and collectively as the “ Parties .” Any capitalized terms not defined in this Amendment will have the meaning set forth in the Common Stock Purchase Warrant dated January 22, 2018 issued by the Company to the Holder (the “ Warrant Agreement ”), attached hereto as Exhibit A .

 

RECITALS

 

WHEREAS , on January 22, 2018, the Company issued to the Holder a 12% Senior Secured Promissory Note in the principal amount of $500,000 (the “ Note ”);

 

WHEREAS , as additional consideration for the issuance of the Note, on January 22, 2018, the Company issued to the Holder warrants to purchase 384,615 shares of the Company’s Stock exercisable at $0.75 per share (the “ Exercise Price ”);

 

WHEREAS , on even date herewith, the Parties wish to amend the Note to extend the maturity date and to reduce the conversion price, amongst other items (the “ Note Amendment ”);

 

WHEREAS , as additional consideration for the Note Amendment, the Parties wish to amend the Warrant Agreement to reduce the Exercise Price from $0.75 to $0.30, add adjustment provisions to the Exercise Price, and to extend the term of the warrants.

 

THEREFORE , in consideration of the foregoing recitals, mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as set forth below.

 

AGREEMENT

 

1.                 Revised Exercise Price . Pursuant to Section 5(l) of the Warrant Agreement, Section 2(b) of the Warrant Agreement is hereby amended so that, as amended, Section 2(b) of the Warrant Agreement reads as follows:

 

(b)       Exercise Price. The exercise price per Common Share under this Warrant shall be $0.30 (the “Exercise Price”).

 

2.                 Adjustments for Annual Milestones . Pursuant to Section 5(l) of the Warrant Agreement, Section 3(b) of the Warrant Agreement is hereby added so that, as amended, Section 3(b) of the Warrant Agreement reads as follows:

 

(b)        Adjustments for Annual Milestones . If the Year-End Milestones are not completed by the end of calendar year 2019, the Exercise Price shall be reduced to $0.15. The “Year-End Milestones” are the following:

 

i.                  Revenue of at least $800,000 for 2019;

 

ii.                At least eight (8) Biotech, Pharma, MedDev companies under the MSA & 1st PO for $25,000;

 

iii.               At least four (4) follow-on contracts after the initial PO from Biotech, Pharma, MedDev companies;

 

iv.               At least three (3) monitoring contracts (recurring revenue) from Biotech, Pharma, MedDev companies;

 

 

 

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v.                 Follow-on contract from the first Automotive customer or a new contract from the Automotive Manufacturing vertical of at least $25,000; and

 

vi.               At least three (3) more bridge monitoring installations for a state in the New England region or a subway related contract from a state in the New England region.

 

3.                 Extension of Warrant Term . Pursuant to Section 3(e) of the Warrant Agreement, the term of the Warrant Agreement is extended to March 6, 2024.

 

4.                 No Other Changes . Except as amended hereby, the Warrant Agreement will continue to be, and will remain, in full force and effect. Except as provided herein, this Amendment will not be deemed (i) to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of the Warrant Agreement or (ii) to prejudice any right or rights which the Parties may now have or may have in the future under or in connection with the Warrant Agreement or any of the instruments or agreements referred to therein, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

5.                 Authority; Binding on Successors . The Parties represent that they each have the authority to enter into this Amendment. This Amendment will be binding on, and will inure to the benefit of, the Parties to it and their respective heirs, legal representatives, successors, and assigns.

 

6.                 Governing Law and Venue . This Amendment and the rights and duties of the Parties hereto will be construed and determined in accordance with the terms of the Warrant Agreement.

 

7.                 Incorporation by Reference . The terms of the Warrant Agreement, except as amended by this Amendment, are incorporated herein by reference and will form a part of this Amendment as if set forth herein in their entirety.

 

8.                 Counterparts; Facsimile Execution . This Amendment may be executed in any number of counterparts and all such counterparts taken together will be deemed to constitute one instrument. Delivery of an executed counterpart of this Amendment by facsimile or email will be equally as effective as delivery of a manually executed counterpart of this Amendment.

 

[ Signature Page to Follow ]

 

 

IN WITNESS WHEREOF , each of the undersigned has executed this Amendment the respective day and year set forth below:

 

COMPANY: IIOT-OXYS, Inc.
     
     
Date:  March 11, 2019 By /s/ Clifford L. Emmons
    Clifford L. Emmons, CEO
     
     
HOLDER:  
     
     
Date:  March 11, 2019 By /s/ Sergey Gogin
    Sergey Gogin

 

 

 

 

 

 

 

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EXHIBIT A

 

Common Stock Purchase Warrant dated January 22, 2018

 

[See Attached]

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit 99.5

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE 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 APPLICABLE STATE SECURITIES LAWS, 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 AS EVIDENCED BY A LEGAL OPINION OF CORPORATE COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

Original Issue Date: ____________, 2019

 

$____________

 

SENIOR SECURED CONVERTIBLE NOTE DUE MARCH 1, 2021

 

THIS SENIOR SECURED CONVERTIBLE NOTE is one of a series of duly authorized and validly issued Senior Secured Convertible Notes of IIOT-OXYS, Inc., a Nevada corporation (the “ Company ”), having its principal place of business at 705 Street, Cambridge, MA 02141, designated as its Senior Secured Convertible Note due March 1, 2021 (this Note, the “ Note ” and, collectively with the other Notes of such series, the “ Notes ”).

 

FOR VALUE RECEIVED, the Company promises to pay to ____________________ or its registered assigns (the “ Holder ”), or shall have paid pursuant to the terms hereunder, the principal sum of $__________ together with interest thereon on March 1, 2021 (the “ Maturity Date ”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder. This Note shall bear interest at a rate of twelve percent (12%) payable quarterly in cash. Quarterly interest payments are to be made on each successive March 31, June 30, September 30 and December 31. The obligations under the Notes are secured by, on a senior basis, by the Pledge and Security Agreement. This Note is subject to the following additional provisions:

 

Section 1. Definitions . For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Securities Purchase Agreement and (b) the following terms shall have the following meanings:

 

Bankruptcy Event ” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any limited liability company or other action for the purpose of effecting any of the foregoing.

 

Business Day ” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

Buy-In ” shall have the meaning set forth in Section 4(d)(v).

 

Common Share ” means the common Share of the Company, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

Conversion ” shall have the meaning ascribed to such term in Section 4.

 

Conversion Date ” shall have the meaning set forth in Section 4(a).

 

 

 

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Conversion Price ” shall have the meaning set forth in Section 4(c).

 

Conversion Shares ” means, collectively, the Common Shares issuable upon conversion of this Note in accordance with the terms hereof.

 

Event of Default ” shall have the meaning set forth in Section 5(a).

 

New York Courts ” shall have the meaning set forth in Section 6(d).

 

Note Register ” shall have the meaning set forth in Section 2(c).

 

Notice of Conversion ” shall have the meaning set forth in Section 4(a).

 

Original Issue Date ” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless of the number of instruments which may be issued to evidence such Notes.

 

Securities Purchase Agreement ” means the Securities Purchase Agreement, dated as of ________________, 2019 among the Company and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.

 

Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

Share Delivery Date ” shall have the meaning set forth in Section 4(d)(ii).

 

Trading Day ” means a day on which the principal Trading Market is open for trading.

 

Trading Market ” means any of the following markets or exchanges on which the Company’s Common Shares (or an equivalent thereof) is listed or quoted for trading on the date in question: the NYSE MKT (formerly NYSE AMEX), the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTC Bulletin Board or the OTC Markets (or any successors to any of the foregoing).

 

Section 2. Interest; Prepayment. The Company acknowledges and agrees that this Note has been issued with an annual interest rate of 12% to be paid quarterly in arrears. Regularly scheduled interest payments shall be made within ten days of the completion of each quarter on this Note on each successive March 31, June 30, September 30 and December 31. All payments hereunder will be paid to the Person in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note (the “ Note Register ”). At the discretion of the Company, the Principal Amount and unpaid accrued interest of the Notes may be prepaid at any time, provided that written notice is provided to the note holders at least 15 days in advance of the prepayment.

 

Section 3. Registration of Transfers and Exchanges .

 

a)         Different Denominations . This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same; provided, that the minimum principal amount of any replacement Note shall be $50,000. No service charge will be payable for such registration of transfer or exchange.

 

b)         Investment Representations . This Note has been issued subject to certain investment representations of the original Holder set forth in the Securities Purchase Agreement and may be transferred or exchanged only in compliance with the Securities Purchase Agreement and applicable federal and state securities laws and regulations to successor Holders who provide the same investment representations to the Company.

 

 

 

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c)         Reliance on Note Register . Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.

 

Section 4. Conversion .

 

a)         Voluntary Conversion . At any time after the Original Issue Date until this Note is no longer outstanding, this Note shall be convertible, in whole or in part, into Common Shares at the option of the Holder, at any time and from time to time. The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “ Notice of Conversion ”), specifying therein the date on which such conversion shall be effected (such date, the “ Conversion Date ”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder, the Holder shall be required to physically surrender this Note to the Company. The Company may deliver an objection to any Notice of Conversion within two (2) Business Days of delivery of such Notice of Conversion.

 

b)        Conversion Price . The Conversion Price of the Common Stock into which the Principal Amount, or the then outstanding interest due thereon, of this Note is convertible shall be $0.20 per share (subject to adjustments as described herein). In the event the Company (i) makes a distribution or distributions on Common Shares payable in Common Shares or any Common Share Equivalents (which, for avoidance of doubt, shall not include any Common Shares issued by the Company upon conversion of, or payment of interest on, the Notes), (ii) subdivides outstanding Common Shares into a larger number of Common Shares, (iii) combines (including by way of a reverse split) outstanding Common Shares into a smaller number of Common Shares or (iv) issues, in the event of a reclassification of Common Shares, any Common Shares of the Company, then the Conversion Price shall be adjusted by multiplying the Conversion Price by a fraction of which the numerator shall be the number of Common Shares outstanding immediately before such event, and of which the denominator shall be the number of Common Shares outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of members entitled to receive such distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

c)         Adjustments for Reorganization, Merger, Consolidation or Sales of Assets . If at any time or from time to time after the issuance date of this Note there shall be a capital reorganization of the Company (other than by way of a stock split or combination of shares or stock dividends or distributions, or a reclassification, exchange or substitution of shares), or a merger or consolidation of the Company with or into another corporation where the holders of the Company’s outstanding voting securities prior to such merger or consolidation do not own over 50% of the outstanding voting securities of the merged or consolidated entity, immediately after such merger or consolidation, or the sale of all or substantially all of the Company’s properties or assets to any other person (an “ Organic Change ”), then as a part of such Organic Change an appropriate revision to the conversion price shall be made if necessary and provision shall be made if necessary (by adjustments of the conversion price or otherwise) so that, upon any subsequent conversion of this Note, the Holder shall have the right to receive, in lieu of Conversion Shares, the kind and amount of shares of stock and other securities or property of the Company or any successor corporation resulting from the Organic Change. In any such case, appropriate adjustment shall be made in the application of the provisions of Section 4(a) with respect to the rights of the Holder after the Organic Change to the end that the provisions of Section 4(a) (including any adjustment in the conversion price then in effect and the number of shares of stock or other securities deliverable upon conversion of this Note) shall be applied after that event in as nearly an equivalent manner as may be practicable.

 

d)         Adjustments for Annual Milestones . If the Year-End Milestones are not completed by the end of calendar year 2019, the Conversion Price shall be reduced to $0.10. The “Year-End Milestones” are the following:

 

i.         Revenue of at least $800,000 for 2019;

 

ii.        At least eight (8) Biotech, Pharma, MedDev companies under the MSA & 1st PO for $25,000;

 

iii.       At least four (4) follow-on contracts after the initial PO from Biotech, Pharma, MedDev companies;

 

iv.       At least three (3) monitoring contracts (recurring revenue) from Biotech, Pharma, MedDev companies;

 

 

 

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v.        Follow-on contract from the first Automotive customer or a new contract from the Automotive Manufacturing vertical of at least $25,000; and

 

vi.       At least three (3) more bridge monitoring installations for a state in the New England region or a subway related contract from a state in the New England region.

 

e)         Mechanics of Conversion .

 

i.          Conversion Shares Issuable Upon Conversion of Principal Amount . The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted by (y) the Conversion Price.

 

ii.         Delivery of Certificate Upon Conversion. The Company shall promptly deliver, or cause to be delivered, to the Holder a certificate or certificates representing the Conversion Shares representing the number of Conversion Shares being acquired upon the conversion of this Note, provided , however , provided if the Company’s transfer agent is participating in the DTC Fast Automated Securities Transfer Program, the Company may credit such aggregate number of shares of Common Stock to which the Holder shall be entitled pursuant to such conversion to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at custodian system.

 

iii.        Failure to Deliver Certificates . If, in the case of a Notice of Conversion, such certificate or certificates are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event the Company shall promptly return to the Holder any original Note delivered to the Company and the Holder shall promptly return to the Company the Common Share certificates issued to such Holder pursuant to the rescinded Notice of Conversion.

 

iv.        Obligation Absolute; Partial Liquidated Damages . The Company’s obligations to issue the Conversion Shares upon conversion of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided , however , that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 5 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

 

v.         Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion . In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant to Section 4(d)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, Common Shares to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “ Buy-In ”), then the Company shall (A) pay in cash to the Holder (in addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase price (including any brokerage commissions) for the Common Shares so purchased exceeds (y) the product of (1) the aggregate number of Common Shares that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal to the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of Common Shares that would have been issued if the Company had timely complied with its delivery requirements under Section 4(d)(ii). For example, if the Holder purchases Common Shares having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Note with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Common Shares upon conversion of this Note as required pursuant to the terms hereof.

 

 

 

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vi.        Fractional Common Shares . No fractional Common Shares shall be issued upon the conversion of this Note. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, 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 Conversion Price or round up to the next whole Common Share.

 

Section 5. Negative Covenants .

 

Except as set forth in the Disclosure Schedules and exhibits thereto attached to the Securities Purchase Agreement, as long as at least 33% of the aggregate Principal Amount of the Notes issued pursuant to the Securities Purchase Agreement remains outstanding, the Company shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:

 

a)         amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights of the Holder;

 

b)        pay cash dividends or distributions on any equity securities of the Company;

 

c)          enter into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for board approval); or

 

d)         enter into any agreement with respect to any of the foregoing.

 

Section 6. Events of Default .

 

a)         Event of Default ” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

 

i.          any default in the payment of (A) the principal amount of any Note or (B) interest, liquidated damages and other amounts owing to a Holder on any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured within seven (7) Trading Days;

 

ii.         the Company shall fail to observe or perform any other material covenant or agreement contained in the Notes which failure is not cured, if possible to cure, within thirty (30) days after receipt by the Company of notice of such failure sent by the Holder or by any other Holder;

 

iii.       any material representation or warranty made in this Note or any other Transaction Documents shall be untrue or incorrect in any material respect as of the date when made or deemed made that would cause a Material Adverse Effect;

 

iv.        the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event; or

 

v.         the Common Shares shall become not eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume listing or quotation for trading thereon within ten (10) Trading Days.

 

b)         Remedies Upon Event of Default . If any Event of Default occurs and is continuing before the Maturity Date, (a) the outstanding principal amount of this Note, plus liquidated damages, interest and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash. Commencing ten (10) Trading Days after the occurrence of any Event of Default that results in the eventual acceleration of this Note, the Principal Amount on this Note shall increase 20%, (b) the number of Warrant Shares (as defined in the Warrant) exercisable pursuant to the Warrant shall increase from 50% to 100%, and (c) and (c) Holders will appoint a Board Member to join the Company’s Board of Directors. Upon the payment in full, the Holder shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 5(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon. If this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note the Company shall be obligated and pay reasonable attorneys’ fees in connection with such collection, enforcement or action.

 

 

 

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Section 7. Miscellaneous .

 

a)         Notices . Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by e-mail, facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other e-mail address, facsimile number or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section 6(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail or facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address, facsimile number or address of the Holder appearing on the signature pages attached to the Securities Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via e-mail or facsimile at the email address or facsimile number set forth on the signature pages attached to the Securities Purchase Agreement prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via e-mail or facsimile at the e-mail address or facsimile number set forth on the signature pages attached to the Securities Purchase Agreement on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

b)        Absolute Obligation . Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company.

 

c)         Lost or Mutilated Note . If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.

 

d)         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 New York, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “ New York Courts ”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York 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 such New York Courts, or such New York 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 other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorney’s fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

e)         Waiver . Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion. Any waiver by the Company or the Holder must be in writing.

 

 

 

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f)         Severability . If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder but will suffer and permit the execution of every such as though no such law has been enacted.

 

g)         Next Business Day . Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

 

h)         Headings . The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.

 

i)         Amendment. This Note may be modified or amended, or the provisions hereof waived in accordance with the Securities Purchase Agreement.

 

 

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

 

  IIOT-OXYS, Inc.
   
   
   
  By:                                  
  Name: Clifford L. Emmons
    Title: Chief Executive Officer

 

 

 

 

 

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ANNEX A NOTICE OF CONVERSION

 

The undersigned hereby elects to convert the principal under the Senior Secured Convertible Note due _______________, 20__ of IIOT-OXYS, INC., a Nevada corporation (the “ Company ”), into Common Shares (the “ Common Shares”), of the Company according to the conditions hereof, as of the date written below. If Common Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

 

Conversion calculations: _________________________________________

 

Date to Effect Conversion: ________________________________________

 

Principal Amount of Note to be Converted: ___________________________

 

Number of Common Shares to be issued: _____________________________

 

Cash to be paid to Holder: ________________________________________

 

Signature: ____________________________________________________

 

Name: _______________________________________________________

 

Address for Delivery of Common Share Certificates: _____________________

 

Or

 

DWAC Instructions: ____________________________________________

 

Broker No: ____________________________________________________

 

Account No: __________________________________________________

 

 

 

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Exhibit 99.6

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “ Agreement ”) is dated as of ____________________, 2019, between IIOT-OXYS, INC., a Nevada corporation (the “ Company ”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “ Purchaser ” and collectively, the “ Purchasers ”).

 

WHEREAS, the Company is offering Senior Secured Convertible Notes with Warrants to acquire up to that number of Common Shares as is determined in accordance with the terms of the Warrants (the “ Offering ”);

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

 

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

 

ARTICLE I

DEFINITIONS

 

1.1       Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Notes (as defined herein), and (b) the following terms have the meanings set forth in this Section 1.1:

 

Acquiring Person ” shall have the meaning ascribed to such term in Section 4.7.

 

Action ” shall have the meaning ascribed to such term in Section 3.1(j).

 

Affiliate ” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

Board of Directors ” means the board of directors of the Company.

 

Business Day ” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

Closings ” means the closings of the purchases and sales of the Securities pursuant to Section 2.1.

 

Closing Dates ” means the Trading Days on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived.

 

Closing Milestones ” means the milestones pursuant to Section 2.1.

 

Commission ” means the United States Securities and Exchange Commission.

 

Common Share ” means the common share of the Company, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

 

 

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Common Share Equivalents ” means any securities of the Company which would entitle the holder thereof to acquire at any time Common Shares, including, without limitation, any debt, preferred share, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Share.

 

Conversion Price ” shall have the meaning ascribed to such term in the Notes.

 

Conversion Shares ” shall have the meaning ascribed to such term in the Notes.

 

Disclosure Schedules ” shall have the meaning ascribed to such term in Section 3.1.

 

Effective Date ” means the earliest of the date that (a) a registration statement covering the Underlying Shares has been declared effective by the Commission, or (b) all of the Underlying Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions.

 

Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

Fourth Closing ” means the closing pursuant to Section 2.1(d).

 

Fourth Closing Milestones ” means the closing pursuant to Section 2.1(d).

 

FCPA ” means the Foreign Corrupt Practices Act of 1977, as amended.

 

First Closing ” means the closing pursuant to Section 2.1(a).

 

First Closing Milestones ” means the closing pursuant to Section 2.1(a).

 

GAAP ” shall have the meaning ascribed to such term in Section 3.1(h).

 

Indebtedness ” shall have the meaning ascribed to such term in Section 3.1(v).

 

Intellectual Property Rights ” shall have the meaning ascribed to such term in Section 3.1(n).

 

Liens ” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

Material Adverse Effect ” shall have the meaning assigned to such term in Section 3.1(b).

 

Material Permits ” shall have the meaning ascribed to such term in Section 3.1(l).

 

Maximum Rate ” shall have the meaning ascribed to such term in Section 5.15.

 

Notes ” means the Senior Secured Convertible Notes issued by the Company to the Purchasers hereunder, in the form of Exhibit A attached hereto.

 

Interest Rate ” means 12%.

 

Person ” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

 

 

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Principal Amount ” means, as to each Purchaser, the principal amount of the Note, set forth below such Purchaser’s signature block on the signature pages hereto next to the heading “Principal Amount,” in United States Dollars.

 

Proceeding ” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

 

Public Information Failure ” shall have the meaning ascribed to such term in Section 4.3(b).

 

Public Information Failure Payments ” shall have the meaning ascribed to such term in Section 4.3(b).

 

Purchaser Party ” shall have the meaning ascribed to such term in Section 4.9.

 

Required Approvals ” shall have the meaning ascribed to such term in Section 3.1(e).

 

Requisite Holders ” shall mean those Purchasers holding Notes having a majority of the aggregate principal amount of all Notes issued pursuant to this Agreement.

 

Required Minimum ” means, as of any date, the maximum aggregate number of Common Shares then issued or potentially issuable in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants or conversion in full of all Notes, ignoring any conversion or exercise limits set forth therein, and assuming that the Conversion Price is at all times on and after the date of determination 75% of the then Conversion Price on the Trading Day immediately prior to the date of determination.

 

Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

Second Closing ” means the closing pursuant to Section 2.1(b).

 

Second Closing Milestones ” means the closing pursuant to Section 2.1(b).

 

Securities ” means the Notes, the Warrants, the Warrant Shares and the Underlying Shares.

 

Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

Short Sales ” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Share).

 

Subscription Amount ” means, as to each Purchaser, the aggregate amount to be paid for Notes and Warrants, which shall equal the Principal Amount, set forth below such Purchaser’s signature block on the signature pages hereto next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.

 

Subsidiary ” means a subsidiary of the Company, as set forth in Section 3.1.

 

Third Closing ” means the closing pursuant to Section 2.1(c).

 

Third Closing Milestones ” means the closing pursuant to Section 2.1(c).

 

Trading Days ” means the day on which the principal Trading Market is open for trading.

 

 

 

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Trading Market ” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT (formerly NYSE AMEX), the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTC Bulletin Board or the Pink OTC Markets (or any successors to any of the foregoing).

 

Transaction Documents ” means this Agreement, the Notes, the Warrants, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

Transfer Agent ” means any transfer agent the Company in the future retains with respect to its shares of Common Stock.

 

Underlying Shares ” means the Common Shares issuable upon conversion or redemption of the Notes and upon exercise of the Warrants.

 

Warrants ” means, collectively, the Common Share purchase warrants delivered to the Purchasers at the Closing, which Warrants shall be exercisable immediately following the Closing Date and have a term of exercise equal to five years, in the form of Exhibit B attached hereto.

 

Warrant Shares ” means the Common Shares issuable upon exercise of the Warrants.

 

ARTICLE II

PURCHASE AND SALE

 

2.1       Multiple Closings . On the Closing Dates, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, the Notes and Warrants. Each Closing shall take place upon the occurrence of certain milestones (the “ Closing Milestones ”) which are as follows:

 

(a)      The first Closing (the “ First Closing ”) of $100,000 shall take place upon the occurrence of the following (the “ First Closing Milestones ”):

 

(i)         Phase 1A PO contract awarded for data analysis ($25,000 contract value) with FIRST customer in Biotech, Pharma, MedDev vertical;

 

(ii)        NDA signature with SECOND major customer in Biotech, Pharma, MedDev vertical; and

 

(iii)       Send monitoring or digital strategy proposal to FIRST customer in Automotive Manufacturing vertical.

 

(b)        The second Closing (the “ Second Closing ”) of $100,000 shall take place upon the occurrence of the following (the “ Second Closing Milestones ”):

 

(i)         Phase 1B PO awarded for Pilot ($50,000 contract value) with FIRST customer in Biotech, Pharma, MedDev vertical;

 

(ii)         Get Master Service Agreement with SECOND biotech company & 1st PO for $25,000;

 

(iii)         NDA signature with THIRD major customer in Biotech, Pharma, MedDev vertical;

 

(iv)       NDA Signature with FOURTH major customer in Biotech, Pharma, MedDev vertical; and

 

(v)         Installation Complete for FIRST customer in Infrastructure Monitoring vertical – Monitoring Contract Starts.

 

(c)        The third Closing (the “ Third Closing ”) of $100,000 shall take place upon the occurrence of the following (the “ Third Closing Milestones ”):

 

 

 

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(i)          Get Master Service Agreement with THIRD biotech company & 1st PO for $25,000;

 

(ii)        Master Service Agreement & 1st PO for $25,000 for FOURTH customer in this market vertical OR Automotive Manufacturing OR Aerospace Manufacturing; and

 

(iii)       NDA Signature with FIFTH major customer in Biotech, Pharma, MedDev vertical.

 

(d)        The fourth Closing (the “ Fourth Closing ”) of $200,000 shall take place upon the occurrence of the following (the “ Fourth Closing Milestones ”):

 

(i)         NDA Signature with SIXTH major customer in Biotech, Pharma, MedDev vertical;

 

(ii)        Get Master Service Agreement with FOURTH (or FIFTH) Biotech, Pharma, MedDev company & 1st PO for $25,000;

 

(iii)       Master Service Agreement & 1st PO for $25,000 for FIFTH (or SIXTH) customer in Biotech, Pharma, MedDev vertical OR Automotive Manufacturing OR Aerospace Manufacturing;

 

(iv)       First company in Biotech, Pharma, MedDev vertical is under annual monitoring contract for at least $24,000/year; and

 

(v)      Additional monitoring contracts on recurring revenue basis for FIRST customer in Infrastructure Monitoring OR proof of concept contracts for additional customers – at least $24,000.

 

Upon the Closings, each Purchaser shall deliver to the Company, via wire transfer or a certified check, immediately available funds equal to such Purchaser’s Subscription Amount (pro-rata per each Purchaser per each Closing) as set forth on the signature page hereto executed by such Purchaser, and the Company shall deliver to each Purchaser its respective Note and a Warrant, as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction or waiver of the covenants and conditions set forth in Sections 2.2 and Section 2.3, each Closing shall occur automatically. At each Closing, the Company shall execute and deliver the Security Agreement (in the form attached hereto as Exhibit C ) and the Purchasers shall file a UCC-1 financing statement with the appropriate division of the Secretary of State of Nevada and the Company shall execute, deliver and/or file such other documents as the Purchasers shall reasonably require.

 

2.2        Deliveries .

 

(a)         On or prior to each Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

 

(i)         this Agreement duly executed by the Company (not required after the First Closing);

 

(ii)         a Note with a principal amount equal to such Purchaser’s Principal Amount, registered in the name of such Purchaser; and

 

(iii)       a Warrant registered in the name of such Purchaser with an exercise price per share of $0.30, and to purchase up to a number of Common Shares equal to 50% of the number of Common Shares issuable upon conversion of such Purchaser’s Note at a conversion price per share of $0.20; provided, however, if the Event of Default (as defined in the Note) occurs and is not cured, the Warrant coverage shall increase from 50% to 100%.

 

(b)        On or prior to each Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:

 

(i)         this Agreement duly executed by the Purchaser (not required after the First Closing); and

 

(ii)        such Purchaser’s Subscription Amount by wire transfer to the account specified in writing by the Company (pro-rata per each Purchaser per each Closing).

 

 

 

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2.3        Closing Conditions .

 

(a)        The obligations of the Company hereunder in connection with each Closing are subject to the following conditions being met:

 

(i)         the accuracy in all material respects on each Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

(ii)        all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and

 

(iii)       the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.

 

(b)        The respective obligations of the Purchasers hereunder in connection with the Closings are subject to the following conditions being met:

 

(i)         the accuracy in all material respects on each Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

(ii)        all obligations, covenants and agreements of the Company required to be performed at or prior to each Closing Date shall have been performed;

 

(iii)      the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement; and

 

(iv)       there shall have been no Material Adverse Effect with respect to the Company since the date hereof.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

3.1         Representations and Warranties of the Company . Except as set forth in the Disclosure Schedule attached hereto (including the exhibits attached to the Disclosure Schedule, collectively, the “ Disclosure Schedule ”), which Disclosure Schedule shall be deemed a part hereof, the Company hereby makes the following representations and warranties to each Purchaser as of each Closing Date:

 

(a)         Subsidiaries . The Company owns, directly or indirectly, all of the Common Shares or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding Common Shares of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

 

(b)         Organization and Qualification . The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in goodstanding 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. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, operating agreements, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a Material Adverse Effect on the legality, validity or enforceability of any Transaction Document, (ii) a Material Adverse Effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, 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 provided, that changes in the trading price of the Common Share shall not, in and of itself, constitute a Material Adverse Effect) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

 

 

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(c)         Authorization; Enforcement . The Company has the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s shareholders in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(d)         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 or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (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 any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, 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 or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary 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.

 

(e)         Filings, Consents and Approvals . The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.6 of this Agreement and (ii) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “ Required Approvals ”).

 

(f)          Issuance of the 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. The Underlying Shares, when issued in accordance with the terms of the Transaction Documents, will be 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.

 

(g)        Further Rights and Approvals . No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. No further approval or authorization of any shareholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no shareholder agreements, voting agreements or other similar agreements with respect to the Company’s Common Shares to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s shareholders.

 

(h)         Financial Statements . The Company’s audited financial statements for the years ended December 31, 2016 and 2017 (the “ Audited Financial Statements ”) have been filed with the Security and Exchange Commission. The Audited Financial Statements have been prepared in accordance with generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods indicated. The Audited Financial Statements fairly present in all material respects the financial condition and operating results of the Company as of the dates, and for the periods, indicated therein. Except as set forth in the Audited Financial Statements, the Company has no material liabilities or obligations, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to December 31, 2017; (ii) obligations under contracts and commitments incurred in the ordinary course of business; and (iii) liabilities and obligations of a type or nature not required under GAAP to be reflected in the Audited Financial Statements, which, in all such cases, individually and in the aggregate would not reasonably be expected to have a Material Adverse Effect.

 

 

 

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(i)          Material Changes; Undisclosed Events, Liabilities or Developments . Since the date of the latest Audited Financial Statements, except as specifically disclosed in a subsequent report filed with the Commission prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any Common Shares, and (v) the Company has not issued any equity securities to any officer, director or Affiliate other than those disclosed with the Commission. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement or as set forth on no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one Trading Day prior to the date that this representation is made.

 

(j)          Litigation . There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “ Action ”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. Except as set forth on Schedule 3.1(j) , there has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

 

(k)         Compliance . Neither the Company nor any Subsidiary: (i) has 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 as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(l)          Regulatory Permits . The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as currently conducted, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“ Material Permits ”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

 

(m)        Title to Assets . The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries, and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

 

 

 

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(n)         Intellectual Property . To the Company’s knowledge, the Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as necessary or required for use in connection with their respective businesses and which the failure to so have could have a Material Adverse Effect (collectively, the “ Intellectual Property Rights ”).

 

(o)         Insurance . The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

 

(p)         Transactions With Affiliates and Employees . None of the officers or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from providing for the borrowing of money from or lending of money to, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, shareholder, shareholder or partner, in each case in excess of $150,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits.

 

(q)         Private Placement . Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated hereby.

 

(r)          Investment Company . The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.

 

(s)         Disclosure . All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, its business and proposed business and the transactions contemplated hereby, including the Disclosure Schedule, to the knowledge of the Company is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

(t)          No Integrated Offering . Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of the Securities Act which would require the registration of any such securities under the Securities Act.

 

(u)         Solvency . The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The Disclosure Schedules set forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “ Indebtedness ” means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary received notice of a claim that it is in default with respect to any Indebtedness.

 

 

 

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(v)        Tax Status . Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has no material tax obligations for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.

 

(w)        Accredited Investors . The Company has offered the Securities for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

 

(x)         Foreign Corrupt Practices . Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision of the FCPA.

 

(y)         No Disagreements with Accountants and Lawyers . There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents.

 

(aa)      Acknowledgment Regarding Purchasers’ Purchase of Securities . The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

(bb)      Office of Foreign Assets Control . Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“ OFAC ”).

 

(cc)      No Bad Actor Disqualifying Event . No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities Act (a “ Disqualification Event ”) is applicable to the Company or, to the Company’s knowledge, any Company Covered Person (as defined by Rule 506(d)), except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or (d)(3), is applicable.

 

3.2         Representations and Warranties of the Purchasers . Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of each Closing Date to the Company as follows (unless as of a specific date therein):

 

(a)         Organization; Authority . Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

 

 

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(b)         Own Account . Such Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

 

(c)          Purchaser Status . At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants or converts any Notes it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

 

(d)          Experience of Such Purchaser . Such Purchaser, 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 Purchaser is able to bear the economic risk of an investment in the Securities and is able to afford a complete loss of such investment.

 

(e)         Certain Transactions and Confidentiality . Other than consummating the transactions contemplated hereunder, such Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).

 

(f)         No Bad Actor. Such Purchaser hereby represents that neither it nor any of its Rule 506(d) Related Parties is a “bad actor” within the meaning of Rule 506(d). For purposes of this Agreement, “Rule 506(d) Related Party” shall mean a person or entity covered by the “Bad Actor disqualification” provision of Rule 506(d).

 

(g)         Foreign Purchaser . If Purchaser is not a United States person, such Purchaser represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Notes or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Notes, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Notes. Such Purchaser further represents that its payment for, and its continued beneficial ownership of the Notes, will not violate any applicable securities or other laws of its jurisdiction.

 

(h)          Access to Information . Purchaser acknowledges that it has carefully and fully reviewed the Disclosure Schedule and has been afforded: (i) the opportunity to ask such questions as it has deemed necessary of representatives of the Company concerning, among other items, those set forth in “ii” below of this Section 3.2(h), that the Purchaser deemed relevant in making a decision to purchase the Securities, the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to all information about the Company including, but not limited to, the terms of the Securities, the Offering, the Company’s business and proposed business, its capitalization, the Disclosure Schedule (including exhibits thereto), the Company’s products, the Audited Financial Statements, the financial status and conditions of the Company, the Company’s prospects, management and controlling shareholders and the terms of its outstanding securities 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 including with regard to the items in “ii” above. Purchaser acknowledges that no third party has made or will make any representation or warranty to such Purchaser regarding the adequacy or completeness for such Investor’s purpose of the information such Purchaser as requested. The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any express representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.

 

 

 

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ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES

 

4.1         Transfer Restrictions .

 

(a)        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, to the Company or to an Affiliate of a Purchaser, the Company may require the transferor thereof to provide to the Company an opinion of corporate 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 make the representations set forth in Section 3.2, and then shall have the rights and obligations of a Purchaser under this Agreement.

 

(b)          The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following form:

 

NEITHER THIS SECURITY NOR ANY SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE 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 AS EVIDENCED BY A LEGAL OPINION OF CORPORATE COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

4.2         Acknowledgment of Dilution . The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding number of Common Shares, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other shareholders of the Company.

 

4.3        Furnishing of Information; Public Information .

 

(a)         Until the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, and so long as the Company is a reporting company pursuant to the Exchange Act, the Company covenants to maintain the registration of the Common Shares under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date thereof pursuant to the Exchange Act even if the Company subsequently is no longer then subject to the reporting requirements of the Exchange Act.

 

(b)         Following the date that the Securities are eligible to be resold pursuant to Rule 144 and ending at such time that all of the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “ Public Information Failure ”), then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell Underlying Shares, an amount in cash equal to 2.0% of the aggregate Subscription Amount of such Purchaser’s Securities on the day of a Public Information Failure and on every thirtieth (30th) day (prorated for periods totaling less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information is no longer required for the Purchasers to transfer the Underlying Shares pursuant to Rule 144. The payments to which a Purchaser shall be entitled pursuant to this Section 4.3(b) are referred to herein as “ Public Information Failure Payments .” Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The Company shall promptly notify Purchaser of the occurrence of a Public Information Failure.

 

 

 

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4.4         Integration . The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

 

4.5         Conversion and Exercise Procedures . The form of Notice of Exercise included in the Warrants and the conversion feature included in the Notes set forth the totality of the procedures required of the Purchasers in order to exercise the Warrants or convert the Notes. No additional legal opinion, other information or instructions shall be required of the Purchasers to exercise their Warrants or convert their Notes. The Company shall honor exercises of the Warrants and conversions of the Notes and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents. Each Purchaser agrees and acknowledges that upon written consent of the Company and the Requisite Holders, the aggregate principal amount of all the outstanding Notes shall convert into Common Shares at the Conversion Price. For clarity, such consent by the Requisite Holders shall be binding upon all Purchasers.

 

4.6         Securities Laws Disclosure; Publicity . The Company and each Purchaser shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not issue a press release disclosing the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except: (a) as required by state or federal securities laws, (b) to the extent requested by the Commission and (c) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clauses (b) and (c).

 

4.7         Shareholder Rights Plan . No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “ Acquiring Person ” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.

 

4.8         Use of Proceeds . The Company shall use the net proceeds from the sale of the Securities hereunder for working capital and general corporate purposes. The Company shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) for the redemption of any Common Share or Common Share Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations.

 

 

 

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4.9         Indemnification of Purchasers . Subject to the provisions of this Section 4.9, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, shareholders, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, shareholders, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “ Purchaser Party ”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any shareholders of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such shareholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.9 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, in a commercially reasonable manner. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law. For the avoidance of doubts, no officers, directors, employees, or shareholders of the Company shall be held personally liable under this Section 4.9.

 

4.10         Reservation and Listing of Securities . The Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such Trading Market an additional Common Shares listing application covering a number of Common Shares at least equal to the Required Minimum on the date of such application, (ii) take all steps necessary to cause such Common Shares to be approved for listing or quotation on such Trading Market as soon as commercially reasonable thereafter, (iii) provide to the Purchasers evidence of such listing or quotation and (iv) maintain the listing or quotation of such Common Shares on any date at least equal to the Required Minimum on such date on such Trading Market or another Trading Market.

 

4.11         Equal Treatment of Purchasers . No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration is also offered to all of the parties to this Agreement. Further, the Company shall not make any payment of principal or interest on the Notes in amounts which are disproportionate to the respective principal amounts outstanding on the Notes at any applicable time. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

 

4.12        Short Sales and Confidentiality After the Date Hereof . Each Purchaser, severally and not jointly with the other Purchasers, represents and covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it, has executed any purchases or sales, including Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced. Each Purchaser, severally and not jointly with the other Purchasers, represents and covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Transaction Documents and the Disclosure Schedules.

 

 

 

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4.13         Form D; Blue Sky Filings . The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States and shall provide evidence of such actions promptly upon request of any Purchaser.

 

ARTICLE V

MISCELLANEOUS

 

5.1         Termination . This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the First Closing has not been consummated on or before March 31, 2019 (unless upon written consent of the Company and the Purchasers); provided , however , that such termination will not affect the right of any party to sue for any breach by any other party (or parties). This Agreement may be terminated by the Company at any time after the First Closing without the consent of any Purchaser. Prior to the First Closing, this Agreement may only be terminated by written consent of the Company and the Purchasers.

 

5.2         Fees and Expenses . Each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any conversion or exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

5.3         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 thereof 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.

 

5.4         Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via e-mail or facsimile at the e-mail address or facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via e-mail or facsimile at the e-mail address or facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

5.5         Amendments; Waivers . The Transaction Documents shall not be amended, and no provision of the Transaction Documents may be waived, except upon written consent of the Company and the Requisite Holders. Each Purchaser acknowledges that (i) in the event of a conflict, this provision controls all Transaction Documents regarding the subject matter hereof, and (ii) an amendment of the Transaction Documents (or waiver of any provision of the Transaction Documents) may occur by consent of the Requisite Holders and shall be binding upon all Purchasers.

 

5.6         No Short Sales . For as long as any Purchaser holds Securities, neither the Purchaser nor any of its Affiliates nor any entity managed or controlled by each such Purchaser will, directly or indirectly, or cause or assist any Person to (x) enter into any Short Sale or (y) trade in derivative securities to the same effect. For instance, no Purchaser shall engage in any Short Sale which would prevent the Company from exercising its rights under Section 6 of the Note.

 

5.7         Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

 

 

 

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5.8         No Third-Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.9 and this Section 5.8.

 

5.9         Governing Law . All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan 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, that such suit, action or proceeding is improper or is an 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 Agreement 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 other manner permitted by law.

 

5.10       Survival . The representations and warranties contained herein shall survive the Closing and the delivery of the Securities until the earlier of (i) one year following the Closing Date and (ii) the date the Notes are no longer outstanding.

 

5.11       Execution . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

5.12       Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

5.13       Replacement of Securities . If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and an indemnification relating thereto. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

 

5.14       Remedies . In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

 

 

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5.15       Payment Set Aside . To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

5.16       Usury . To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “ Maximum Rate ”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Purchaser’s election.

 

5.17        Independent Nature of Purchase rs’ Obligations and Rights . The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents.

 

5.18        Liquidated Damages . The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.

 

5.19        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.

 

5.20        Construction . The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to Common Share prices and Common Shares in any Transaction Document shall be subject to adjustment for reverse and forward Common Share splits, Common Share combinations and other similar transactions of the Common Shares that occur after the date of this Agreement.

 

5.21       WAIVER OF JURY TRIAL . IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

(Signature Pages Follow)

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

IIOT-OXYS, INC. Address for Notice:
   
   
By:_____________________________ Fax::
Name: Clifford L. Emmons Email:
Title: Chief Executive Officer  
   
with a copy to (which shall not constitute notice):

 

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

 

 

 

 

 

 

 

 

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IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Name of Purchaser: ______________________________________________________________

 

Signature of Authorized Signatory of Purchaser: ________________________________________

 

Name of Authorized Signatory: _____________________________________________________

 

Title of Authorized Signatory: ______________________________________________________

 

Email Address of Authorized Signatory: ______________________________________________

 

Facsimile Number of Authorized Signatory:____________________________________________

 

Address for Notice to Purchaser: ___________________________________________________

 

Address for Delivery of Securities to Purchaser

(if not same as address for notice): _________________________________________________

 

Pro-rata Subscription Amount (dollar amount paid for the Notes): $ _______________________

 

Principal Amount (Subscription Amount): $ _____________________

 

Conversion Shares: (Principal Amount / $0.__):            Conversion Shares

 

Warrant Shares: (50% of Conversion Shares):            Warrant Shares

 

 

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[INSERT DISCLOSURE SCHEDULE HERE]

 

 

 

 

 

 

 

 

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EXHIBIT A

 

Form of 12% Senior Secured Promissory Note

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT B

 

Form of Warrant Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT C

 

Form of Security Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit 99.7

 

SECURITY AND PLEDGE AGREEMENT

 

This SECURITY AND PLEDGE AGREEMENT , dated as of __________, 2019 (this Agreement ”), is among IIOT-OXYS, Inc., a Nevada corporation (the “ Company ” or the “ Debtor ”), and the holders of the Company’s 12% Senior Secured Convertible Promissory Notes (the “ Lenders ”), in the original aggregate principal amount of up to $500,000 (the “ Notes ”) signatory hereto, their endorsees, transferees and assigns (collectively, the “ Secured Parties ”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the Securities Purchase Agreement (as defined in the Notes), the Secured Parties have severally agreed to extend the loans to the Company evidenced by the Notes; and

 

WHEREAS, in order to induce the Secured Parties to extend the loans evidenced by the Notes, the Debtor has agreed to execute and deliver to the Secured Parties this Agreement and to grant the Secured Parties, pari passu with each other Secured Party (and the holder of the Company’s previously-issued senior secured debt) and through the Collateral Agent (as defined in Section 18 hereof), a security interest in certain property of the Debtor to secure the prompt payment, performance and discharge in full of all of the Company’s obligations under the Notes;

 

NOW, THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                 Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used but not otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account”, “chattel paper”, “commercial tort claim”, “deposit account”, “document”, “equipment”, “fixtures”, “general intangibles”, “goods”, “instruments”, “inventory”, “investment property”, “letter-of-credit rights”, “proceeds” and “supporting obligations”) shall have the respective meanings given such terms in Article 9 of the UCC.

 

(a)               “Collateral” means the collateral in which the Secured Parties are granted a security interest by this Agreement and which shall include all personal property of the Debtor, whether presently owned or existing or hereafter acquired or coming into existence, wherever situated, and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds, products and accounts thereof, including, without limitation, all proceeds from the sale or transfer of the Collateral and of insurance covering the same and of any tort claims in connection therewith, and all dividends, interest, cash, notes, securities, equity interest or other property at any time and from time to time acquired, receivable or otherwise distributed in respect of, or in exchange for, any or all of the Pledged Securities, if applicable (as defined below):

 

i.                    All goods, including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, rigs, ships, appliances, furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind and nature and wherever situated, together with all documents of title and documents representing the same, all additions and accessions thereto, replacements therefor, all parts therefor, and all substitutes for any of the foregoing and all other items used and useful in connection with the Debtor’s businesses and all improvements thereto, and (B) all inventory;

 

ii.                  All contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests, stock or other securities, rights under any of the Organizational Documents, agreements related to the Pledged Securities, licenses, distribution and other agreements, computer software (whether “off-the-shelf’, licensed from any third party or developed by the Debtor), computer software development rights, leases, franchises, customer lists, quality control procedures, grants and rights, goodwill, Intellectual Property and income tax refunds;

 

iii.                 All accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising, goods, equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties with respect to each account, including any right of stoppage in transit;

 

 

 

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iv.                  All documents, letter-of-credit rights, instruments and chattel paper;

 

v.                  All commercial tort claims;

 

vi.                 All deposit accounts and all cash (whether or not deposited in such deposit accounts);

 

vii.                All investment property;

 

viii.               All supporting obligations;

 

ix.                  All files, records, books of account, business papers, and computer programs; and

 

x.                   the products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ix) above.

 

Without limiting the generality of the foregoing, the “Collateral” shall include all investment property and general intangibles respecting ownership and/or other equity interests in each subsidiary, including, without limitation, the shares of capital stock and the other equity interests listed on Schedule H hereto (as the same may be modified from time to time pursuant to the terms hereof), and any other shares of capital stock and/or other equity interests of any other direct or indirect subsidiary of the Debtor obtained in the future, and, in each case, all certificates representing such shares and/or equity interests and, in each case, all rights, options, warrants, stock, other securities and/or equity interests that may hereafter be received, receivable or distributed in respect of, or exchanged for, any of the foregoing and all rights arising under or in connection with the Pledged Securities, including, but not limited to, all dividends, interest and cash.

 

Notwithstanding the foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes void by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the extent that such applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law); provided, however, that to the extent permitted by applicable law, this Agreement shall create a valid security interest in such asset and, to the extent permitted by applicable law, this Agreement shall create a valid security interest in the proceeds of such asset.

 

(b)              “Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, (ii) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof, and all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, (iii) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade dress, service marks, logos, domain names and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common law rights related thereto, (iv) all trade secrets arising under the laws of the United States, any other country or any political subdivision thereof, (v) all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii) all causes of action for infringement of the foregoing.

 

(c)               “Majority in Interest” means, at any time of determination, the majority in interest (based on then-outstanding principal amounts of Notes at the time of such determination) of the Secured Parties.

 

(d)              “Necessary Endorsements” means undated stock powers endorsed in blank or other proper instruments of assignment duly executed and such other instruments or documents as the Collateral Agent (as that term is defined below) may reasonably request.

 

 

 

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(e)               “Organizational Documents” means with respect to the Debtor, the documents by which the Debtor was organized (such as a articles of incorporation, certificate of limited partnership or articles of organization, and including, without limitation, any certificates of designation for preferred stock or other forms of preferred equity) and which relate to the internal governance of the Debtor (such as bylaws, a partnership agreement or an operating, limited liability or members agreement).

 

(f)               “Permitted Liens” means the following:

 

i.                   Liens imposed by law for taxes that are not yet due or are being contested in good faith, which in each case, have been appropriately reserved for;

 

ii.                  carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than thirty (30) days or are being contested in good faith;

 

iii.                 pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

 

iv.                 deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

 

v.                  Any lien for secured debt (Sergey Gogin and Cambridge MedSpace LLC) that existed prior to the Notes;

 

vi.                 Liens under this Agreement; and

 

vii.                any other liens in favor of the Lenders.

 

(g)              “Pledged Interests” shall have the meaning ascribed to such term in Section 4(j).

 

(h)              “Pledged Securities” shall have the meaning ascribed to such term in Section 4(i).

 

(i)                “Secured Obligations” means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing to, of the Debtor to the Secured Parties, including, without limitation, all obligations under this Agreement, the Notes, the Securities Purchase Agreement, and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from any of the Secured Parties as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time. Without limiting the generality of the foregoing, the term “Secured Obligations” shall include, without limitation: (i) principal of, and interest on the Notes and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Debtor from time to time under or in connection with this Agreement, the Notes, and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Debtor.

 

(j)                “UCC” means the Uniform Commercial Code of the State of New York and or any other applicable law of any state or states which has jurisdiction with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent of the parties that defined terms in the UCC should be construed in their broadest sense so that the term “Collateral” will be construed in its broadest sense. Accordingly, if there are, from time to time, changes to defined terms in the UCC that broaden the definitions, they are incorporated herein and if existing definitions in the UCC are broader than the amended definitions, the existing ones shall be controlling.

 

 

 

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2.                 Grant of Security Interest in Collateral. As an inducement for the Secured Parties to extend the loans as evidenced by the Notes and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Secured Obligations, the Debtor hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Parties, on a pro-rata basis , a perfected, first priority security interest in and to, a lien upon and a right of set-off against all of its respective right, title and interest of whatsoever kind and nature in and to, the Collateral (a “ Security Interest ” and, collectively, the “ Security Interests ”). If the Company defaults on one of the series of Notes, that Secured Party would only have the right to its pro-rata interest in the Collateral. The Lenders must consent to any and all Collateral distributions.

 

3.                 Delivery of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, the Debtor shall deliver or cause to be delivered to the Collateral Agent (a) any and all certificates and other instruments representing or evidencing the Pledged Securities, and (b) any and all certificates and other instruments or documents representing any of the other Collateral, in each case, together with all Necessary Endorsements. The Debtor is, contemporaneously with the execution hereof, delivering to the Collateral Agent, or have previously delivered to the Collateral Agent, a true and correct copy of each of the Organizational Documents governing any of the Pledged Securities.

 

4.                 Representations, Warranties, Covenants and Agreements of the Debtor. Except as set forth under the corresponding section of the disclosure schedules delivered to the Secured Parties concurrently herewith (the “ Disclosure Schedules ”), which Disclosure Schedules shall be deemed a part hereof, the Debtor represents and warrants to, and covenants and agrees with, the Secured Parties as follows:

 

(a)               The Debtor has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement and otherwise to carry out its obligations hereunder. The execution, delivery and performance by the Debtor of this Agreement and the filings contemplated therein have been duly authorized by all necessary action on the part of the Debtor and no further action is required by the Debtor. This Agreement has been duly executed by the Debtor. This Agreement constitutes the legal, valid and binding obligation of the Debtor, enforceable against the Debtor in accordance with its terms except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization and similar laws of general application relating to or affecting the rights and remedies of creditors and by general principles of equity.

 

(b)              The Debtor has no place of business or offices where its respective books of account and records are kept (other than temporarily at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule A attached hereto. Except as specifically set forth on Schedule A, the Debtor is the record owner of the real property where such Collateral is located, and there exist no mortgages or other liens on any such real property except for liens as set forth on Schedule A. Except as disclosed on Schedule A, none of such Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor.

 

(c)               Except as set forth on Schedule B attached hereto, the Debtor is the sole owner of the Collateral (except for non-exclusive licenses granted by the Debtor in the ordinary course of business), free and clear of any liens, security interests, encumbrances, rights or claims, and are fully authorized to grant the Security Interests. Except as set forth on Schedule C attached hereto, there is not on file in any governmental or regulatory authority, agency or recording office an effective financing statement, security agreement, license or transfer or any notice of any of the foregoing (other than those that will be filed in favor of the Secured Parties pursuant to this Agreement) covering or affecting any of the Collateral. Except as set forth on Schedule C attached hereto and except pursuant to this Agreement, as long as this Agreement shall be in effect, the Debtor shall not execute and shall not knowingly permit to be on file in any such office or agency any other financing statement or other document or instrument (except to the extent filed or recorded in favor of the Secured Parties pursuant to the terms of this Agreement).

 

(d)              No written claim has been received that any Collateral or the Debtor’s use of any Collateral violates the rights of any third party. There has been no adverse decision to the Debtor’s claim of ownership rights in or exclusive rights to use the Collateral in any jurisdiction or to the Debtor’s right to keep and maintain such Collateral in full force and effect, and there is no proceeding involving said rights pending or, to the best knowledge of the Debtor, threatened before any court, judicial body, administrative or regulatory agency, arbitrator or other governmental authority.

 

(e)               The Debtor shall at all times maintain its books of account and records relating to the Collateral at its principal place of business and its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account and records or tangible Collateral unless it delivers to the Secured Parties at least thirty (30) days prior to such relocation (i) written notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate financing statements under the UCC and other necessary documents have been filed and recorded and other steps have been taken to perfect the Security Interests to create in favor of the Secured Parties a valid, perfected and continuing perfected first priority lien in the Collateral.

 

 

 

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(f)               This Agreement creates in favor of the Secured Parties a valid first priority security interest in the Collateral, securing the payment and performance of the Secured Obligations. Upon making the filings described in the immediately following paragraph, all security interests created hereunder in any Collateral which may be perfected by filing Uniform Commercial Code financing statements shall have been duly perfected. Except for (i) the filing of the Uniform Commercial Code financing statements referred to in the immediately following paragraph, (ii) the recordation of the Intellectual Property Security Agreement (as defined in Section 4(o) hereof) with respect to copyrights and copyright applications in the United States Copyright Office referred to in paragraph 4(ll), (iii) the recordation of the Intellectual Property Security Agreement (as defined in Section 4(o) hereof) with respect to patents and trademarks of the Debtor in the United States Patent and Trademark Office referred to in paragraph 4(mm), no action is necessary to create, perfect or protect the security interests created hereunder. Without limiting the generality of the foregoing, except for the foregoing, no consent of any third parties and no authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for (x) the execution, delivery and performance of this Agreement, (y) the creation or perfection of the Security Interests created hereunder in the Collateral or (z) the enforcement of the rights of the Collateral Agent and the Secured Parties hereunder.

 

(g)              The Debtor hereby authorizes the Collateral Agent to file one or more financing statements under the UCC, with respect to the Security Interests, with the proper filing and recording agencies in any jurisdiction deemed proper by it.

 

(h)              The execution, delivery and performance of this Agreement by the Debtor does not (i) violate any of the provisions of any Organizational Documents of the Debtor or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law, rule or regulation applicable to the Debtor 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, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing the Debtor’s debt or otherwise) or other understanding to which the Debtor is a party or by which any property or asset of the Debtor is bound or affected. If any, all required consents (including, without limitation, from stockholders or creditors of the Debtor) necessary for the Debtor to enter into and perform its obligations hereunder have been obtained.

 

(i)                The capital stock and other equity interests listed on Schedule H hereto (if any) (the “ Pledged Securities ”) represent all of the capital stock and other equity interests of the subsidiaries, and represent all capital stock and other equity interests owned, directly or indirectly, by the Company. All of the Pledged Securities, when issued, will be validly issued, fully paid and nonassessable, and the Company will be the legal and beneficial owner of the Pledged Securities, free and clear of any lien, security interest or other encumbrance except for the security interests created by this Agreement and except for Permitted Liens.

 

(j)                The ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the “ Pledged Interests ”) by their express terms provide that they are securities governed by Article 8 of the UCC.

 

(k)              The Debtor shall at all times maintain the liens and Security Interests provided for hereunder as valid and perfected, first priority liens and security interests in the Collateral in favor of the Secured Parties until this Agreement and the Security Interest hereunder shall be terminated pursuant to Section 14 hereof. The Debtor hereby agrees to defend the same against the claims of any and all persons and entities. The Debtor shall safeguard and protect all Collateral for the account of the Secured Parties. At the request of the Collateral Agent, the Debtor will sign and deliver to the Collateral Agent on behalf of the Secured Parties at any time or from time to time one or more financing statements pursuant to the UCC in form reasonably satisfactory to the Collateral Agent and will pay the cost of filing the same in all public offices wherever filing is, or is deemed by the Collateral Agent to be, necessary or desirable to effect the rights and obligations provided for herein. Without limiting the generality of the foregoing, the Debtor shall pay all fees, taxes and other amounts necessary to maintain the Collateral and the Security Interests hereunder, and the Debtor shall obtain and furnish to the Collateral Agent from time to time, upon demand, such releases and/or subordinations of claims and liens which may be required to maintain the priority of the Security Interests hereunder.

 

(l)                The Debtor will not transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except for non-exclusive licenses granted by the Debtor in its ordinary course of business, sales of inventory by the Debtor in its ordinary course of business and the replacement of worn-out or obsolete equipment by the Debtor in its ordinary course of business) without the prior written consent of a Majority in Interest.

 

 

 

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(m)             The Debtor shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order and shall not operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.

 

(n)              The Debtor shall, within five (5) days of obtaining knowledge thereof, advise the Secured Parties promptly, in sufficient detail, of any material adverse change in the Collateral, and of the occurrence of any event which would have a material adverse effect on the value of the Collateral or on the Secured Parties’ security interest, through the Collateral Agent, therein.

 

(o)              The Debtor shall promptly execute and deliver to the Collateral Agent such further deeds, mortgages, confessions of judgment, assignments, security agreements, financing statements or other instruments, documents, certificates and assurances and take such further action as the Collateral Agent may from time to time request and may in its sole discretion deem necessary to perfect, protect or enforce the Secured Parties’ security interest in the Collateral including, without limitation, if applicable, the execution and delivery of a separate security agreement with respect to the Debtor’s Intellectual Property (“ Intellectual Property Security Agreement ”) in which the Secured Parties have been granted a security interest hereunder, substantially in a form reasonably acceptable to the Collateral Agent, which Intellectual Property Security Agreement, other than as stated therein, shall be subject to all of the terms and conditions hereof.

 

(p)              Upon reasonable prior notice (so long as no Event of Default has occurred or continuing, which in either such event, no prior notice is required), the Debtor shall permit the Collateral Agent and its representatives and agents to inspect the Collateral during normal business hours and to make copies of records pertaining to the Collateral as may be reasonably requested by the Collateral Agent from time to time.

 

(q)              The Debtor shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes of action and accounts receivable in respect of the Collateral.

 

(r)               The Debtor shall promptly notify the Secured Parties in sufficient detail upon becoming aware of any attachment, garnishment, execution or other legal process levied against any Collateral and of any other information received by the Debtor that may materially affect the value of the Collateral, the Security Interest or the rights and remedies of the Secured Parties hereunder.

 

(s)               All information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of the Debtor with respect to the Collateral is accurate and complete in all material respects as of the date furnished.

 

(t)                The Debtor shall at all times preserve and keep in full force and effect its respective valid existence and good standing and any rights and franchises material to its business.

 

(u)              The Debtor will not change its name, type of organization, jurisdiction of organization, organizational identification number (if it has one), legal or corporate structure, or identity, or add any new fictitious name unless it provides at least thirty (30) days prior written notice to the Secured Parties of such change and, at the time of such written notification, the Debtor provides any financing statements or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.

 

(v)              Except in the ordinary course of business, the Debtor may not consign any of its inventory or sell any of its inventory on bill and hold, sale or return, sale on approval, or other conditional terms of sale without the consent of the Collateral Agent which shall not be unreasonably withheld.

 

(w)             The Debtor may not relocate its chief executive office to a new location without providing thirty (30) days prior written notification thereof to the Secured Parties and so long as, at the time of such written notification, the Debtor provides any financing statements or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.

 

(x)              The Debtor was organized and remains organized solely under the laws of the state set forth next to the Debtor’s name in Schedule D attached hereto, which Schedule D sets forth the Debtor’s organizational identification number or, if the Debtor does not have one, states that one does not exist.

 

 

 

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(y)              The actual name of the Debtor is the name set forth in Schedule D attached hereto; (ii) the Debtor has no trade names except as set forth on Schedule E attached hereto; (iii) the Debtor has not used any name other than that stated in the preamble hereto or as set forth on Schedule E for the preceding five (5) years; and (iv) no entity has merged into the Debtor or been acquired by the Debtor within the past five (5) years except as set forth on Schedule E.

 

(z)               At any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require or permit possession by the secured party to perfect the security interest created hereby, the applicable Debtor shall deliver such Collateral to the Collateral Agent.

 

(aa)            The Debtor, in its capacity as issuer, hereby agrees to comply with any and all orders and instructions of the Collateral Agent regarding the Pledged Interests consistent with the terms of this Agreement as contemplated by Section 8-106 (or any successor section) of the UCC. Further, the Debtor agrees that it shall not enter into a similar agreement (or one that would confer “control” within the meaning of Article 8 of the UCC) with any other person or entity.

 

(bb)           The Debtor shall cause all tangible chattel paper constituting Collateral to be delivered to the Collateral Agent, or, if such delivery is not possible, then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest created by this Agreement. To the extent that any Collateral consists of electronic chattel paper, the applicable Debtor shall cause the underlying chattel paper to be “marked” within the meaning of Section 9-105 of the UCC (or successor section thereto).

 

(cc)            To the extent that any Collateral consists of letter-of-credit rights, the applicable Debtor shall cause the issuer of each underlying letter of credit to consent to an assignment of the proceeds thereof to the Secured Parties.

 

(dd)           To the extent that any Collateral is in the possession of any third party, the applicable Debtor shall join with the Collateral Agent in notifying such third party of the Secured Parties’ security interest in such Collateral and shall use its best efforts to obtain an acknowledgement and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory to the Collateral Agent.

 

(ee)            If the Debtor shall at any time hold or acquire a commercial tort claim, the Debtor shall promptly notify the Secured Parties in a writing signed by the Debtor of the particulars thereof and grant to the Secured Parties in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Collateral Agent.

 

(ff)             The Debtor shall immediately provide written notice to the Secured Parties of any and all accounts which arise out of contracts with any governmental authority and, to the extent necessary to perfect or continue the perfected status of the Security Interests in such accounts and proceeds thereof, shall execute and deliver to the Collateral Agent an assignment of claims for such accounts and cooperate with the Collateral Agent in taking any other steps required, in its judgment, under the Federal Assignment of Claims Act or any similar federal, state or local statute or rule to perfect or continue the perfected status of the Security Interests in such accounts and proceeds thereof.

 

(gg)           The Debtor shall vote the Pledged Securities to comply with the covenants and agreements set forth herein and in the Notes.

 

(hh)           The Debtor shall register the pledge of the applicable Pledged Securities on the books of the Debtor. The Debtor shall notify each issuer of Pledged Securities to register the pledge of the applicable Pledged Securities in the name of the Secured Parties on the books of such issuer. Further, except with respect to certificated securities delivered to the Collateral Agent, the applicable Debtor shall deliver to the Collateral Agent an acknowledgement of pledge (which, where appropriate, shall comply with the requirements of the relevant UCC with respect to perfection by registration) signed by the issuer of the applicable Pledged Securities, which acknowledgement shall confirm that: (i) it has registered the pledge on its books and records; and (ii) at any time directed by Collateral Agent during the continuation of an Event of Default, such issuer will transfer the record ownership of such Pledged Securities into the name of any designee of Collateral Agent, will take such steps as may be necessary to effect the transfer, and will comply with all other instructions of Collateral Agent regarding such Pledged Securities without the further consent of the applicable Debtor.

 

 

 

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(ii)              In the event that, upon an occurrence of an Event of Default, Collateral Agent shall sell all or any of the Pledged Securities to another party or parties (herein called the “ Transferee ”) or shall purchase or retain all or any of the Pledged Securities, the Debtor shall, to the extent applicable: (i) deliver to the Collateral Agent or the Transferee, as the case may be, the articles of incorporation, bylaws, minute books, stock certificate books, corporate seals, deeds, leases, indentures, agreements, evidences of indebtedness, books of account, financial records and all other Organizational Documents and records of the Debtor and its direct and indirect subsidiaries (but not including any items subject to the attorney-client privilege related to this Agreement or any of the transactions hereunder); (ii) use its best efforts to obtain resignations of the persons then serving as officers and directors of the Debtor and its direct and indirect subsidiaries, if so requested; and (iii) use its best efforts to obtain any approvals that are required by any governmental or regulatory body in order to permit the sale of the Pledged Securities to the Transferee or the purchase or retention of the Pledged Securities by the Collateral Agent and allow the Transferee or Collateral Agent to continue the business of the Debtor and their direct and indirect subsidiaries.

 

(jj)              Without limiting the generality of the other obligations of the Debtor hereunder, the Debtor shall promptly (i) cause to be registered at the United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with respect to all Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office to be duly recorded at the applicable office, and (iii) give the Collateral Agent notice whenever it acquires (whether absolutely or by license) or creates any additional material Intellectual Property.

 

(kk)           The Debtor will from time to time, at the expense of the Debtor, promptly execute and deliver all such further instruments and documents, and take all such further action as may be necessary or desirable, or as the Collateral Agent may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Secured Parties to exercise and enforce their rights and remedies hereunder and with respect to any Collateral or to otherwise carry out the purposes of this Agreement.

 

(ll)              Schedule F attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered copyrights, and domain names owned by any of the Debtor as of the date hereof. Schedule F lists all material licenses in favor of the Debtor for the use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents and trademarks of the Debtor have been duly recorded at the United States Patent and Trademark Office and all material copyrights of the Debtor have been duly recorded at the United States Copyright Office.

 

(mm)        Except as set forth on Schedule G attached hereto, none of the account debtors or other persons or entities obligated on any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or any similar federal, state or local statute or rule in respect of such Collateral.

 

5.                 Effect of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting equity or ownership interests (regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests upon the occurrence of certain events (including, without limitation, upon the transfer of all or any of the other stock or assets of the issuer), it is agreed by Debtor that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement of any of Secured Parties’ rights hereunder shall not be deemed to be the type of event which would trigger such conversion rights notwithstanding any provisions in the Organizational Documents or agreements to which the Debtor is subject or to which the Debtor is party.

 

6.                 Defaults. The following events shall be “Events of Default”:

 

(a)               The occurrence of an Event of Default (as defined in the Notes or in any other Transaction Document) under the Notes or any other Transaction Document;

 

(b)              Any representation or warranty of the Debtor in this Agreement shall prove to have been incorrect in any material respect when made;

 

(c)               The failure by the Debtor to observe or perform any of its obligations hereunder for five (5) days after delivery to the Debtor of notice of such failure by or on behalf of a Secured Party unless such default is capable of cure but cannot be cured within such time frame and the Debtor is using best efforts to cure same in a timely fashion; or

 

 

 

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(d)              If any provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by the Debtor, or a proceeding shall be commenced by the Debtor, or by any governmental authority having jurisdiction over the Debtor, seeking to establish the invalidity or unenforceability thereof, or the Debtor shall deny that the Debtor has any liability or obligation purported to be created under this Agreement.

 

7.              Duty to Hold in Trust.

 

(a)               Upon the occurrence of any Event of Default and at any time thereafter, the Debtor shall, upon receipt of any revenue, income, dividend, interest or other sums subject to the Security Interests, whether payable pursuant to the Notes or otherwise, or of any check, draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum, hold the same in trust for the Secured Parties and shall forthwith endorse and transfer any such sums or instruments, or both, to the Secured Parties, pro-rata in proportion to their respective then-currently outstanding principal amount of Notes for application to the satisfaction of the Secured Obligations (and if any Notes is not outstanding, pro-rata in proportion to the initial purchases of the remaining Notes).

 

(b)              If the Debtor shall become entitled to receive or shall receive any securities or other property (including, without limitation, shares of Pledged Securities or instruments representing Pledged Securities acquired after the date hereof, or any options, warrants, rights or other similar property or certificates representing a dividend, or any distribution in connection with any recapitalization, reclassification or increase or reduction of capital, or issued in connection with any reorganization of the Debtor or any of its direct or indirect subsidiaries) in respect of the Pledged Securities (whether as an addition to, in substitution of, or in exchange for, such Pledged Securities or otherwise), the Debtor agrees to (i) accept the same as the agent of the Secured Parties; (ii) hold the same in trust on behalf of and for the benefit of the Secured Parties; and (iii) to deliver any and all certificates or instruments evidencing the same to Collateral Agent on or before the close of business on the fifth business day following the receipt thereof by the Debtor, in the exact form received together with the Necessary Endorsements, to be held by Collateral Agent subject to the terms of this Agreement as Collateral.

 

8.                 Rights and Remedies Upon Default.

 

(a)               Upon the occurrence of any Event of Default and at any time thereafter, the Secured Parties, acting through the Collateral Agent, shall have the right to exercise all of the remedies conferred hereunder and under the Notes, and the Secured Parties shall have all the rights and remedies of a secured party under the UCC. Without limitation, the Collateral Agent, for the benefit of the Secured Parties, shall have the following rights and powers:

 

i.                   The Collateral Agent shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and the Debtor shall assemble the Collateral and make it available to the Collateral Agent at places which the Collateral Agent shall reasonably select, whether at the Debtor’s premises or elsewhere, and make available to the Collateral Agent, without rent, all of the Debtor’s respective premises and facilities for the purpose of the Collateral Agent taking possession of, removing or putting the Collateral in saleable or disposable form.

 

ii.                   Upon notice to the Debtor by the Collateral Agent, all rights of the Debtor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise and all rights of the Debtor to receive the dividends and interest which it would otherwise be authorized to receive and retain, shall cease. Upon such notice, the Collateral Agent shall have the right to receive, for the benefit of the Secured Parties, any interest, cash dividends or other payments on the Collateral and, at the option of Collateral Agent, to exercise in such Collateral Agent’s discretion all voting rights pertaining thereto. Without limiting the generality of the foregoing, the Collateral Agent shall have the right (but not the obligation) to exercise all rights with respect to the Collateral as it were the sole and absolute owner thereof, including, without limitation, to vote and/or to exchange, at its sole discretion, any or all of the Collateral in connection with a merger, reorganization, consolidation, recapitalization or other readjustment concerning or involving the Collateral or the Debtor or any of its direct or indirect subsidiaries.

 

 

 

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iii.                  The Collateral Agent shall have the right to operate the business of the Debtor using the Collateral and shall have the right to assign, sell, lease or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with or without special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at such time or times and at such place or places, and upon such terms and conditions as the Collateral Agent may deem commercially reasonable, all without (except as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to the Debtor or right of redemption of the Debtor, which are hereby expressly waived. Upon each such sale, lease, assignment or other transfer of Collateral, the Collateral Agent, for the benefit of the Secured Parties, may, unless prohibited by applicable law which cannot be waived, purchase all or any part of the Collateral being sold, free from and discharged of all trusts, claims, right of redemption and equities of the Debtor, which are hereby waived and released.

 

iv.                 The Collateral Agent shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or accounts to make payments directly to the Collateral Agent, on behalf of the Secured Parties, and to enforce the Debtor’s rights against such account debtors and obligors.

 

v.                  The Collateral Agent may (but is not obligated to) direct any financial intermediary or any other person or entity holding any investment property to transfer the same to the Secured Parties or their designee.

 

vi.                 The Collateral Agent may (but is not obligated to) transfer any or all Intellectual Property registered in the name of the Debtor at the United States Patent and Trademark Office and/or Copyright Office into the name of the Secured Parties or any designee or any purchaser of any Collateral.

 

(b)              The Collateral Agent shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral. The Collateral Agent may sell the Collateral without giving any warranties and may specifically disclaim such warranties. If the Collateral Agent sells any of the Collateral on credit, the Debtor will only be credited with payments actually made by the purchaser. In addition, the Debtor waives (except as shall be required by applicable statute and cannot be waived) any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Collateral Agent’s rights and remedies hereunder, including, without limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its rights and remedies with respect thereto.

 

(c)               For the purpose of enabling the Collateral Agent to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement or applicable law, the Debtor hereby grants to the Collateral Agent, for the benefit of the Secured Parties, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Debtor) to use, license or sublicense following an Event of Default, any Intellectual Property now owned or hereafter acquired by the Debtor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.

 

9.                 Applications of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding, storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other costs incurred in connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses incurred by the Collateral Agent in enforcing the Secured Parties’ rights hereunder and in connection with collecting, storing and disposing of the Collateral, and then to satisfaction of the Secured Obligations pro rata among the Secured Parties (based on then-outstanding principal amounts of Notes at the time of any such determination), and to the payment of any other amounts required by applicable law, after which the Secured Parties shall pay to the applicable Debtor any surplus proceeds. If, upon the sale, license or other disposition of the Collateral, the proceeds thereof are insufficient to pay all amounts to which the Secured Parties are legally entitled, the Debtor will be liable for the deficiency, together with interest thereon, at the rate of 18% per annum or the lesser amount permitted by applicable law (the “ Default Rate ”), and the reasonable fees of any attorneys employed by the Secured Parties to collect such deficiency. To the extent permitted by applicable law, the Debtor waives all claims, damages and demands against the Secured Parties arising out of the repossession, removal, retention or sale of the Collateral, unless due solely to the gross negligence or willful misconduct of the Secured Parties as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.

 

 

 

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10.              Securities Law Provision. The Debtor recognizes that the Collateral Agent may be limited in its ability to effect a sale to the public of all or part of the Pledged Securities by reason of certain prohibitions in the Securities Act of 1933, as amended, or other federal or state securities laws (collectively, the “ Securities Laws ”), and may be compelled to resort to one or more sales to a restricted group of purchasers who may be required to agree to acquire the Pledged Securities for their own account, for investment and not with a view to the distribution or resale thereof. The Debtor agrees that sales so made may be at prices and on terms less favorable than if the Pledged Securities were sold to the public, and that the Collateral Agent has no obligation to delay the sale of any Pledged Securities for the period of time necessary to register the Pledged Securities for sale to the public under the Securities Laws. The Debtor shall cooperate with the Collateral Agent in its attempt to satisfy any requirements under the Securities Laws (including, without limitation, registration thereunder if requested by the Collateral Agent) applicable to the sale of the Pledged Securities by the Collateral Agent.

 

11.              Costs and Expenses. The Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with any filing required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation statements, partial releases and/or termination statements related thereto or any expenses of any searches reasonably required by the Collateral Agent. The Debtor shall also pay all other claims and charges which in the reasonable opinion of the Collateral Agent are reasonably likely to prejudice, imperil or otherwise affect the Collateral or the Security Interests therein. The Debtor will also, upon demand, pay to the Collateral Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which the Collateral Agent, for the benefit of the Secured Parties, may incur in connection with the creation, perfection, protection, satisfaction, foreclosure, collection or enforcement of the Security Interest and the preparation, administration, continuance, amendment or enforcement of this Agreement and pay to the Collateral Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which the Collateral Agent, for the benefit of the Secured Parties, and the Secured Parties may incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the rights of the Secured Parties under the Notes. Until so paid, any fees payable hereunder shall be added to the principal amount of the Notes and shall bear interest at the Default Rate.

 

12.              Responsibility for Collateral. The Debtor assume all liabilities and responsibility in connection with all Collateral, and the Secured Obligations shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its unavailability for any reason. Without limiting the generality of the foregoing and except as required by applicable law, (a) neither the Collateral Agent nor any Secured Party (i) has any duty (either before or after an Event of Default) to collect any amounts in respect of the Collateral or to preserve any rights relating to the Collateral, or (ii) has any obligation to cleanup or otherwise prepare the Collateral for sale, and (b) the Debtor shall remain obligated and liable under each contract or agreement included in the Collateral to be observed or performed by the Debtor thereunder. Neither the Collateral Agent nor any Secured Party shall have any obligation or liability under any such contract or agreement by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any Secured Party of any payment relating to any of the Collateral, nor shall the Collateral Agent or any Secured Party be obligated in any manner to perform any of the obligations of the Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Collateral Agent or any Secured Party in respect of the Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the Collateral Agent or any Secured Party or to which the Collateral Agent or any Secured Party may be entitled at any time or times.

 

13.              Security Interests Absolute. All rights of the Secured Parties and all obligations of the Debtor hereunder, shall be absolute and unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Notes or any agreement entered into in connection with the foregoing; (b) any change in the time, manner or place of payment or performance of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Notes or any other agreement entered into in connection with the foregoing; (c) any exchange, release or nonperfection of any of the Collateral, or any release or amendment or waiver of or consent to departure from any other collateral for, or any guarantee, or any other security, for all or any of the Secured Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and cancel in their sole discretion any insurance claims or matters made or arising in connection with the Collateral; or (e) any other circumstance which might otherwise constitute any legal or equitable defense available to the Debtor, or a discharge of all or any part of the Security Interests granted hereby. Until the Secured Obligations shall have been paid and performed in full, the rights of the Secured Parties shall continue even if the Secured Obligations are barred for any reason, including, without limitation, the running of the statute of limitations. The Debtor expressly waives presentment, protest, notice of protest, demand, notice of nonpayment and demand for performance. In the event that at any time any transfer of any Collateral or any payment received by the Secured Parties hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due to any party other than the Secured Parties, then, in any such event, the Debtor’s obligations hereunder shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof. The Debtor waives all right to require the Secured Parties to proceed against any other person or entity or to apply any Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other remedy. The Debtor waives any defense arising by reason of the application of the statute of limitations to any obligation secured hereby.

 

 

 

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14.              Term of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the Notes have been indefeasibly paid in full and all other Secured Obligations have been paid or discharged; provided, however, that all indemnities of the Debtor contained in this Agreement (including, without limitation, Annex A hereto) shall survive and remain operative and in full force and effect regardless of the termination of this Agreement.

 

15.              Power of Attorney; Further Assurances.

 

(a)               The Debtor authorizes the Collateral Agent, and does hereby make, constitute and appoint the Collateral Agent and its officers, agents, successors or assigns with full power of substitution, as the Debtor’s true and lawful attorney-in-fact, with power, in the name of the Collateral Agent or the Debtor, to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note, checks, drafts, money orders or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect of the Collateral that may come into possession of the Collateral Agent; (ii) to sign and endorse any financing statement pursuant to the UCC or any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge taxes, liens, security interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv) to demand, collect, receipt for, compromise, settle and sue for monies due in respect of the Collateral; (v) to transfer any Intellectual Property or provide licenses respecting any Intellectual Property; and (vi) generally, at the option of the Collateral Agent, and at the expense of the Debtor, at any time, or from time to time, to execute and deliver any and all documents and instruments and to do all acts and things which the Collateral Agent deems necessary to protect, preserve and realize upon the Collateral and the Security Interests granted therein in order to effect the intent of this Agreement and the Notes all as fully and effectually as the Debtor might or could do; and the Debtor hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Secured Obligations shall be outstanding. The designation set forth herein shall be deemed to amend and supersede any inconsistent provision in the Organizational Documents or other documents or agreements to which the Debtor is subject or to which the Debtor is a party. Without limiting the generality of the foregoing, after the occurrence and during the continuance of an Event of Default, each Secured Party is specifically authorized to execute and file any applications for or instruments of transfer and assignment of any patents, trademarks, copyrights or other Intellectual Property with the United States Patent and Trademark Office and the United States Copyright Office.

 

(b)              On a continuing basis, the Debtor will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper filing and recording agencies in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule C attached hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as reasonably requested by the Collateral Agent, to perfect the Security Interests granted hereunder and otherwise to carry out the intent and purposes of this Agreement, or for assuring and confirming to the Collateral Agent the grant or perfection of a perfected security interest in all the Collateral under the UCC.

 

(c)               The Debtor hereby irrevocably appoints the Collateral Agent as the Debtor’s attorney-in-fact, with full authority in the place and instead of the Debtor and in the name of the Debtor, from time to time in the Collateral Agent’s discretion, to take any action and to execute any instrument which the Collateral Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including the filing, in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral without the signature of the Debtor where permitted by law, which financing statements may (but need not) describe the Collateral as “all assets” or “all personal property” or words of like import, and ratifies all such actions taken by the Collateral Agent. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Secured Obligations shall be outstanding.

 

16.              Notices. All notices, requests, demands and other communications hereunder shall be subject to the notice provision of the Securities Purchase Agreement (as such term is defined in the Notes).

 

17.              Other Security. To the extent that the Secured Obligations are now or hereafter secured by property other than the Collateral or by the guarantee, endorsement or property of any other person, firm, corporation or other entity, then the Collateral Agent shall have the right, in its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying or affecting any of the Secured Parties’ rights and remedies hereunder.

 

 

 

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18.              Appointment of Collateral Agent. The Secured Parties in their sole discretion may delegate certain of their rights hereunder to one or more collateral agents. If and as applicable, the Secured Parties may insert the name of the selected collateral agent in this Section 18. To this end, the Secured Parties hereby appoint ____________________________ to act as their collateral agent (the “ Collateral Agent ”) for purposes of exercising any and all rights and remedies of the Secured Parties hereunder. Such appointment shall continue until revoked in writing by a Majority in Interest, at which time a Majority in Interest may appoint a new Collateral Agent. The Collateral Agent shall have the rights, responsibilities and immunities set forth in Annex A hereto.

 

19.              Miscellaneous.

 

(a)               No course of dealing between the Debtor and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on the part of the Secured Parties, any right, power or privilege hereunder or under the Notes shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

 

(b)              All of the rights and remedies of the Secured Parties with respect to the Collateral, whether established hereby or by the Notes or by any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.

 

(c)               This Agreement, together with the exhibits and schedules hereto and the other Transaction Documents (as defined in the Securities Purchase Agreement), 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 this Agreement and the exhibits and schedules hereto. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtor and the Secured Parties holding 67% or more of the principal amounts of Notes then outstanding, or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.

 

(d)              If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

(e)               No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

(f)               This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Secured Party (other than by merger). Any Secured Party may assign any or all of its rights under this Agreement to any Person (as defined in the Securities Purchase Agreement) to whom such Secured Party assigns or transfers any Secured Obligations, provided such transferee agrees in writing to be bound, with respect to the transferred Secured Obligations, by the provisions of this Agreement that apply to the “Secured Parties.”

 

(g)              Each party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order to carry out the provisions and purposes of this Agreement.

 

 

 

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(h)              Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, the Debtor agrees that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and the Notes (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan. Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, the Debtor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such 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 Agreement 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. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

 

(i)                This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

 

(j)                The Debtor shall indemnify, reimburse and hold harmless the Collateral Agent and the Secured Parties and their respective partners, members, shareholders, officers, directors, employees and agents (and any other persons with other titles that have similar functions) (collectively, “ Indemnitees ”) from and against any and all losses, claims, liabilities, damages, penalties, suits, costs and expenses, of any kind or nature, (including fees relating to the cost of investigating and defending any of the foregoing) imposed on, incurred by or asserted against such Indemnitee in any way related to or arising from or alleged to arise from this Agreement or the Collateral, except any such losses, claims, liabilities, damages, penalties, suits, costs and expenses which result from the gross negligence or willful misconduct of the Indemnitee as determined by a final, nonappealable decision of a court of competent jurisdiction. This indemnification provision is in addition to, and not in limitation of, any other indemnification provision in the Notes, the Securities Purchase Agreement (as such term is defined in the Notes) or any other agreement, instrument or other document executed or delivered in connection herewith or therewith.

 

(k)              Nothing in this Agreement shall be construed to subject the Collateral Agent or any Secured Party to liability as a partner in the Debtor or any if its direct or indirect subsidiaries that is a partnership or as a member in the Debtor or any of its direct or indirect subsidiaries that is a limited liability company, nor shall the Collateral Agent or any Secured Party be deemed to have assumed any obligations under any partnership agreement or limited liability company agreement, as applicable, of the Debtor or any of its direct or indirect subsidiaries or otherwise, unless and until any such Secured Party exercises its right to be substituted for the Debtor as a partner or member, as applicable, pursuant hereto.

 

(l)                To the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent, approval or action of any partner or member, as applicable, of the Debtor or any direct or indirect subsidiary of the Debtor or compliance with any provisions of any of the Organizational Documents, the Debtor hereby represents that all such consents and approvals have been obtained.

 

[ SIGNATURE PAGE OF DEBTOR FOLLOWS ]

 

 

 

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IN WITNESS WHEREOF, the undersigned has caused this Security and Pledge Agreement to be duly executed on the day and year first above written.

 

IIOT-OXYS, INC.

 

 

By: ____________________________

Clifford L. Emmons, CEO

 

[ SIGNATURE PAGE OF SECURED PARTIES FOLLOWS ]

 

 

 

 

 

 

 

 

 

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IN WITNESS WHEREOF, the undersigned party hereto has caused this Security and Pledge Agreement to be duly executed on the day and year first above written.

 

 

 

Name of Secured Party: ____________________________________________________

 

Signature of Authorized Signatory of Secured Party: ______________________________

 

Name of Authorized Signatory: ______________________________________________

 

Title of Authorized Signatory (if applicable): ____________________________________

 

 

 

 

 

 

 

 

 

 

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SCHEDULE A

 

 

 

 

 

 

 

 

 

 

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SCHEDULE B

 

 

 

 

 

 

 

 

 

 

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SCHEDULE C

 

 

 

 

 

 

 

 

 

 

 

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SCHEDULE D

 

· IIOT-OXYS, Inc., a Nevada corporation (NV20171424751)

 

 

 

 

 

 

 

 

 

 

 

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SCHEDULE E

 

On March 16, 2017, the Company’s Board of Directors adopted resolutions to approve the Securities Exchange Agreement (the “ OXYS SEA ”) between the Company and OXYS Corporation, a Nevada Corporation, a Nevada corporation (“ OXYS ”).

 

Under the terms of the OXYS SEA the Company acquired 100% of the issued voting shares of OXYS in exchange for 34,687,244 shares of the Company’s Common Stock. Also, in connection with the transaction, the Company cancelled 1,500,000 outstanding shares of its Common Stock. The OXYS SEA was effective on July 28, 2017.

 

On December 14, 2017, the Company entered into a Share Exchange Agreement (the “ HereLab SEA ”) with HereLab, Inc., a Delaware corporation (“ HereLab ”), and HereLab’s two shareholders pursuant to which the Company would acquire all of the issued and outstanding shares of HereLab in exchange for 1,650,000 shares of its Common Stock. On January 11, 2018, the closing of the HereLab SEA was held.

 

 

 

 

 

 

 

 

 

 

 

 

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SCHEDULE F

 

Trademarks:

 

EdgeTelligence®

 

EdgeMap®

 

EdgeRune®

 

MakerSafe®

 

Patents:

 

The Company currently has no patent filings. The Company will notify Secured Parties of any future filings once they are assigned a case number from the U.S. Patent Office and they will be added to this Schedule F at that time. An Intellectual Property Security Agreement will also be executed by the Company.

 

 

 

 

 

 

 

 

 

 

 

 

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SCHEDULE G

 

 

 

 

 

 

 

 

 

 

 

 

 

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SCHEDULE H

 

IIOT-OXYS, Inc. is the owner of all the outstanding equity interests of OXYS Corporation and HereLab, Inc.

 

IIOT-OXYS, Inc. owns 34,281,980 shares of OXYS Corporation Common Stock.

 

IIOT-OXYS, Inc. owns 1,650,000 shares of HereLab, Inc. Common Stock.

 

 

 

 

 

 

 

 

 

 

 

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ANNEX A

 

Collateral Agent Agreement

 

 

 

 

 

 

 

 

 

 

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Exhibit 99.8

 

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 APPLICABLE STATE SECURITIES LAWS, 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 AS EVIDENCED BY A LEGAL OPINION OF CORPORATE COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

COMMON STOCK PURCHASE WARRANT

IIOT-OXYS, INC.

 

Warrant Shares: [____] Original Issue Date: [________], 2019

 

THIS COMMON STOCK PURCHASE WARRANT (the “ Warrant ”) certifies that, for value received [____________________] or its assigns (the “ Holder ”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth and in the Securities Purchase Agreement between the Company and the Holder (the “ Purchase Agreement ”), at any time on or after the Original Issue Date and on or prior to the close of business on the fifth anniversary of the Original Issue Date (the “ Termination Date ”) but not thereafter, to subscribe for and purchase from IIOT-OXYS, INC, a Nevada corporation (the “ Company ”), up to [__________] Common Shares (as subject to adjustment hereunder, the “ Warrant Shares ”); provided, however, the number of Warrant Shares exercisable pursuant to this Warrant shall increase from 50% to 100% in the Event of Default (as defined in the Notes) has occurred and has not been cured. The purchase price of one Common Share 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 the Secured Convertible Notes (the “ Notes ”), dated [__________], 2019, issued by the Company to the purchasers pursuant to the Securities Purchase Agreement.

 

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 the Company 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 of the Notice of Exercise 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 Common Shares thereby purchased by wire transfer to an account designated by the Company 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. If the amount of payment received by the Company is less than the aggregate Exercise Price of the Common Shares being purchased, the Holder shall make payment of the deficiency within three (3) Trading Days following notice thereof. 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 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 automatically reduce 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 Form within two (2) Business Days 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.

 

 

 

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b)                   Exercise Price . The exercise price per Common Share under this Warrant shall be $0.30 (the “ Exercise Price ”).

 

c)                    Cashless Exercise . In connection with a Cashless Exercise, this Warrant shall represent the right to subscribe for and acquire the number of Warrant Shares equal to (i) the number of Warrant Shares specified by the Holder in its Notice of Exercise (the “ Total Number ”) less (ii) the number of Warrant Shares equal to the quotient obtained by dividing (A) the product of the Total Number and the applicable existing Exercise Price by (B) the Fair Market Value. “ Fair Market Value ” shall mean: (1) if the Warrant Shares are listed on the NYSE MKT (formerly NYSE AMEX), the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTC Bulletin Board or the OTC Markets (or any successors to any of the foregoing), the last reported sale price of the Warrant Shares on such exchange or Nasdaq on the date for which the determination is being made; or (2) if the Warrant Shares are not so listed, “ Fair Market Value ” shall be determined in good faith by the Board of Directors of the Company.

 

d)                    Mechanics of Exercise .

 

i.                 Delivery of Certificates Upon Exercise . When Holder exercises this Warrant, certificates for Common Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker 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 and such Warrant Shares have been sold or (B) the Common Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is five (5) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant (if required), and (C) payment of the aggregate Exercise Price as set forth above (including by cashless exercise, if permitted) (such date, the “ Warrant Share Delivery Date ”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised in accordance with the requirements of the preceding sentence and with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such Common Shares, having been paid.

 

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 certificate or certificates representing 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 a certificate or the certificates representing 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.

 

 

 

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iv.               Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise at IPO . In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, Common Shares to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “ Buy-In ”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Shares so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of Common Shares that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder subject to payment of the Exercise Price therefor. For example, if the Holder purchases Common Shares having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of Common Shares with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Common Shares upon exercise of the Warrant as required pursuant to the terms hereof.

 

v.                No Fractional Common Shares . No fractional Common Shares shall be issued upon the exercise of this Warrant. As to any fraction of a Common 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 to the nearest whole Common Share.

 

Section 3.         Certain Adjustments .

 

a) Issuance of Additional Common Shares .

 

i.                 In the event the Company shall issue any Additional Common Shares (as defined below), at a price per share less than the Exercise Price then in effect or without consideration, then the Exercise Price upon each such issuance shall be adjusted to that price determined by multiplying the Exercise Price then in effect by a fraction:

 

(A)             the numerator of which shall be equal to the sum of (x) the number of outstanding Common Shares (assuming full exercise, conversion or exchange of all warrants and other securities which are convertible into or exercisable or exchangeable for, and any right to subscribe for, Common Shares) immediately prior to the issuance of such Additional Common Shares plus (y) the number of Common Shares (rounded to the nearest whole Common Share) which the aggregate consideration for the total number of such Additional Common Shares so issued would purchase at a price per share equal to the Exercise Price then in effect, and

 

(B)             the denominator of which shall be equal to the number of outstanding Common Shares (assuming full exercise, conversion or exchange of all warrants and other securities which are convertible into or exercisable or exchangeable for, and any right to subscribe for, Common Shares) immediately after the issuance of such Additional Common Shares.

 

 

 

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ii.               Additional Common Shares ” means all Common Shares issued by the Company after the date hereof, except: (i) securities issued (other than for cash) in connection with a merger, acquisition, or consolidation, (ii) securities issued pursuant to the conversion or exercise of convertible or exercisable securities issued or outstanding on or prior to the date of the Purchase Agreement or issued pursuant to the Purchase Agreement (so long as the conversion or exercise price in such securities are not amended to lower such price and/or adversely affect the Holders), (iii) the Warrant Shares, (iv) securities issued in connection with bona fide strategic license agreements or other partnering arrangements so long as such issuances are not for the purpose of raising capital, (v) Common Shares issued to the Company’s employees, directors or advisors, and (vi) any warrants issued to any placement agent and its designees for the transactions contemplated by the Purchase Agreement.

 

b)                 Adjustments for Annual Milestones . If the Year-End Milestones are not completed by the end of calendar year 2019, the Exercise Price shall be reduced to $0.15. The “Year-End Milestones” are the following:

 

i.                      Revenue of at least $800,000 for 2019;

 

ii.                     At least eight (8) Biotech, Pharma, MedDev companies under the MSA & 1st PO for $25,000;

 

iii.                    At least four (4) follow-on contracts after the initial PO from Biotech, Pharma, MedDev companies;

 

iv.                   At least three (3) monitoring contracts (recurring revenue) from Biotech, Pharma, MedDev companies;

 

v.                    Follow-on contract from the first Automotive customer or a new contract from the Automotive Manufacturing vertical of at least $25,000; and

 

vi.                   At least three (3) more bridge monitoring installations for a state in the New England region or a subway related contract from a state in the New England region.

 

c)              Calculations . All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a Common Share, as the case may be. For purposes of this Section 3, the number of Common Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Common Shares issued and outstanding.

 

d) 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.

 

 

 

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ii.               Notice to Allow Exercise by Holder . If (A) the Company shall declare a dividend on the Common Shares, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Shares, (C) the Company shall authorize the granting to all holders of the Common Shares rights or warrants to subscribe for or purchase any Common Shares of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any reclassification of the Common Shares, 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 Shares are 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 10 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, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Shares of record to be entitled to such dividend, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or Common Share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Shares of record shall be entitled to exchange their Common Shares for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or Common 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 hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously publicly disclose such notice. 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.

 

e)             Voluntary Adjustment By Company . The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

 

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, 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 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, but only after such transferee agrees to be bound by the provisions of this Agreement. 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. 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.

 

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.

 

 

 

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d)             Transfer Restrictions . The Warrant may only be disposed of in compliance with state and federal securities laws and shall not transferred unless the Warrant is (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.

 

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 Shareholder Until Exercise . This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

 

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 Common Shares .

 

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 Shares 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 or Bylaws 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) 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 (ii) 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 having jurisdiction thereof.

 

e)             Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.

 

f)             Restrictions . The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, 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 or Company shall operate as a waiver of such right or otherwise prejudice the Holder’s or Company’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If either party willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the other, the first party shall pay to the other party 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 affected party in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

h)               Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via email or facsimile at the email address or facsimile number set forth on the signature pages attached to the Purchase Agreement at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of email or facsimile transmission, if such notice or communication is delivered via email or facsimile at the email address or facsimile number set forth on the signature pages attached to the Purchase Agreement on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature page attached to 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 Shares or as a shareholder 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 in accordance with the Purchase Agreement.

 

 

 

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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.

 

 

 

 

 

 

 

 

 

 

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.

 

 

  IIOT-OXYS, Inc.
   
   
   
  By:                                  
  Name: Clifford L. Emmons
    Title: Chief Executive Officer

 

 

 

 

 

 

 

 

 

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NOTICE OF EXERCISE

 

TO:         IIOT-OXYS, 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): [ ] 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).

 

 

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

 

 

________________________________________________

 

 

________________________________________________

 

 

________________________________________________

 

(3)              Accredited Investor . The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended, and that the aforesaid Common Shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale, in connection with the distribution thereof, and that the undersigned has no present intention of distributing or reselling such Common Shares.

 

[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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ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute this form and supply required information. Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, [___] all of or [___] Common Shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

_____________________________________________________________________________________________whose address is

 

_______________________________________________________________________________________________________.

 

 

Dated:____________________, ___________________

 

  Holder’s Signature:    
  Holder’s Address:    
       

 

 

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of limited liability companies and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

 

 

 

 

 

 

 

 

 

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Exhibit 99.9

 

 

Consulting Agreement

 

This Consulting Agreement (the “ Agreement ”), dated effective the 4 th day of June 2018, (the “ Effective Date ”) is by and between Cliff L. Emmons , the Company’s Chief Executive Officer, Interim Chief Financial Officer, and director (hereinafter referred to as the “ Consultant ”), and IIOT-OXYS, Inc. , a Nevada corporation (hereinafter referred to as the “ Company ”).

 

Recitals:

 

A.               The Company desires to engage the Consultant to provide consulting services for the Company and for the Consultant to serve as the Company’s Chief Executive Officer, Interim Chief Financial Officer, and director.

 

B.                The Consultant has significant experience and has agreed to provide the services on the terms and conditions set forth in this Agreement.

 

Now, therefore , in consideration of the faithful performance of the obligations set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Consultant and the Company hereby agree as follows.

 

1.                    Engagement . The Company hereby engages the Consultant, and the Consultant hereby accepts the engagement, to provide certain consulting services for the Company subject to and in compliance with the terms and conditions of this Agreement.

 

2.                    Appointment as Officer and Director . Effective as of June 4, 2018, the Consultant hereby agrees to serve as the Company’s Chief Executive Officer (“ CEO ”), Interim Chief Financial Officer (“ CFO ”), and director.

 

3.                    Term of Service . The Company hereby retains the Consultant for a period of three (3) years beginning as of the Effective Date, which term shall be automatically renewable upon mutual consent of the parties for additional one-year terms as provided herein, unless sooner terminated as provided in Section 8 below (the “ Term ”). The Term and any extension thereof shall be referred to herein as the “ Consulting Period .” Any Services, as defined below, provided hereunder, and any compensation paid prior to the date this Agreement is executed by the parties, but after the Effective Date, shall be included in this Agreement.

 

4.                    Services to Be Provided . During the Consulting Period the Consultant shall provide the following services to the Company:

 

a.                    Consulting Services . The Consultant shall provide such services and have such duties, authorities and responsibilities as are consistent with his position as CEO, CFO, and director, and as the Board of Directors may designate from time to time while the Consultant serves as the CEO, CFO, and director of the Company (the “ Services ”). The Consultant will report directly to the Board of Directors.

 

b.                    Availability. The Consultant shall perform the Services on an as-needed basis as reasonably requested by the Company from time to time and the Consultant shall make himself reasonably available to perform such Services in a timely manner. The parties shall in good faith develop a schedule of projects to be performed in connection with the Company’s operations with the completion dates for each project.

 

c.                    Manner of Services Provided . The Consultant agrees that the Services will be rendered in a “workmanlike manner,” consistent with the manner of performance by other consultants providing the same or similar services as being rendered hereunder.

 

 

 

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5.                    Devotion of Time . During the Consulting Period, the Consultant shall expend adequate working time to perform the Services; shall devote his best efforts, energy and skill to the services of the Company and the development of the Company’s business operations; and shall not take part in activities detrimental to the best interests of the Company. Nothing in this Agreement shall preclude the Consultant during the term of this Agreement from engaging, directly or indirectly, in any business activity which is not competitive with the then existing business of the Company.

 

6.                    Disclosure of Material Events. The Company shall promptly disclose to the Consultant those events or discoveries which are known and/or reasonably anticipated that, in the judgment of the Company may have a material impact on the Company’s business operations and which may have a material impact on the ability and effectiveness of the Consultant in providing the Services hereunder.

 

7.                    Compensation . In consideration for Services provided by the Consultant to the Company, the Company shall provide the following compensation to the Consultant:

 

a.                    Monthly Fees . The Consultant shall receive a monthly fee of $15,000 (the “ Monthly Fee ”) which shall accrue until, either (i) converted, in whole or in part, into shares of Common Stock of the Company pursuant to Section 7(b) hereof; or (ii) the closing (in one or multiple closings) of a capital raise (either in equity or debt securities) by the Company of at least $500,000 (the “ $500k Capital Raise ”). Upon the occurrence of a $500k Capital Raise, the Consultant shall begin to receive cash $5,000 monthly with the remainder of the Monthly Fee to continue to accrue. Any cash to be paid pursuant to the Monthly Fee shall be payable by the Company no later than 10-days following the end of the month in which the Monthly Fee is earned. Upon the occurrence of a capital raise (either in equity or debt securities) by the Company of at least $2,000,000 (the “ $2MM Capital Raise ”), the Consultant shall begin to receive the Monthly Fee in cash with none accruing. No later than the one-year anniversary of the occurrence of the $2MM Capital Raise, the Company shall pay all accrued and unpaid Monthly Fees to the Consultant; however, the Company may do so prior to the one-year anniversary.

 

b.                    Conversion of Accrued and Unpaid Monthly Fees . At any time, the Consultant shall have the right to convert any accrued and unpaid Monthly Fees into shares of Common Stock of the Company (the “ Conversion Shares ”). The conversion price shall equal 90% multiplied by the Market Price (as defined herein) (representing a discount rate of 10%) (the “ Conversion Price ”). “Market Price” means the average of the Trading Prices (as defined below) for the shares of Common Stock of the Company during the thirty (30) day period ending on the latest complete trading day prior to the Conversion Date. “Trading Price” and “Trading Prices” means, for any security as of any date, the closing trade price of the Company’s Common Stock on the OTC Pink, OTCQB or applicable trading market as reported by a reliable reporting service (“ Reporting Service ”) designated by the Consultant or, if the OTC Pink is not the principal trading market for such security, the trading price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no trading price of such security is available in any of the foregoing manners, the average of the trading prices of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc. “Conversion Date” shall mean the date of receipt by the Company of the completed and executed Notice of Conversion, the form of which is attached hereto as Exhibit A .

 

c.                    Reimbursable Expenses . The Company agrees to reimburse the Consultant for all direct expenses authorized by the Company in writing incurred during the Term of this Agreement. The Consultant shall submit invoices for such expenses and shall provide such supporting information and documentation as the Company may reasonably request in accordance with Company policy and the requirements of the Internal Revenue Code. The Company shall pay such invoices within fifteen (15) days of receipt.

 

d.                    Equity Compensation . Beginning on the Effective Date, the Consultant shall be eligible to participate in the Company’s 2019 Stock Incentive Plan through the award of an aggregate of 3,060,000 shares of the Company’s Common Stock (the “ Shares ”) which shall vest as follows:

 

(i) 560,000 Shares on the first anniversary of the Effective Date;
(ii) 1,000,000 Shares on the second anniversary of the Effective Date; and
(iii) 1,500,000 Shares on the third anniversary of the Effective Date.

 

 

 

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In the event that the Agreement is terminated by either Party pursuant to the terms of the Agreement, all unvested Shares which have been earned shall vest on a pro-rata basis as of the effective date of the termination of the Agreement and all unearned, unvested Shares shall be terminated. Shares are only earned as long as the Agreement is in effect and no Shares shall be earned after the effective date of the termination of the Agreement.

 

e.                    Acceleration of Vesting . Unless unvested Shares have earlier terminated pursuant to Section 8 of the Agreement, vesting of all unvested Shares shall be accelerated so that all unvested Shares shall become one hundred percent (100%) vested in the Consultant upon a Change of Control. For purposes of this Agreement, the term Change of Control shall mean (i) the sale of all or substantially all of the assets of the Company, (ii) the sale of more than fifty percent (50%) of the outstanding common stock of the Company in a non-public sale, (iii) the dissolution or liquidation of the Company, or (iv) any merger, share exchange, consolidation or other reorganization or business combination of the Company if immediately after such transaction either (A) persons who were directors of the Company immediately prior to such transaction do not constitute at least a majority of the directors of the surviving entity, or (B) persons who hold a majority of the voting capital stock of the surviving entity are not persons who held a majority of the voting capital stock of the Company immediately prior to such transaction.

 

f.                     Vesting Upon Listing . In addition to the acceleration of vesting in the event of a Change of Control, unless unvested Shares have earlier terminated pursuant to Section 8 of the Agreement, vesting of all unvested Shares shall be accelerated so that all unvested Shares shall become one hundred percent (100%) vested in the Consultant upon the listing of the Company's Common Stock on a senior exchange.

 

8.                    Termination and Extension . The Term shall be sooner terminated or further extended under the following circumstances:

 

a.                   Termination for Cause . Either party hereto shall be entitled, with or without prior notice, to terminate this Agreement for Cause, in which case no consulting fees or other compensation (other than such fees that have already been earned by the Consultant) shall be payable to the Consultant after such termination. “Cause” means either party’s (i) gross negligence in the performance or non-performance of any material duties hereunder; (ii) commission of any material criminal act or fraud or of any act that affects adversely the reputation of the Company or the Consultant; (iii) habitual neglect of either party’s duties required to perform under this Agreement; (iv) dishonesty; or (v) gross misconduct. Such termination shall not prejudice any other remedy under law or equity of the non-defaulting party and the failure of such party to terminate the Consultant when cause exists shall not constitute the waiver of that party’s right to terminate this Agreement at a later time. Termination under this Section shall be considered “for cause” for purposes of this Agreement.

 

b.                   Termination by Mutual Consent . The Agreement may be terminated by mutual consent of the parties hereto.

 

c.                   Extension of Term . The initial Term may be further extended with the express authorization of the Company’s Board of Directors and the Consultant. Any extended term may be terminated at any time at the will of the Board of Directors, with or without cause.

 

9.                    Confidential Information . The Consultant recognizes and acknowledges that certain information, including, but not limited to, information pertaining to the financial condition of the Company, its systems, methods of doing business, agreements with customers or suppliers, or other aspects of the business of the Company or which are sufficiently secret to derive economic value from not being disclosed (hereinafter “ Confidential Information ”) may be made available or otherwise come into the possession of the Consultant by reason of this engagement with the Company. Accordingly, the Consultant agrees that no agent, employee, or representative will (either during or after the term of this Agreement) disclose any Confidential Information to any person, firm, corporation, association, or other entity for any reason or purpose whatsoever or make use to its or their personal advantage or to the advantage of any third party, of any Confidential Information, without the prior written consent of the Company. The parties hereto agree that the provisions of this Section shall not apply with respect to any information that the Consultant can document (i) is or becomes (through no improper action or inaction by the Consultant or any affiliate, agent, consultant or employee) generally available to the public, or (ii) was in its possession or known by it without any limitation on use or disclosure prior to the Effective Date. The Consultant shall, upon termination of this engagement, return to the Company, and shall cause his agents, employees, and representatives to return to the Company, all documents which reflect Confidential Information (including copies thereof). Notwithstanding anything heretofore stated in this paragraph, the Consultant’s obligations under this Agreement shall not, after termination of Consultant’s engagement with the Company, apply to information which has become generally available to the public without any action or omission of the Consultant (except that any Confidential Information which is disclosed to any third party by an employee or representative of the Company who is authorized to make such disclosure shall be deemed to remain confidential and protectable under this provision).

 

 

 

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10.                Trading Practices . So long as the Consultant is in possession of any material non-public information of the Company, the Consultant shall not, directly or indirectly engage in the purchase or sale the common stock of the Company. During the Term of this Agreement, and for a period of one year after the termination of this Agreement, the Consultant shall not, directly or indirectly, engage in any short selling activities of the common stock of the Company.

 

11.                Independent Contractor . The Consultant agrees that in performing this Agreement, it is acting as an independent contractor and not as an employee, representative, or agent of the Company and shall provide all facilities and equipment necessary to fulfill its obligations hereunder. As an independent contractor, the Consultant shall make no representation as an agent or employee of the Company, shall have no authority to bind the Company or incur other obligations on behalf of the Company, and shall not be eligible for any benefits which the Company may provide to its employees. Likewise, the Company shall have no authority to bind or incur obligations on behalf of the Consultant. All persons hired or retained by Consultant to perform this Agreement, including, but not limited to, its employees, representatives, and agents, shall be employees or contractors of the Consultant and shall not be construed as employees or agents of the Company in any respect. The Consultant shall be responsible for all taxes, insurance and other costs and payments legally required to be withheld or provided in connection with Consultant’s performance of this Agreement, including without limitation, all withholding taxes, worker’s compensation insurance, and similar costs. The Consultant shall abide by all laws, rules, and regulations pertaining to the Services to be provided hereunder.

 

12.                Miscellaneous Provisions .

 

a.        Notice . All notices required or permitted hereunder shall be in writing and shall be deemed effective: (i) upon personal delivery; (ii) in the case of delivery by mail within the continental United States, on the fourth (4 th ) business day after such notice or other communication shall have been deposited in the mail, postage prepaid, return receipt requested; (iii) when sent by either facsimile or email at the applicable facsimile number or email address set forth below upon confirmation of transmission or receipt of mailing; or (iv) in the case of delivery by internationally recognized overnight delivery service, when received, addressed as follows:

 

If to the Company to:

 

IIOT-OXYS, Inc.

705 Cambridge St.

Cambridge, MA 02141

Attn: Karen McNemar, COO

 

If to the Consultant, to:

 

Cliff L. Emmons

24 Freedom Trail

Dennis, MA 02638

 

or to such other address or addresses as either party shall designate to the other in writing from time to time by like notice.

 

b.        Attorneys’ Fees . If any legal action or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party or parties will be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or he may be entitled.

 

 

 

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c.        Additional Remedies . The Consultant acknowledges and agrees that, in the event it shall violate any of the restrictions of this Agreement, the Company will be without adequate remedy at law and will therefor be entitled to enforce such restrictions by temporary or permanent injunctive or mandatory relief obtained in an action or may have at law or in equity, and the Consultant hereby consents to the jurisdiction of such court for such purpose, provided that reasonable notice of any proceeding is given, it being understood that such injunction shall be in addition to any remedy which the Company may have at law or otherwise.

 

d.        Entire Agreement; Modification; Waiver . This Agreement constitutes the entire agreement between or among the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties. No supplement, modification, or amendment of this Agreement will be binding unless executed in writing by all the parties or the applicable parties to be bound by such amendment. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision, whether or not similar, nor will any waiver constitute a continuing waiver. No waiver will be binding unless executed in writing by the party making the waiver.

 

e.        Survival of Covenants, Etc. All covenants, representations and warranties made herein shall survive the making of this Agreement and shall continue in full force and effect for a period of two (2) years from the termination date of this Agreement, at the end of which period no claim may be made with respect to any such covenant, representation, or warranty unless such claim shall have been asserted in writing to the indemnifying party during such period.

 

f.        Assignment . This Agreement, as it relates to the engagement of the Consultant, is a personal contract and the rights and interests of the Consultant hereunder may not be sold, transferred, assigned, pledged or hypothecated, without the prior written consent of the Company, which consent may be withheld for any reason.

 

g.        Binding on Successors . This Agreement will be binding on, and will inure to the benefit of, the parties to it and their respective successors, and assigns.

 

h.        Governing Law and Venue . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Massachusetts applicable to contracts made and to be performed in such State, without reference to the choice of law principals thereof, and any and all actions to enforce the provisions of this Agreement shall be brought in a court of competent jurisdiction in the State of Massachusetts and in no other place.

 

i.        Rights Are Cumulative . The rights and remedies granted to the parties hereunder shall be in addition to and cumulative of any other rights or remedies either may have under any document or documents executed in connection herewith or available under applicable law. No delay or failure on the part of a party in the exercise of any power or right shall operate as a waiver thereof nor as an acquiescence in any default nor shall any single or partial exercise of any power or right preclude any other or further exercise thereof or the exercise of any other power or right.

 

j.        Severability . If any provision of this Agreement is held invalid or unenforceable by any court of final jurisdiction, it is the intent of the parties that all other provisions of this Agreement be construed to remain fully valid, enforceable, and binding on the parties.

 

k.        Drafting . This Agreement was drafted with the joint participation of the parties and/or their legal counsel. Any ambiguity contained in this Agreement shall not be construed against any party as the draftsman, but this Agreement shall be construed in accordance with its fair meaning.

 

l.        Headings . The descriptive headings of the various paragraphs or parts of this Agreement are for convenience only and shall not affect the meaning or construction of any of the provisions hereof.

 

 

 

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m.        Number and Gender . Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, the feminine, or the neuter gender shall include the masculine, feminine, and neuter.

 

n.        Counterparts; Facsimile Execution . This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one instrument. Delivery of an executed counterpart of this Agreement by facsimile or email shall be equally as effective as delivery of a manually executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by facsimile or email also shall deliver a manually executed counterpart of this Agreement, but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, or binding effect of this Agreement.

 

o.        Full Knowledge . By their signatures, the parties acknowledge that they have carefully read and fully understand the terms and conditions of this Agreement, that each party has had the benefit of counsel, or has been advised to obtain counsel, and that each party has freely agreed to be bound by the terms and conditions of this Agreement.

 

[Signature Page Follows]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Signature Page

 

 

In Witness Whereof , each of the parties hereto, thereunto duly authorized, has executed this Agreement the respective day and year set forth below.

 

 

COMPANY: IIOT-OXYS, Inc.
   
   
Date: February 27, 2019 By: /s/ Karen McNemar                       
         Karen McNemar, COO

 

 

 

CONSULTANT:

   
Date: February 27, 2019 By: / s/ Clifford L. Emmons                       
         Clifford L. Emmons, an individual

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT A

 

NOTICE OF CONVERSION

 

IIOT-OXYS, Inc.

 

Re: Conversion of Accrued and Unpaid Monthly Fees

 

Gentlemen:

 

The undersigned hereby irrevocably exercises the option to convert $____________________ into shares of common stock of IIOT-OXYS, Inc., in accordance with the terms of this Agreement, and directs that the shares issuable and deliverable upon the conversion be issued in the name of and delivered to the undersigned unless a different name has been indicated below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay any transfer taxes payable with respect thereto.

 

Date:                                  , 201___    
     
     
     
    (Signature)
     
     
COMPLETE FOR REGISTRATION OF SHARES    
     
     
     
(Printed Name)   (Social Security or other identifying number)
     
     
     
(Street Address)    
     
     
     
(City, State, and ZIP Code)    
     
     
     

 

 

 

 

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Exhibit 99.10

 

Consulting Agreement

 

This Consulting Agreement (the “ Agreement ”), dated effective the 1st day of October 2018, (the “ Effective Date ”) is by and between Karen McNemar (hereinafter referred to as the “ Consultant ”), and IIOT-OXYS, Inc. , a Nevada corporation (hereinafter referred to as the “ Company ”).

 

Recitals:

 

A.               The Company desires to engage the Consultant to provide consulting services for the Company and for the Consultant to serve as the Company’s Chief Operating Officer.

 

B.                The Consultant has significant experience and has agreed to provide the services on the terms and conditions set forth in this Agreement.

 

Now, therefore , in consideration of the faithful performance of the obligations set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Consultant and the Company hereby agree as follows.

 

1.                    Engagement . The Company hereby engages the Consultant, and the Consultant hereby accepts the engagement, to provide certain consulting services for the Company subject to and in compliance with the terms and conditions of this Agreement.

 

2.                    Appointment as Chief Operating Officer . Effective as of September 20, 2018, the Consultant hereby agrees to serve as the Company’s Chief Operating Officer (“ COO ”).

 

3.                    Term of Service . The Company hereby retains the Consultant for a period of three (3) years beginning as of the Effective Date, which term shall be automatically renewable upon mutual consent of the parties for additional one-year terms as provided herein, unless sooner terminated as provided in Section 8 below (the “ Term ”). The Term and any extension thereof shall be referred to herein as the “ Consulting Period .” Any Services, as defined below, provided hereunder, and any compensation paid prior to the date this Agreement is executed by the parties, but after the Effective Date, shall be included in this Agreement.

 

4.                    Services to Be Provided . During the Consulting Period the Consultant shall provide the following services to the Company:

 

a.                    Consulting Services . The Consultant shall provide such services and have such duties, authorities and responsibilities as are consistent with her position as COO, and as the Chief Executive Officer (“ CEO ”) and Board of Directors may designate from time to time while the Consultant serves as the COO of the Company (the “ Services ”). The Consultant will report directly to the CEO and the Board of Directors.

 

b.                    Availability. The Consultant shall perform the Services on an as-needed basis as reasonably requested by the Company from time to time and the Consultant shall make herself reasonably available to perform such Services in a timely manner. The parties shall in good faith develop a schedule of projects to be performed in connection with the Company’s operations with the completion dates for each project.

 

c.                    Manner of Services Provided . The Consultant agrees that the Services will be rendered in a “workmanlike manner,” consistent with the manner of performance by other consultants providing the same or similar services as being rendered hereunder.

 

 

 

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5.                    Devotion of Time . During the Consulting Period, the Consultant shall expend adequate working time to perform the Services; shall devote her best efforts, energy and skill to the services of the Company and the development of the Company’s business operations; and shall not take part in activities detrimental to the best interests of the Company. Nothing in this Agreement shall preclude the Consultant during the term of this Agreement from engaging, directly or indirectly, in any business activity which is not competitive with the then existing business of the Company.

 

6.                    Disclosure of Material Events. The Company shall promptly disclose to the Consultant those events or discoveries which are known and/or reasonably anticipated that, in the judgment of the Company may have a material impact on the Company’s business operations and which may have a material impact on the ability and effectiveness of the Consultant in providing the Services hereunder.

 

7.                    Compensation . In consideration for Services provided by the Consultant to the Company, the Company shall provide the following compensation to the Consultant:

 

a.                    Monthly Fees . The Consultant shall receive a monthly fee of $12,750 (the “ Monthly Fee ”) which shall accrue until, either (i) converted, in whole or in part, into shares of Common Stock of the Company pursuant to Section 7(b) hereof; or (ii) the closing (in one or multiple closings) of a capital raise (either in equity or debt securities) by the Company of at least $500,000 (the “ $500k Capital Raise ”). Upon the occurrence of a Capital Raise, the Consultant shall begin to receive cash $4,250 monthly with the remainder of the Monthly Fee to continue to accrue. Any cash to be paid pursuant to the Monthly Fee shall be payable by the Company no later than 10-days following the end of the month in which the Monthly Fee is earned. Upon the occurrence of a capital raise (either in equity or debt securities) by the Company of at least $2,000,000 (the “ $2MM Capital Raise ”), the Consultant shall begin to receive the Monthly Fee in cash with none accruing. No later than the one-year anniversary of the occurrence of the $2MM Capital Raise, the Company shall pay all accrued and unpaid Monthly Fees to the Consultant; however, the Company may do so prior to the one-year anniversary.

 

b.                    Conversion of Accrued and Unpaid Monthly Fees . At any time, the Consultant shall have the right to convert any accrued and unpaid Monthly Fees into shares of Common Stock of the Company (the “ Conversion Shares ”). The conversion price shall equal 90% multiplied by the Market Price (as defined herein) (representing a discount rate of 10%) (the “ Conversion Price ”). “Market Price” means the average of the Trading Prices (as defined below) for the shares of Common Stock of the Company during the thirty (30) day period ending on the latest complete trading day prior to the Conversion Date. “Trading Price” and “Trading Prices” means, for any security as of any date, the closing trade price of the Company’s Common Stock on the OTC Pink, OTCQB or applicable trading market as reported by a reliable reporting service (“ Reporting Service ”) designated by the Consultant or, if the OTC Pink is not the principal trading market for such security, the trading price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no trading price of such security is available in any of the foregoing manners, the average of the trading prices of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc. “Conversion Date” shall mean the date of receipt by the Company of the completed and executed Notice of Conversion, the form of which is attached hereto as Exhibit A .

 

c.                    Reimbursable Expenses . The Company agrees to reimburse the Consultant for all direct expenses authorized by the Company in writing incurred during the Term of this Agreement. The Consultant shall submit invoices for such expenses and shall provide such supporting information and documentation as the Company may reasonably request in accordance with Company policy and the requirements of the Internal Revenue Code. The Company shall pay such invoices within fifteen (15) days of receipt.

 

d.                    Equity Compensation . Beginning on the Effective Date, the Consultant shall be eligible to participate in the Company’s 2017 Stock Incentive Plan (or any subsequent equity compensation plan adopted and approved by the Company’s Board of Directors) through the award of an aggregate of 2,409,000 shares of the Company’s Common Stock (the “ Shares ”) which shall vest as follows:

 

(i) 409,000 Shares on the first anniversary of the Effective Date;
(ii) 800,000 Shares on the second anniversary of the Effective Date; and
(iii) 1,200,000 Shares on the third anniversary of the Effective Date.

 

 

 

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In the event that the Agreement is terminated by either Party pursuant to the terms of the Agreement, all unvested Shares which have been earned shall vest on a pro-rata basis as of the effective date of the termination of the Agreement and all unearned, unvested Shares shall be terminated. Shares are only earned as long as the Agreement is in effect and no Shares shall be earned after the effective date of the termination of the Agreement.

 

e.                    Acceleration of Vesting . Unless unvested Shares have earlier terminated pursuant to Section 8 of the Agreement, vesting of all unvested Shares shall be accelerated so that all unvested Shares shall become one hundred percent (100%) vested in the Consultant upon a Change of Control. For purposes of this Agreement, the term Change of Control shall mean (i) the sale of all or substantially all of the assets of the Company, (ii) the sale of more than fifty percent (50%) of the outstanding common stock of the Company in a non-public sale, (iii) the dissolution or liquidation of the Company, or (iv) any merger, share exchange, consolidation or other reorganization or business combination of the Company if immediately after such transaction either (A) persons who were directors of the Company immediately prior to such transaction do not constitute at least a majority of the directors of the surviving entity, or (B) persons who hold a majority of the voting capital stock of the surviving entity are not persons who held a majority of the voting capital stock of the Company immediately prior to such transaction.

 

f.                     Vesting Upon Listing . In addition to the acceleration of vesting in the event of a Change of Control, unless unvested Shares have earlier terminated pursuant to Section 8 of the Agreement, vesting of all unvested Shares shall be accelerated so that all unvested Shares shall become one hundred percent (100%) vested in the Consultant upon the listing of the Company's Common Stock on a senior exchange.

 

8.                    Termination and Extension . The Term shall be sooner terminated or further extended under the following circumstances:

 

a.                   Termination for Cause . Either party hereto shall be entitled, with or without prior notice, to terminate this Agreement for Cause, in which case no consulting fees or other compensation (other than such fees that have already been earned by the Consultant) shall be payable to the Consultant after such termination. “Cause” means either party’s (i) gross negligence in the performance or non-performance of any material duties hereunder; (ii) commission of any material criminal act or fraud or of any act that affects adversely the reputation of the Company or the Consultant; (iii) habitual neglect of either party’s duties required to perform under this Agreement; (iv) dishonesty; or (v) gross misconduct. Such termination shall not prejudice any other remedy under law or equity of the non-defaulting party and the failure of such party to terminate the Consultant when cause exists shall not constitute the waiver of that party’s right to terminate this Agreement at a later time. Termination under this Section shall be considered “for cause” for purposes of this Agreement.

 

b.                   Termination by Mutual Consent . The Agreement may be terminated by mutual consent of the parties hereto.

 

c.                   Extension of Term . The initial Term may be further extended with the express authorization of the Company’s Board of Directors and the Consultant. Any extended term may be terminated at any time at the will of the Board of Directors, with or without cause.

 

9.                    Confidential Information . The Consultant recognizes and acknowledges that certain information, including, but not limited to, information pertaining to the financial condition of the Company, its systems, methods of doing business, agreements with customers or suppliers, or other aspects of the business of the Company or which are sufficiently secret to derive economic value from not being disclosed (hereinafter “ Confidential Information ”) may be made available or otherwise come into the possession of the Consultant by reason of this engagement with the Company. Accordingly, the Consultant agrees that no agent, employee, or representative will (either during or after the term of this Agreement) disclose any Confidential Information to any person, firm, corporation, association, or other entity for any reason or purpose whatsoever or make use to its or their personal advantage or to the advantage of any third party, of any Confidential Information, without the prior written consent of the Company. The parties hereto agree that the provisions of this Section shall not apply with respect to any information that the Consultant can document (i) is or becomes (through no improper action or inaction by the Consultant or any affiliate, agent, consultant or employee) generally available to the public, or (ii) was in its possession or known by it without any limitation on use or disclosure prior to the Effective Date. The Consultant shall, upon termination of this engagement, return to the Company, and shall cause his agents, employees, and representatives to return to the Company, all documents which reflect Confidential Information (including copies thereof). Notwithstanding anything heretofore stated in this paragraph, the Consultant’s obligations under this Agreement shall not, after termination of Consultant’s engagement with the Company, apply to information which has become generally available to the public without any action or omission of the Consultant (except that any Confidential Information which is disclosed to any third party by an employee or representative of the Company who is authorized to make such disclosure shall be deemed to remain confidential and protectable under this provision).

 

 

 

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10.                Trading Practices . So long as the Consultant is in possession of any material non-public information of the Company, the Consultant shall not, directly or indirectly engage in the purchase or sale the common stock of the Company. During the Term of this Agreement, and for a period of one year after the termination of this Agreement, the Consultant shall not, directly or indirectly, engage in any short selling activities of the common stock of the Company.

 

11.                Independent Contractor . The Consultant agrees that in performing this Agreement, it is acting as an independent contractor and not as an employee, representative, or agent of the Company and shall provide all facilities and equipment necessary to fulfill its obligations hereunder. As an independent contractor, the Consultant shall make no representation as an agent or employee of the Company, shall have no authority to bind the Company or incur other obligations on behalf of the Company, and shall not be eligible for any benefits which the Company may provide to its employees. Likewise, the Company shall have no authority to bind or incur obligations on behalf of the Consultant. All persons hired or retained by Consultant to perform this Agreement, including, but not limited to, its employees, representatives, and agents, shall be employees or contractors of the Consultant and shall not be construed as employees or agents of the Company in any respect. The Consultant shall be responsible for all taxes, insurance and other costs and payments legally required to be withheld or provided in connection with Consultant’s performance of this Agreement, including without limitation, all withholding taxes, worker’s compensation insurance, and similar costs. The Consultant shall abide by all laws, rules, and regulations pertaining to the Services to be provided hereunder.

 

12.                Miscellaneous Provisions .

 

a.        Notice . All notices required or permitted hereunder shall be in writing and shall be deemed effective: (i) upon personal delivery; (ii) in the case of delivery by mail within the continental United States, on the fourth (4 th ) business day after such notice or other communication shall have been deposited in the mail, postage prepaid, return receipt requested; (iii) when sent by either facsimile or email at the applicable facsimile number or email address set forth below upon confirmation of transmission or receipt of mailing; or (iv) in the case of delivery by internationally recognized overnight delivery service, when received, addressed as follows:

 

If to the Company to:

 

IIOT-OXYS, Inc.

705 Cambridge St.

Cambridge, MA 02141

Attn: Cliff L. Emmons, CEO

 

If to the Consultant, to:

 

Karen McNemar

65 Mansfield Road

Milford, CT 06461

 

or to such other address or addresses as either party shall designate to the other in writing from time to time by like notice.

 

b.        Attorneys’ Fees . If any legal action or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party or parties will be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or she may be entitled.

 

 

 

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c.        Additional Remedies . The Consultant acknowledges and agrees that, in the event it shall violate any of the restrictions of this Agreement, the Company will be without adequate remedy at law and will therefor be entitled to enforce such restrictions by temporary or permanent injunctive or mandatory relief obtained in an action or may have at law or in equity, and the Consultant hereby consents to the jurisdiction of such court for such purpose, provided that reasonable notice of any proceeding is given, it being understood that such injunction shall be in addition to any remedy which the Company may have at law or otherwise.

 

d.        Entire Agreement; Modification; Waiver . This Agreement constitutes the entire agreement between or among the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties. No supplement, modification, or amendment of this Agreement will be binding unless executed in writing by all the parties or the applicable parties to be bound by such amendment. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision, whether or not similar, nor will any waiver constitute a continuing waiver. No waiver will be binding unless executed in writing by the party making the waiver.

 

e.        Survival of Covenants, Etc. All covenants, representations and warranties made herein shall survive the making of this Agreement and shall continue in full force and effect for a period of two (2) years from the termination date of this Agreement, at the end of which period no claim may be made with respect to any such covenant, representation, or warranty unless such claim shall have been asserted in writing to the indemnifying party during such period.

 

f.        Assignment . This Agreement, as it relates to the engagement of the Consultant, is a personal contract and the rights and interests of the Consultant hereunder may not be sold, transferred, assigned, pledged or hypothecated, without the prior written consent of the Company, which consent may be withheld for any reason.

 

g.        Binding on Successors . This Agreement will be binding on, and will inure to the benefit of, the parties to it and their respective successors, and assigns.

 

h.        Governing Law and Venue . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Massachusetts applicable to contracts made and to be performed in such State, without reference to the choice of law principals thereof, and any and all actions to enforce the provisions of this Agreement shall be brought in a court of competent jurisdiction in the State of Massachusetts and in no other place.

 

i.        Rights Are Cumulative . The rights and remedies granted to the parties hereunder shall be in addition to and cumulative of any other rights or remedies either may have under any document or documents executed in connection herewith or available under applicable law. No delay or failure on the part of a party in the exercise of any power or right shall operate as a waiver thereof nor as an acquiescence in any default nor shall any single or partial exercise of any power or right preclude any other or further exercise thereof or the exercise of any other power or right.

 

j.        Severability . If any provision of this Agreement is held invalid or unenforceable by any court of final jurisdiction, it is the intent of the parties that all other provisions of this Agreement be construed to remain fully valid, enforceable, and binding on the parties.

 

k.        Drafting . This Agreement was drafted with the joint participation of the parties and/or their legal counsel. Any ambiguity contained in this Agreement shall not be construed against any party as the draftsman, but this Agreement shall be construed in accordance with its fair meaning.

 

l.        Headings . The descriptive headings of the various paragraphs or parts of this Agreement are for convenience only and shall not affect the meaning or construction of any of the provisions hereof.

 

 

 

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m.        Number and Gender . Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, the feminine, or the neuter gender shall include the masculine, feminine, and neuter.

 

n.        Counterparts; Facsimile Execution . This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one instrument. Delivery of an executed counterpart of this Agreement by facsimile or email shall be equally as effective as delivery of a manually executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by facsimile or email also shall deliver a manually executed counterpart of this Agreement, but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, or binding effect of this Agreement.

 

o.        Full Knowledge . By their signatures, the parties acknowledge that they have carefully read and fully understand the terms and conditions of this Agreement, that each party has had the benefit of counsel, or has been advised to obtain counsel, and that each party has freely agreed to be bound by the terms and conditions of this Agreement.

 

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Signature Page

 

 

In Witness Whereof , each of the parties hereto, thereunto duly authorized, has executed this Agreement the respective day and year set forth below.

 

 

COMPANY: IIOT-OXYS, Inc.
   
   
Date: February 15, 2019 By: / s/ Clifford L. Emmons                       
          Clifford L. Emmons, CEO

 

 

CONSULTANT:  
   
   
Date: February 15, 2019 By: /s/ Karen McNemar                       
         Karen McNemar

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT A

 

NOTICE OF CONVERSION

 

IIOT-OXYS, Inc.

 

Re: Conversion of Accrued and Unpaid Monthly Fees

 

Gentlemen:

 

The undersigned hereby irrevocably exercises the option to convert $____________________ into shares of common stock of IIOT-OXYS, Inc., in accordance with the terms of this Agreement, and directs that the shares issuable and deliverable upon the conversion be issued in the name of and delivered to the undersigned unless a different name has been indicated below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay any transfer taxes payable with respect thereto.

 

Date:                                  , 201___    
     
     
     
    (Signature)
     
     
COMPLETE FOR REGISTRATION OF SHARES    
     
     
     
(Printed Name)   (Social Security or other identifying number)
     
     
     
(Street Address)    
     
     
     
(City, State, and ZIP Code)    
     
     
     

 

 

 

 

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Exhibit 99.11

 

AMENDED AND RESTATED Consulting Agreement

 

This Amended and Restated Consulting Agreement (the “ Agreement ”), dated effective the 23 rd day of April 2018, (the “ Effective Date ”) is by and between Antony Coufal (hereinafter referred to as the “ Consultant ”), and IIOT-OXYS, Inc. , a Nevada corporation (hereinafter referred to as the “ Company ”).

 

Recitals:

 

A.               On April 23, 2018, the Company entered into the Consulting Agreement with the Consultant (the “ Coufal Agreement ”) pursuant to which Mr. Coufal was appointed as the Company’s Chief Technology Officer.

 

B.                Effective as of April 23, 2018, the Company entered into Amendment No. 1 to the Coufal Agreement (the “ Amendment ”).

 

C.                Pursuant to the terms of the Coufal Agreement, the Company and the Consultant wish to enter into the Agreement, which will supersede the Coufal Agreement and the Amendment.

 

D.               The Company desires to engage the Consultant to provide consulting services for the Company and for the Consultant to serve as the Company’s Chief Technology Officer.

 

E.                The Consultant has significant experience and has agreed to provide the services on the terms and conditions set forth in this Agreement.

 

Now, therefore , in consideration of the faithful performance of the obligations set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Consultant and the Company hereby agree as follows.

 

1.                 Engagement . The Company hereby engages the Consultant, and the Consultant hereby accepts the engagement, to provide certain consulting services for the Company subject to and in compliance with the terms and conditions of this Agreement.

 

2.                 Appointment as Chief Technology Officer . Effective as of April 23, 2018, the Consultant hereby agrees to serve as the Company’s Chief Technology Officer (“ CTO ”).

 

3.                 Term of Service . The Company hereby retains the Consultant for a period of three (3) years beginning as of the Effective Date, which term shall be automatically renewable upon mutual consent of the parties for additional one-year terms as provided herein, unless sooner terminated as provided in Section 8 below (the “ Term ”). The Term and any extension thereof shall be referred to herein as the “ Consulting Period .” Any Services, as defined below, provided hereunder, and any compensation paid prior to the date this Agreement is executed by the parties, but after the Effective Date, shall be included in this Agreement.

 

4.                 Services to Be Provided . During the Consulting Period the Consultant shall provide the following services to the Company:

 

a.                 Consulting Services . The Consultant shall provide such services and have such duties, authorities and responsibilities as are consistent with his position as CTO, and as the Chief Executive Officer (“ CEO ”) and Board of Directors may designate from time to time while the Consultant serves as the CTO of the Company (the “ Services ”). The Consultant will report directly to the CEO and the Board of Directors.

 

b.                 Availability. The Consultant shall perform the Services on an as-needed basis as reasonably requested by the Company from time to time and the Consultant shall make himself reasonably available to perform such Services in a timely manner. The parties shall in good faith develop a schedule of projects to be performed in connection with the Company’s operations with the completion dates for each project.

 

 

 

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c.                 Manner of Services Provided . The Consultant agrees that the Services will be rendered in a “workmanlike manner,” consistent with the manner of performance by other consultants providing the same or similar services as being rendered hereunder.

 

5.                 Devotion of Time . During the Consulting Period, the Consultant shall expend adequate working time to perform the Services; shall devote his best efforts, energy and skill to the services of the Company and the development of the Company’s business operations; and shall not take part in activities detrimental to the best interests of the Company. Nothing in this Agreement shall preclude the Consultant during the term of this Agreement from engaging, directly or indirectly, in any business activity which is not competitive with the then existing business of the Company.

 

6.                 Disclosure of Material Events. The Company shall promptly disclose to the Consultant those events or discoveries which are known and/or reasonably anticipated that, in the judgment of the Company may have a material impact on the Company’s business operations and which may have a material impact on the ability and effectiveness of the Consultant in providing the Services hereunder.

 

7.                 Compensation . In consideration for Services provided by the Consultant to the Company, the Company shall provide the following compensation to the Consultant:

 

a.                 Monthly Fees . The Consultant shall receive a monthly fee of $9,375 (the “ Monthly Fee ”) which shall accrue until, either (i) converted, in whole or in part, into shares of Common Stock of the Company pursuant to Section 7(b) hereof; or (ii) the closing (in one or multiple closings) of a capital raise (either in equity or debt securities) by the Company of at least $500,000 (the “ $500k Capital Raise ”). Upon the occurrence of a $500k Capital Raise, the Consultant shall begin to receive cash $3,125 monthly with the remainder of the Monthly Fee to continue to accrue. Any cash to be paid pursuant to the Monthly Fee shall be payable by the Company no later than 10-days following the end of the month in which the Monthly Fee is earned. Upon the occurrence of a capital raise (either in equity or debt securities) by the Company of at least $2,000,000 (the “ $2MM Capital Raise ”), the Consultant shall begin to receive the Monthly Fee in cash with none accruing. No later than the one-year anniversary of the occurrence of the $2MM Capital Raise, the Company shall pay all accrued and unpaid Monthly Fees to the Consultant; however, the Company may do so prior to the one-year anniversary.

 

b.                 Conversion of Accrued and Unpaid Monthly Fees . At any time, the Consultant shall have the right to convert any accrued and unpaid Monthly Fees into shares of Common Stock of the Company (the “ Conversion Shares ”). The conversion price shall equal 90% multiplied by the Market Price (as defined herein) (representing a discount rate of 10%) (the “ Conversion Price ”). “Market Price” means the average of the Trading Prices (as defined below) for the shares of Common Stock of the Company during the thirty (30) day period ending on the latest complete trading day prior to the Conversion Date. “Trading Price” and “Trading Prices” means, for any security as of any date, the closing trade price of the Company’s Common Stock on the OTC Pink, OTCQB or applicable trading market as reported by a reliable reporting service (“ Reporting Service ”) designated by the Consultant or, if the OTC Pink is not the principal trading market for such security, the trading price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no trading price of such security is available in any of the foregoing manners, the average of the trading prices of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc. “Conversion Date” shall mean the date of receipt by the Company of the completed and executed Notice of Conversion, the form of which is attached hereto as Exhibit A .

 

c.                 Reimbursable Expenses . The Company agrees to reimburse the Consultant for all direct expenses authorized by the Company in writing incurred during the Term of this Agreement. The Consultant shall submit invoices for such expenses and shall provide such supporting information and documentation as the Company may reasonably request in accordance with Company policy and the requirements of the Internal Revenue Code. The Company shall pay such invoices within fifteen (15) days of receipt.

 

d.                 Equity Compensation . Beginning on the Effective Date, the Consultant shall be eligible to participate in the Company’s 2017 Stock Incentive Plan (or any subsequent equity compensation plan adopted and approved by the Company’s Board of Directors) through the award of an aggregate of 1,800,000 shares of the Company’s Common Stock (the “ Shares ”) which shall vest as follows:

 

(i) 300,000 Shares on the first anniversary of the Effective Date;
(ii) 600,000 Shares on the second anniversary of the Effective Date; and
(iii) 900,000 Shares on the third anniversary of the Effective Date.

 

 

 

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In the event that the Agreement is terminated by either Party pursuant to the terms of the Agreement, all unvested Shares which have been earned shall vest on a pro-rata basis as of the effective date of the termination of the Agreement and all unearned, unvested Shares shall be terminated. Shares are only earned as long as the Agreement is in effect and no Shares shall be earned after the effective date of the termination of the Agreement.

 

e.                 Acceleration of Vesting . Unless unvested Shares have earlier terminated pursuant to Section 8 of the Agreement, vesting of all unvested Shares shall be accelerated so that all unvested Shares shall become one hundred percent (100%) vested in the Consultant upon a Change of Control. For purposes of this Agreement, the term Change of Control shall mean (i) the sale of all or substantially all of the assets of the Company, (ii) the sale of more than fifty percent (50%) of the outstanding common stock of the Company in a non-public sale, (iii) the dissolution or liquidation of the Company, or (iv) any merger, share exchange, consolidation or other reorganization or business combination of the Company if immediately after such transaction either (A) persons who were directors of the Company immediately prior to such transaction do not constitute at least a majority of the directors of the surviving entity, or (B) persons who hold a majority of the voting capital stock of the surviving entity are not persons who held a majority of the voting capital stock of the Company immediately prior to such transaction.

 

f.                  Vesting Upon Listing . In addition to the acceleration of vesting in the event of a Change of Control, unless unvested Shares have earlier terminated pursuant to Section 8 of the Agreement, vesting of all unvested Shares shall be accelerated so that all unvested Shares shall become one hundred percent (100%) vested in the Consultant upon the listing of the Company's Common Stock on a senior exchange.

 

8.                 Termination and Extension . The Term shall be sooner terminated or further extended under the following circumstances:

 

a.                Termination for Cause . Either party hereto shall be entitled, with or without prior notice, to terminate this Agreement for Cause, in which case no consulting fees or other compensation (other than such fees that have already been earned by the Consultant) shall be payable to the Consultant after such termination. “Cause” means either party’s (i) gross negligence in the performance or non-performance of any material duties hereunder; (ii) commission of any material criminal act or fraud or of any act that affects adversely the reputation of the Company or the Consultant; (iii) habitual neglect of either party’s duties required to perform under this Agreement; (iv) dishonesty; or (v) gross misconduct. Such termination shall not prejudice any other remedy under law or equity of the non-defaulting party and the failure of such party to terminate the Consultant when cause exists shall not constitute the waiver of that party’s right to terminate this Agreement at a later time. Termination under this Section shall be considered “for cause” for purposes of this Agreement.

 

b.                Termination by Mutual Consent . The Agreement may be terminated by mutual consent of the parties hereto.

 

c.                Extension of Term . The initial Term may be further extended with the express authorization of the Company’s Board of Directors and the Consultant. Any extended term may be terminated at any time at the will of the Board of Directors, with or without cause.

 

9.                 Confidential Information . The Consultant recognizes and acknowledges that certain information, including, but not limited to, information pertaining to the financial condition of the Company, its systems, methods of doing business, agreements with customers or suppliers, or other aspects of the business of the Company or which are sufficiently secret to derive economic value from not being disclosed (hereinafter “ Confidential Information ”) may be made available or otherwise come into the possession of the Consultant by reason of this engagement with the Company. Accordingly, the Consultant agrees that no agent, employee, or representative will (either during or after the term of this Agreement) disclose any Confidential Information to any person, firm, corporation, association, or other entity for any reason or purpose whatsoever or make use to its or their personal advantage or to the advantage of any third party, of any Confidential Information, without the prior written consent of the Company. The parties hereto agree that the provisions of this Section shall not apply with respect to any information that the Consultant can document (i) is or becomes (through no improper action or inaction by the Consultant or any affiliate, agent, consultant or employee) generally available to the public, or (ii) was in its possession or known by it without any limitation on use or disclosure prior to the Effective Date. The Consultant shall, upon termination of this engagement, return to the Company, and shall cause his agents, employees, and representatives to return to the Company, all documents which reflect Confidential Information (including copies thereof). Notwithstanding anything heretofore stated in this paragraph, the Consultant’s obligations under this Agreement shall not, after termination of Consultant’s engagement with the Company, apply to information which has become generally available to the public without any action or omission of the Consultant (except that any Confidential Information which is disclosed to any third party by an employee or representative of the Company who is authorized to make such disclosure shall be deemed to remain confidential and protectable under this provision).

 

 

 

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10.              Trading Practices . So long as the Consultant is in possession of any material non-public information of the Company, the Consultant shall not, directly or indirectly engage in the purchase or sale the common stock of the Company. During the Term of this Agreement, and for a period of one year after the termination of this Agreement, the Consultant shall not, directly or indirectly, engage in any short selling activities of the common stock of the Company.

 

11.              Independent Contractor . The Consultant agrees that in performing this Agreement, it is acting as an independent contractor and not as an employee, representative, or agent of the Company and shall provide all facilities and equipment necessary to fulfill its obligations hereunder. As an independent contractor, the Consultant shall make no representation as an agent or employee of the Company, shall have no authority to bind the Company or incur other obligations on behalf of the Company, and shall not be eligible for any benefits which the Company may provide to its employees. Likewise, the Company shall have no authority to bind or incur obligations on behalf of the Consultant. All persons hired or retained by Consultant to perform this Agreement, including, but not limited to, its employees, representatives, and agents, shall be employees or contractors of the Consultant and shall not be construed as employees or agents of the Company in any respect. The Consultant shall be responsible for all taxes, insurance and other costs and payments legally required to be withheld or provided in connection with Consultant’s performance of this Agreement, including without limitation, all withholding taxes, worker’s compensation insurance, and similar costs. The Consultant shall abide by all laws, rules, and regulations pertaining to the Services to be provided hereunder.

 

12.              Miscellaneous Provisions .

 

a.        Notice . All notices required or permitted hereunder shall be in writing and shall be deemed effective: (i) upon personal delivery; (ii) in the case of delivery by mail within the continental United States, on the fourth (4 th ) business day after such notice or other communication shall have been deposited in the mail, postage prepaid, return receipt requested; (iii) when sent by either facsimile or email at the applicable facsimile number or email address set forth below upon confirmation of transmission or receipt of mailing; or (iv) in the case of delivery by internationally recognized overnight delivery service, when received, addressed as follows:

 

If to the Company to:

 

IIOT-OXYS, Inc.

705 Cambridge St.

Cambridge, MA 02141

Attn: Cliff L. Emmons, CEO

 

If to the Consultant, to:

 

Antony Coufal

49 Edgemere Road

Quincy, MA 02169

 

or to such other address or addresses as either party shall designate to the other in writing from time to time by like notice.

 

b.        Attorneys’ Fees . If any legal action or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party or parties will be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or he may be entitled.

 

 

 

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c.        Additional Remedies . The Consultant acknowledges and agrees that, in the event it shall violate any of the restrictions of this Agreement, the Company will be without adequate remedy at law and will therefor be entitled to enforce such restrictions by temporary or permanent injunctive or mandatory relief obtained in an action or may have at law or in equity, and the Consultant hereby consents to the jurisdiction of such court for such purpose, provided that reasonable notice of any proceeding is given, it being understood that such injunction shall be in addition to any remedy which the Company may have at law or otherwise.

 

d.        Entire Agreement; Modification; Waiver . This Agreement constitutes the entire agreement between or among the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties. No supplement, modification, or amendment of this Agreement will be binding unless executed in writing by all the parties or the applicable parties to be bound by such amendment. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision, whether or not similar, nor will any waiver constitute a continuing waiver. No waiver will be binding unless executed in writing by the party making the waiver.

 

e.        Survival of Covenants, Etc. All covenants, representations and warranties made herein shall survive the making of this Agreement and shall continue in full force and effect for a period of two (2) years from the termination date of this Agreement, at the end of which period no claim may be made with respect to any such covenant, representation, or warranty unless such claim shall have been asserted in writing to the indemnifying party during such period.

 

f.        Assignment . This Agreement, as it relates to the engagement of the Consultant, is a personal contract and the rights and interests of the Consultant hereunder may not be sold, transferred, assigned, pledged or hypothecated, without the prior written consent of the Company, which consent may be withheld for any reason.

 

g.        Binding on Successors . This Agreement will be binding on, and will inure to the benefit of, the parties to it and their respective successors, and assigns.

 

h.        Governing Law and Venue . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Massachusetts applicable to contracts made and to be performed in such State, without reference to the choice of law principals thereof, and any and all actions to enforce the provisions of this Agreement shall be brought in a court of competent jurisdiction in the State of Massachusetts and in no other place.

 

i.        Rights Are Cumulative . The rights and remedies granted to the parties hereunder shall be in addition to and cumulative of any other rights or remedies either may have under any document or documents executed in connection herewith or available under applicable law. No delay or failure on the part of a party in the exercise of any power or right shall operate as a waiver thereof nor as an acquiescence in any default nor shall any single or partial exercise of any power or right preclude any other or further exercise thereof or the exercise of any other power or right.

 

j.        Severability . If any provision of this Agreement is held invalid or unenforceable by any court of final jurisdiction, it is the intent of the parties that all other provisions of this Agreement be construed to remain fully valid, enforceable, and binding on the parties.

 

k.        Drafting . This Agreement was drafted with the joint participation of the parties and/or their legal counsel. Any ambiguity contained in this Agreement shall not be construed against any party as the draftsman, but this Agreement shall be construed in accordance with its fair meaning.

 

l.        Headings . The descriptive headings of the various paragraphs or parts of this Agreement are for convenience only and shall not affect the meaning or construction of any of the provisions hereof.

 

m.        Number and Gender . Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, the feminine, or the neuter gender shall include the masculine, feminine, and neuter.

 

 

 

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n.        Counterparts; Facsimile Execution . This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one instrument. Delivery of an executed counterpart of this Agreement by facsimile or email shall be equally as effective as delivery of a manually executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by facsimile or email also shall deliver a manually executed counterpart of this Agreement, but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, or binding effect of this Agreement.

 

o.        Full Knowledge . By their signatures, the parties acknowledge that they have carefully read and fully understand the terms and conditions of this Agreement, that each party has had the benefit of counsel, or has been advised to obtain counsel, and that each party has freely agreed to be bound by the terms and conditions of this Agreement.

 

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Signature Page

 

 

In Witness Whereof , each of the parties hereto, thereunto duly authorized, has executed this Agreement the respective day and year set forth below.

 

Company : IIOT-OXYS, Inc.
   
   
   
Date:  February __, 2019 By: /s/ Cliff L. Emmons
         Cliff L. Emmons, CEO

 

 

 

Consultant :  
   
   
   
Date:  February 28, 2019 By: /s/ Antony Coufal
         Antony Coufal

 

 

 

 

 

 

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EXHIBIT A

 

NOTICE OF CONVERSION

 

IIOT-OXYS, Inc.

 

Re: Conversion of Accrued and Unpaid Monthly Fees

 

Gentlemen:

 

The undersigned hereby irrevocably exercises the option to convert $____________________ into shares of common stock of IIOT-OXYS, Inc., in accordance with the terms of this Agreement, and directs that the shares issuable and deliverable upon the conversion be issued in the name of and delivered to the undersigned unless a different name has been indicated below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay any transfer taxes payable with respect thereto.

 

Date: _____________, 201___

 

     
     
    (Signature)
     
COMPLETE FOR REGISTRATION OF SHARES    
     
     
     
(Printed Name)   (Social Security or other identifying number)
     
     
(Street Address)    
     
     
(City, State, and ZIP Code)    

 

 

 

 

 

 

 

  8  

Exhibit 99.1

 

IIOT-OXYS, Inc. Closes Financing

 

Cambridge, MA – March 12, 2019 - IIOT-OXYS, Inc. (OTCPink: ITOX), IIOT-OXYS, Inc. announced today the first closing of a round of funding consisting of senior secured promissory notes in the aggregate amount of $100,000. The promissory notes have a conversion price of $0.20 and the warrants issued in connection with the promissory notes have an exercise price of $0.30. Details can be found in our 8-K filing.

 

Cliff Emmons, CEO of IIOT-OXYS, Inc. stated, “I am pleased to announce the continued support with respect to our funding needs. This financing provides the company with the flexibility to implement new initiatives as related to sales and marketing and maintain the momentum with current customers. We continue to see unique opportunities for structural health monitoring and industrial applications within various markets, including but not limited to Biotech, Medtech and Pharma.”

 

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

 

About Us
IIOT-OXYS, Inc. uses a variety of sensors to capture and analyze massive amounts of data using Machine Learning and proprietary algorithms to identify discreet patterns and anomalies which can be associated to specific real-world events and used to provide actionable mission critical insights for the Medical/Pharmaceutical, Manufacturing, Agriculture, Defense, and Structural Health, and other industries. IIOT-OXYS, Inc. edge computing open-source hardware and proprietary ML algorithms employ our Minimally-Invasive Load Monitoring (MILM) technology to simply gather data and gain insights to monitor, scope, move from preventive to predictive maintenance, and even optimize development and manufacturing processes. For additional information visit www.oxyscorp.com

 



Forward-Looking Statements

This news release contains forward-looking statements that reflect Management's current views about future events and financial performance. Forward-looking statements often contain words such as ''expects,'' ''anticipates,'' ''intends,'' or ''believes.'' Our forward-looking statements are subject to a number of risks and uncertainties that may cause actual results and events to differ materially from those projected in the forward-looking statements. Risks and uncertainties that could adversely affect us include, without limitation, the loss of major customers, our failure to obtain new contracts, our inability to patent products or processes, our infringement of patents held by others, our inability to finance our business and the other risks and uncertainties that are discussed in our most recent filings with the Securities and Exchange Commission. The forward-looking statements in this news release are made only as of the date of this news release. We undertake no obligation to update our forward-looking statements, whether as a result of new information, future events or otherwise.

 

Investor Relations Contact:
Andrew Barwicki
Phone: 516-662-9461
Email: andrew@barwicki.com