Registration No. 333-__________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CHINA INFRASTRUCTURE
CONSTRUCTION CORP.
(Exact name of registrant as specified in its
charter)
____________________
| Colorado |
8999; 8099 |
84-4901229 |
| (State or other jurisdiction of |
Primary Standard |
(I.R.S. Employer Identification No.) |
| Incorporation or organization) |
Industrial Classification |
|
| |
Code Numbers |
|
____________________
6201 Bonhomme Road, Suite 466S,
Houston, TX 91789
Telephone: (832) 606-7500
(Address, including zip
code and telephone number,
including area code, of registrant’s principal executive offices)
____________________
Dante Picazo
Chief Executive Officer
China Infrastructure Construction Corp.
6201 Bonhomme Road, Suite 466S,
Houston, TX 91789
Telephone: (832) 606-7500
(Name, address, including zip code, and telephone
number,
including area code, of agent for service)
____________________
With a copy to:
Barry J. Miller, Esq.
Barry J. Miller PLLC
2999 Bloomfield Park Drive
West Bloomfield, MI 48323
Telephone: (248) 232-8039
Fax: (248) 246-9524
____________________
Approximate date of commencement of proposed sale to the
public: ______________, 2022
As soon as practicable following the effective
date of this registration statement is declared effective by the Registrant and from time to time thereafter, as determined by the Selling
Stockholders.
If any of the securities being registered on
this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following
box: ☒
If this form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed
pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. ☐
___________________
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act. (check one)
| Large accelerated filer |
☐ |
Accelerated filer |
☐ |
| Non-accelerated filer |
☒ |
Smaller reporting company |
☒ |
| |
|
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 7(a)(2)(B) of the Securities Act. ☐
___________________
____________________
The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
PROSPECTUS
CHINA INFRASTRUCTURE CONSTRUCTION CORP.
__________________ SHARES OF COMMON STOCK
This Prospectus relates to the offer and sale
of up to _______________ shares of the common stock, par value $0.001 per share (“Common Stock”), of China Infrastructure Construction
Corp., a Colorado corporation (the “Shares”), of which ___________ shares are offered by the Company and 1,478,721,758
shares are offered by the Selling Stockholders. The Company will receive the proceeds of sales of the shares that it sells, but none
of the proceeds of the sales of the shares that are sold by the Selling. Of the ______________ shares of Common Stock offered by this
Prospectus, the Company is offering ____________ shares at an aggregate offering price of $5,000,000.
An investment
in Common Stock is speculative and involves a high degree of risk. Therefore, before purchasing Common Stock, investors should carefully
consider the risk factors and other uncertainties described in this Prospectus. See “Risk Factors.”
We are
an “emerging growth company” as defined under the U.S. federal securities laws and, as such, may elect to comply with reduced
public company reporting requirements for this Prospectus and future filings. See “Prospectus Summary – Implications
of Being an Emerging Growth Company.”
The Common Stock is quoted on the OTC Pink tier
of the alternate trading system operated by OTC Markets Group Inc. (“OTC”).
The Company and the Selling Stockholders
will offer their shares at $______ per share (the “Fixed Offering Price”). See “Plan of Distribution”
for further information. The Selling Stockholders may sell any, all or none of their shares and the Company does not know when, in
what amounts or in what manner they may sell their shares.
The Company intends to change its corporate name
to Cannabis Bioscience International Holdings, Inc. and to obtain a new trading symbol reflecting the name change. Doing so will require
the processing of a notice to be filed with the Financial Industry Regulatory Authority (“FINRA”), and no assurance can be
given that FINRA will do so. If FINRA does not process the notice, the Company will not be able to change its corporate name and obtain
a new trading symbol.
The Selling Stockholders and any broker-dealers
or agents involved in selling the Shares may be deemed to be underwriters within the meaning of the Securities Act of 1933, as amended
(the “Securities Act”), in connection with such sales. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the Shares purchased by them may be deemed to be underwriting commissions or discounts under the
Securities Act.
The Selling
Stockholders and any other person participating in the sale of the Shares will be subject to the provisions of the Securities Exchange
Act of 1934 (the “Exchange Act”) and the rules and regulations promulgated thereunder. These rules include, without limitation,
Regulation M, which may limit the timing of purchases and sales of any of the Shares by the Selling Stockholders and any other person.
In addition, Regulation M may restrict the ability of any person engaged in the distribution of the Shares to engage in market-making
activities with respect to the particular shares being distributed, which may affect the marketability of the Shares and the ability
of any person or entity to engage in market-making activities with respect to the Shares.
Once sold
under the registration statement of which this Prospectus forms a part, the Shares will be freely tradeable in the hands of persons other
than our affiliates.
We have
paid and will pay all expenses incurred in registering the shares, whether offered by the Company or the Selling Stockholders, including
legal and accounting fees. See “Plan of Distribution.” For information regarding expenses of registration,
see “Use of Proceeds.”
The Jumpstart
Our Business Startups Act, or the JOBS Act, was enacted in April 2012 to encourage capital formation in the United States and reduce
the regulatory burden on new-public companies that qualify as “emerging growth companies.” We are an “emerging growth
company” within the meaning of the JOBS Act. As an “emerging growth company,” we intend to take advantage of certain
exemptions from various public reporting requirements, including the requirement that our internal control over financial reporting be
audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley
Act, certain requirements related to the disclosure of executive compensation in this Prospectus and our periodic reports and proxy statements,
and the requirement that we hold a non-binding advisory vote on executive compensation and any golden parachute payments. We may take
advantage of these exemptions until we are no longer an “emerging growth company.”
NEITHER THE SECURITIES AND EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _________________,
2022.
Through and including _____________,
2022, (the 25th day after the date of this Prospectus), all dealers effecting transactions in these securities, whether or not participating
in this offering, may be required to deliver a prospectus, in addition to a dealer’s obligation to deliver a prospectus when acting
as an underwriter and with respect to an unsold allotment or subscription.
This Prospectus forms a part of a registration
statement on Form S-1 that we filed with the SEC. Under this registration statement, the Selling Stockholders may, from time to time,
sell their shares, as described in this Prospectus. We will not receive any proceeds from the sale of the Shares by any such Selling
Stockholders. See “Use of Proceeds.”
Neither we nor the Selling Stockholders have
authorized anyone to provide any information or make any representations other than those contained in this Prospectus or any free writing
prospectuses we have prepared. Neither we nor the Selling Stockholders take responsibility for, and can provide no assurance as to the
reliability of, any information that others may give you, other than the information contained in this Prospectus. This Prospectus is
an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information
contained in this Prospectus is current only as of its date, regardless of the time of delivery of this Prospectus or any sale of Common
Stock.
For investors outside the United States: Neither
we nor the Selling Stockholders have taken any action that would permit this offering or possession or distribution of this Prospectus
in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who
come into possession of this Prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares
of Common Stock and the distribution of this Prospectus outside the United States.
PROSPECTUS SUMMARY
This summary highlights information contained
elsewhere in this Prospectus. Because this is only a summary, it does not contain all information that may be important to you. You should
read the entire Prospectus and should consider, among other things, the matters set forth under “Risk Factors,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the notes
thereto appearing elsewhere in this Prospectus before making an investment decision. This Prospectus contains forward-looking statements
and information relating to the Company. See “Cautionary Notes.”
The Company is based in Houston, Texas, and was
established in 2003. For more detailed information respecting its corporate history, see “Description of Business
– History.” The address of our principal executive office is 6201 Bonhomme Road, Suite 466S, Houston, TX 77036, and our
telephone number is (832) 606-7500. Our website is www.chnc-hdh.com. The information contained thereon is not intended to be incorporated
into this Prospectus or the registration statement of which it is a part.
We provide educational and other services to
the cannabis industry (the “Pharmacology University Business”) (see “Description of Business –
Business – Pharmacology University Business”), clinical trial services to Sponsors and CROs(the “Alpha Research
Business”) (see “Description of Business – Business – Alpha Research Business”) and diagnostic
services related to sleep disorders through the Alpha Fertility and Sleep Center (the “AFSC”) (see “Description
of Business – Business – AFSC Business”). “Sponsor” means a person who takes responsibility for and
initiates a clinical investigation of a drug or medical device, including an individual or pharmaceutical company, governmental agency,
academic institution, private organization, or other organization. “CRO” means a person that assumes, as an independent contractor
with a Sponsor, one or more of the obligations of a Sponsor, such as the design of a protocol, selection or monitoring of investigations,
evaluation of reports, and preparation of materials to be submitted to the U.S. Food and Drug Administration (the “FDA”).
Implications of Being an Emerging Growth Company
We are an “emerging growth company”
as defined in the Jumpstart Our Business Startups Act (known as the “JOBS Act”). Under the JOBS Act, we may utilize reduced
reporting requirements that are otherwise applicable to public companies, including delaying auditor attestation of internal control
over financial reporting, providing only two years of audited financial statements and related Management’s Discussion and Analysis
of Financial Condition and Results of Operations in this Prospectus and the reports that we will file with the U.S. Securities and Exchange
Commission (the “SEC”), including reduced executive compensation disclosures.
We are permitted to remain an emerging growth
company for up to five years from the date of the first sale in this offering. However, if certain events occur before the end of that
period, including our becoming a “large accelerated filer,” our annual gross revenue’s exceeding $1.07 billion or our
issuance of more than $1.0 billion of nonconvertible debt in any three-year period, we will cease to be an emerging growth company.
We have elected to take advantage of certain
of the reduced disclosure obligations in this Prospectus and the registration statement of which it is a part and may elect to take advantage
of other reduced reporting requirements in future filings. In particular, in this Prospectus, we have provided only two years of audited
financial statements and have not included all of the information relating to executive compensation that would be required if we were
not an emerging growth company. As a result, the information that we provide to our stockholders may be different from that which might
be received from public reporting companies that are not emerging growth companies. We have irrevocably elected to avail ourselves of
the extended transition period for complying with new or revised accounting standards and therefore, we will be subject to the same new
or revised accounting standards as private companies.
Recent Developments
The COVID-19 pandemic has harmed the Company
Early in 2020, the COVID-19 pandemic resulted
in decreased business activity and restrictions on the conduct of businesses, including mandatory lockdowns. Because of these restrictions,
all our classrooms and public venues were closed and other Pharmacology University Business activities that required face-to-face contacts,
such as its consulting services and franchising and marketing efforts, we and remain sharply reduced or terminated. Among other things,
the Pharmacology University Business closed its seminars in Ecuador and the Dominican Republic; ceased holding classes at the University
of Tadeo in Bogota, Cartagena and Santa Marta, Colombia; and ceased all travel. The business conducted by the Alpha Research Business
has also been adversely affected because several of the clinical studies in which it was participating were deferred, shortened or canceled.
These restrictions have been reduced or eliminated in many jurisdictions, but if the pandemic resurges, they could be reimposed. We have
not been able to resume classroom teaching and seminars, consulting services, franchising and marketing efforts and the Alpha Research
Business has continued to be adversely impacted.
As a result of the pandemic, we experienced substantial
reductions in our revenues and our losses increased in our educational and clinical trial businesses. See “Management’s
Discussion and Analysis of Financial Condition and Results of Operations – Impact of the Covid-19 Pandemic.” In order
to protect our business from disruption from the COVID-19 pandemic and to enable our students to continue to be educated, we created
online courses. We currently have over 100 online videos in English, Spanish, Portuguese, Italian and Arabic. We also commenced the use
of Zoom meetings to hold virtual classes to teach students and be able to respond to their questions in real time. We believe that these
measures have helped us to manage our business prudently during the pandemic; nevertheless, much of our business depends on personal
contacts, and we have not been able to reduce the adverse effects of the pandemic’s reducing or eliminating personal contact.
Risk Factors Summary
Our business is subject to many risks and uncertainties
of which you should be aware before deciding whether to invest in Common Stock, in addition to general business risks. These risks are
more fully described in the section titled “Risk Factors” immediately following this Prospectus Summary. These risks include,
among others, the following:
| · | The
COVID-19 pandemic and the impact of actions to mitigate the COVID-19 pandemic have materially
and adversely impacted and will continue to materially and adversely impact our business,
results of operations and financial condition. In particular, our revenues have decreased
and our losses have increased, in each case materially, since the onset of the pandemic. |
| · | The
Company expects to encounter significant challenges in recovering from the adverse effects
of the Covid-19 pandemic and can give no assurances respecting its success in meeting them. |
| · | The
Company has incurred net losses each year since its inception and may not be able to achieve
profitability. It incurred net losses of $159,308 and $541,152 for the fiscal years ended
May 31, 2021, and May 31, 2020, respectively, and $630,150 for the nine months ended February
28, 2022. Its accumulated deficit for the fiscal years ended May 31, 2022, and May 31, 2021,
were $2,764,985 and $2,605,677, respectively, and was $3,395,145 as of February 28, 2022. |
| · | The
Alpha Research Business is conducted in a highly competitive industry and may not be able
to compete successfully with its current or future competitors. |
| · | Both
the Pharmacology University Business and the Alpha Research Business are subject to a wide
variety of complex, evolving, and, with respect to the Pharmacology University Business,
sometimes inconsistent and ambiguous laws and regulations that may adversely impact their
operations and could cause the Company to incur significant liabilities including fines and
criminal penalties, which could have a material adverse effect on its business, results of
operations, and financial condition. |
| · | The
Alpha Research Business is conducted in a highly competitive industry and may not be able
to compete successfully with its current or future competitors. |
THE
OFFERING
| Amount of Offering by us: |
|
$5,000,000 |
| |
|
|
| Offering Price per Share: |
|
The shares offered by the Company will be sold at a the Fixed Offering Price of $_______
per share for the duration of the offering (the “Fixed Offering Price”). The Selling Stockholders may offer their shares in
a number of different ways and at varying prices. See “Plan of Distribution.” |
| |
|
|
| Shares of Common Stock offered by us: |
|
____________ shares |
| |
|
|
Shares
of Common Stock offered by the Selling Stockholders:
|
|
1,478,721,758 shares |
| |
|
|
Shares
of Common Stock outstanding prior to the Offering:
|
|
___________ shares |
| |
|
|
Shares
of Common Stock outstanding after the Offering:
|
|
___________ shares |
| |
|
|
| |
|
The number of shares of Common Stock to be outstanding after the Offering is based on _____________
shares of Common Stock outstanding as of __________ ___, 2022. |
| |
|
|
| Voting rights: |
|
Each share of Common Stock and Series A Preferred is entitled to one vote per share. The Series B Preferred
has 60% of the voting power in the Company and all of the outstanding shares are held by the Company’s chief executive officer,
who is also a director. By virtue of his holdings of Series B Preferred, he has power to control the outcome of all matters submitted
to stockholders for approval, including the election of directors and the approval of any change-of-control transaction. See “Description
of Capital Stock.” |
| |
|
|
| Use of Proceeds: |
|
The proceeds that we receive from sales of the shares offered by the Company will be used for the purposes
set forth under “Use of Proceeds.”. We will not receive any proceeds from the sale of the Shares offered
by the Selling Stockholders. |
| |
|
|
| Trading symbol: |
|
CHNC |
| |
|
|
| Risk Factors: |
|
An investment in Common Stock is highly speculative and involves a high degree of risk for the reasons
set forth in “Risk Factors” and elsewhere in this Prospectus. |
| |
|
|
| Fees and Expenses: |
|
We will pay all expenses incident to the registration of the shares offered by this Prospectus, except
for sales commissions and other expenses of the Selling Stockholders. |
RISK FACTORS
An investment in
Common Stock involves a high degree of risk. Prospective investors should carefully consider the risks described below and all of the
other information contained in this Prospectus, including the Company’s consolidated financial statements and the related notes
and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” before deciding whether
to invest in Common Stock. If any of the events described below occur, the Company’s business, business prospects, cash flow, results
of operations or financial condition could be materially and adversely harmed. In these events, the trading price of the Common Stock
could decline, and investors might lose all or part of their investments. Investors should read the section entitled “Forward-Looking Statements” for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements
in the context of this Prospectus.
The following is a discussion of the risk
factors that the Company believes are currently material. These risks and uncertainties are not the only ones facing the Company and,
in addition to general business risks, there may be other matters of which the Company is not aware or that it currently considers immaterial.
All of these could adversely affect the Company’s business, business prospects, cash flow, results of operations or financial condition.
Business-Related Risks
The COVID-19 pandemic
and the efforts to mitigate its impact may have an adverse effect on the Company’s business, liquidity, results of operations,
financial condition and price of its securities.
The Covid-19 pandemic has materially and adversely
impacted the Company and its results of operations, particularly as a result of limitations on the ability of the Pharmacology University
Business to conduct classes and other face-to-face activities due to lockdowns. Public health authorities and governments at local, national
and international levels have from time to time announced various measures of varying intensity to respond to this pandemic. Some measures
that have directly or indirectly impacted the Company’s business include voluntary or mandatory quarantines and business closures,
restrictions on travel and limiting gatherings of people in public places.
For detailed information respecting the impact
of the pandemic on the Company’s financial results, see “Management’s Discussion and Analysis of Financial
Condition and Results of Operations – Impact of the Covid-19 Pandemic.”
Although many of the measures that were introduced
to combat the COVID-19 pandemic have been relaxed, and in some cases terminated, the Company does not know when it will be able to resume
its normal operations, particularly in the classroom, franchising and consulting activities of the Pharmacology University Business.
However, we expect that returning to normal operations will require time, will involve substantial costs and will involve uncertainties,
including (i) whether the pandemic will continue to abate, (ii) what measures governments will take if the pandemic intensifies and (iii)
the ability of our customers and suppliers to recover from the effects of the pandemic.
To the extent the pandemic has and may continue
to affect the Company’s business and financial results adversely, it may also have the effect of heightening many of the other
risks to which the Company is subject, whether or not described under “Risk Factors.” To the extent that the pandemic does
not continue to abate or intensifies, the Company’s ability to execute its business plan on a timely basis or at all may be materially
impeded.
We have a limited operating history, making
it difficult to forecast our revenue and evaluate our business and prospects.
We have a limited operating history and as a
result, our ability to forecast our future results of operations and plan for growth is limited and subject to many uncertainties. We
have encountered and expect to continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly evolving
industries, such as the risks and uncertainties described herein. Accordingly, we may be unable to prepare accurate internal financial
forecasts or replace anticipated revenue that we do not receive as a result of delays arising from these factors, and our results of
operations in future reporting periods may be below the expectations of investors. If we do not address these risks successfully, our
results of operations could differ materially from our estimates and forecasts or the expectations of investors, causing our business
to suffer and the market price of the Common Stock to decline.
We
have a history of net losses, we anticipate increasing operating expenses in the future, and we may not be able to achieve and, if achieved,
maintain profitability.
We have incurred significant net losses each
year since our inception (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations”).
We expect to continue to incur net losses for the foreseeable future and we may not achieve or maintain profitability in the future.
It is difficult for us to predict our future results of operations or the limits of our market opportunity. We expect our operating expenses
to significantly increase over the next several years as we hire additional personnel, particularly in sales and marketing, and expand
our operations, both domestically and internationally. We may also selectively pursue acquisitions. In addition, because we will become
subject to the reporting and other requirements of the Exchange Act as a result of the effectiveness of the registration statement of
which this Prospectus is a part, we will incur additional significant legal, accounting, and other expenses that we did not incur previously.
If our revenue does not increase to offset the expected increases in our operating expenses, we will not become profitable. Our growth
could be impeded for many reasons, including, but not limited to, those set forth under “Risk Factors.” Our failure to sustain
consistent profitability could cause the market price of the Common Stock to decline.
The Company requires substantial additional
capital. If the Company cannot raise capital, it may have to curtail its operations or it could fail.
The Company requires substantial additional capital
through public or private debt or equity financings in order to continue operating, as well as to fund its operating losses, increase
its sales and marketing capacity, take advantage of opportunities for internal expansion or acquisitions, hire, train and retain employees,
develop and complete existing services and new services and products and respond to economic and competitive pressures. The Company needs
$5,000,000 in order to execute its business plan and meet its other corporate expenses, some or all of which may be provided from the
sale of the Shares. If it cannot raise such capital, it may have to alter its business plan or curtail its operations, or it could fail.
The financial condition of the Company presents a material risk to investors and may make it difficult to attract additional capital
or adversely affect the terms on which the Company can obtain it. For further information, see “Management’s
Discussion and Analysis of Financial Condition and Results of Operations – General Statement of Business – Going Concern”
and “– Liquidity and Capital Resources.”
The Company has received no commitment for financing
from investors or banks and no assurance can be given that any such commitment will be forthcoming or, if so, in what amount and on what
terms.
Management has concluded that the foregoing
risk factors raise substantial doubt about our ability to continue as a going concern and our independent registered public accounting
firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited consolidated
financial statements included in this Prospectus.
The consolidated financial statements contained
in the Prospectus were prepared on the assumption that we will continue as a going concern and accordingly, the accompanying financial
statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. We do not have
adequate funds available, and the Offering may not provide sufficient proceeds to fund our anticipated expenses without obtaining significant
additional financing, which raises substantial doubt about our ability to continue as a going concern. The perception that we may not
be able to continue as a going concern may materially limit our ability to raise additional funds through the issuance of new debt or
equity securities or otherwise and no assurance can be given that sufficient funding will be available when needed to allow us to continue
as a going concern. This perception may also make it more difficult to operate our business due to concerns about our ability to meet
our contractual obligations. Our ability to continue as a going concern is contingent upon, among other factors, our ability to sell
shares of Common Stock, including those that we are offering by this Prospectus, and obtaining additional capital. We cannot provide
any assurance that we will be able to raise additional capital. If we are unable to secure additional capital, we may be required to
curtail our operations and take measures to reduce costs in order to conserve cash in amounts sufficient to sustain operations and meet
our obligations. These measures could cause significant delays in the realization of our business plan. It is not presently possible
for us to predict the potential success of our business plan. The revenue and income potential of our proposed businesses and operations
are currently unpredictable. If we cannot operate as a viable entity, you may lose some or all of your investment.
In
addition, the report of our independent registered public accounting firm with respect to our consolidated financial statements appearing
elsewhere in this Prospectus contains an explanatory paragraph stating that the Company had negative working capital at May 31, 2021,
had incurred recurring losses and recurring negative cash flow from operating activities, and had an accumulated deficit, raising substantial
doubt about its ability to continue as a going concern. For information about Management’s evaluation of and plans regarding these
matters, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” and Note 3 to its audited consolidated financial statements.
We May be Affected by Inflation.
Inflation rates have increased and
may continue to rise. Companies from which we purchase goods and services may raise their prices and we may be unable to pass these increases
on to our customers. This could adversely affect our business, including our competitive position, market share, revenues and operating
income.
We May be Affected by Increasing
Interest Rates.
Rising interest rates may reduce our
access ability to borrow, which may adversely affect our business plans and growth, and will increase the cost of our borrowings, which
would reduce our earnings.
Because the Pharmacology University Business
deals with persons that operate in the cannabis industry, it faces unique, unpredictable and evolving risks.
Although the Company does not sell cannabis,
risks related to the cannabis industry that may adversely affect its customer and potential customers may, in turn, adversely affect
demand for the services and products offered by the Pharmacology University Business. Specific risks faced by companies operating in
the cannabis industry include the following:
Cannabis is illegal
under federal law.
Cannabis is illegal under
federal law, as is growing, cultivating, selling or possessing it for any purpose or assisting or conspiring with those who do so. Additionally,
it is unlawful to knowingly open, lease, rent, use, or maintain any place, whether permanently or temporarily, for the purpose of manufacturing,
distributing, or using cannabis. Even in states in which the use of cannabis has been legalized, its use remains a violation of federal
law, because these federal laws preempt state laws. Strict enforcement of these federal laws would likely result in clients’ inability
to operate, which could adversely affect demand for the Company’s services.
Uncertainties exist
respecting enforcement.
Although it appears that
cannabis prosecutions are not a priority for the U.S. Department of Justice (the “DOJ”), there can be no assurance as to
whether, and if so, to what extent, the federal government will enforce such laws in the future.
In 2014, the United States
Congress passed a bill prohibiting the use of federal funds and resources allocated under the bill to prevent states from implementing
their medical cannabis laws, but did not contain federal protections for medical cannabis patients and producers. Moreover, despite the
provisions of this bill, the DOJ maintains that it can prosecute violations of the federal cannabis laws. However, the Ninth Circuit
Court of Appeals and other courts have construed the bill as meaning that the DOJ cannot prosecute medical cannabis operators that comply
strictly with state medical cannabis laws. These provisions, which applied only to the fiscal year to which the bill related, were renewed
on December 20, 2019, effective through September 30, 2020, but have not been renewed in any of the bills thus far adopted that relate
to the budget for the fiscal year ending September 30, 2021. On May 28, 2021, the Marijuana Opportunity, Reinvestment and Expungement
(MORE) Act was introduced in the House of Representatives and was passed on April 1, 2022. If passed by the Senate and signed by the
president, this legislation would end cannabis prohibition by the federal government. The House of Representatives previously passed
prior versions of the MORE Act, but it has never advanced in the Senate. No assurance can be given that the More Act or any other bill
affecting federal decriminalization of cannabis will be adopted.
The Company could
become subject to racketeering laws.
While the Company does not
grow, handle, process or sell cannabis or products derived from it, its receipt of money from clients that do so exposes it to risks
related to the Racketeer Influenced Corrupt Organizations Act (“RICO”). RICO is a federal statute providing civil and criminal
penalties for acts performed as part of an ongoing criminal organization. Under RICO, it is unlawful for any person who has received
income derived from a pattern of racketeering activity (which includes most felonious violations of the federal laws relating to cannabis)
to use or invest any of that income in the acquisition of any interest, or the establishment or operation of, any enterprise which is
engaged in interstate commerce. RICO also authorizes private parties whose properties or businesses are harmed by such patterns of racketeering
activity to initiate civil actions. A violation of RICO could result in fines, penalties, administrative sanctions, convictions or settlements
arising from civil or criminal proceedings, seizure of assets, disgorgement of profits, cessation of business activities or divestiture.
Banking regulations
could limit access to banking services and expose the Company to risk.
Receipt of payments from
clients engaged in the cannabis business could subject the Company to the consequences of federal laws and regulations relating to money
laundering, financial record keeping and proceeds of crime, including the Bank Secrecy Act, as amended by the “Patriot Act.”
Since the Company may receive money from persons whose activities are illegal, many banks and other financial institutions could be concerned
that their receipt of these funds from the Company could violate federal statutes such as those relating to money laundering, unlicensed
money remittances and the Bank Secrecy Act. As a result, banks may refuse to provide services to the Company. Such refusal could make
it difficult for the Company to operate. Additionally, some courts have denied cannabis-related businesses bankruptcy protection, thus,
making it difficult for lenders to recoup their investments, which may make it more difficult for the Company to raise capital through
loans. While the Company has not encountered difficulty in obtaining banking services, no assurance can be given that it will be able
to do so.
Since 2014, the DOJ has
de-prioritized enforcement of the Bank Secrecy Act against financial institutions and cannabis-related businesses which utilize them.
If such enforcement were to increase, it might become more difficult for the Company and its clients and potential clients to access
the U.S. banking systems and conduct financial transactions, which could adversely affect the Company’s operations.
Dividends and distributions
could be prevented if receipt of payments from clients is deemed to be proceeds of crime.
While the Company has no
intention to declare or pay dividends in the foreseeable future, if any of its revenues were found to have resulted from violations of
money laundering laws or otherwise the proceeds of crime, the Company might determine to or be required to suspend the declaration declaring
or payment of dividends.
Further legislative
developments beneficial to the Company’s operations are not assured.
The Pharmacology University
Business involves providing services to persons who may be directly or indirectly engaged in the cultivation, distribution, manufacture,
storage, transportation or sale of cannabis and cannabis products. Its success depends on the continued development of the cannabis industry.
Such development is dependent upon continued legislative and regulatory legalization of cannabis at the state level and either legalization
at the federal level or a continued “hands-off” approach by federal enforcement agencies. However, regulatory developments
beneficial to the industry cannot be assured. While there may be ample public support for legislative action, other factors, such as
the willingness of legislative bodies to act, election results, scientific findings or intangible events, could slow or halt progressive
legislation relating to cannabis and or reduce the current tolerance for the use of cannabis, which could adversely affect the demand
for the Company’s services.
The House of Representatives,
in its most recent term, passed bills that would decriminalize cannabis, remove it from the list of scheduled substances under the Controlled
Substances Act, eliminate criminal penalties for individuals who manufacture, distribute, or possess cannabis, and prohibit a federal
banking regulator from penalizing a depository institution for providing banking services to legitimate cannabis- or hemp-related businesses
or ordering a depository institution to terminate a customer account unless (i) the agency has a valid reason for doing so, and (ii)
that reason is not based solely on reputation risk. Neither of these bills became law because the Senate did not pass them. None of these
bills was adopted by Congress. No assurance can be given that any similar bill will be adopted by the present or any future Congress.
Changes in legislation
or clients’ violations of law could adversely affect the Company.
The voters or legislatures
of states in which cannabis has been legalized could repeal or amend these laws, which could adversely affect the demand for the Company’s
services. In addition, changes to and interpretations of laws and regulations could detrimentally affect its clients and, in turn, result
in a material adverse effect on its operations. Violations of these laws, or allegations of such violations, could disrupt our clients’
business, thereby adversely affecting the Company.
Changes
in government regulation could affect the Alpha Research Business.
Governmental
agencies worldwide, including in the United States, strictly regulate the drug development process. The Alpha Research Business is subject
to regulation and its activities involve providing services helping pharmaceutical and biotechnology companies and CROs that are subject
to regulation. Changes in regulations, especially those that affect clinical trials, could adversely affect demand for our services.
Also, if government efforts to contain drug costs or changes in the practices of health insurers impact pharmaceutical and biotechnology
companies’ profits from new drugs, they may spend less, or reduce their growth in spending on research and development, thereby
reducing the market for clinical trials.
Failure
to comply with existing regulations or contractual obligations could result in a loss of revenue or earnings or increased costs.
Failure
on the part of the Alpha Research Business to comply with applicable regulations, whether imposed directly or required to be complied
with by contract, could have adverse effects. If this were to happen, we could be contractually required to repeat the trial at no further
cost to our customer, but at substantial cost to us, or the contract could be terminated; in either case, we could be exposed to a lawsuit
seeking substantial monetary damages.
We may
bear financial losses because most of our clinical trial contracts are fixed price and may be delayed or terminated or reduced in scope
for reasons beyond our control.
Many of
our clinical trials contracts provide for services on a fixed-price or capped fee-for-service basis and they may be terminated or reduced
in scope either immediately or upon notice. Cancellations may occur for a variety of reasons, including the inefficacy of a drug or device;
its failure to meet safety requirements; unexpected or undesired results; insufficient patient enrollment; insufficient investigator
recruitment; a client’s decision to terminate the development of a product or to end a particular study; and our failure to perform
our duties under the contract properly.
The loss,
reduction in scope or delay of a contract or the loss, delay or conclusion of multiple contracts could materially adversely affect our
business, although our contracts often entitle us to receive the costs of winding down terminated projects, as well as all fees earned
by us up to the time of termination.
We may
suffer losses if we underprice our contracts or incur overrun costs.
Since
Alpha Research Institute’s contracts are often structured based on a fixed price or a fee for service with a cap, we would bear
the loss if we misjudge cost estimates. Underpricing or cost overruns could have a material adverse effect on our business, results of
operations, financial condition, and cash flows.
The
potential loss or delay of a contract or multiple contracts could adversely affect our results.
Most of our contracts for clinical trials can
be terminated by our customers upon 30 to 90 days’ notice or immediately in certain circumstances. Our clients may delay, terminate
or reduce the scope of our contracts for a variety of reasons beyond our control, including but not limited to decisions to forego or
terminate a particular clinical trial; lack of available financing, budgetary limits or changing priorities; actions by regulatory authorities;
production problems resulting in shortages of the drug being tested; failure of products being tested to satisfy safety requirements
or efficacy criteria; unexpected or undesired clinical results for products; insufficient patient enrollment in a clinical trial; insufficient
investigator recruitment; shift of business to a competitor or internal resources; product withdrawal following market launch; shut down
of manufacturing facilities; or our failure to comply with the provisions of a contract.
In the event of termination, our contracts often
provide for fees for winding down the project, but these fees may not be sufficient for us to realize the full amount of revenues or
profits anticipated thereunder.
If the Alpha Research Business fails to
perform services in accordance with contractual requirements, regulatory standards and ethical considerations, we could be subject to
significant costs or liability and our reputation could be harmed.
We contract
with Sponsors and CROs in performing clinical trials to assist them in bringing new drugs to market. Clinical trials are complex and
subject to contractual requirements, regulatory standards and ethical considerations. If we fail to perform in accordance with these
requirements, regulatory agencies may take action against us or customers may terminate contracts. Customers may also bring claims against
us for breach of our contractual obligations and patients in the clinical trials and patients taking drugs approved on the basis of those
clinical trials may bring personal injury claims against us for negligence. Any such action could have a material adverse effect on our
results of operations, financial condition and reputation. The occurrence of any of the foregoing could impact our ability to provide
the same level of service to our clients, require us to modify our services or increase our costs, which could materially and adversely
affect our operating results and financial condition.
We are subject to federal and state health
privacy laws and regulations. If we cannot comply or have not fully complied with such laws and regulations, we could face government
enforcement actions, civil penalties, criminal sanctions, or damages, which could harm our reputation and adversely affect our business.
The Health Insurance Portability and Accountability
Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act and their respective implementing regulations
(“collectively, HIPAA”), establishes federal privacy and security standards for the protection of individually identifiable
health information that apply to health plans, healthcare clearinghouses, and healthcare providers that submit certain covered transactions,
or “covered entities.” A subset of these standards also applies to “business associates,” which are persons or
entities that perform certain services for, or on behalf of, a covered entity that involve creating, receiving, maintaining, or transmitting
protected health information.
Some of our customers may be HIPAA-covered entities
and service providers, and in that context, we may function as a business associate under HIPAA. Among other things, this status means
that, for certain activities, we must comply with applicable administrative, technical, and physical safeguards as required by HIPAA,
including stringent data security obligations. Failure to comply with HIPAA can result in significant civil monetary penalties and, in
certain circumstances, criminal penalties with fines or imprisonment.
The HIPAA-covered entities and service providers
that we serve as a business associate may require us to enter into HIPAA-compliant business associate agreements with them. If we were
unable to comply with our obligations as a HIPAA business associate, we could face contractual liability under the applicable business
associate agreement.
In addition, many state laws govern the privacy
and security of health information in certain circumstances, many of which differ from HIPAA. There may also be costs associated with
responding to government investigations regarding alleged violations of these and other laws and regulations, even if there are ultimately
no findings of violations or no penalties imposed. These costs could consume our resources and impact our business. Publicity from alleged
violations could harm our reputation.
If we are unable to meet the requirements of
HIPAA, our business associate agreements or state health privacy laws, we could face contractual liability or civil and criminal liability
under HIPAA, all of which could have an adverse impact on our business and generate negative publicity, which, in turn, could have an
adverse effect on our ability to attract new customers and adversely affect our business condition and prospects.
We may be adversely affected by client
concentration.
We derive the majority of our revenues from a
few customers. If any of them decreases or terminates its relationship with us, our business, results of operations or financial condition
could be materially adversely affected.
Our business could incur liability if a
drug causes harm to a patient. While we are generally indemnified and insured against such risks, we may still suffer financial losses.
We could suffer liability for harm allegedly
caused by a drug or device for which we conduct a clinical trial, either as a result of a lawsuit against the Sponsor or CRO to which
we are joined or an action launched by a regulatory body. While we are generally indemnified for such harm under our agreements with
Sponsors and CROs, we could nonetheless incur financial losses, regulatory penalties or both. Further, the indemnification obligations
of Sponsors and CROS are enforceable by us only if specific facts, which may be difficult to prove or may be subject to dispute, exist.
Any claim could result in potential liability for us if the claim is outside the scope of such indemnification, the Sponsor or CRO does
not comply with its indemnification obligations or our liability exceeds applicable indemnification limits or available insurance coverage.
Further, we do not carry insurance to cover damages for which we are liable. Such a claim could have an adverse impact on our financial
condition and results of operations. Furthermore, the associated negative publicity could have an adverse effect on our business and
reputation.
If we fail to maintain an effective system
of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements
or comply with applicable regulations could be impaired.
The Sarbanes-Oxley Act of 2002 (“SOX”)
requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
We need to develop and refine our disclosure controls and other procedures to ensure that information required to be disclosed by us
in the reports that we will file under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
We are also continuing to improve our internal control over financial reporting. In order to maintain and improve effective disclosure
controls and procedures and internal control over financial reporting, we will need to expend significant resources, including accounting-related
costs and significant management oversight.
Our current controls and any new controls that
we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls and
internal control over financial reporting may be discovered. Any failure to develop or maintain effective controls or any difficulties
encountered in their implementation or improvement could adversely affect our results of operations or cause us to fail to meet our reporting
obligations and result in a restatement of our consolidated financial statements. Failure to implement and maintain effective internal
control over financial reporting could also adversely affect the results of periodic management evaluations and annual independent registered
public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will
eventually be required to include in our periodic reports filed with the SEC. Ineffective disclosure controls and procedures and internal
control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which
could have a negative effect on the trading price of Common Stock. We are not currently required to comply with the SEC rules that implement
Section 404 of SOX and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial
reporting for that purpose. After the registration statement of which this Prospectus forms a part is made effective, we will be required
to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second
annual report on Form 10-K.
Our independent registered public accounting
firm will not be required to attest formally to the effectiveness of our internal control over financial reporting until after we cease
to be an “emerging growth company” as defined in the JOBS Act. At that time, our independent registered public accounting
firm may issue an adverse report if it is not satisfied with the level at which our internal control over financial reporting is documented,
designed or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could harm
our business, results of operations, and financial condition and could cause a decline in the price of Common Stock.
The Company is an “emerging growth
company,” as defined in the Securities Act (an “EGC”), and a “smaller reporting company,” as defined in
Rule 405 promulgated under the Securities Act (an “SRC”) and intends to take advantage of certain exemptions from disclosure
requirements available to it. Doing so could make the Common Stock less attractive to investors and make it more difficult to compare
the performance of the Company with that of other public companies.
As long as the Company is an EGC, it intends
to utilize certain exemptions from reporting requirements that apply to public companies that are not EGCs. Among the reporting requirements
from which the Company is so exempted are the auditor attestation requirements of SOX, certain disclosures relating to executive compensation,
holding a nonbinding advisory vote on executive compensation and stockholder approval of “golden parachute” payments. The
Company may be an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in
which its annual gross revenues exceed $1 billion, (ii) the date that it becomes a “large accelerated filer” as defined in
Rule 12b-2 under the Exchange Act, which would occur if the market value of Common Stock that is held by non-affiliates exceeds $700
million as of the last business day of its most recently completed second fiscal quarter, or (iii) the date on which it has issued
more than $1 billion in nonconvertible debt during the preceding three-year period.
As an SRC, the Company intends to utilize certain
reduced disclosure requirements, including publishing two years of audited financial statements instead of three years, as required for
companies that are not SRCs. The Company will remain an SRC until the last day of the fiscal year in which it had (i) a public float
that exceeded $250 million or (ii) annual revenues of more than $100 million and a public float that exceeded $700 million. To the extent
the Company takes advantage of such reduced disclosure obligations, it may make comparison of its financial statements to those of other
public companies difficult or impossible.
After the Company ceases to be an EGC, it is
expected to incur additional management time and cost to comply with the more stringent reporting requirements applicable to companies
that are accelerated filers or large accelerated filers, including complying with the auditor attestation requirements of Section 404
of SOX.
Changes in existing financial accounting
standards or practices may harm our results of operations.
Changes in existing accounting rules or practices,
including generally accepted accounting principles in the United States (“GAAP”), new accounting pronouncements rules, or
varying interpretations of current accounting pronouncements or practices could harm our results of operations or the manner in which
we conduct our business. Further, such changes could potentially affect our reporting of transactions completed before such changes are
effective. GAAP is subject to interpretation by the Financial Accounting Standards Board, FASB, the SEC and various bodies formed to
promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant
effect on our reported financial results and affect the reporting of transactions completed before the announcement of a change. Any
difficulties in implementing these pronouncements could cause us to fail to meet our financial reporting obligations, which could result
in regulatory discipline and harm investors’ confidence in us.
If our estimates or judgments relating
to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.
Preparing financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements
and related notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under
the circumstances, as provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
The results of these estimates form the basis for making assumptions and judgments affecting our consolidated financial statements, including
those related to revenue recognition, stock-based compensation, the fair value of Common Stock, valuation of strategic investments, periods
of benefit for deferred costs, and uncertain tax positions. Our results of operations may be adversely affected if our assumptions change
or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations
of securities analysts and investors, resulting in a decline in the trading price of Common Stock.
The Company’s business depends substantially
on the continuing efforts of its executive officers, and its business may be severely disrupted if it were to lose the services rendered
by any of them.
The Company’s future success depends substantially
on the continued services of its executive officers. The Company does not maintain key-man life insurance on its executive officers.
If any of these executive officers were unable or unwilling to continue in their present positions, the Company might not be able to
replace them readily, if at all. The loss of any of these officers could cause the Company’s business to be disrupted, and it could
incur additional expenses to recruit and retain new officers.
This risk is increased because the Company has
no employment contracts with its officers and is paying them sporadically and in varying amounts as the Company’s financial condition
permits. Further, their salaries are not commensurate with their contributions and abilities. While none of these officers has indicated
when or whether he would terminate his employment if he continues to be paid on the basis set forth above, the Company believes that
they may not work for it indefinitely without appropriate and regularly paid compensation. If the Company were to lose any of its officers,
its ability to operate would be materially impaired.
The Company’s business depends substantially
on recruiting additional members of management and key personnel and its business could be severely disrupted if it were unable to hire
such personnel or lose their services.
The Company needs to attract, hire and retain
additional managers and key employees in order to implement its business plan. If it were unable to do so or if, after being hired, any
of the members of the Company’s management were lost, it would have to spend a considerable amount of time and resources searching,
recruiting, and integrating their replacements, which would substantially divert management’s attention from and severely disrupt
its business. The Company may face difficulties in attracting and retaining additional management and, if it were to lose any of them,
in attracting and retaining their replacements because it cannot presently pay competitive compensation and its future is uncertain.
Litigation could adversely affect the Company’s
business, financial condition and results of operations.
From time to time, the Company may become subject
to litigation that may result in liability materially adverse to its financial condition or may negatively affect its operating results
if changes to its business operation are required. The cost of defending such litigation could be significant and require the diversion
of its resources. Adverse publicity associated with litigation could negatively affect perceptions of the Company, regardless of whether
the allegations are valid or whether the Company is ultimately found not to be liable. As a result, litigation could adversely affect
the Company’s business, financial condition and results of operations.
Acquisitions, other strategic alliances
and investments could result in operating difficulties, dilution, and other harmful consequences that may adversely impact the Company’s
business and results of operations.
The Company may acquire other businesses and
these transactions could be material to its financial condition and results of operations. The areas where it may encounter risks in
connection with acquisitions include, but are not limited to, the failure to successfully further develop the acquired business, the
implementation or remediation of controls, procedures and policies at the acquired business, the transition of operations, users and
customers onto our existing platforms, and the challenges associated with integrating the acquired business and its employees into the
Company’s organization, as well as retaining employees of the acquired businesses. Failure to address these risks or other problems
encountered in connection with acquisitions successfully could cause the Company to fail to realize the anticipated benefits of such
acquisitions, investments or alliances, incur unanticipated liabilities, and harm its business generally.
Such acquisitions could also result in dilutive
issuances of the Company’s equity securities, the incurrence of debt, contingent liabilities or amortization expenses, impairment
of goodwill and purchased long-lived assets, or restructuring charges, any of which could adversely affect its financial condition, results
of operations and cash flows. Also, the anticipated benefits and synergies of acquisitions may not materialize.
Because our success depends in part on
our ability to expand our operations outside the United States, our business will be susceptible to risks associated with international
operations.
We currently maintain operations and have personnel
outside the United States in Mexico, Peru, Ecuador, Columbia and the Dominican Republic. We plan to expand into Argentina, Chile, Brazil,
Panama and other countries where our activities are lawful, and we intend to expand our international operations. In the fiscal years
ended May 31, 2021, and May 31, 2020, our non-U.S. revenue was 5% and 14% of our total revenue, respectively. We expect to continue to
expand our international operations, but these efforts may not be successful. In addition, conducting international operations subjects
us to new risks, some of which we have not generally faced in the United States or other countries where we currently operate. These
risks include, among other things: lack of familiarity and burdens of complying with foreign laws, legal standards, regulatory requirements
and other barriers, and the risk of penalties to the Company, its management and employees if its practices are deemed to be out of compliance;
unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties, or other trade restrictions;
longer accounts receivable payment cycles and difficulties in collecting accounts receivable; increased financial accounting and reporting
burdens and complexities; difficulties in managing and staffing international operations including the proper classification of independent
contractors and other contingent workers, differing employer/employee relationships, and local employment laws; increased costs involved
with recruiting and retaining an expanded employee population outside the United States through cash- and equity-based incentive programs
and unexpected legal costs and regulatory restrictions in issuing our shares to employees outside the United States; global political
and regulatory changes that may lead to restrictions on immigration and travel for our employees outside the United States; potentially
adverse tax consequences, including the complexities of foreign value added tax (or other tax) systems, and restrictions on the repatriation
of earnings; and permanent establishment risks and complexities in connection with international payroll, tax, and social security requirements
for international employees.
Additionally, operating in international markets
requires significant management attention and financial resources. We cannot be certain that the investments and additional resources
required to establish operations in other countries will produce desired levels of revenue or profitability.
Compliance with laws and regulations applicable
to our global operations also substantially increases our cost of doing business in foreign jurisdictions. We have limited experience
in operating outside the United States, which increases the risk that any operations that we may undertake will not be successful. If
we invest substantial time and resources to expand our international operations and are unable to do so successfully and timely, our
business, results of operations, and financial condition will suffer. We may be unable to keep current with changes in government requirements
as they change from time to time. Failure to comply with these regulations could harm our business. In many countries, it is common for
others to engage in business practices that are prohibited by United States law and regulation or by our policies and procedures.
A significant portion of our
operations is conducted in foreign jurisdictions and is subject to the economic, political, legal and business environments of the countries
in which we do business. Risks associated with such international operations could negatively affect our business, financial condition,
results of operations and cash flows.
We have significant operations outside the United
States and plan to expand them. International operations inherently subject us to a number of risks and uncertainties, including those
arising from compliance with governmental controls, trade restrictions, restrictions on direct investments, quotas, embargoes, import
and export restrictions, tariffs, duties, and regulatory and licensing requirements by domestic or foreign entities, including restrictions
administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury; difficulties in building, staffing and managing
foreign operations (including a geographically dispersed workforce) and maintaining compliance with foreign labor laws; burdens to comply
with, and different levels of protection offered by, multiple and potentially conflicting foreign laws and regulations, including those
relating to environmental, health and safety requirements and intellectual property; changes in laws, regulations, government controls
or enforcement practices with respect to our business and the businesses of our customers; political and social instability, including
crime, civil disturbance, terrorist activities, armed conflicts and natural and other disasters; ongoing instability or changes in a
country’s or region’s regulatory, economic or political conditions; local business and cultural factors that differ from
our standards and practices, including business practices prohibited by the Foreign Corrupt Practices Act and other anti-corruption laws
and regulations; longer payment cycles and increased exposure to counterparty risk; and differing needs of foreign customers.
The international nature of our business subjects
us to potential risks that various taxing authorities may challenge the pricing of our cross-border arrangements and subject us to additional
tax, adversely impacting our effective tax rate and tax liability.
In addition, international transactions may involve
increased financial and legal risks due to differing legal systems and customs. Compliance with these requirements may prohibit the import
or export of certain products and technologies or require us to obtain licenses before importing or exporting certain products or technology.
Our failure to comply with any of these laws, regulations or requirements could result in civil or criminal legal proceedings, monetary
or non-monetary penalties, or both, disruptions to our business, limitations on our ability to import and export products and services,
and damage to our reputation.
While the impact of these factors is difficult
to predict, any of them could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Changes in any of these laws, regulations or requirements, or the political environment in a particular country, may affect our ability
to engage in business transactions in certain markets, including investment, procurement and repatriation of earnings.
We are subject to anti-corruption, anti-bribery,
and similar laws, and non-compliance with them could subject us to criminal penalties or significant fines and harm our business and
reputation.
We are subject to anti-corruption and anti-bribery
and similar laws, such as the Foreign Corrupt Practices Act of 1977 (the “FCPA”), and other anti-corruption, anti-bribery
and anti-money laundering laws in the United States and in the countries in which we conduct activities. They prohibit companies and
their employees and agents from promising, authorizing, making, or offering improper payments or other benefits to government officials
and others in the private sector. As we increase our international operations, our risks under these laws may increase. Anti-corruption
and anti-bribery laws have been enforced vigorously in recent years and interpreted broadly. Noncompliance with these laws could subject
us to investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages,
other civil and criminal penalties or injunctions, adverse media coverage, and other consequences. Any investigations, actions or sanctions
could harm our business, results of operations, and financial condition. Under some of these laws, we may be held liable for the corrupt
or other illegal activities of intermediaries, and our employees, representatives, contractors, partners, and agents, even if we do not
explicitly authorize such activities. We intend to implement an anti-corruption compliance program but cannot assure that all of these
persons will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible. Any violation
of the FCPA, other applicable anti-corruption laws, or anti-money laundering laws could result in whistleblower complaints, adverse media
coverage, investigations, loss of privileges and severe criminal or civil sanctions, any of which could have a materially adverse effect
on our reputation, business, results of operations, and prospects.
Our business is exposed to domestic and
foreign currency fluctuations that could have a material adverse effect on our business, financial condition, results of operations and
cash flows.
Approximately 4.2% of our revenue in the fiscal
year ended May 31, 2022, was from customers outside the United States. When the abatement of the Covid-19 pandemic permits the opening
of classrooms in Latin America, and if we expand our foreign operations as planned, this percentage may increase. Changes in non-U.S.
currencies relative to the U.S. dollar impact our revenues, profits, assets and liabilities. In addition, the weakening or strengthening
of the U.S. dollar may result in significant favorable or unfavorable translation effects when the operating results of our non-U.S.
business activity are translated into U.S. dollars and could cause our results of operations to differ from our expectations and the
expectations of our investors. For our international sales denominated in U.S. dollars, an increase in the value of the U.S. dollar relative
to foreign currencies could make our products and services less competitive in international markets. Alternately, a weakening of the
currencies in which sales are generated relative to those in which costs are denominated would decrease operating profits and cash flow.
Changes in currency exchange rates may also affect the relative prices at which we provide services in foreign markets. In addition,
the impact of currency devaluations in countries experiencing high inflation rates or significant currency exchange fluctuations could
negatively impact our operating results. While we may use financial instruments to mitigate the impact of fluctuations in currency exchange
rates on our cash flows, unhedged exposures would continue to be subject to currency fluctuations.
If we fail to manage our growth effectively,
we may be unable to execute our business plan or maintain high service levels and customer satisfaction.
We hope to attain rapid growth. Doing so will
place significant demands on our management and operational and financial resources. We have established international operations, including
Mexico, Peru, Ecuador, Columbia and the Dominican Republic, and plan to expand into Argentina, Chile, Brazil, Panama and other countries
where its activities are lawful. In addition, our organizational structure will become more complex as we grow, as will our operational,
financial and management controls and reporting systems and procedures. To manage growth in our operations, we will need to continue
to grow and improve our operational, financial, and management controls and reporting systems and procedures. We will require significant
capital expenditures and the allocation of valuable management resources to grow and change in these areas. Our growth will place a significant
strain on our management and may distract management from other important functions. If we cannot manage our growth effectively, our
reputation, as well as our business, results of operations and financial condition, could be harmed.
We may not be able to compete effectively.
While we believe that the market served by the
Pharmacology University Business has few participants, if one or more competitors were to enter this market, we might not be able to
compete effectively for many reasons, including a competitor’s greater financial resources, better services, a more effective sales
organization or a superior website. AFSC, in contrast, provides services in a market that is highly fragmented and has many competitors,
and in which the ability to compete successfully depends on quality of service, the ability to form and maintain professional relationships
and satisfy demanding customers.
Many of our existing competitors have, and some
of our potential competitors could have, substantial competitive advantages such as greater recognition and longer operating histories,
larger sales and marketing budgets and resources, and, especially in the case of the Alpha Research Business and AFSC, established relationships
with customers, greater resources to make acquisitions, lower labor costs and substantially greater financial and other resources. Competitors
with greater financial and operating resources may be able to respond more quickly and effectively than we can to new or changing opportunities,
developments or customer requirements. Conditions relating to the Alpha Research Business and AFSC could also change rapidly and significantly,
potentially adversely, as a result of changes in the laws relating to cannabis, especially at the federal level.
If we do not compete effectively with established
companies as well as new market entrants, our business, results of operations, and financial condition could be harmed. Competitive pressures
could result in price reductions; fewer customers; reduced revenue, gross profit and gross margins; increased net losses; and loss of
market share.
Risks Related to the Common Stock and This
Offering
There are risks, including stock market
volatility, inherent in owning Common Stock.
The market price and volume of the Common Stock
have been, and may continue to be, subject to significant fluctuations and trading in Common Stock has often been sporadic. These fluctuations
may arise from general stock market conditions, the impact of risk factors described herein on our results of operations and financial
position, or a change in opinion in the market regarding our business prospects or other factors, many of which may be outside our control.
We believe that this has and may continue to materially and adversely affect our ability to fund our business through sales of equity
securities and could adversely affect the retentive power of our 2022 Equity Incentive Plan. The lack of an active market for Common
Stock may impair investors’ ability to sell their shares when they wish to sell them or at prices that they consider reasonable,
may reduce the fair market value of their shares and may impair the Company’s ability to raise capital to continue to fund operations
by selling shares and may impair its ability to acquire additional intellectual property assets by using our shares as consideration.
We may change the Fixed Offering Price.
In the event that we are unable to sell the Shares
at the Fixed Offering Price, we may amend the Registration Statement of which this Prospectus is a part to reduce it one or more times.
In any such event, investors who had purchased Shares before the reduction would suffer an immediate and perhaps permanent loss in the
market value of their Shares.
There will be a large number of shares
of Common Stock that will be eligible to be sold in the public markets.
In addition to the _____________ shares of Common Stock that are offered
by this Prospectus, all of which may be sold in the public markets, beginning on August 24, 2023, (i) approximately 900,000,000 shares
of Common Stock are held by persons who are not affiliates of the Company will be permitted to be sold under Rule 144 promulgated by
the SEC under the Securities Act (“Rule 144”) without notice to the SEC in unlimited amounts and without restriction as to
the manner of sale and (ii) approximately 4,000,000,000 shares of Common Stock are held by a person who is an affiliate of the Company
will be permitted to be sold under Rule in limited amounts, subject to notice to the SEC and subject to restriction as to the manner
of sale. In addition, up to 600,000,000 shares of Common Stock that may be issued under the Company's 2022 Equity Incentive Plan may
be sold in the public markets without registration. The sale of these shares or the perception that these shares may be sold in the public
markets may substantially and adversely affect the market price of the Common Stock, with the result that persons who acquire shares
of Common Stock in the Offering may be able to resell them only at substantial losses. For further information concerning shares
that are eligible for future resale, see “Shares Eligible for Future Resale.”
If the Company issues additional equity
or equity-linked securities, investors may incur immediate and substantial dilution in the book value of their shares.
If the Company issues additional shares of Common
Stock (including under stock options or warrants) or securities convertible into or exchangeable or exercisable for shares of Common
Stock, its stockholders, including investors who purchase shares of Common Stock in the Offering, may experience additional dilution.
Any such issuances may result in downward pressure on the price of the Common Stock. No assurance can be given that investors will be
able to sell shares sold pursuant to this Prospectus at a price per share that is equal to or greater than the prices that they pay.
The Company does not intend to pay dividends
for the foreseeable future and investors must rely on increases in the market price of the Common Stock for returns on their investments.
For the foreseeable future, the Company intends
to retain its earnings, if any, to finance the development and expansion of our business, and the Company does not anticipate paying
any cash dividends on the Common Stock. Accordingly, investors must be prepared to rely on sales of their Common Stock after price appreciation
to earn an investment return, but no assurance can be given that the price of the Common Stock will appreciate or if it does, that it
will remain at or rise above the level to which it has appreciated. Any determination to pay dividends in the future will be made at
the discretion of the Company’s board of directors (the “Board”) and will depend on our results of operations, financial
condition, capital needs, contractual restrictions, restrictions imposed by applicable law and other factors the Company’s Board
deems relevant.
Because the Common Stock is subject to
the penny stock rules, it may be more difficult to sell.
The SEC has adopted rules that regulate broker-dealer
practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00
(subject to exceptions that do not apply to the Common Stock). The penny stock rules require a broker-dealer, at least two business days
prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver to the customer a standardized risk disclosure
document containing specified information and to obtain from the customer a signed and date acknowledgment of receipt of that document.
In addition, these rules require that, prior to effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer
must make a special written determination that the penny stock is a suitable investment for the purchaser and receive: (i) the purchaser’s
written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks;
and (iii) a signed and dated copy of a written suitability statement. These requirements may have the effect of reducing the trading
activity in Common Stock, and therefore stockholders may have difficulty selling their shares.
One person has voting control of the company
and may authorize or prevent corporate actions to the detriment of other stockholders.
One person, who is an officer and director of
the Company, through his ownership of Series B Preferred, has voting control of the Company. Accordingly, he has power to determine the
outcome of all matters requiring the approval of the stockholders, including the election of directors and the approval of mergers and
other significant corporate transactions. His interests could conflict with the interests of other stockholders.
CAUTIONARY NOTES
Regarding Forward-Looking Statements
This Prospectus contains forward-looking statements
about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts
contained in this Prospectus, including statements regarding our strategy, future financial condition, future operations, projected costs,
prospects, plans, objectives of management, and expected market growth, are forward-looking statements. In some cases, you can identify
forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,”
“expects,” “plans,” “anticipates,” “could,” “intends,” “target,”
“projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,”
“goal,” “objective,” “seeks,” or “continue” or the negative of these words or other similar
terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Prospectus
include, but are not limited to, statements about the effects of the COVID-19 pandemic on our business and the U.S. and global economies
generally; our expectations regarding our financial performance; our expectations regarding future operating performance; our ability
to attract and retain customers; our ability to compete in our industries; our ability to meet our liquidity needs; our ability to effectively
manage our exposure to fluctuations in foreign currency exchange rates; the increased expenses associated with being a public company;
the size of our addressable markets, market share, and market trends, including our ability to grow our business in the countries we
have identified as near- term priorities; anticipated trends, developments, and challenges in our industry, business, and the highly
competitive markets in which we operate; our ability to anticipate market needs or develop new or enhanced offerings and services to
meet those needs; our ability to manage expansion into international markets and new industries; our ability to comply with laws and
regulations, including laws affecting the cannabis and pharmaceutical industries, that currently apply or may become applicable to our
business both in the United States and internationally; our ability to effectively manage our growth and expand our infrastructure and
maintain our corporate culture; our ability to identify, recruit, and retain skilled personnel, including key members of senior management;
our ability to successfully defend litigation brought against us; our ability to successfully identify, manage, and integrate any existing
and potential acquisitions; our ability to maintain, protect, and enhance our intellectual property; and our intended use of the net
proceeds from this offering.
You should not rely upon forward-looking statements
as predictions of future events. We have based the forward-looking statements in this Prospectus primarily on our current expectations,
estimates, forecasts, and projections about future events and trends that we believe may affect our business, results of operations,
financial condition, and prospects. Although we believe that we have a reasonable basis for each such forward-looking statement, we cannot
guarantee that the future results, activity levels, performance, or events and circumstances reflected in the forward-looking statements
will be achieved. The outcome of the events described or discussed in these forward-looking statements is subject to risks, uncertainties,
and other factors described in the section titled “Risk Factors” and elsewhere in this Prospectus. Moreover, we operate in
a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for
us to predict all of them that could have an impact on the forward-looking statements contained in this Prospectus. The results, events,
and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances
could differ materially from those described in the forward-looking statements.
The forward-looking statements in this Prospectus
relate only to events or circumstances as of the date on which they are made. We undertake no obligation to update any forward-looking
statement in this Prospectus to reflect events or circumstances after the date of this Prospectus or to reflect new information or the
occurrence of unanticipated events, except as required by law. We may not achieve the plans, intentions, or expectations disclosed in
our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements
do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
In addition, statements that “we believe”
and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available
to us as of the date of this Prospectus, and while we believe such information forms a reasonable basis for such statements, such information
may be limited or incomplete, and such statements should not be read to indicate that we have conducted an exhaustive inquiry into, or
review of, all potentially available relevant information. These statements are inherently uncertain, and you should not unduly rely
upon them.
You should read this Prospectus and the documents
referred to in it completely and with the understanding that our actual future results may be materially different from what we expect.
We qualify all forward-looking statements in this Prospectus by these cautionary statements.
Third-Party Information
This Prospectus includes information and estimates
that are based on reports and other publications sources from industry analysts, market research firms and other independent sources
that were generally available to the public and not commissioned by us, in addition to management’s own good-faith estimates and
analyses. We believe that such reports and publications are reliable but have not independently verified them or their underlying data
sources, methodologies or assumptions. They contain information and estimates that are based on estimates, forecasts, projections, market
research, or similar methodologies, and are inherently subject to uncertainties. Actual events or circumstances may differ materially
from events and circumstances reflected in these reports.
Descriptions of Contracts
This Prospectus may contain descriptions of contracts
and instruments to which the Company or its officers and directors are parties or by which it is affected. These contracts and instruments
are exhibits to the Registration Statement of which this Prospectus is a part and are identified in Item 16, Exhibits, Financial Statement
Schedules. Where any such contract or instrument is described in this Prospectus, you are referred to the related exhibit, which
may be found on the SEC’s website, and the description thereof is qualified by such reference.
USE OF PROCEEDS AND BUSINESS
PLAN
This Prospectus relates in part to shares of
Common Stock that may be offered and sold from time to time by the Company and in part to shares being offered and sold by the Selling
Shareholders. We will receive proceeds from sales of the shares that we are offering and none of the proceeds of sales of shares offered
by the Selling Stockholders. See “Plan of Distribution.”
We will realize gross proceeds from the Offering
of $1,250,000 if 25% of the shares offered by us are sold, $2,500,000 if 50% of such shares are sold, $3,750,000 if 75% of such shares
are sold and $5,000,000 if 100% of such shares are sold.
Use of Proceeds
The following table shows how we expect to use
the net proceeds from our sales of the shares in executing our business plan, which is discussed below. Further details as to such use
appear in “Business Plan,” below. The table does not represent the order of priority in which such proceeds may be applied.
Estimated
Use of Proceeds for 25%, 50%, 75%, and 100% of Offering
| | |
25% of
Offering | | |
50% of
Offering | | |
75% of
Offering | | |
100%
of Offering | |
| | |
Dollar
Amount | | |
|
% of Gross Proceeds |
|
|
|
Dollar Amount | | |
|
% of Gross Proceeds | | |
Dollar
Amount | | |
% of
Gross Proceeds | | |
Dollar
Amount | | |
% of
Gross Proceeds | |
| Alpha Research Institute | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Increase employees from
6 to 35 | |
$ | 131,250 | | |
| 10.5% | | |
$ | 262,500 | | |
| 10.5% | | |
$ | 393,750 | | |
| 10.5% | | |
$ | 525,000 | | |
| 10.5% | |
| Obtain new contacts with health professionals,
sponsors and CROs | |
$ | 7,500 | | |
| 0.6% | | |
$ | 15,000 | | |
| 0.6% | | |
$ | 22,500 | | |
| 0.6% | | |
$ | 30,000 | | |
| 0.6% | |
| Contract with at least ten new principal
investigators specializing in various areas of medicine | |
$ | 25,000 | | |
| 2.0% | | |
$ | 50,000 | | |
| 2.0% | | |
$ | 75,000 | | |
| 2.0% | | |
$ | 100,000 | | |
| 2.0% | |
| Conduct at least
six seminars with the expectation of generating relationships | |
$ | 5,000 | | |
| 0.4% | | |
$ | 10,000 | | |
| 0.4% | | |
$ | 15,000 | | |
| 0.4% | | |
$ | 20,000 | | |
| 0.4% | |
| Total Alpha Research Institute | |
$ | 168,750 | | |
| 13.5% | | |
$ | 337,500 | | |
| 13.5% | | |
$ | 506,250 | | |
| 13.5% | | |
$ | 675,000 | | |
| 13.5% | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Pharmacology
University | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Increase the number of annual paid
subscriptions to Cannabis World Journals to at least 5,000 | |
$ | 12,500 | | |
| 1.0% | | |
$ | 25,000 | | |
| 1.0% | | |
$ | 37,500 | | |
| 1.0% | | |
$ | 50,000 | | |
| 1.0% | |
| Sell educational materials to third
parties | |
$ | 25,000 | | |
| 2.0% | | |
$ | 50,000 | | |
| 2.0% | | |
$ | 75,000 | | |
| 2.0% | | |
$ | 100,000 | | |
| 2.0% | |
| Resume and increase classroom and
seminar teaching | |
$ | 62,500 | | |
| 5.0% | | |
$ | 125,000 | | |
| 5.0% | | |
$ | 187,500 | | |
| 5.0% | | |
$ | 250,000 | | |
| 5.0% | |
| Add additional staff for in-house
sleep studies | |
$ | 87,500 | | |
| 7.0% | | |
$ | 175,000 | | |
| 7.0% | | |
$ | 262,500 | | |
| 7.0% | | |
$ | 350,000 | | |
| 7.0% | |
| Increase our
portfolio of cannabis-related educational material | |
$ | 50,000 | | |
| 4.0% | | |
$ | 100,000 | | |
| 4.0% | | |
$ | 150,000 | | |
| 4.0% | | |
$ | 200,000 | | |
| 4.0% | |
| Total Pharmacology University | |
$ | 187,500 | | |
| 15.0% | | |
$ | 375,000 | | |
| 15.0% | | |
$ | 562,500 | | |
| 15.0% | | |
$ | 750,000 | | |
| 15.0% | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Alpha Fertility and Sleep
Center | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Expand to be
capable of performing sleep tests for 20 patients per month and open a second sleep center | |
$ | 200,000 | | |
| 16.0% | | |
$ | 400,000 | | |
| 16.0% | | |
$ | 600,000 | | |
| 16.0% | | |
$ | 800,000 | | |
| 16.0% | |
| Total Alpha Fertility and Sleep Center | |
$ | 200,000 | | |
| 16.0% | | |
$ | 400,000 | | |
| 16.0% | | |
$ | 600,000 | | |
| 16.0% | | |
$ | 800,000 | | |
| 16.0% | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Corporate | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Operating costs | |
$ | 243,750 | | |
| 19.5% | | |
$ | 487,500 | | |
| 19.5% | | |
$ | 731,250 | | |
| 19.5% | | |
$ | 975,000 | | |
| 19.5% | |
| Overhead | |
$ | 150,000 | | |
| 12.0% | | |
$ | 300,000 | | |
| 12.0% | | |
$ | 450,000 | | |
| 12.0% | | |
$ | 600,000 | | |
| 12.0% | |
| Legal and accounting | |
$ | 50,000 | | |
| 4.0% | | |
$ | 100,000 | | |
| 4.0% | | |
$ | 150,000 | | |
| 4.0% | | |
$ | 200,000 | | |
| 4.0% | |
| Operating capital | |
$ | 200,000 | | |
| 16.0% | | |
$ | 400,000 | | |
| 16.0% | | |
$ | 600,000 | | |
| 16.0% | | |
$ | 800,000 | | |
| 16.0% | |
| Total Corporate | |
$ | 643,750 | | |
| 51.5% | | |
$ | 1,287,500 | | |
| 51.5% | | |
$ | 1,931,250 | | |
| 51.5% | | |
$ | 2,575,000 | | |
| 51.5% | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total Use of Proceeds | |
$ | 1,250,000 | | |
| 100% | | |
$ | 2,500,000 | | |
| 100% | | |
$ | 3,750,000 | | |
| 100% | | |
$ | 5,000,000 | | |
| 100% | |
The foregoing represents our best estimate as
to how the proceeds of the shares offered by the Company will be expended. We reserve the right to redirect any portion of the funds
either among the items referred to above or such other projects as our management considers to be in our best interest.
Business Plan
Background
Since the year ended on
May 31, 2020, the Company has striven to grow and improve in the following ways:
Alpha Research Institute
Alpha Research Institute
has devoted time and attention to bettering interinstitutional relationships with the pharmaceutical industry; improving operational
values; creating and re-establishing alliances with clinical study contractors; understanding the needs of its staff and its patients,
improving documentation and internal and external communications, offering transportation to patients and increasing participation in
clinical trials by addressing potential patients’ Covid-related concerns.
Alpha Fertility and Sleep
Center
The mission of AFSC, which
opened in June 2022, is to provide superior care in sleep medicine and fertility and, in doing so, to address the concerns of each patient
and his referring physician’s concerns effectively and satisfactorily.
Pharmacology University
As a result of the Covid-19
pandemic, which made classroom education impossible, Pharmacology University has focused on the production of educational materials for
sale on online platforms (including those operated by Amazon, Zinio, Apple, Walmart/Kobo, Barnes & Noble and Google Books), which
maintaining its relationships with academic venues where it expects to resume classroom teaching when the pandemic abates. It also focuses
on entering into subscription and commercial agreements with universities and e-commerce platforms.
We have published 50 cannabis-related
eBooks in five languages, have produced videos to offer online and have recorded over 13,000 minutes of audio in 5 languages. We have
also engaged artificial intelligence services to generate translations of these materials in up to 100 additional languages; while this
activity has resulted in increased expenses while producing minimal revenue and no profit, we believe that it will become profitable
and be a significant segment of our business.
Several of our online publications
have been unified into a single magazine, Cannabis World Journals, which began publication in five languages, beginning in the
third and fourth quarters of the year ending May 31, 2022.
Operating Goals
The Company has established
the following principal goals, for the attainment of which it expects to expend approximately $2,425,000 for the period ending May 31,
2024:
Alpha Research Institute
The Company’s principal
goals for Alpha Research Institute are:
| |
· |
To increase its revenue from clinical trials from $761,737 in the year ended May 31, 2021, to $1,500,000.
To achieve this goal, the number of Alpha Research Institute’s employees will be increased from its present 6 to approximately
35, comprising approximately 25 employees in the Houston office and approximately 10 patient recruiters, for which the Company will
need to spend approximately $525,000. |
| |
|
|
| |
· |
To obtain new contacts with health professionals, sponsors and CROs in order to obtain new and diverse
clinical trials at an approximate cost of $30,000. |
| |
|
|
| |
· |
To contract with at least ten new principal investigators, specializing in various areas of medicine,
including cancer, PTSD, rare diseases and glaucoma; and organize six training programs on clinical research for health professionals
at an approximate cost of $100,000. |
| |
|
|
| |
· |
To conduct at least six seminars in Houston with the expectation of generating relationships with personnel
in the U.S. pharmaceutical industry in charge of finding new clinical trials at the cost of approximately $20,000. |
The total cost of these
goals is approximately $675,000.
Pharmacology University
The Company’s principal
goals for Pharmacology University are:
| |
· |
To resume and increase classroom and seminar teaching, which involved approximately four classrooms
in two countries, generating revenues of approximately $38,440, to 20 classrooms in 5 countries, generating revenues of $1,000,000,
at an approximate cost of $250,000. |
| |
|
|
| |
· |
To increase the number of annual paid subscriptions to Cannabis World Journals to at least 5,000, which
will require better positioning and improving traffic on the internet and social media by using search engine optimization (SEO) and
search engine marketing (SEM) strategists at an approximate cost of $50,000. |
| |
|
|
| |
· |
To increase our portfolio of cannabis-related educational material from 50 eBooks in five languages,
154 online videos in five languages, and over 13,000 minutes of audio in 5 languages to 150 eBooks in five languages, 300 online videos
in more than 100 languages, and over 40,000 minutes of audio in five languages, generating revenues of $1,500,000 at an approximate
cost of $200,000. |
| |
|
|
| |
· |
To sell the above educational materials to third parties, who would resell them worldwide on their
platforms, we will need to increase our sales staff and supervisors. We believe that this activity could generate revenues of $500,000
at an approximate cost of $100,000. |
The total cost of these
goals is approximately $600,000.
Alpha Fertility and Sleep
Center
The Company’s principal
goals for AFSC are:
| |
· |
To expand the existing facility to be capable of performing sleep tests for 20 patients per month,
with a view to opening a second facility having a larger capacity and a complete laboratory, generating revenues of $2,500,000 at an
approximate cost of $800,000. |
| |
|
|
| |
· |
Add additional staff for in-house sleep studies at an approximate cost of $350,000. |
The total cost of these
goals is approximately $1,150,000.
The Company intends to devote
its manpower and capital resources to execute its business plan, which it believes will enable it to become profitable. No assurance
can be given, however, that the Company will be able to obtain any of the goals set forth above, in whole or in part.
Even if the Company sells all of the shares of
Common Stock offered by it under this Prospectus, it will need to obtain additional financing in order to attain the above goals. For
further information regarding the Company’s capital needs and its ability to meet them, see “Management’s
Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”
DIVIDEND POLICY
We intend to retain any future earnings and do
not anticipate declaring or paying cash dividends in the foreseeable future. If we raise capital through borrowing, the terms of the
related instruments may restrict our ability to pay dividends or make distributions. Future determination to declare cash dividends will
be made at the discretion of our Board, subject to applicable laws, and will depend on many factors, including our financial condition,
results of operations, capital requirements, contractual restrictions, general business conditions and such other factors as the Board
may deem relevant.
CAPITALIZATION
The following table sets forth our capitalization
as of February 28, 2022, and as adjusted at that date to give effect to the issuance of all of the shares offered by this Prospectus
at the Fixed Offering Price.
| | |
As of February 28, 2022 | |
| | |
Actual | | |
As Adjusted | |
| Long-term debt: | |
| – | | |
| – | |
| Stockholders’ equity: | |
| | | |
| | |
| Common Stock | |
| | | |
| | |
| Series A Preferred | |
| 2,500 | | |
| 2,500 | |
| Series B Preferred | |
| – | | |
| – | |
| Additional paid-in capital | |
| 2,993,815 | | |
| 7,993,815 | |
| Accumulated deficit | |
| (3,395,135 | ) | |
| (3,395,135 | ) |
| Total stockholders’ equity (deficit) | |
| (398,820 | ) | |
| 4,601,180 | |
| Total capitalization | |
| (398,820 | ) | |
| 4,601,180 | |
DILUTION
Our net tangible book value as of February 28,
2022, was approximately $(398,820), or approximately $(0.00005) per share of Common Stock based on 8,265,600,111 shares then outstanding,
assuming the conversion of all of the outstanding shares of our Series A Preferred. Net tangible book value per share is determined by
dividing our net tangible book value, which consists of tangible assets, less total liabilities, by the number of shares of Common Stock
outstanding on that date.
After giving effect to the effect to the sale of all of the shares
of Common Stock offered by the Company at the Fixed Offering Price, and after deducting the estimated offering expenses payable by us, we would have had a net tangible book value as of February 28, 2022, of approximately $(________________)
or $(___) per share of Common Stock. This represents an immediate increase in the net tangible
book value of $__________ per share to our existing stockholders and an immediate dilution
in net tangible book value of $_______ per share to an investor in this offering. The following
table illustrates this per share dilution:
| | |
| | |
| | |
| |
| | |
As of February 28, 2022 | |
| | |
Actual | | |
Pro Forma | | |
Pro Forma As
Adjusted(1) | |
| | |
| |
| | |
| | |
| | |
| |
| Cash and cash equivalents(2) | |
$ | | | |
$ | | | |
$ | | |
| | |
| | | |
| | | |
| | |
| Long-term debt: | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| SBA Loans | |
| — | | |
| — | | |
| — | |
| | |
| | | |
| | | |
| | |
| PPP Note | |
| – | | |
| – | | |
| – | |
| | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| Stockholders’ deficit: | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| Series A Preferred stock, par value $0.001 per share | |
| — | | |
| — | | |
| — | |
| | |
| | | |
| | | |
| | |
| Series B Preferred stock, without par value | |
| – | | |
| – | | |
| – | |
| | |
| | | |
| | | |
| | |
| Common Stock, without par value | |
| — | | |
| — | | |
| — | |
| | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| Additional paid-in capital | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| Accumulated deficit | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| Total stockholders’ deficit | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| Total capitalization | |
$ | | | |
| | | |
| | |
MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The financial information discussed below
is derived from the Company’s audited consolidated financial statements at May 31, 2021, and its unaudited consolidated financial
statements at February 28, 2022, which were prepared and presented in accordance with generally accepted accounting principles (“GAAP”).
This financial information is only a summary and should be read in conjunction with the audited financial statements and related notes
contained herein, which more fully present the Company’s financial condition and results of operations at that date. The results
set forth in these consolidated financial statements are not necessarily indicative of the Company’s future performance. This section
and other parts of this report contain forward-looking statements that involve risks and uncertainties. Actual results may differ significantly
from the results discussed in forward-looking statements.
Information about the Company
The Company, headquartered in Houston, Texas,
offers services in the areas of clinical trials through Alpha Research Institute; cannabis-related education in classrooms, seminars
and online through Pharmacology University; and sleep disorder and related fertility problems through Alpha Sleep and Fertility Center.
For detailed information about the Company and its operations, see “Description of Business.”
The Company’s fiscal year begins on June
1 in each year and ends on May 31 in the following year.
Going Concern
As indicated in Note 3 of the notes to the unaudited
consolidated financial statements for the nine months ended February 28, 2022, there is substantial doubt as to the ability of the Company
to continue as a going concern. The Company has generated material operating losses since inception and its ability to continue as a
going concern depends on the successful execution of its operating plan, which includes the resumption of services that were interrupted
by the Covid-19 pandemic, increasing sales of existing services and introducing new services, as well as raising either debt or equity
financing.
The Company needs a substantial amount of additional
capital to fund its business, including the completion of its business plan and repayment of its debts. No assurance can be given that
any additional capital can be obtained or, if obtained, will be adequate to meet its needs, and the Company may need to take measures
to remain a going concern. If adequate capital cannot be obtained on a timely basis and on satisfactory terms, the Company’s operations
could be materially negatively impacted, or it could be forced to terminate its operations.
Impact of the Covid-19 Pandemic
The COVID-19 pandemic has adversely impacted
the Company and its financial results in different ways, depending on the particular business operation.
In the case of educational programs and cannabis
consulting services, the Company encountered quarantines, restrictions on gatherings and other governmental regulations that precluded
classroom education, as well as restrictions on travel that reduced consulting activities. The Company reduced the impact of the pandemic
by developing online educational programs and transitioning its workforce to a remote working environment without reducing its workforce.
Principally as a result of the pandemic:
| |
· |
Revenue from this operation was increased from $18,323 (unaudited) in the year ended May 31, 2019,
to $44,799 and $38,440 in the years ended May 31, 2020, and May 31, 2021, respectively; revenue for the nine months ended February
28, 2022, was $13,985. |
| |
|
|
| |
· |
In the case of clinical trial services, quarantines, restrictions on gatherings and other governmental
regulations negatively affected clinical studies, which were amplified because of potential patients’ fears of contracting Covid-19
at the Company’s clinics. In addition, during the Company’s two most recent fiscal years, these clinics were subject to
closure if cases of the virus were detected. Nevertheless, the Company’s financial results from clinical trials were improved
substantially during the pandemic: |
| |
|
|
| |
· |
Revenue from this operation changed from $165,666 (unaudited) in the year ended May 31, 2019, to $84,979
and $706,007 in the years ended May 31, 2020, and May 31, 2021, respectively; revenue for the 9 months ended February 28, 2022, was
$127,219. |
The Company believes that it may have
been negatively impacted by the association of the pandemic with the People’s Republic of China because “China” appears
in its corporate name. Although the Company has no operations in or any relationship with China, the Company believes that potential
investors may have been deterred from considering the Company because of concerns related to that country. For this reason, and because
the Company’s corporate name does not reflect its activities, it intends to change its name to Cannabis Bioscience International
Holdings, Inc.
Overview
The Company provides educational systems focused
on medical cannabis in the United States and Latin America, as well as worldwide through online education; services in therapeutic areas
of clinical trials; and services relating to sleep disorders, including resulting infertility, through its fertility and sleep center
in Houston, Texas. The Company’s operating units and their activities are:
| · | Alpha
Research Institute – Clinical trials and medical research. |
| | | |
| · | Pharmacology
University: – Education, consulting, digital publishing, marketing, and franchising
related to medical cannabis. |
| | | |
| · | Alpha
Fertility and Sleep Center – services related to sleep disorders. |
For further information concerning the Company
and its business, see “Description of Business.”
Results of Operations
Comparison of the Nine Months Ended
February 28, 2022, and the Nine Months Ended February 28, 2021
The following table sets forth information from
the consolidated statements of operations for the nine months ended February 28, 2022, and February 28, 2021.
| | |
Nine
Months Ended February
28, | |
| | |
2022 | | |
2021 | |
| Revenues | |
$ | 141,981 | | |
$ | 711,925 | |
| Cost of revenues | |
| 31,515 | | |
| 86,726 | |
| Gross profit | |
| 110,466 | | |
| 625,199 | |
| | |
| | | |
| | |
| Operating expenses | |
| 728,659 | | |
| 571,539 | |
| Operating income (loss) | |
| (618,193 | ) | |
| 53,660 | |
| | |
| | | |
| | |
| Non-operating income (expense): | |
| | | |
| | |
| Other income | |
| 11,957 | | |
| (662 | ) |
| Net income (loss) | |
$ | (630,150 | ) | |
$ | 54,322 | |
Revenues
Revenues were $141,981 and $711,925 for the nine
months ended February 28, 2022, and February 28, 2021, respectively, primarily due to a decrease of $526,796 in revenues from clinical
trial contracts, which were $660,343 in the earlier period and $133,547 in the later. The Company attributes this reduction to Covid-19,
in that patients for clinical studies were reluctant to visit clinics or doctor’s offices, resulting in the early termination or
cancellation of studies. Primarily due to the effects of the Covid-19 pandemic, revenues from cannabis-related educational classes and
seminars decreased by $28,135, from $35,792 for the nine months ended February 28, 2021, to $7,657 for the nine months ended February
28, 2022, and franchise fees decreased from $15,789 for the nine months ended February 28, 2021, to $0 for the nine months ended February
28, 2022.
Operating Expenses
Operating expenses for the nine months ended
February 28, 2022, and February 28, 2021, consisted of the following:
| | |
Nine Months Ended February 28, | |
| | |
2022 | | |
2021 | |
| General and administrative | |
$ | 98,880 | | |
$ | 70,439 | |
| Contract labor | |
| 397,216 | | |
| 190,513 | |
| Professional fees | |
| 108,911 | | |
| 72,338 | |
| Officer compensation | |
| 54,797 | | |
| 146,381 | |
| Rent and lease | |
| 60,353 | | |
| 61,109 | |
| Travel | |
| 8,501 | | |
| 30,757 | |
| Interest | |
| 45,665 | | |
| 553 | |
| Total operating expenses | |
$ | 774,324 | | |
$ | 572,092 | |
Operating expenses, including interest
expense, were $774,324 and $572,092 for the nine months ended February 28, 2022, and February 28, 2021, respectively. The increase
in contract labor was due to adding staff to write, translate, and produce audiobooks, e-books, and online videos. Professional fees
decreased due to the reduction of $36,316 in study fees due to Covid-19 causing a decrease in clinical trials, even though increases
in auditing costs incurred principally in connection with the preparation of the Company’s audited financial statements for
the year ended May 31, 2021, and legal expenses incurred in connection with the preparation of the registration statement of which
this Prospectus is a part, as well in the preparation of reports that the Company filed with OTC Markets Group Inc. Officer
compensation decreased because an officer left the Company and was not replaced. Travel decreased because of Covid-19 restrictions.
Finally, interest increased because the Company borrowed money in the year ended May 31, 2022, to fund its operations, whereas
borrowing was minimal during the year ended May 31, 2021.
Other Income
In the nine months ended February 28, 2022, the
Company recorded other income of $33,708 from the forgiveness of the PPP Loan.
Net Income (Loss)
Net loss for the nine months ended February 28,
2022, was $630,150, compared with net income of $54,322 for the nine months ended February 28, 2021, for the reasons set forth above
in relation to income (loss) from operations and the effect of other income received in the nine months ended February 28, 2022.
Comparison of the Year Ended May 31,
2021, and the Year Ended May 31, 2020
The following table sets forth information from
the consolidated statements of operations for the years ended May 31, 2021, and May 31, 2020.
| | |
Year
Ended May
31, | |
| | |
2021 | | |
2020 | |
| Revenues | |
$ | 761,737 | | |
$ | 290,232 | |
| Cost of revenues | |
| – | | |
| – | |
| Gross profit | |
| 761,737 | | |
| 290,232 | |
| | |
| | | |
| | |
| Operating expenses | |
| 921,045 | | |
| 853,369 | |
| Operating loss | |
| (159,308 | ) | |
| (563,136 | ) |
| | |
| | | |
| | |
| Non-operating income (expense): | |
| | | |
| | |
| Other income | |
| – | | |
| 21,984 | |
| Net loss | |
$ | (159,308 | ) | |
$ | (541,152 | ) |
Revenues
Revenues were $761,737 and $290,232 for the years
ended May 31, 2021, and May 31, 2020, respectively, primarily due to an increase of $575,364 in revenues from clinical trial contracts,
which were $84,979 in the year ended May 31, 2020, and $660,343 in the year ended May 31, 2021. Revenues from consulting fees decreased
from $142,782 for the year ended May 31, 2020, to $0 for the year ended on May 31, 2021, due to the effects of the Covid-19 pandemic,
and revenues from cannabis-related classes and seminars decreased by $6,359 from $44,799 for the year ended May 31, 2020, to $38,440
for the year ended on May 31, 2021.
Operating Expenses
Operating expenses for the years ended May 31,
2021, and May 31, 2020, consisted of the following:
| | |
Year Ended May 31, | |
| | |
2021 | | |
2020 | |
| General and administrative | |
$ | 100,281 | | |
$ | 45,568 | |
| Contract labor | |
| 263,137 | | |
| 265,972 | |
| Professional fees | |
| 198,496 | | |
| 97,047 | |
| Officer compensation | |
| 211,312 | | |
| 180,241 | |
| Rent | |
| 72,244 | | |
| 90,235 | |
| Travel | |
| 31,230 | | |
| 62,365 | |
| Interest | |
| 44,343 | | |
| 3,101 | |
| Total operating expenses | |
$ | 921,045 | | |
$ | 853,369 | |
Operating expenses were $921,045 and $853,369
for the years ended May 31, 2021, and May 31, 2020, respectively. Professional fees increased due to auditing costs incurred principally
in connection with the preparation of the Company’s audited financial statements for the year ended May 31, 2021, and legal expenses
incurred in connection with the preparation of the registration statement of which this Prospectus is a part, as well in the preparation
of reports that the Company filed with OTC Markets Group Inc. Officer compensation increased because, prior to June 1, 2020, the Company’s
officers were uncompensated. Travel decreased because the Company’s personnel were limited in their ability to travel after restrictions
that were imposed because of the Covid-19 pandemic. Finally, interest increased from $43,001 in the year ended May 31, 2021, to $3,101
during the year ended May 31, 2020.
Net Loss
Net loss for the year ended May 31, 2021, was
$159,308, compared with net loss of $541,152 for the year ended May 31, 2020, for the reasons set forth above in relation to loss from
operations and the effect of other income received in year ended May 31, 2020.
Liquidity and Capital Resources
As of February 28, 2022, the Company had $4,783
in cash and accounts receivable of $8,442. As of February 28, 2022, and May 31, 2021, the Company had negative working capital of $452,708
and $354,131, respectively. As of February 28, 2022, the Company had commitments of $7,170 for capital expenditures. The Company had
cash in the amount of $_______ on the date of this Prospectus.
During the nine months ended February 28, 2022,
the Company experienced negative cash flow from operations of $584,728 and recorded cash flow from financing activities of $548,192.
Cash provided from financing activities increased from $178,915 for the nine months ended February 28, 2021, to $548,192 for the nine-month
period ended February 28, 2022, primarily as the result of an increase in proceeds from the issuance of Common Stock to investors.
Since June 1, 2020, the Company has raised capital
as follows:
| |
· |
In the years ended May 31, 2021, and May 31, 2020, the Company received $56,861 and $31,750 of PPP
loans, respectively, under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), totaling $88,611.
On April 12, 2022, the Company was notified that the earlier loan and the interest accrued thereon had been forgiven in full, subject
to review by the SBA. The principal and interest forgiven have been recorded as non-operating income in the consolidated statement
of operations for the nine months ended February 28, 2022. |
| |
|
|
| |
· |
In the years ended May 31, 2021, and May 31, 2020, the Company received SBA loans of $106,200 and $153,100,
respectively, totaling $259,300. |
| |
|
|
| |
· |
In the years ended May 31, 2021, May 31, 2020, and the nine months ended February 28, 2022, the Company
received $261,000, $53,955 and $532,500, respectively, from sales of its Common Stock to private investors, totaling $847,455. |
The total capital raised from June 1, 2020, through
February 28, 2022, amounting to $1,195,366, has been sufficient to meet the Company’s needs, in view of the fact that the Company
incurred net losses of $630,150 during that period.
The Company believes that it will require $2,425,000
to attain the goals described under “Business Plan” and estimates that other capital needs, including operating costs of
$975,000, legal/accounting costs of $200,000, overhead of $600,000 and a reserve for contingencies of $800,000 for the next two years,
will approximate $2,575,000, totaling $5,000,000.
To the extent that capital needs cannot be met
by revenue from operations, profits and the proceeds of the Offering, the Company will need to raise additional capital through the sale
of debt or equity securities to public and private investors. There is no assurance that such funding will be available on acceptable
terms or available at all, or that the Company will attain profitability. If the Company is unable to raise sufficient funds when required
or on acceptable terms, it may have to reduce its operations significantly or discontinue them entirely. To the extent that funds are
raised by issuing equity securities or securities that are convertible into the Company’s equity securities, its stockholders may
experience significant dilution.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
DESCRIPTION OF BUSINESS
History
China Infrastructure Construction Corp. was formed
in the State of Colorado on February 28, 2003, as a limited liability company under the name Fidelity Aircraft Partners LLC. On December
16, 2009, it converted to a corporation under the name Fidelity Aviation Corporation, and on August 24, 2009, it changed its name to
China Infrastructure Construction Corp. On February 28, 2018, the Company changed its name to Hippocrates Direct Healthcare, Inc. and
on July 4, 2018, it resumed its present name.
From its inception to 2009, the Company was in
the business of selling used aircraft parts and airframe components salvaged from non-flying jet aircraft. Beginning on October 8, 2009,
the Company terminated that business and entered into concrete production in the Peoples’ Republic of China and Hong Kong through
subsidiaries. From early 2012 to early 2015, no information about the Company is available, but the current management believes that
the Company was dormant during that period. In February 2015, an independent investor obtained control of the Company. On July 25, 2016,
the Company disposed of its subsidiaries and on January 6, 2017, transferred control of the Company to another independent investor.
On February 5, 2018, control of the Company was acquired by a former member of its management. On December 20, 2019, the present management
acquired control of the Company as a result of the PUI Merger.
Acquisition of Hippocrates
On December 17, 2017, the Company entered into
an Agreement and Plan of Merger, by and among the Company, a wholly owned subsidiary of the Company and Hippocrates Direct Healthcare,
LLC, a Texas limited liability company (“Hippocrates”), which was formed on September 17, 2017. On February 5, 2018, the
subsidiary was merged with and into Hippocrates. Before this merger, the Company had no operations and no or nominal assets (a “Rule
144 Shell Company”). As a result of this merger, Hippocrates became the wholly owned subsidiary of the Company and the Company
ceased to be a Rule 144 Shell Company. The business of Hippocrates (the “Hippocrates Business”), which was terminated on
October 31, 2020, was concierge healthcare. For a more detailed description of the Hippocrates Business, see “Description of Business
– Hippocrates Business.”
Acquisition of Pharmacology University
Inc.
Pharmaceutical University Inc.(“PUI”)
was incorporated in the State of Delaware on January 5, 2017, under the corporate name Canna-Pharmacology University Inc.; on March 15,
2017, its certificate of incorporation was amended to change its corporate name to Pharmacology University Inc. On December 20, 2019,
PUI was merged with and into the Company, such that the shareholders of PUI received 4,875,000,000 shares of Common Stock and 2,000,000
shares of the Company’s Series A Convertible Preferred Stock (“Series A Preferred”) as merger consideration. The Company
conducts the business acquired by this merger (the “Pharmacology University Business”) under the trade name Pharmacology
University. The Pharmacology University Business is generally cannabis-related research and education. For a more detailed description
of the Pharmacology University Business, see “Description of Business – Pharmacology University Business.” For a description
of the interest of certain members of the management of the Company in this merger, “Certain Relationships and Related Party Transactions – Merger with Pharmacology University, Inc.”
Acquisition of Precision Research Institute
On March 31, 2019, the Company entered into the
Alpha Research Business by acquiring all of the outstanding units in Precision Research Institute, LLC, a Texas limited liability company
(“PRI”), which was formed on May 18, 2016, from the Company’s then president. On August 20, 2020, PRI was merged with
and into the Company. The Company conducts the Alpha Research Business under the trade name Alpha Research Institute. For a detailed
description of the Alpha Research Business, see “Description of Business – Alpha Research Business.”
Businesses
Until October 31, 2020, the Company had three
lines of business, namely, the Pharmacology University Business, the Alpha Research Business and the Hippocrates Business. Its vision
is to provide superior services to its customers, while adhering to its core values of integrity, respect, compassion, inclusiveness,
social responsibility, excellence and innovation.
Pharmacology University Business
The Cannabis Industry
The cannabis industry is
fast-growing, increasingly complex, and rapidly changing. The Company believes that the growing cannabis industry in numerous U.S. states
and other countries represents a significant market opportunity for the Pharmacology University Business, as persons involved in the
industry need the educational and other services that it furnishes, as more fully described below.
The regulated cannabis industry,
including medicinal and recreational use, is experiencing rapid growth. According to Arcview Market Research and BDS Analytics’
latest “State of Legal Cannabis Markets” report, total legal spending on medical and adult-use cannabis in the United States
reached an estimated $12.2 billion in 2019, an increase of 34% over a total of $9.1 billion in 2018. Legal spending in the United States
is forecast to reach over $31.1 billion in 2024, rising at a compound annual growth rate of nearly 23% from the 2018 total. The worldwide
legal cannabis industry generated an estimated $14.9 billion in 2019, up 45.7% from 2018, which saw a 17% growth to $10.2 billion. The
report also notes that with pending international legislative decisions on Mexico’s adult-use market and Germany’s medical
market, total legal sales outside of the U.S. and Canada could rise from $517 million in 2018 to $5.4 billion in 2024, representing a
compound annual growth rate of 47.7%.
The rise in the legalization
of cannabis in various countries is one of the key factors driving market growth. The use of cannabis for medical purposes is gaining
momentum worldwide owing to recent legalization in many countries. Medical cannabis is used to treat many diseases, such as cancer, arthritis,
and neurological disorders, such as anxiety, depression, epilepsy, Parkinson’s disease and Alzheimer’s disease.
The high prevalence of cancer
is expected to be one of the factors driving the demand for legal cannabis. For instance, according to the World Health Organization
(WHO), cancer is the second leading cause of death worldwide and was responsible for about 8.8 million deaths in 2015. In addition, the
growing disease burden of chronic pain and significant side effects associated with opioid usage is expected to drive the demand for
medical cannabis, which has proved to be a potent product for chronic pain management. The Company believes that these and other applications
will lead to increased demand.
The 2018 Farm Bill in the
U.S. created an opportunity for hemp-derived cannabidiol (CBD) products in retail and pharmaceutical channels. Also, many countries,
including Canada, China, Italy, Australia, and South Korea, have legalized hemp for growth and export. In the United States, CBD is widely
available from retailers, including online, drug and convenience stores, natural products, beauty, grocery, and pet stores. According
to the Grand View Research Industrial Hemp Market Analysis, the global CBD market was valued at $4.6 billion in 2018 and is expected
to grow at a CAGR of 22.2% from 2019 to 2025. Additionally, the global industrial hemp market size was estimated at $4.71 billion in
2019 and is expected to show a revenue-based compound annual growth rate of 15.8%.
A recent CBS News poll found
that 88% of Americans support the legal use of medical cannabis when recommended by a doctor. Sales in the cannabis industry are projected
by Cannabis Business Daily to be $15.5 billion and $20.3 billion in 2020 and 2021, respectively and sales could be as high as $37 billion
in 2024. The size of the industry was only $3.4 billion industry in 2015. Sharp sales increases in recently launched medical cannabis
programs – as well as continued gains in adult-use markets – are expected to fuel much of the industry’s growth over
the coming years. The Company believes that this is due to many factors, including:
| · | Expanding
Legalization of Cannabis: The medical use of cannabis is now legal in 37 states and
the District of Columbia and 18 states and the District of Columbia have either legalized
or decriminalized its recreational use. Despite a conservative political environment in Washington,
D.C., support for cannabis legalization appears to be rapidly growing: according to a Gallup
Poll conducted in November 2020, 66 percent of United States adults support the legalization
of cannabis in the United States, exceeding the 64% to 66% range seen from 2017 to 2019.
Nevertheless, the sale and possession of cannabis are illegal under federal law, although
the Company believes that the DOJ is not prioritizing the prosecution of businesses that
comply with state laws. |
| | | |
| · | Market Size: According
to a 2018 report of the Substance Abuse and Mental Health Services Administration, 43.5 million
Americans above the age of 12 used cannabis in that year; monthly use was 27.7 percent. |
The Company believes that
the anticipated growth of the cannabis industry offers it opportunities for it to expand. The industry requires skilled and educated
cannabis professionals in order to operate.
Overview of the Pharmacology
University Business
Through the Pharmacology
University Business, the Company provides knowledge and promotes professionalism in the rapidly growing worldwide cannabis industry through
education in and research about the medical properties and healing virtues of this substance. The Company does not cultivate, sell or
distribute cannabis or cannabis-infused products and has no plans to do so. Pharmacology University is not an institution of higher education,
is not chartered, regulated or accredited by any governmental or private agency and does not offer training that qualifies recipients
to become pharmacists or pharmacologists.
The Pharmacology University
Business and its prospects depend on the growth of the cannabis industry and the need for experienced, educated professional persons
to lead and grow that industry ethically and responsibly in the United States and other countries where the Company’s activities
are legal. While the Company embraces the legal cannabis industry generally, its primary focus is on educating cannabis industry workers
and leaders and scientific research and development of hemp and cannabis for medicinal and commercial applications. One of the Company’s
most important assets is the close relationship of its personnel to, and cooperation with, law enforcement agencies in the locations
where it does business. Police agencies in several countries have appeared as guest speakers at the Company’s cannabis seminars.
In the United States, the
Company has conducted instructional seminars and cannabis classes in the states of Texas, Arkansas, Florida, Illinois, Missouri, Oklahoma
and Georgia, as well as Puerto Rico, and is planning to do likewise in the remaining states. The Company has operations in Mexico, Peru,
Ecuador, Columbia and the Dominican Republic. It plans to expand into Argentina, Chile, Brazil, Panama and other Latin American countries
where its activities are lawful.
Presently, because of the
Covid-19 pandemic, the Company is conducting no classroom teaching or seminars, but intends to resume these activities as the abatement
of the pandemic permits.
The Company has offered,
and after the abatement of the pandemic, intends to offer, opportunities for learning, discovery and engagement to students, doctors,
scientists, entrepreneurs and others in a real-world setting. The Company offers a full range of educational programs at all levels and
pursues a broad agenda of research, innovative and creative activities and builds partnerships with other educational institutions, community
organizations, government agencies and the private sector in many jurisdictions, including Jorge Tadeo Lozano University in Bogota, Cartagena,
and Santa Marta, Colombia; Clayton State University, Atlanta, Georgia; Autonomous University of Santo Domingo, Dominican Republic; EUFLORIA
Medical Cannabis Dispensary, Tulsa, Oklahoma; the Polytechnic University of Puerto Rico in San Juan, Dispensarios 420, Puerto Rico; Cannapolis
Scientific Farm in Colombia; Hemp Ecuador in Ecuador.
Educational Services
The Company has offered,
and after the abatement of the pandemic, intends to offer, multilevel educational services to entrepreneurs, medical and legal professionals,
cultivators, dispensary technicians, manufacturers, patients and others who desire to participate in the cannabis industry or who are
otherwise interested in cannabis. These services include:
| · | Continuing
medical education courses for physicians |
| | | |
| · | Continuing
legal education courses for attorneys |
| | | |
| · | Certification
courses for physicians |
| | | |
| · | Certification
for industry workers |
| | | |
| · | General
education seminars |
| | | |
| · | On-site
training |
These courses cover all
aspects of the medical cannabis industry. For the general public, they focus on the history of cannabis, its medicinal value, dispensary
concepts, legal issues and ethics, production, growing and extracts, security, operations and economics. For doctors, our courses and
seminars cover subjects such as medicinal uses of cannabis, the biochemistry of cannabis, functions of the endocannabinoid system, pharmacology,
cannabis use and abuse, and administration and dosage of cannabis medications. The cultivation course focuses on germination, cultivation
practices, cloning, growth stages and harvesting, drying and curing, and the manufacturing course covers the chemical composition of
cannabis plants, extraction of oils, laboratory practices, the manufacture of cannabis products and marketing. Overall, we have certified
and graduated several thousand students in our courses in the United States, Puerto Rico and Colombia.
Courses are taught and seminars
are led by degreed professionals, university professors, and industry experts with at least two years of commercial experience in the
particular subject. For example, the cultivation course might be taught by a professor of horticulture, an individual with an M.S. degree
in agriculture, or a master grower with three years’ experience growing crops of at least 500 plants. Before the Covid-19 pandemic,
classes were usually held at local colleges and universities in classrooms with projectors, screens and microphones. Among these colleges
and universities were the University of Texas, Houston; Texas Women’s University; University of Oklahoma; Oklahoma State University;
Clayton State University, Atlanta; Polytechnic University, San Juan; Texas A&M University; and Jorge Tadeo Lozano University in Bogota,
Cartagena, and Santa Marta, Colombia.
Students learn of Pharmacology
University through its website, social media, various ticket venues, and local cannabis groups. Upon successful completion of a course
of study, students receive a certification of completion to indicate they are certified to work in the relevant field. A 130-hour course
lasting a semester was available at the University of Tadeo in Colombia and the students who completed it received a certificate entitled
“Diplomado en Cannabis.” In addition, CME and CLE credits were available for doctors and lawyers taking the classes.
We were the first company
approved by the Department of Health of the Commonwealth of Puerto Rico as a provider of all training certifications, including medical
education, agriculture and manufacturing education, dispensary education, and others in the medicinal cannabis industry.
Since the advent of the
Covid-19 pandemic, all of our classrooms and public venues were forced to close. We also canceled all travel plans to further our expansion.
To meet this pandemic, we created online courses. We currently have more than 100 videos available online in English, Spanish, Portuguese,
Italian and Arabic and we plan to add other languages. Additionally, we have used Zoom to hold virtual classes to teach students and
be able to respond to their questions in real-time during the courses. However, revenue received from online courses has not replaced
the revenue that we believe that we would have generated if our classrooms and public venues had remained open. The Company intends to
resume its former courses and add new courses as theCovid-19 pandemic abates.
Digital Products
As a result of the Covid-19
pandemic, which made classroom education impossible, Pharmacology University has focused on the production of educational materials for
sale on on-line platforms (including those operated by Amazon, Zinio, Apple, Walmart/Kobo, Barnes & Noble and Google Books), which
maintaining its relationships with academic venues where it expects to resume classroom teaching when the pandemic abates (including
ICESI, TADEO and UTB). It is also focusing on entering into subscription and commercial agreements with universities and e-commerce platforms.
We have published 50 cannabis-related
eBooks in five languages, have produced videos to offer online and have recorded over 13,000 minutes of audio in 5 languages. We have
also engaged artificial intelligence services to generate translations of these materials in up to 100 additional languages; while this
activity has resulted in increased expenses, while producing minimal revenue and no profit, we believe that it will become profitable
and will be a significant segment of our business.
We have aimed to publish
our educational content on different marketplaces that host products in different languages that are well established and known all around
the world. We work with platforms from Brazil, Spain, England, Mexico, Canada, the United States, Germany, and more. We currently have
four types of products published on different platforms:
| · | E-Books:
We publish fifty titles in Spanish, English, Portuguese, Italian, and Arabic on Amazon,
Kobo and Google Books. In addition, Smashwords distributes our content on Barnes & Noble,
Apple, Baker & Taylor's Axis 360, OverDrive, Scribd, cloudLibrary, Gardners Extended
Retail, Odilo and Gardners Library. |
| | | |
| · | Audiobooks:
Findawayvoices distributes our content on 3Leaf Group, Axiell, Baker & Taylor, Bibliotheca,
Bidi, EBSCO, Follett, hoopla, LOL, dilo, Overdrive, Perma-Bound, Ulverscroft, and Wheelers,
as well as on 24symbols, Anyplay, Apple, Audiobooks.com, AudiobooksNow, AudiobooksNZ, BajaL,
BingeBooks, Bokus Play, Bookmate, Chirp, Cliq, Downpour, eStories, Google Play, Hummingbird,
Instaread, Leamos, Libro.FM, Milkbox, Nextory, NOOK, Scribd, and Ubook. |
| | | |
| · | Video
courses: We publish 161 titles on Amazon (6 courses), Sympla (17 courses), Teachlr
( 62 courses), Edusity ( 13 courses), Simplivlearning (16 courses), Alugha (40 courses),
Aprendum (4 courses), and Unihance (105 courses). |
| | | |
| · | Cannabis
Worlds. We publish Cannabis World, our digital magazine, on Google books (25 issues
in five languages), Zinio ( 25 issues in Spanish and English), Pocketmags ( 25 issues in
English) and Magzter (25 issues in five languages). |
The Company believes that the amount and scope of its digital products
exceeds those offered by any of its competitors in cannabis-related education.
Franchising
| · | We
have offered, and after the abatement of the pandemic, intend to offer, our educational programs
to franchisees worldwide. A franchisee purchases the right to provide our courses in its
particular city. In addition to an initial franchise fee, a franchisee pays us a 10% franchise
fee and a 2% advertising fee on all gross sales. We assist in creating and registering a
franchisee’s business identity; developing and activating its websites; creating its
social media platforms; providing it with marketing plans; assisting in finding venues for
their classes; explaining how to find qualified instructors; providing PowerPoint presentations
as well as books for students and instructors; and providing one week of one-on-one training
relating to the operation of the franchise. In addition, we provide one month of marketing
assistance. Prior to the Covid-19 pandemic, we had four franchisees that produced revenue
of $28,202 and $34,000 in the years ended May 31, 2021, and May 31, 2020, respectively, but
as a result of the pandemic, we are receiving no revenue from these franchisees because they
are unable to operate. |
Consulting
We have offered, and after
the abatement of the pandemic, intend to offer, consulting services that consist of assisting persons or companies that wish to obtain
a license to enter the legal cannabis marketplace. The cost of these services is based on the nature of each assignment. These services
may include:
| · | creating
and presenting advertising material for campaigns in traditional and digital media, including
publicity strategy, campaign creation, design of flyers, advertising social networks, newspapers
and magazines and creation of audiovisual content. |
| | | |
| · | consulting services to entrepreneurs
who are considering entering the cannabis industry, manufacturers and growers, including
preparation of business plans, guidance in business structure, guidance in seeking investment,
preparation of license and other applications and development of operating procedures. |
We have provided consulting
services in many states and Puerto Rico and have assisted in obtaining over 40 licenses for our clients for dispensaries, cultivation,
manufacturing and a full analytical laboratory.
Business – Alpha Research Business
Through the Alpha Research
Business, based in Houston, Texas, the Company offers specialized services in all therapeutic areas of clinical trials and has conducted
over 20 clinical trials. These trials have included drugs relating to diseases in the areas of asthma, allergies, renal disorders, neurology
disorders, cardiac and vascular disorders, nutrition/metabolism, obstetrics/gynecology, dermatology, oncology, ophthalmology, orthopedics,
gastroenterology, psychiatric disorders, infectious diseases, pulmonary and respiratory diseases, urology and Covid-19, as well as devices
for orthopedic and cardiovascular problems. Our clients have included Sponsors such as Pfizer Inc., Merck & Co, Inc., Shionogi &
Co., Ltd., Medtronic plc, Novartis, GlaxoSmithKline plc, Gilead Sciences, Inc. and Johnson & Johnson, and CROs, such as PPD, Inc.,
Icon plc, Parexel, PRA Health Sciences, Inc., Covance, IQVIA Holdings Inc. and Medpace Holdings, Inc.
Clinical trials are a method
of clinical research designed to evaluate and test new drugs or devices and are typically conducted in four phases, each of which has
a different purpose and helps scientists answer different questions.
| · | Phase
I. Researchers test an experimental drug or treatment in a small group of people for
the first time. The researchers evaluate the treatment’s safety, determine a safe dosage
range, and identify side effects. |
| | | |
| · | Phase II. The experimental
drug or treatment is given to a larger group of people to ascertain whether it is effective
and to evaluate its safety further. |
| | | |
| · | Phase III. The experimental
study drug or treatment is administered to large groups of people. Researchers confirm its
effectiveness, monitor side effects, compare it to commonly used treatments, and collect
information that will allow the experimental drug or treatment to be used safely. |
| | | |
| · | Phase IV. Post-marketing
studies, which are conducted after a treatment is approved for use by the FDA, provide additional
information, including information relating to treatment, risks, benefits and best use. |
Clinical trials are conducted
by Sponsors or CROs. The Company will contract with a Sponsor or CRO to provide services in connection with a clinical trial after it
has provided information respecting its ability to provide them and after a visit by the Sponsor or CRO to our facilities to confirm
our ability to conduct the trial and to establish communications procedures. After further measures, which include establishing a budget
and providing additional information about the Company and a second visit to our facilities, we will enter into a contract with the Sponsor
or CRO, which will issue a “Site Activation Letter.” When we receive this letter, we begin enrolling volunteer test subjects.
The Company’s facilities
are equipped with examination and blood drawing rooms, secure storage for investigational medication and study-related equipment. The
Company employs only clinical research coordinators (“CRCs”) with at least five years of experience. CRCs are involved in
supervising drug trials and medical research, which involves recruiting patients for medical and drug trials and screening them to assure
that they meet the guidelines of the trial, as well as following good clinical practice, overseeing the progress of the clinical trial
and ensuring that it is properly conducted, recorded, and reported.
The recruitment of subjects
from minority, rural and economically disadvantaged groups is important to clinical trials because the benefits and risks of new drugs
with respect to them may differ from other groups due to genetic, environmental and other factors. To enhance such recruitment, the Company
has worked with community organizations, churches, social services and public agencies and has provided transportation services.
The Alpha Research Business
is staffed by six personnel responsible for regulatory and Investigational Review Board (“IRB”) processes and a staff of
two auditors. An IRB is an independent body required by federal regulation, comprising medical, scientific, and nonscientific members,
the responsibility of which is to ensure the protection of the rights, safety, and well-being of human subjects involved in a clinical
trial. An IRB reviews, approves and provides continuing reviews of the clinical trials, protocols, amendments, methods and materials
to be used in obtaining and documenting informed consents from the trial subjects.
We employ more than 20 full-
or part-time principal investigators, who are physicians and prepare and perform or oversee clinical trials, analyze the resulting data
and report the results of a trial to the Sponsor or CRO. They usually conduct clinical trials in conjunction with their medical practices.
Our professional employees are encouraged to keep up to date on good clinical practices and regulations relating to clinical research.
Alpha Research obtains customers
in three ways:
| · | Recruitment
websites. On these websites, we search for trials that are within our competence and
contact the related Sponsors or CROs, providing relevant information about ourselves, who
will respond if they are interested in our services. The Sponsor or CRO will consider entering
into a contract for the study only after it has met with our personnel and has visited our
facilities, and if the Sponsor or CRO is satisfied that we can conduct the trial and comply
with the terms of its contract, which, as indicated above, are complex. Even then, the Sponsor
or CRO may award the contract to a firm that it considers better qualified. |
| | | |
| · | Sponsor
or CRO websites. The process is similar to that described above for recruitment websites. |
| | | |
| · | Personal
contact. |
Alpha Sleep and Fertility Center
In July 2022, the Company opened AFSC, which
serves Houston-area patients who are interested in improving their sleep quality and enhancing their physical and mental well-being.
The Sleep Center utilizes state-of-the-art equipment. Its goal is to assess, diagnose, and treat sleep problems and provide patients
with convenient and flexible care.
AFSC is intended as a one-stop source for patients’
sleep disorder needs. The Sleep Center is overseen by Dr. Esteban Berberian, who is primary care physician and board-certified internal
medicine physician. Working with Dr. Berberian are our registered sleep specialists, many of whom are Registered Polysomnographic Technologists
(“RGSPTs”). RGSPTs are health care professionals certified by the American Board of Sleep Medicine (the “ABSM”)
who clinically assess patients with sleep disorders. The ABSM is a nonprofit organization that certifies physicians, PhDs, specialists,
and technologists in the specialty of sleep medicine.
Millions of Americans suffer from sleep disorders,
resulting in poor quality and a limited quantity of sleep that significantly interferes with their overall functioning. These disorders
include insomnia, obstructive sleep apnea, excessive daytime sleepiness and cataplexy (narcolepsy), restless leg syndrome (RLS), REM
sleep behavior disorder and snoring. Sleep disorders can cause sexual problems, such as loss of libido and erectile dysfunction, and
there is a high correlation between sleep disorders and irregular menstrual cycle or premenstrual symptoms and infertility in women and
low testosterone in men.
Sleep-related disorders are a nationwide problem, according to the
American Academy of Sleep Medicine:
| |
· |
about 30 percent of adults have symptoms of insomnia and about 10 percent of adults have insomnia that
is severe enough to cause daytime consequences. |
| |
|
|
| |
· |
about 26 percent of adults between the ages of 30 and 70 years have sleep apnea. |
| |
|
|
| |
· |
about 2 percent of adults suffer from RLS. |
| |
|
|
| |
· |
about 1 percent of people have narcolepsy and REM sleep behavior disorder. |
AFSC acquires patients through referrals and marketing efforts.
The development of AFSC is in its early stages.
It is leasing space and equipment in two locations as needed. Its staff is being hired on a part-time basis until our patient load is
sufficient to support full-time staffing. The current staff comprises a medical director, who has general oversight of AFSC, a polysomnographic
technologist, who performs diagnostic procedures (“sleep studies”), a Sleep Board registered physician and a Registered Sleep
Tech Scorer, who evaluates, interprets and scores sleep studies, and an office manager who it shares with PRI. Our staff works for us
only when we have patients. We believe that our staff, space and equipment are adequate for the current operations of AFSC.
Our goal is to expand our existing facility to
be capable of performing sleep tests for 20 patients per month, with a view, as patient load increases, to opening a second facility
having a larger capacity and a complete laboratory. The staffing described above would be increased to include a director of business
operations and a receptionist.
When a patient is referred to AFSC for testing,
it may perform an at-home sleep test, which monitors a patient’s breathing, oxygen levels, and breathing effort. If the at-home
test indicates further testing, or if AFSC determines that at-home testing would not be useful, it will perform a sleep study (“polysomnography”),
which is a comprehensive test used to diagnose sleep disorders by monitoring sleep stages and cycles to identify if or when they are
disrupted and why. This test records a patient’s brain waves, blood oxygen level, heart rate, breathing rate and eye and leg movements.
Polysomnography may be performed at a sleep disorder
unit in a hospital or a sleep center. In a typical test, a patient arrives in the evening and stays overnight. The test is performed
in a dark and quiet room with a bed and a bathroom, and is equipped with a low-light video camera so that the polysomnography technologist
can observe the room when lights are extinguished. After a patient prepares for sleep, a technologist attaches sensors to the patient’s
scalp, temples, chest and legs and an oximeter to his finger or earlobe; these devices are connected to a computer, which records data
indicating his sleep patterns during the night. While the patient sleeps, a technologist observes the video and monitors his brainwaves,
eye movements, heart rate, breathing pattern, blood oxygen level, body position, chest, abdominal and limb movement, and snoring. If
sleep apnea is being treated, the technician may have the patient try a positive airway pressure machine or other device that delivers
a constant stream of air that keeps his airway passages open while sleeping.
The information gathered during polysomnography
is evaluated first by a polysomnography technologist, who uses the data to chart sleep stages and cycles. The measurements recorded during
the polysomnography provide information about a patient’s sleep patterns. For example:
| |
· |
Brain wave activity and eye movements during sleep can help to identify disruptions in the stages that
may occur due to sleep disorders such as narcolepsy and REM sleep behavior disorder. |
| |
|
|
| |
· |
Abnormal variations in heart and breathing rate in blood oxygen may suggest sleep apnea. |
| |
|
|
| |
· |
Correct settings for positive airway pressure machines or oxygen if prescribed. |
| |
|
|
| |
· |
Frequent leg movements that disrupt sleep may indicate periodic limb movement disorder. |
| |
|
|
| |
· |
Other unusual movements or behaviors during sleep may indicate REM sleep behavior disorder or another
sleep disorder. |
A report is generated, reviewed for accuracy,
scored and given to the doctor who will diagnose the sleep disorder. After diagnosis, the following therapies are offered:
| |
· |
Continuous positive airway pressure (CPAP). If a patient has moderate to severe sleep apnea, he may
benefit from using a machine that delivers air pressure through a mask while asleep. |
| |
|
|
| |
· |
Other airway pressure devices. An airway pressure device that automatically adjusts while a patient
sleeps (auto-CPAP) is available. Units that supply bilevel positive airway pressure (BPAP) also are available. These provide more pressure
when a patient inhales and less when he exhales. |
| |
|
|
| |
· |
Oral appliances. Oral appliances are designed to open a patient’s throat by bringing your jaw
forward, which can sometimes relieve snoring and mild obstructive sleep apnea. |
| |
|
|
| |
· |
Supplemental oxygen. Using supplemental oxygen while a patient is asleep may help if he has central
sleep apnea. |
| |
|
|
| |
· |
Adaptive servo-ventilation (ASV). This more recently approved airflow device learns a patient’s
normal breathing pattern and stores the information in a built-in computer. |
Hippocrates Business
The Hippocrates Business provided concierge healthcare
services. From its inception, it did not provide sufficient revenue and was discontinued on October 31, 2020.
Description of Property
The Company leases premises of approximately
4,500 square feet located at 6201 Bonhomme Road, Suites 460S and 466S, Houston, Texas. The lease provides for a base rent of $3,381.96
per month, increasing to (i) $3,529 per month on July 1, 2020, (ii) $3,676 per month on July 1, 2021, and (iii) $3,823 per month
on July 1, 2022, subject to CPI increase. The lease expires on June 30, 2023. The leased space is shared by PUI, Alpha Research Institute
and AFSC.
In addition, two of the Company’s officers
lease 1,400 square feet in Houston, Texas, at 1625 Main St, Houston, Texas, under a lease the term of which commenced on February 29,
2020, and will expire on September 30, 2022, at a rent of $3,449 per month; these officers have made a portion of these premises available
to the Company for use as office space, for which the Company pays them $2,817 per month.
Legal Proceedings
The Company has not been and is not a party to
any litigation and is not aware of threatened litigation.
Off-Balance Sheet Arrangements
We have no off-balance-sheet arrangements.
MANAGEMENT
The following table presents information with
respect to our officers and directors:
| Name |
Age |
Position |
| Dante Picazo |
66 |
Chief Executive Officer and Director |
| Henry Levinski |
70 |
Vice President and Director |
| Jose Torres |
63 |
Secretary and Director |
Each of our directors serves until his death,
resignation or removal or until his successor is elected and qualified. Each of our officers is elected by the Board to a term of one
year and serves until his successor is duly elected and qualified, or until he dies, resigns or is removed. Members of the Board receive
no compensation for their services as such.
Biographical Information Regarding Officers and Directors
Dante Picazo
Mr. Picazo has been the chief executive officer
and a director of the Company since the merger of PUI into the company on December 19, 2019, and was the co-founder of PUI, serving as
one of its directors and as its chief executive officer and president from its incorporation in 2009 to that merger.
He has 45 years of experience in operating and
growing from concept to profitability, originating marketing and branding efforts, leading to initial public offerings for three companies.
He graduated from Cornell University School of
Hotel Administration in Ithaca, N.Y., and is fluent in three languages.
Mr. Picazo’s control of the Company through
his ownership of its capital stock, together with his knowledge of the Pharmacology University Business and his extensive experience
in international business and finance, led to the conclusion that he should serve as a member of the board.
Henry Levinski
Mr. Levinski has served as treasurer and a director
of the Company since the merger of PUI into the company on December 19, 2019, and was the co-founder of PUI, serving as one of its directors
and its chief executive officer from its incorporation in 2009. He has over 40 years of experience in operations, marketing, purchasing
and training.
Mr. Levinski’s knowledge of the Pharmacology
University Business, together with his prior experience, led to the conclusion that he should serve as a member of the board.
Jose Torres
Dr. Torres has served as a director and national
medical director of the Company since the merger of PUI into the company on December 19, 2019. He served in like positions with PUI until
the merger. He is board-certified in General medicine, internal medicine and an Anti-aging medicine Specialist with 35 years of medical
practice experience.
He received his medical degree from the Autonomous
University of Guerrero in Chilpancingo, Guerrero, Mexico, and completed a residency in internal medicine residency at Caguas Regional
Hospital in Puerto Rico. He is certified in urgent care and by World Link Medical. He is a Member of the American College of Physicians,
the Puerto Rico College of Physicians and the American Academy of Cannabinoid Medicine. He is an expert in the medical uses of cannabis
and is involved in research respecting its use in treating several medical conditions, including sleep disorders, pain management, treatment
of nausea and vomiting associated with cancer and chemotherapy, asthma and other bronchial ailments, and decreased libido.
Mr. Torres’ experience with the medicinal
use of cannabis and with sleep disorders led to the conclusion that he should serve as a member of the board.
EXECUTIVE COMPENSATION
Compensation of Officers
The following table sets forth information concerning
all compensation awarded to, earned by, or paid to our principal executive officer and our two most highly compensated executive officers
other than the principal executive officer who were serving as such on May 31, 2022, for the fiscal years ended May 31, 2022, and May
31, 2021.
SUMMARY COMPENSATION TABLE
| Name and principal position |
|
Year |
|
Salary
($) |
|
Bonus
($) |
|
Stock
Awards
($) |
|
Option
Awards
($) |
|
Non-equity
incentive plan compensation
($) |
|
Change in pension value
and nonqualified deferred compensation earnings
($) |
|
All Other
Compensation
($) |
|
Total
($) |
| (a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
| Dante Picazo |
|
2021 |
|
22,500 |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
22,500 |
| CEO |
|
2020 |
|
5,000 |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
5,000 |
Henry Levinski
|
|
2021 |
|
24,000 |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
24,000 |
| VP |
|
2020 |
|
16,200 |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
16,200 |
Compensation Discussion and Analysis
The Company has determined the amount paid as
salary to the persons named in the above table based on the Company’s ability to pay. The Company believes that these salaries
are lower than those that these persons could earn in equivalent positions in other companies and that these persons have elected to
receive these salaries and remain with the Company because of their equity positions in the Company, their belief in the prospects of
the Company and intangible reasons of which the Company may not be aware. In the case of Mr. Levinski, the Company has provided additional
compensation in the form of shares of Common Stock. The Company believes that it needs to be able to provide competitive compensation
to these persons, as well as persons that it hires in the future, but will not be able to do so until it can generate materially increased
revenue. Until then, the Company is subject to the risk that one or more of these persons will seek employment elsewhere. The Company
has adopted its 2022 Equity Incentive Plan (see “Incentive Plan”) and may explore the adoption of plans that will enable
it to reward and retain the loyalty of these and other employees through awards of share-based compensation, such as stock options, restricted
stock and restricted stock units.
Incentive Plan
General Information
On July 20, 2022, the Board
adopted, and the shareholders approved, the 2022 Equity Incentive Plan (the “Incentive Plan”), which provides for the grant
of stock options, stock appreciation rights, restricted stock, unrestricted stock, restricted stock units, and performance awards to
directors, officers, employees and consultants (“Grantees”). The Incentive Plan is administered by the Board, which has the
authority, among other things, to select eligible persons to receive awards and determine the terms of awards.
The Company will recognize
as share-based compensation expense all share-based payments to Grantees over the requisite service period (generally the vesting period)
in its consolidated statements of income based on the fair values of the awards that are ultimately expected to vest. As a result, for
most awards, recognized share-based compensation expense will be reduced for estimated forfeitures prior to vesting, primarily based
initially on the judgment of management and thereafter, estimated forfeitures will be reassessed in subsequent periods based on facts
and circumstances. We will satisfy exercises and issuances of vested awards with issuances of Common Stock from a reserve of 600,000,000
shares of Common Stock. As no awards were made under the Incentive Plan during the periods covered by the consolidated financial statements
included in this Prospectus, no expense for share-based compensation was recorded therein.
The Company adopted the
Incentive Plan because it believes that long-term incentives for Grantees will be a significant factor in generating returns for its
shareholders based upon the Incentive Plan’s ability to focus on long-term performance. By providing Grantees with opportunities
to acquire a meaningful equity stake in the Company, it can better align their interests with those of its shareholders and create value
for them.
The Company expects to make
periodic awards to its executive officers, employees and consultants, as well as awards in connection with promotions or new hires, the
occurrence of significant events or as awards intended to promote retention.
Awards will generally be
subject to time- or performance-based vesting over periods determined by the Board. Performance-based goals will be determined by the
Board. We believe that performance-based awards will encourage Grantees to achieve key strategic objectives and maximize value creation
for our shareholders.
The completion of the Offering
will not result in acceleration of vesting of any awards.
Provisions of the
Incentive Plan
The following is a description
of the material terms of the Incentive Plan, which is not a complete description and is qualified in its entirety by reference to the
Incentive Plan, which is filed as an exhibit to the registration statement of which this Prospectus is a part.
Authorized shares.
Subject to adjustment in certain events, the maximum number of shares of Common Stock that may be issued in satisfaction of awards
is 600,000,000. As of the date of this Prospectus, no awards had been granted.
Eligibility. The
Board may select participants from among employees and directors of and consultants to the Company.
Types of awards; vesting.
The Incentive Plan provides for various awards, including incentive stock options (“ISOs”), nonstatutory stock options,
stock appreciation rights, restricted and unrestricted stock and stock units, performance awards and cash. The Board has the authority
to determine the vesting schedule applicable to each award and to accelerate the vesting or exercisability of any award.
Termination of awards.
Unless otherwise provided
in an award agreement, upon termination of employment or service, a participant’s options and SARS will terminate and the participant
shall have no further right, title or interest therein, the shares of Common Stock subject thereto or any consideration in respect thereof.
If employment or service terminates otherwise than for cause, the Participant may exercise his Option or SAR to the extent vested, but
only within the following period or, if applicable, such other period provided in the Award Agreement.
Except as otherwise provided
in the Award Agreement or other written agreement, if a Participant’s continuous service terminates for any reason, (i) the Company
may receive through a forfeiture condition or a repurchase right any or all of the shares of Common Stock held by the participant under
his restricted stock award that have not vested as of the date of such termination as set forth in such agreement and (ii) any portion
of his RSU award that has not vested shall terminate upon such termination and he shall have no further right, title or interest in the
RSU award, the shares of Common Stock issuable pursuant thereto the RSU Award or any consideration in respect thereof the RSU.
Except as provided in an
award agreement, in the event of a dissolution or liquidation of the Company, outstanding awards (other than those consisting of vested
and outstanding shares of Common Stock not subject to a forfeiture condition or the Company’s right of repurchase) shall terminate
prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the Company’s repurchase
rights or subject to a forfeiture condition may be repurchased or reacquired by the Company, provided that the Board may cause some or
all expired or terminated Awards to become fully vested, exercisable or no longer subject to repurchase or forfeiture before the dissolution
or liquidation is completed but contingent on its completion.
Transferability.
Options and SARs may not
be transferred to financial institutions for value and the Board may impose such additional limitations on the transferability of an
option or SAR as it determines. In the absence of any such determination, the following restrictions shall apply (provided that, except
as explicitly provided in the Incentive Plan, an option or a SAR may not be transferred for consideration and, if an option is an ISO,
it may be deemed to be a nonstatutory stock option as a result of such transfer):
An option or SAR shall not
be transferable, except by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of a participant
only by him (provided that, in certain cases, the Board may permit the transfer of an Option or SAR in a manner that is not prohibited
by applicable tax and securities laws upon the Participant’s request, including to a trust if the Participant is considered to
be the sole beneficial owner of such trust (as determined under Section 671 of the U.S. Internal Revenue Code of 1986, as amended (the
“Code”), and applicable state law) while such Option or SAR is held in such trust, provided that the Participant and the
trustee enter into a transfer and other agreements required by the Company.
Subject to the execution
of transfer documentation in a format acceptable to the Company and subject to the approval of the Board or a duly authorized officer,
an Option or SAR may be transferred pursuant to a domestic relations order.
Corporate transactions.
In the event of certain corporate transactions (including merger, consolidation, reorganization, recapitalization, reincorporation,
stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, reverse stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate structure), the Board shall appropriately and proportionately
adjust (a) the class or classes and the maximum number of shares of Common Stock subject to the Plan, (b) the class or classes and the
maximum number of shares that may be issued pursuant to the exercise of ISOs and (c) the class or classes and the number of securities
and exercise price, strike price or purchase price of Common Stock subject to outstanding Awards.
Acceleration.
The Board may accelerate the time at which an award may first be exercised or the time during which an award or any part thereof will
vest.
Change in control.
In the event of a change in control of the Company (as defined in the Incentive Plan), the Board shall have discretion (i) settle
awards for an amount of cash or securities equal to their value, where in the case of options and SARs, the value of such Awards, if
any, shall be equal to their in-the-money spread value (if any), as determined in the sole discretion of the Board, (ii) arrange for
the surviving corporation or acquiring corporation (or its parent company) to assume or continue the award or to substitute a substantially
similar award, (iii) arrange for the assignment of any reacquisition or repurchase rights held by the Company in respect of Common Stock
issued pursuant to the award to the surviving corporation or acquiring corporation (or its parent company), (iv) modify the terms of
awards to add events, conditions or circumstances (including termination of employment within any specified period after a change in
control) upon which the vesting of such awards or lapse of restrictions thereon shall accelerate or deem any performance conditions satisfied
at target, maximum or actual performance through closing or provide for the performance conditions to continue after closing, (v) arrange
for the lapse, in whole or in part, of any reacquisition or repurchase rights held by the Company with respect to awards, (vi) cancel
or arrange for the cancellation of awards, to the extent not vested or not exercised prior to the effective time of the change in control,
in exchange for such cash consideration, if any, as the Board may consider appropriate, or(vii) provide that, for at least 20 days
prior to the change in control, any Options or SARs that would not otherwise become exercisable prior thereto shall be exercisable as
to all shares of Common Stock subject thereto, contingent upon and subject to the occurrence of the change in control, and that any options
or SARs not exercised prior to the consummation of the change in control shall terminate and be of no further force and effect as of
the consummation thereof.
Amendment and termination.
The Board may amend the Incentive Plan or outstanding awards, except that it may not materially impair the rights and obligations
under any award except with the written consent of the affected participant.
Retirement, Resignation or Termination Plans
We have or sponsor no plan, whether written or
verbal, that would provide compensation or benefits of any type to an executive upon retirement or any plan that would provide payment
for retirement, resignation, or termination as a result of a change in control of our company or as a result of a change in the responsibilities
of an executive following a change in control of our company.
Pension Benefits
The Company has no plans under which retirement
payments and benefits, or payments and benefits that will be provided primarily following retirement, may be or have been or may be paid.
Nonqualified Defined Contribution and Other
Nonqualified Deferred Compensation Plans
The Company has no defined contribution or other
plan that provides for the deferral of compensation.
Potential Payments upon Termination or Change-in-Control
The Company is not a party to any contract, agreement,
plan or arrangement, whether written or unwritten, that provides for payment to any of its executive officers at, following or in connection
with any termination, including without limitation resignation, severance, retirement or constructive termination, or a change in control
of the Company or a change in any of their responsibilities.
Compensation of Directors
Our directors receive no compensation in their
capacities as such.
CERTAIN RELATIONSHIPS AND
RELATED PARTY TRANSACTIONS
Merger with Pharmacology University, Inc.
On December 19, 2019, Pharmacology University,
Inc., a Delaware corporation (“PUI”), with and into the Company pursuant to an Agreement and Plan of Merger, dated as of
November 7, 2019, under which PUI was merged with and into the Company (the “PU Merger Agreement”). Pursuant to this agreement,
the Company issued 4,595,467,025 shares of Common Stock to the former holders of the common stock of PUI and also issued 2,000,000 shares
of its Series A Preferred to Dante Picazo, who became the Company’s chief executive officer president upon the closing of the PU
Merger Agreement. As a result of these issuances, Mr. Picazo acquired sole control of the Company.
On January 5, 2020, the Company issued 50,000,000
shares of Common Stock to Henry Levinski, a director and vice president of the Company in consideration of his employment. These shares
had a market value of $5,000 on the date of their issuance.
On January 5, 2020, the Company issued 40,000,000
shares of Common Stock to Jose Torres, a director and secretary of the Company, in consideration of $40,000. Based on the closing price
for the Common Stock on January 3, 2020, which was the most recent date on which it was traded, these shares had a market value of $8,000.
Dante Picazo and Henry Levinski, two of the Company’s
officers, lease 1,400 square feet in Houston, Texas, at 1625 Main St, Houston, Texas, under a lease, the term of which commenced on February
29, 2020, and will expire on September 30, 2022, at a rent of $3,449 per month; these officers have made a portion of these premises
available to the Company for use as office space, for which the Company pays them $2,817 per month. The Company believes that the rental
that it pays to Messrs. Picazo and Levinski is the fair market value of the space rented.
On August 15, 2022, pursuant to resolutions of
the Board, Mr. Picazo exchanged 595,467,205 shares of Common Stock for 1,000 shares of the Company’s Series B Preferred Stock (“Series
B Preferred”). Since Mr. Picazo had an interest in this exchange, he did not vote on the adoption of this resolution.
PRINCIPAL AND SELLING STOCKHOLDERS
The table below sets forth the beneficial ownership
of Common Stock as of the date of this Prospectus. As of that date, ________________ shares
of Common Stock were issued and outstanding.
The following table provides information with
respect to the beneficial ownership of Common Stock by the following (i) each of our named executive officers, (ii) each of our directors,
(ii) all directors and executive officers as a group, (iii) each person known to beneficially own more than 5% of Common Stock (excluding
the Selling Stockholders) and (iv) the Selling Stockholders.
The amounts and percentages of shares beneficially
owned are reported as required by the SEC’s rules respecting the determination of beneficial ownership of securities. Under these
rules, a person is deemed to be a “beneficial owner” of a security if he has or shares voting power or investment power,
which includes the power to dispose of or to direct the disposition of such security; and is also deemed to be a beneficial owner of
any securities of which he has a right to acquire beneficial ownership within 60 days after the determination date. Securities that can
be so acquired are deemed to be outstanding for purposes of determining such person’s ownership percentage, but not for purposes
of determining any other person’s percentage. Under these rules, more than one person may be deemed to be a beneficial owner of
the same securities and a person may be deemed to be a beneficial owner of securities as to which he has no economic interest.
| | |
Shares
Beneficially Owned Prior to the Offering | |
| | |
Shares Beneficially
Owned After the Offering1 | |
| Name
and Address of Beneficial Owner2 | |
Title
of Class or Series | |
Number | | |
Percent
of
Outstanding Shares3 | | |
Shares
Being Offered | | |
Number | | |
Percent
of
Outstanding Shares3 | |
| Named Executive
Officers and Directors: | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| Dante Picazo | |
Common Stock | |
| 4,002,611,700 | 4,
5 | |
| 49.14 | | |
| 576,500,000 | | |
| 3,426,111,700 | 4,
5 | |
| 32.54 | |
| | |
Series A Preferred | |
| 2,000,000 | | |
| 80.00 | | |
| – | | |
| 2,000,000 | | |
| 80.00 | |
| | |
Series B Preferred | |
| 1,000 | | |
| 100.00 | | |
| – | | |
| 1,000 | | |
| 100.00 | |
| Henry Levinski | |
Common Stock | |
| 50,000,000 | | |
| <1 | | |
| 50,000,000 | | |
| – | | |
| – | |
| Jose A. Torres | |
Common Stock | |
| 40,000,000 | | |
| <1 | | |
| 40,000,000 | | |
| – | | |
| – | |
| All directors and
executive officers as a group (3 persons): | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Common Stock | |
| 4,092,611,700 | | |
| 50.25 | | |
| 676,500,000 | | |
| 3,426,111,700 | 4,
5 | |
| 32.54 | |
| | |
Series A Preferred | |
| 2,000,000 | | |
| 100.0 | | |
| – | | |
| 2,500,000 | | |
| 100.00 | |
| | |
Series B Preferred | |
| 1,000 | | |
| 100.0 | | |
| – | | |
| 1,000 | | |
| 100.00 | |
| The Selling Stockholders: | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| John Neville | |
Common Stock | |
| 200,000,000 | | |
| 2.46 | | |
| 200,000,000 | | |
| – | | |
| – | |
| John Jones | |
Common Stock | |
| 303,888,888 | | |
| 3.73 | | |
| 144,166,665 | | |
| 159,722,223 | | |
| | |
| Harry Feinberg | |
| |
| 164,705,881 | | |
| 2.02 | | |
| 82,352,941 | | |
| 82,352,940 | | |
| <1 | |
| Julian J. Gonzalez | |
Common Stock | |
| 321,428,572 | | |
| 3.95 | | |
| 65,285,714 | | |
| 256,142,858 | | |
| 2.43 | |
| Jeffery Lien | |
Common Stock | |
| 55,000,000 | | |
| <1 | | |
| 55,000,000 | | |
| – | | |
| – | |
| Mark Herbert | |
Common Stock | |
| 61,111,111 | | |
| <1 | | |
| 50,000,000 | | |
| 11,111,111 | | |
| <1 | |
| Clifford Miller | |
Common Stock | |
| 41,025,641 | | |
| <1 | | |
| 20,512,820 | | |
| 20,512,821 | | |
| <1 | |
| Stephen A. Khoury | |
Common Stock | |
| 50,000,000 | | |
| <1 | | |
| 20,000,000 | | |
| 30,000,000 | | |
| <1 | |
| Casaro, S.A. | |
Common Stock | |
| 50,000,000 | | |
| <1 | | |
| 20,000,000 | | |
| 30,000,000 | | |
| <1 | |
| Tony Brown | |
Common Stock | |
| 75,892,857 | | |
| <1 | | |
| 15,178,572 | | |
| 60,714,285 | | |
| <1 | |
| Esteban Berberian | |
Common Stock | |
| 51,470,588 | | |
| <1 | | |
| 10,294,118 | | |
| 41,176,470 | | |
| <1 | |
| Paola Cedano | |
Common Stock | |
| 50,000,000 | | |
| <1 | | |
| 10,000,000 | | |
| 40,000,000 | | |
| <1 | |
| Dianely Heredia | |
Common Stock | |
| 10,000,000 | | |
| <1 | | |
| 10,000,000 | | |
| – | | |
| – | |
| Shane Leupold | |
Common Stock | |
| 10,000,000 | | |
| <1 | | |
| 10,000,000 | | |
| – | | |
| – | |
| Will Morey | |
Common Stock | |
| 10,000,000 | | |
| <1 | | |
| 10,000,000 | | |
| – | | |
| – | |
| Lourdes Perez Ruiz
and Cesar A Oliver Canabal | |
Common Stock | |
| 7,000,000 | | |
| <1 | | |
| 7,000,000 | | |
| – | | |
| – | |
| Leroy Wilits | |
Common Stock | |
| 31,904,762 | | |
| <1 | | |
| 6,380,953 | | |
| 25,523,809 | | |
| <1 | |
| Eduardo Ibarra | |
Common Stock | |
| 5,000,000 | | |
| <1 | | |
| 5,000,000 | | |
| – | | |
| <1 | |
| Jorge Verar | |
Common Stock | |
| 20,000,000 | | |
| <1 | | |
| 5,000,000 | | |
| 15,000,000 | | |
| <1 | |
| Katarin O. Robles | |
Common Stock | |
| 5,000.000 | | |
| <1 | | |
| 5,000,000 | | |
| – | | |
| – | |
| Rosa Casares | |
Common Stock | |
| 16,975,703 | | |
| <1 | | |
| 3,395,141 | | |
| 13,580,562 | | |
| <1 | |
| Frank and Maria Hernandez | |
Common Stock | |
| 16,071,428 | | |
| <1 | | |
| 3,214,285 | | |
| 12,857,143 | | |
| <1 | |
| Adriane Kearney | |
Common Stock | |
| 15,000,000 | | |
| <1 | | |
| 3,000,000 | | |
| 12,000,000 | | |
| <1 | |
| Ludvina Martinez | |
Common Stock | |
| 14,705,882 | | |
| <1 | | |
| 2,941,177 | | |
| 11,764,705 | | |
| <1 | |
| Andres Mesa | |
Common Stock | |
| 14,285,715 | | |
| <1 | | |
| 2,857,143 | | |
| 11,428,572 | | |
| <1 | |
| Laura and Jesus Grimaldo | |
Common Stock | |
| 13,161,764 | | |
| <1 | | |
| 2,632,353 | | |
| 10,529,411 | | |
| <1 | |
| David Ward | |
Common Stock | |
| 10,080,645 | | |
| <1 | | |
| 2,016,129 | | |
| 8,064,516 | | |
| <1 | |
| Fernando and Ramon Najera | |
Common Stock | |
| 2,000,000 | | |
| <1 | | |
| 2,000,000 | | |
| – | | |
| – | |
| Alfonso Campos | |
Common Stock | |
| 10,000,000 | | |
| <1 | | |
| 2,000,000 | | |
| 8,000,000 | | |
| <1 | |
| Robert A. Fleming | |
Common Stock | |
| 10,000,000 | | |
| <1 | | |
| 2,000,000 | | |
| 8,000,000 | | |
| <1 | |
| Oscar Ismael Rosales Lozano | |
Common Stock | |
| 2,000,000 | | |
| <1 | | |
| 2,000,000 | | |
| – | | |
| – | |
| Dolores Diaz | |
Common Stock | |
| 8,928,857 | | |
| <1 | | |
| 1,785,772 | | |
| 7,143,085 | | |
| <1 | |
| Shawna M. Heisler | |
Common Stock | |
| 7,000,000 | | |
| <1 | | |
| 1,400,000 | | |
| 5,600,000 | | |
| <1 | |
| Stephen Joshua Bertrand | |
Common Stock | |
| 7,000,000 | | |
| <1 | | |
| 1,400,000 | | |
| 5,600,000 | | |
| <1 | |
| Ana and Raul Hernandez | |
Common Stock | |
| 6,944,444 | | |
| <1 | | |
| 1,388,889 | | |
| 5,555,555 | | |
| <1 | |
| Cannapolis Scientific Farm SAS | |
Common Stock | |
| 6,429,000 | | |
| <1 | | |
| 1,285,800 | | |
| 5,143,200 | | |
| <1 | |
| Juan de Dios Martinez | |
Common Stock | |
| 6,250,000 | | |
| <1 | | |
| 1,250,000 | | |
| 5,000,000 | | |
| <1 | |
| Rosa Galindo | |
Common Stock | |
| 6,250,000 | | |
| <1 | | |
| 1,250,000 | | |
| 5,000,000 | | |
| <1 | |
| Paola Perales | |
Common Stock | |
| 6,000,000 | | |
| <1 | | |
| 1,200,000 | | |
| 4,800,000 | | |
| <1 | |
| David Esparza | |
Common Stock | |
| 5,882,353 | | |
| <1 | | |
| 1,176,471 | | |
| 4,705,882 | | |
| <1 | |
| George and Sky Noel | |
Common Stock | |
| 5,018,939 | | |
| <1 | | |
| 1,003,788 | | |
| 4,015,151 | | |
| <1 | |
| Limary Rios Camacho | |
Common Stock | |
| 1,000,000 | | |
| <1 | | |
| 1,000,000 | | |
| – | | |
| – | |
| Alex J. Cruz Valez | |
Common Stock | |
| 5,000,000 | | |
| <1 | | |
| 1,000,000 | | |
| 4,000,000 | | |
| <1 | |
| Jhazmin Guadalupe Duran | |
Common Stock | |
| 1,000,000 | | |
| <1 | | |
| 1,000,000 | | |
| – | | |
| – | |
| Bob Wood | |
Common Stock | |
| 5,000,000 | | |
| <1 | | |
| 1,000,000 | | |
| 4,000,000 | | |
| <1 | |
| Brian Cuban | |
Common Stock | |
| 5,000,000 | | |
| <1 | | |
| 1,000,000 | | |
| 4,000,000 | | |
| <1 | |
| Maria Magdelena Pinedo | |
Common Stock | |
| 5,000,000 | | |
| <1 | | |
| 1,000,000 | | |
| 4,000,000 | | |
| <1 | |
| Victor Montanez | |
Common Stock | |
| 5,000,000 | | |
| <1 | | |
| 1,000,000 | | |
| 4,000,000 | | |
| <1 | |
| Ericka and Marcos Nava | |
Common Stock | |
| 3,750,000 | | |
| <1 | | |
| 750,000 | | |
| 3,000,000 | | |
| <1 | |
| Wyntrea Cunningham | |
Common Stock | |
| 3,571,428 | | |
| <1 | | |
| 714,286 | | |
| 2,857,142 | | |
| <1 | |
| Shana Rodriguez | |
Common Stock | |
| 3,125,000 | | |
| <1 | | |
| 685,000 | | |
| 2,440,000 | | |
| <1 | |
| Dante Rodriguez | |
Common Stock | |
| 3,000,000 | | |
| <1 | | |
| 600,000 | | |
| 2,400,000 | | |
| <1 | |
| Eugenio E. Ibarra Pereira | |
Common Stock | |
| 3,000,000 | | |
| <1 | | |
| 600,000 | | |
| 2,400,000 | | |
| <1 | |
| Leidy Marulanda Escudero | |
Common Stock | |
| 3,000,000 | | |
| <1 | | |
| 600,000 | | |
| 2,400,000 | | |
| <1 | |
| Barbara Collazo Cortes | |
Common Stock | |
| 500,000 | | |
| <1 | | |
| 500,000 | | |
| – | | |
| – | |
| Daniela Montana Arevalo | |
Common Stock | |
| 500,000 | | |
| <1 | | |
| 500,000 | | |
| – | | |
| – | |
| Arturo Gomez | |
Common Stock | |
| 2,500,000 | | |
| <1 | | |
| 500,000 | | |
| 2,000,000 | | |
| <1 | |
| Teresa Serrano-Lamm | |
Common Stock | |
| 2,500,000 | | |
| <1 | | |
| 500,000 | | |
| 2,000,000 | | |
| <1 | |
| Cardamom Export Company SAS | |
Common Stock | |
| 2,143,000 | | |
| <1 | | |
| 428,600 | | |
| 1,714,400 | | |
| <1 | |
| Billy and Krista Foxworth | |
Common Stock | |
| 2,000,000 | | |
| <1 | | |
| 400,000 | | |
| 1,600,000 | | |
| <1 | |
| Cecil Bishop, Jr. | |
Common Stock | |
| 2,000,000 | | |
| <1 | | |
| 400,000 | | |
| 1,600,000 | | |
| <1 | |
| Martina A Cortez | |
Common Stock | |
| 2,000,000 | | |
| <1 | | |
| 400,000 | | |
| 1,600,000 | | |
| <1 | |
| Presly Schoenman | |
Common Stock | |
| 2,000,000 | | |
| <1 | | |
| 400,000 | | |
| 1,600,000 | | |
| <1 | |
| Tom Tusing | |
Common Stock | |
| 2,000,000 | | |
| <1 | | |
| 400,000 | | |
| 1,600,000 | | |
| <1 | |
| Lizeth Vega | |
Common Stock | |
| 1,893,939 | | |
| <1 | | |
| 378,788 | | |
| 1,515,151 | | |
| <1 | |
| Steven and Sonia Flores | |
Common Stock | |
| 1,562,500 | | |
| <1 | | |
| 312,500 | | |
| 1,250,000 | | |
| <1 | |
| Eric Dangler, Timothy
Borgmann and David Farmos | |
Common Stock | |
| 1,500,000 | | |
| <1 | | |
| 300,000 | | |
| 1,200,000 | | |
| <1 | |
| Leavery Y. Davidson | |
Common Stock | |
| 1,500,000 | | |
| <1 | | |
| 300,000 | | |
| 1,200,000 | | |
| <1 | |
| Akil Thomas | |
Common Stock | |
| 1,470,588 | | |
| <1 | | |
| 294,117 | | |
| 1,176,471 | | |
| <1 | |
| Annabel Velasquez | |
Common Stock | |
| 1,470,588 | | |
| <1 | | |
| 294,117 | | |
| 1,176,471 | | |
| <1 | |
| Jeanette Cantu and Ricardo Beltran | |
Common Stock | |
| 1,470,588 | | |
| <1 | | |
| 294,117 | | |
| 1,176,471 | | |
| <1 | |
| Maryanne Velasquez | |
Common Stock | |
| 1,470,588 | | |
| <1 | | |
| 294,117 | | |
| 1,176,471 | | |
| <1 | |
| Ricardo Delacruz | |
Common Stock | |
| 1,470,588 | | |
| <1 | | |
| 294,117 | | |
| 1,176,471 | | |
| <1 | |
| Robert Gomez | |
Common Stock | |
| 1,470,588 | | |
| <1 | | |
| 294,117 | | |
| 1,176,471 | | |
| <1 | |
| Shanner Fugett | |
Common Stock | |
| 1,470,588 | | |
| <1 | | |
| 294,117 | | |
| 1,176,471 | | |
| <1 | |
| Tommy Hampton | |
Common Stock | |
| 1,470,588 | | |
| <1 | | |
| 294,117 | | |
| 1,176,471 | | |
| <1 | |
| Victor and Rene Gonzalez | |
Common Stock | |
| 1,470,588 | | |
| <1 | | |
| 294,117 | | |
| 1,176,471 | | |
| <1 | |
| Brenda Gonzalez | |
Common Stock | |
| 250,000 | | |
| <1 | | |
| 250,000 | | |
| – | | |
| – | |
| Carrie Ray | |
Common Stock | |
| 1,177,000 | | |
| <1 | | |
| 235,400 | | |
| 941,600 | | |
| <1 | |
| Denise Rodriguez Steidel | |
Common Stock | |
| 1,000,000 | | |
| <1 | | |
| 200,000 | | |
| 800,000 | | |
| <1 | |
| Jill Rocha | |
Common Stock | |
| 1,000,000 | | |
| <1 | | |
| 200,000 | | |
| 800,000 | | |
| <1 | |
| Kristina Gallegos Martinez | |
Common Stock | |
| 1,000,000 | | |
| <1 | | |
| 200,000 | | |
| 800,000 | | |
| <1 | |
| Monique Lucy Castillo Velosa | |
Common Stock | |
| 1,000,000 | | |
| <1 | | |
| 200,000 | | |
| 800,000 | | |
| <1 | |
| Erika Daniel | |
Common Stock | |
| 500,000 | | |
| <1 | | |
| 100,000 | | |
| 400,000 | | |
| <1 | |
| Travis Slater | |
Common Stock | |
| 500,000 | | |
| <1 | | |
| 100,000 | | |
| 400,000 | | |
| <1 | |
| Sara and Maria Jaramillo
Castillo | |
Common Stock | |
| 250,000 | | |
| <1 | | |
| 50,000 | | |
| 200,000 | | |
| <1 | |
| Alexis Marie Molina | |
Common Stock | |
| 150,000 | | |
| <1 | | |
| 30,000 | | |
| 120,000 | | |
| <1 | |
(1) Assumes the sale of all shares of Common
Stock shown in the column captioned “Shares Being Offered.”
(2) The address for each person is c/o China
Infrastructure Construction Corp., 6201 Bonhomme Road, Suite 466S, Houston, TX 91789.
(3) Applicable percentage of ownership is based
on _____________ shares of Common Stock outstanding on the date of this Prospectus plus
the number of shares into which shares of Series A Preferred held by a person or group are convertible.
(4) Assumes the conversion of all of the shares
of Series A Preferred.
(5) Includes 117,000 beneficially owned together
with Henry Levinski.
Corporate Governance
Director Independence
OTC defines “independent director”
as a person other than an executive officer or employee of a company or any other person having a relationship which, in the opinion
of the Board, would interfere with the exercise of independent judgment in carrying out their responsibilities as a director. The persons
who are not considered independent for purposes of this definition are (i) a director who is, or at any time during the past three
years was, employed by the company; (ii) a director who accepted or has a family member who accepted any compensation from the company
in excess of $120,000 during any fiscal year within the three years preceding the determination of independence, other than compensation
for board or board committee service; compensation paid to a family member who is an employee (other than an executive officer) of the
company or benefits under a tax-qualified retirement plan, or non-discretionary compensation or (iii) a director who is the family member
of a person who is, or at any time during the past three years was, employed by the Company as an executive officer.
Inasmuch as all of the directors of the Company
are employed by the Company as its officers, none of them is an independent director.
A director is not considered independent if he
is also an executive officer or employee of the corporation.
Compensation Committee
The Company does not have a standing compensation
committee or a committee performing similar functions because the Board believes that, in light of the Company’s early stage of
development and the fact that its compensation structure is not complex, such a committee is not presently warranted. Accordingly, the
whole Board participates in the consideration of executive compensation and will do so if in the future, directors are compensated for
their services as such.
MARKET PRICE FOR OUR COMMON
EQUITY
AND RELATED SHAREHOLDER MATTERS
The Common Stock is quoted on the OTC Pink tier
of the quotation system operated by OTC under the symbol CHNC. Market quotations for shares of Common Stock shown on OTC’s quotation
system reflect inter-dealer prices without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
On the date of this Prospectus, the closing price
for the Common Stock quoted by OTC was $_____.
As of ______________,
2022, there were ___ record holders of ____________
shares of the Common Stock, of which 2,335,975,553 shares were freely tradable.
The exemption from registration afforded by Rule
144 will not be available until August 24, 2023, at the earliest.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock comprises 20,000,000,000
shares of Common Stock, without par value, of which _____________ shares are outstanding,
and 10,000,000 shares of preferred stock, without par value, issuable in series, of which 2,500,000 shares have been designated Series
A Convertible Preferred Stock (“Series A Preferred”) and 1,000 shares have been designated Series B Convertible Preferred
Stock (“Series B Preferred”), all of which are outstanding. The rights of the holders of each class and series are as follows:
Common Stock
Holders of Common Stock are entitled to cast
one vote for each share of Common Stock on all matters submitted to a vote of the stockholders; to receive, on a pro-rata basis, dividends
and distributions, if any, that the Board may declare out of legally available funds, subject to preferences that are applicable to the
Series A Preferred and Series B Preferred, and, if any, to series of preferred stock that may be designated in the future; and upon liquidation,
dissolution or winding up, to share equally and ratably in any assets remaining after the payment of all debts and other liabilities,
subject to the prior rights of the holders of the Series A Preferred.
We do not expect to declare or pay dividends
on Common Stock for the foreseeable future. See “Dividend Policy.”
The holders of Common Stock do not have any preemptive,
cumulative voting, subscription, conversion, redemption or sinking fund rights. The Common Stock is not subject to calls or assessments.
The rights and privileges of holders of the Common Stock are subject to those of the Series A Preferred, which are described below, and
to any other series of preferred stock that we may issue in the future.
The Common Stock is quoted on the OTC Pink tier
of the alternate trading system operated by OTC under the symbol “CHNC.”
Preferred Stock
The Company has authorized 10,000,000 shares
of preferred stock, of which 2,500,000 shares have been designated Series A Convertible Preferred Stock and 1,000 shares have been designated
Series B Preferred Stock (“Series B Preferred”). The rights and preferences of the Series A Preferred Stock are the Series
B Preferred Stock are as follows:
Series A Preferred
The Series A Preferred Stock
is senior to the Common Stock and subordinate to all other series of preferred stock.
Each share of Series A Preferred
is entitled to receive out of the funds of the Company legally available therefor, on the date on which such dividend or other distribution
is paid or made to the holders of Common Stock, a dividend or distribution equal to the dividend or distribution that would be paid on
the number of shares of Common Stock into which such share of Series A Preferred Stock is convertible immediately prior to the record
date for such dividend.
In the event of any liquidation,
dissolution or winding up of the Company, the holders of the outstanding shares of Series A Preferred shall be entitled to be paid out
of the assets of the Corporation available for distribution to its shareholders, whether from capital, surplus funds or earnings, and
before any payment is made in respect of the shares of Common Stock, an amount equal to the greater of: (i) the Market Price (as defined
in the restated articles of incorporation) of the Series A Preferred Stock on the date of the liquidation, or (ii) ten cents ($0.10)
per share of Series A Preferred, plus accrued but unpaid dividends.
The Series A Preferred may
be redeemed, as a whole or in part, at any time or from time to time, as determined by the Board in its discretion. Upon redemption,
each share of Series A Preferred shall receive as the full redemption payment the number of shares of Common Stock into which it is then
convertible. The Board shall select the shares of Series A Preferred to be redeemed in its sole and unfettered discretion and need not
do so on a pro-rata basis. The Series A Preferred is not redeemable at the option of the holders.
Each share of Series A Preferred
is entitled to one vote for each share of Common Stock into which it is convertible, and except as otherwise required by law, vote as
a group with the holders of Common Stock.
Each share of Series A Preferred
may be converted, at the option of the holder, into the number of shares of Common Stock equal to the quotient obtained by dividing the
current Series A Preference Price by the Series A Conversion Price, which is the greater of: (i) $0.10 or (ii) 75% of the Market
Price of the Common Stock on the Conversion Date.
Series B Preferred
The Series B Preferred is
senior to the Common Stock and the Series A Preferred.
In the event of liquidation,
the shares of Series B Preferred shall not be entitled to receive any distribution of cash or other property whatsoever.
The Series B Preferred is
not redeemable at the option of the holder or the Company.
The holders of the Series
B Preferred vote as a group with the holders of all other classes and series of the Corporation’s capital stock and have 60% of
the voting power of the Company on all matters, except that the holders of the Series B Preferred vote as a separate voting group on
all matters affecting their rights as such or as otherwise specified by law. No series of preferred stock having voting rights equal
or superior to the voting rights of the Series B Preferred may designated without the unanimous vote of all of the holders thereof.
The holders of Series B
Preferred have no conversion rights.
Anti-Takeover Effects of the Series B Preferred
The provisions of the restated articles of incorporation
designating the Series B Preferred vest 60% of the voting power of the Company in the holders thereof. These provisions prevent the holders
of Common Stock from taking any action without the approval of the holders of the Series B Preferred. These provisions may have an anti-takeover
effect and may delay, deter or prevent a tender offer, takeover attempt or other transaction that might be in a stockholder’s best
interest, including an attempt that might result in the receipt of a premium over the market price for shares of Common Stock.
Indemnification
The Company’s amended and restated articles
of incorporation require it to indemnify, to the full extent permitted by law, any person who is or was a director or officer of the
Company, and may indemnify any other person against any claim, liability or expense arising against or incurred by such person made a
party to a proceeding because he is or was a director, officer, agent, fiduciary or employee of the Company or because he is or was serving
another entity as a director, officer, partner, trustee, employee, fiduciary or agent at the Company’s request.
Elimination of Personal Liability
The Company’s amended and restated articles
of incorporation provide that the personal liability of the Company’s directors to the Company or its stockholders is limited to
the full extent permitted by the CBCA.
Annual Stockholders Meeting
Our amended and restated by-laws provide that
annual stockholder meetings will be held at a date, time and place selected by resolution adopted by a majority of our entire Board or,
if duly authorized by the affirmative vote of a majority of our entire Board, by a committee thereof, or by the chairman of our Board
(if delegated such authority by resolution adopted by a majority of our entire Board). We are permitted to conduct stockholder meetings
by remote communications.
The affirmative vote of holders of a majority
of the outstanding shares of our capital stock present, in person or by proxy, at any annual or special meeting of stockholders and entitled
to vote will decide all matters voted on by stockholders at such meeting, provided that such shares constitute a quorum, unless the question
is one upon which, by express provision of law, under our amended and restated certificate of incorporation, or under our amended and
restated by-laws, a different vote is required, in which case such provision will control.
SHARES ELIGIBLE FOR FUTURE
SALE
Future sales of substantial amounts of Common
Stock, including shares issued upon the exercise of outstanding options or warrants, in the public market after the Offering, or the
perception that such sales may occur, could cause the market price for the Common Stock to fall or impair our ability to raise capital
through sales of our equity securities.
Upon the closing of the Offering, assuming that
all of the shares offered by the Company are sold, there will be ___________ shares
of Common Stock outstanding.
Of these shares, we expect that _____________
shares will be freely tradable without restriction under the Securities Act unless held by our affiliates, as that term is defined
in Rule 144 under the Securities Act, as described below. Shares held by our affiliates may not be resold except pursuant to an effective
registration statement or an exemption from registration, including in limited amounts under the exemption from registration afforded
by Rule 144. As of the date of this Prospectus, there are 2,335,975,553 shares of Common Stock that are free trading.
In addition, following the Offering, up to 600,000,000
shares of Common Stock issuable pursuant to awards granted under the Incentive Plan under a registration statement on Form S-8
that we expect to file; these shares, except for shares held by our affiliates, will be freely tradable in the public market, subject
to contractual and legal restrictions.
The remaining ________________
shares of Common Stock outstanding after the Offering will be “restricted securities,” as that term is defined in
Rule 144 of the Securities Act, all of which securities may be sold in the public market only if the sale is registered or pursuant to
an exemption from registration, such as the exemption from registration afforded by Rule 144. Rule 144 will be available for the sale
of all of these shares on August 23, 2023.
Rule 144
In general, under Rule 144, beginning on August
23, 2023, any person who is not our affiliate and has held their shares for at least six months, including the holding period of any
prior owner, except for our affiliates, may sell shares without restriction, subject to the availability of current public information
about us. In addition, under Rule 144, any person who is not and has not been our affiliate at any time during the preceding three months
and has held his shares for at least one year, including the holding period of any prior owner, except for our affiliates, would be entitled
to sell an unlimited number of shares immediately in the event that no current public information about us is available.
Beginning on August 23, 2023, a person who is
our affiliate or who was our affiliate at any time during the preceding three months and who has beneficially owned restricted securities
for at least six months, including the holding period of any prior owner other than one of our affiliates, will be entitled to sell a
number of shares within any three-month period that does not exceed the greater of: (i) 1% of the number of shares of Common Stock
outstanding, which will be approximately ____________ shares immediately after the Offering,
assuming that all of the shares offered by the Company are sold, and (ii) the average weekly trading volume of Common Stock during
the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. Such sales will be subject to certain
manner-of-sale provisions, notice requirements and the availability of current public information about us.
Incentive Plan Registration Statement
We intend to file with the SEC a registration
statement on Form S-8 under the Securities Act covering the shares of common stock that are issuable to existing and future awards under
the Incentive Plan. Shares covered by such registration statement will be available for sale in the open market following its effective
date, subject to Rule 144 limitations applicable to our affiliates.
Registration rights
Persons to whom we sell shares of Common Stock
or securities convertible into Common Stock pursuant to exemptions from registration under the Securities Act may acquire these shares
or securities under agreements pursuant to which they may demand that we register the sale of the purchased shares under the Securities
Act or, if we file a registration statement under the Securities Act other than a registration statement on Form S-8 covering securities
issuable under the Incentive Plan or on Form S-4, may have the right to include their shares in such registration. Following such registered
sales, these shares will be freely tradable without restriction under the Securities Act, unless they are held by our affiliates.
MATERIAL U.S. FEDERAL INCOME
TAX CONSEQUENCES TO NON-U.S. HOLDERS OF COMMON STOCK
The following is a summary of the material U.S.
federal income tax consequences to non-U.S. holders (as defined below) of the acquisition, ownership, and disposition of Common Stock
issued pursuant to this offering. This discussion is not a complete analysis of all potential U.S. federal income tax consequences relating
thereto, does not address the potential application of the Medicare contribution tax on net investment income, the alternative minimum
tax, or the special tax accounting rules under Section 451(b) of the Code, and does not address any estate or gift tax consequences or
any tax consequences arising under any state, local, or foreign tax laws, or any other U.S. federal tax laws. This discussion is based
on the Code and applicable Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative
pronouncements of the Internal Revenue Service, or IRS, all as in effect as of the date hereof. These authorities are subject to differing
interpretations and may change, possibly retroactively, resulting in U.S. federal income tax consequences different from those discussed
below. We have not requested a ruling from the IRS with respect to the statements made and the conclusions reached in the following summary,
and there can be no assurance that the IRS or a court will agree with such statements and conclusions.
This discussion is limited to non-U.S. holders
who purchase Common Stock pursuant to this offering and who hold Common Stock as a “capital asset” within the meaning of
Section 1221 of the Code (generally, property held for investment). This discussion does not address all of the U.S. federal income tax
consequences that may be relevant to a particular holder in light of such holder’s particular circumstances. This discussion also
does not consider any specific facts or circumstances that may be relevant to holders subject to special rules under the U.S. federal
income tax laws, including:
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certain former citizens or long-term residents of the United States;
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“controlled foreign corporations;” |
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“passive foreign investment companies;” |
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corporations that accumulate earnings to avoid U.S. federal income
tax; |
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banks, financial institutions, investment funds, insurance companies,
brokers, dealers, or traders in securities; |
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tax-exempt organizations and governmental organizations; |
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tax-qualified retirement plans; |
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“qualified foreign pension funds” as defined in Section 897(l)(2)
of the Code and entities, all of the interests of which are held by qualified foreign pension funds; |
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persons that own, or have owned, actually or constructively, more than
5% of Common Stock at any time; |
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persons who have elected to mark securities to market; and |
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persons holding Common Stock as part of a hedging or conversion transaction
or straddle, a constructive sale, or other risk reduction strategy or integrated investment. |
If an entity or arrangement that is classified
as a partnership for U.S. federal income tax purposes holds Common Stock, the U.S. federal income tax treatment of the partnership and
the partners thereof generally
depend on the status of the partner and the activities
of the partnership. Partnerships holding Common Stock and the partners in such partnerships are urged to consult their tax advisors about
the particular U.S. federal income tax consequences to them of holding and disposing of Common Stock.
THIS DISCUSSION IS FOR INFORMATIONAL PURPOSES
ONLY AND IS NOT TAX ADVICE. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE PARTICULAR U.S. FEDERAL INCOME TAX
CONSEQUENCES TO THEM OF ACQUIRING, OWNING, AND DISPOSING OF COMMON STOCK, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER ANY STATE, LOCAL,
OR FOREIGN TAX LAWS AND ANY OTHER U.S. FEDERAL TAX LAWS.
Definition of non-U.S. holder
For purposes of this discussion, the term “non-U.S.
holder” means any beneficial owner of Common Stock that is not a “U.S. person” or a partnership (including any entity
or arrangement treated as a partnership) for U.S. federal income tax purposes. A U.S. person is any person that, for U.S. federal income
tax purposes, is or is treated as any of the following:
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an individual who is a citizen or resident of the United States; |
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a corporation (or entity treated as a corporation for U.S. federal
income tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia; |
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an estate, the income of which is subject to U.S. federal income tax
regardless of its source; or |
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a trust (1) whose administration is subject to the primary supervision
of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or
(2) that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. |
Distributions on Common Stock
We have not paid dividends on Common Stock and
do not anticipate paying dividends on Common Stock for the foreseeable future. However, if we make cash or other property distributions
on Common Stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current
or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S.
federal income tax purposes will constitute a return of capital and will first be applied against and reduce a holder’s tax basis
in Common Stock, but not below zero. Any excess will be treated as gain realized on the sale or other disposition of Common Stock and
will be treated as described under the section titled “— Gain on disposition of Common Stock” below.
Subject to the discussions below regarding effectively
connected income, backup withholding and Sections 1471 through 1474 of the Code (commonly referred to as FATCA), dividends paid to a
non-U.S. holder generally will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends or such
lower rate specified by an applicable income tax treaty. To receive the benefit of a reduced treaty rate, a non-U.S. holder must furnish
a valid IRS Form W-8BEN or IRS Form W-8BEN-E (or applicable successor form) and satisfy applicable certification and other requirements.
This certification must be provided before the payment of dividends and must be updated periodically. If the non-U.S. holder holds the
stock through a financial institution or other agent acting on the non-U.S. holder’s behalf, the non-U.S. holder will be required
to provide appropriate documentation to the agent, which then will be required to provide certification, either directly or through other
intermediaries.
If a non-U.S. holder holds Common Stock in connection
with the conduct of a trade or business in the United States, and dividends paid on Common Stock are effectively connected with such
holder’s U.S. trade or business (and are attributable to such holder’s permanent establishment in the United States if required
by an applicable tax treaty), the non-U.S. holder will be exempt from U.S. federal withholding tax. To claim the exemption, the non-U.S.
holder must generally furnish a valid IRS Form W-8ECI (or applicable successor form) to us or our paying agent. However, any such effectively
connected dividends paid on Common Stock generally will be subject to U.S. federal income tax on a net income basis at the regular U.S.
federal income tax rates in the same manner as if such holder were a resident of the United States. A non-U.S. holder that is a foreign
corporation also may be subject to an additional branch profits tax equal to 30% (or such lower rate specified by an applicable income
tax treaty) of its effectively connected earnings and profits for the taxable year, as adjusted for certain items. Non-U.S. holders should
consult their tax advisors regarding any applicable income tax treaties that may provide for different rules.
Non-U.S. holders that do not provide the required
certification on a timely basis, but that qualify for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely
filing an appropriate claim for refund with the IRS.
Gain on disposition of Common Stock
Subject to the discussions below regarding backup
withholding and FATCA, a non-U.S. holder generally will not be subject to U.S. federal income tax on any gain realized on the sale or
other disposition of Common Stock, unless:
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the gain is effectively connected with the non-U.S. holder’s
conduct of a trade or business in the United States, and, if required by an applicable income tax treaty, is attributable to a permanent
establishment maintained by the non-U.S. holder in the United States; |
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the non-U.S. holder is a nonresident alien individual present in the
United States for 183 days or more during the taxable year of the disposition, and certain other requirements are met; or |
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Common Stock constitutes a “United States real property interest,”
or USRPI, by reason of our status as a United States real property holding corporation, or USRPHC, for U.S. federal income tax purposes
at any time within the shorter of the five-year period preceding the disposition or the non-U.S. holder’s holding period for
Common Stock. |
The determination of whether we are a USRPHC
depends on the fair market value of our USRPIs relative to the fair market value of worldwide real property interests and our other assets
used or held for use in a trade or business. We believe that we are not currently and do not anticipate becoming a USRPHC for U.S. federal
income tax purposes, although there can be no assurance that we will not become a USRPHC. Even if we are or were to become a USRPHC,
gain arising from the sale or other taxable disposition of Common Stock by a non-U.S. holder will not be subject to U.S. federal income
tax if Common Stock is “regularly traded” (as defined by applicable Treasury Regulations) on an established securities market,
and such non-U.S. holder owned, actually and constructively, 5% or less of Common Stock throughout the shorter of the five-year period
ending on the date of the sale or other taxable disposition or the non-U.S. holder’s holding period. Prospective investors are
encouraged to consult their own tax advisors regarding the possible consequences to them if we are, or were to become, a USRPHC.
Gain described in the first bullet point above
generally will be subject to U.S. federal income tax on a net income basis at the regular U.S. federal income tax rates in the same manner
as if such holder were a resident of the United States. A non-U.S. holder that is a foreign corporation also may be subject to an additional
branch profits tax equal to 30% (or such lower rate specified by an applicable income tax treaty) of its effectively connected earnings
and profits for the taxable year, as adjusted for certain items. Gain described in the second bullet point above will be subject to U.S.
federal income tax at a flat 30% rate (or such lower rate specified by an applicable income tax treaty), but may be offset by certain
U.S.-source capital losses (even though the individual is not considered a resident of the United States), provided that the non-U.S.
holder has timely filed U.S. federal income tax returns with respect to such losses. Non-U.S. holders should consult their tax advisors
regarding any applicable income tax treaties that may provide for different rules.
Information reporting and backup withholding
Annual reports are required to be filed with
the IRS and provided to each non-U.S. holder indicating the amount of distributions on Common Stock paid to such holder and the amount
of any tax withheld with respect to those distributions. These information reporting requirements apply regardless of whether such distributions
constitute dividends and even if no withholding was required. This information also may be made available under a specific treaty or
agreement with the tax authorities in the country in which the non-U.S. holder resides or is established. Backup withholding, currently
at a 24% rate, generally will not apply to payments to a non-U.S. holder of dividends on or the gross proceeds of a disposition of Common
Stock provided the non-U.S. holder furnishes the required certification for its non-U.S. status, such as by providing a valid IRS Form
W-8BEN, IRS Form W-8BEN-E, or IRS Form W-8ECI, or certain other requirements are met. Backup withholding may apply if the payor has actual
knowledge, or reason to know, that the holder is a U.S. person who is not an exempt recipient.
Backup withholding is not an additional tax.
If any amount is withheld under the backup withholding rules, the non-U.S. holder should consult with a U.S. tax advisor regarding the
possibility of and procedure for obtaining a refund or a credit against the non-U.S. holder’s U.S. federal income tax liability,
if any.
FATCA
FATCA imposes a U.S. federal withholding tax
of 30% on certain payments made to a “foreign financial institution” (as specially defined under these rules) unless such
institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the U.S.
tax authorities substantial information regarding certain U.S. account holders of such institution (which includes certain equity and
debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or an exemption applies.
FATCA also generally will impose a U.S. federal withholding tax of 30% on certain payments made to a non-financial foreign entity unless
such entity provides the withholding agent a certification identifying certain direct and indirect U.S. owners of the entity or an exemption
applies. An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements. Under
certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes. FATCA currently applies to dividends
paid on Common Stock. Under applicable Treasury Regulations and administrative guidance, withholding under FATCA would have applied to
payments of gross proceeds from the sale or other disposition of stock, but under proposed regulations (the preamble to which specifies
that taxpayers are permitted to rely on such proposed regulations pending finalization), no withholding would apply with respect to payments
of gross proceeds.
Prospective investors are encouraged to consult
with their own tax advisors regarding the possible implications of this legislation on their investment in Common Stock.
PLAN OF DISTRIBUTION
By the Company
The Company is offering up to ____________
shares of Common Stock at the Fixed Offering Price, unless modified by a post-effective amendment to the registration statement of
which this Prospectus is a part. The Company may sell these shares in one or more of the following three ways: (i) to or through
underwriters or dealers; (ii) directly to one or more purchasers; or (iii) through agents.
Each time we offer and sell such shares, we will,
if required, make available a Prospectus supplement or supplements that will describe the method of distribution and set forth the terms
of the offering, including (i) the name or names of any underwriters, dealers, or agents and the number of shares of securities underwritten
or purchased by each of them; (ii) if a fixed price offering, the public offering price of the securities and the proceeds to us; (iii)
any options under which underwriters may purchase additional securities from us; (iv) any underwriting discounts or commissions or agency
fees and other items constituting underwriters’ or agents’ compensation; (v) terms and conditions of the offering; (vi) any
discounts, commissions or concessions allowed or reallowed or paid to dealers; and (vii) any securities exchange or market on which the
securities may be listed.
We may terminate the offering before all shares
are sold. There is no minimum number of shares that must be sold before we may use the proceeds. Proceeds will not be returned to investors
if we sell less than all of the shares offered by this Prospectus. The proceeds from the sales of the shares will not be placed in an
escrow account.
The offering will be conducted by Dante Picazo,
our Chief Executive Officer, and the other executive officers of the Company. Under Rule 3a 4-1 of the Exchange Act, an issuer may conduct
a direct offering of its securities without registration as a broker-dealer using officers who perform substantial duties for or on behalf
of the issuer otherwise than in connection with securities transactions and who were not brokers or dealers or associated persons of
brokers or dealers within the preceding 12 months and who have not participated in selling an offering of securities for any issuer more
than once every 12 months, with certain exceptions. Furthermore, such persons may not be subject to statutory disqualification under
Section 3(a)(39) of the Securities Exchange Act and may not be compensated in connection with securities offerings by payment of commission
or other remuneration based either directly or indirectly on transactions in securities and at the time of offering our shares may not
be associated persons of a broker or dealer. Mr. Picazo and our other executive officers meet these requirements.
During the Offering, the Company may offer unregistered
shares of Common Stock to investors in private placements at prices per share that may be higher or lower than the public offering price.
By the Selling Stockholders
The Selling Stockholders identified in this Prospectus
may offer, from time to time, shares of Common Stock. We will not receive any of the proceeds of such sales. There can be no assurance
that the Selling Stockholders will offer sell any or all of the Common Stock registered pursuant to the registration statement of which
this Prospectus forms a part.
Messrs. Picazo, Levinski and Torres, who are
officers and directors of the Company, may be regarded as underwriters. In addition, Mr. Picazo has indicated that he may reinvest all
or a portion of the proceeds of sales of Shares in the Company, in the form of equity or debt, on terms to be approved by the Board in
the manner provided by Colorado law respecting transactions in which officers and directors of the Company have an interest and may be
regarded as an underwriter in respect of such reinvestments.
The Selling Stockholders and their successors,
including their transferees, may sell all or a portion of their shares directly to purchasers or through underwriters, broker-dealers
or agents, who may receive compensation in the form of discounts, concessions or commissions from the Selling Stockholders or the purchasers
of the shares. These discounts, concessions or commissions as to any particular underwriter, broker-dealer or agent may be in excess
of those customary in the types of transactions involved.
These shares may be sold in one or more transactions
on any national securities exchange or alternate trading system on which the shares may be listed or quoted at the time of sale or in
the over-the-counter market or in transactions otherwise than on these exchanges or systems in one or more transactions. The Shares will
be sold at the Fixed Offering Price. These sales may be effected in transactions, which may involve crosses or block transactions. Additionally,
the Selling Stockholders may enter into derivative transactions with third parties, or sell securities not covered by this Prospectus
to third parties in privately negotiated transactions. The Selling Stockholders may use any one or more of the following methods when
selling shares:
| · | on
any national securities exchange or alternated trading system on which the shares may be
listed or quoted at the time of sale, including NASDAQ; |
| · | in
transactions otherwise than on these exchanges or services or in the over-the-counter market; |
| · | through
the writing or settlement of options or other hedging transactions, whether the options are
listed on an options exchange or otherwise; |
| · | ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| · | block
trades in which the broker-dealer will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction; |
| · | purchases
by a broker-dealer as principal and resale by the broker-dealer for its account; |
| · | an
exchange distribution in accordance with the rules of the applicable exchange; |
| · | a
debt-for-equity exchange; |
| · | privately
negotiated transactions; |
| · | settlement
of short sales entered into after the effective date of the registration statement of which
this Prospectus forms a part; |
| · | broker-dealers
may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated
price per share; |
| · | a
combination of any such methods of sale; and |
| · | any
other method permitted pursuant to applicable law. |
The Selling Stockholders may offer Common Stock
to the public through underwriting syndicates represented by managing underwriters or through underwriters without an underwriting syndicate.
If underwriters are used for the sale of Common Stock, the securities will be acquired by the underwriters for their own account. The
underwriters may resell the Common Stock in one or more transactions, including in negotiated transactions at a fixed public offering
price or at varying prices determined at the time of sale. In connection with any such underwritten sale of Common Stock, underwriters
may receive compensation from the Selling Stockholders, for whom they may act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell Common Stock to or through dealers, and the dealers may receive compensation in the form of discounts, concessions
or commissions from the underwriters or commissions from the purchasers for whom they may act as agents. Such compensation may be in
excess of customary discounts, concessions or commissions.
If underwriters are used for the sale of Common
Stock, to the extent required by law, the names of the underwriters will be set forth in the Prospectus or prospectus supplement used
by the underwriters to sell those securities. The Selling Stockholders may use underwriters with whom we or the Selling Stockholders
have a material relationship. We will describe the nature of such relationship in any applicable prospectus supplement naming the underwriter
or underwriters.
If underwriters are used for the sale of Common
Stock, unless otherwise indicated in this Prospectus or a prospectus supplement relating to a particular offering of Common Stock, the
obligations of any underwriters to purchase the securities will be subject to customary conditions precedent, and the underwriters will
be obligated to purchase all of the securities offered if any of the securities are purchased.
If underwriters are used for the sale of Common
Stock, in connection with such offering, the underwriters may advise us that they may engage in stabilizing transactions, which involves
making bids for, purchasing and selling shares of Common Stock in the open market for the purpose of preventing or retarding a decline
in the market price of the Common Stock while this offering is in progress. These stabilizing transactions may include making short sales
of the Common Stock, which involves the sale by the underwriters of a greater number of shares of Common Stock than they are required
to purchase in this offering and purchasing shares of Common Stock on the open market to cover positions created by short sales. Short
sales may be “covered” shorts, which are short positions in an amount not greater than the underwriters’ option to
purchase additional shares referred to above, or may be “naked” shorts, which are short positions in excess of that amount.
The underwriters may close out any covered short position either by exercising their option to purchase additional shares, in whole or
in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things,
the price of shares available for purchase in the open market compared to the price at which the underwriters may purchase shares through
the option to purchase additional shares. A naked short position is more likely to be created if the underwriters are concerned that
there may be downward pressure on the price of the Common Stock in the open market that could adversely affect investors who purchase
in this offering. To the extent that the underwriters create a naked short position, they will purchase shares in the open market to
cover the position.
The anti-manipulation rules of Regulation M under
the Exchange Act may apply to sales of the shares of Common Stock pursuant to this Prospectus and any applicable prospectus supplement
and to the activities of the Selling Stockholders. In addition, we will make copies of this Prospectus and any applicable prospectus
supplement available to the Selling Stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities
Act. To the extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the Common Stock
to engage in market-making activities with respect to the Common Stock. All of the foregoing may affect the marketability of the Common
Stock and the ability of any person or entity to engage in market-making activities with respect to the Common Stock.
In addition, any securities that qualify for
sale pursuant to Rule 144, Regulation S under the Securities Act or Section 4(1) under the Securities Act may be sold under such rules
rather than pursuant to this Prospectus or a prospectus supplement.
The Selling Stockholders may enter into hedging
transactions with broker-dealers, which may in turn engage in short sales of the shares of Common Stock in the course of hedging the
positions they assume. The Selling Stockholders may also sell short the shares and deliver Common Stock to close out short positions,
or loan or pledge the shares to broker-dealers that in turn may sell these shares. The Selling Stockholders may also enter into option
or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities that require
the delivery to such broker-dealer or other financial institution of shares offered by this Prospectus and any applicable prospectus
supplement, which shares such broker-dealer or other financial institution may resell pursuant to this Prospectus and any applicable
prospectus supplement. The Selling Stockholders also may transfer and donate the shares in other circumstances in which case the transferees,
donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this Prospectus and any applicable
prospectus supplement.
The aggregate proceeds to the Selling Stockholders
from the sale of the shares of Common Stock will be the sale price for the shares less discounts and commissions, if any.
In offering the shares of Common Stock covered
by this Prospectus and any applicable prospectus supplement, the Selling Stockholders and any broker-dealers who execute sales for the
Selling Stockholders may be deemed to be “underwriters” within the meaning of Section 2(a)(11) of the Securities Act in connection
with such sales. Any profits realized by the Selling Stockholders and the compensation of any broker-dealer may be deemed to be underwriting
discounts and commissions. Selling Stockholders who are “underwriters” within the meaning of Section 2(a)(11) of the Securities
Act will be subject to the prospectus delivery requirements of the Securities Act and may be subject to certain statutory and regulatory
liabilities, including liabilities imposed pursuant to Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange
Act.
In order to comply with the securities laws of
certain states, if applicable, the shares of Common Stock must be sold in such jurisdictions only through registered or licensed brokers
or dealers. In addition, in certain states the shares may not be sold unless the shares are registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is available and is complied with.
At the time when a particular offering of the
shares is made, a prospectus supplement, if required, will be distributed, which will set forth the name of the Selling Stockholders,
the aggregate amount of shares being offered by the Selling Stockholders and the terms of the offering, including, to the extent required,
(1) the name or names of any underwriters, broker-dealers or agents, (2) any discounts, commissions and other terms constituting compensation
from the Selling Stockholders and (3) any discounts, commissions or concessions allowed or reallowed to be paid to broker-dealers.
Agents and underwriters and their respective
affiliates may engage in transactions with, or perform services for, us in the ordinary course of business for which they may receive
customary fees and reimbursement of expenses.
LEGAL MATTERS
The validity of the shares of Common Stock offered
by this Prospectus has been passed upon by Barry J. Miller of West Bloomfield, Michigan. Mr. Miller is the indirect beneficial holder
of 50,000,000 shares of Common Stock.
EXPERTS
The consolidated financial statements of the
Company for the two years ended on May 31, 2021, have been included in this Prospectus and in the registration statement of which it
forms a part in reliance upon the report of PWR CPA, LLP, our independent registered public accounting firm, appearing elsewhere herein,
and upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement
on Form S-1, including exhibits and schedules, under the Securities Act, with respect to the shares of Common Stock being offered by
this Prospectus. This Prospectus, which constitutes part of the registration statement, does not contain all of the information in the
registration statement and its exhibits. For further information with respect to us and the Common Stock offered by this Prospectus,
we refer you to the registration statement and its exhibits. Statements contained in this Prospectus as to the contents of any contract
or any other document referred to are not necessarily complete, and in each instance, we refer you to the copy of the contract or other
document filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by this reference.
You can read our SEC filings, including the registration
statement, free of charge, over the Internet at the SEC’s website at www.sec.gov.
We will be subject to the information reporting
requirements of the Exchange Act and we will file reports and other information with the SEC. You may access these materials free of
charge on the SEC’s website as soon as they are filed with the SEC.
Information on or accessible through our website
is not a part of this Prospectus, and the inclusion of our website address in this Prospectus is an inactive textual reference only.
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
CHINA INFRASTRUCTURE CONSTRUCTION CORP.
CONSOLIDATED BALANCE SHEETS
| | |
February 28, 2022 | | |
May 31, 2021 | |
| | |
(Unaudited) | | |
(Audited) | |
| ASSETS | |
| Current Assets | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 4,784 | | |
$ | 41,322 | |
| Accounts receivable | |
| 8,442 | | |
| 1,295 | |
| Prepaid expenses | |
| 1,538 | | |
| – | |
| Related party receivables | |
| 12,000 | | |
| 12,000 | |
| Total current assets | |
| 26,764 | | |
| 54,617 | |
| | |
| | | |
| | |
| Right of use assets | |
| 68,992 | | |
| 94,172 | |
| TOTAL ASSETS | |
| 95,756 | | |
| 148,789 | |
| | |
| | | |
| | |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |
| Liabilities | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Accounts payable and accrued expenses | |
| 64,642 | | |
| 8,281 | |
| Accrued rent | |
| 7,326 | | |
| 8,063 | |
| Deferred revenue | |
| 31,860 | | |
| – | |
| Bank overdraft | |
| – | | |
| – | |
| Related party payable | |
| 16,035 | | |
| 10,808 | |
| Short-term loan | |
| 5,465 | | |
| – | |
| SBA loan | |
| 249,300 | | |
| 249,300 | |
| PPP loan | |
| 61,881 | | |
| 88,631 | |
| Lease liabilities - current | |
| 42,963 | | |
| 43,965 | |
| Total current liabilities | |
| 479,472 | | |
| 409,048 | |
| Lease liabilities - noncurrent | |
| 15,104 | | |
| 40,911 | |
| Total Liabilities | |
| 494,576 | | |
| 449,959 | |
| | |
| | | |
| | |
| Stockholders' deficiency | |
| | | |
| | |
| Preferred stock, par value $0.001 per share: 10,000,000 shares authorized; 2,500,000
shares designated Series A Convertible Preferred Stock and outstanding at February 28, 2022, and May 31, 2021 | |
| 2,500 | | |
| 2,500 | |
| Common stock, without par value: 20,000,000,000 shares authorized; 8,265,600,111
and 7,814,238,100 shares issued and outstanding as of February 28, 2022, and May 31, 2021, respectively | |
| – | | |
| – | |
| Additional paid-in capital | |
| 2,993,815 | | |
| 2,461,315 | |
| Accumulated deficit | |
| (3,395,135 | ) | |
| (2,764,985 | ) |
| Total stockholders' deficiency | |
| (398,820 | ) | |
| (301,170 | ) |
| | |
| | | |
| | |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | |
$ | 95,756 | | |
$ | 148,789 | |
The accompanying notes are an integral part of
these unaudited consolidated financial statements.
CHINA INFRASTRUCTURE CONSTRUCTION CORP.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
| | |
Nine Months Ended February 28, | | |
Three Months Ended February 28, | |
| | |
2022 | | |
2021 | | |
2022 | | |
2021 | |
| | |
| | |
| | |
| | |
| |
| Revenues | |
$ | 141,981 | | |
$ | 711,925 | | |
$ | 32,492 | | |
$ | 90,138 | |
| Cost of Revenues | |
| 31,515 | | |
| 86,726 | | |
| 7,407 | | |
| 7,092 | |
| Gross profit | |
| 110,466 | | |
| 625,199 | | |
| 25,085 | | |
| 83,046 | |
| Cost and expenses | |
| | | |
| | | |
| | | |
| | |
| General and administrative | |
| 98,880 | | |
| 70,439 | | |
| 25,384 | | |
| 17,662 | |
| Contract labor | |
| 397,216 | | |
| 190,514 | | |
| 148,097 | | |
| 82,042 | |
| Professional fees | |
| 108,911 | | |
| 72,338 | | |
| 50,973 | | |
| 22,184 | |
| Officer compensation | |
| 54,797 | | |
| 146,381 | | |
| 14,500 | | |
| 39,002 | |
| Rent and lease | |
| 60,353 | | |
| 61,109 | | |
| 24,225 | | |
| 19,855 | |
| Travel | |
| 8,502 | | |
| 30,758 | | |
| 3,737 | | |
| 6,202 | |
| Total operating expenses | |
| 728,659 | | |
| 571,539 | | |
| 266,916 | | |
| 186,947 | |
| | |
| | | |
| | | |
| | | |
| | |
| Operating Income | |
| (618,193 | ) | |
| 53,660 | | |
| (241,831 | ) | |
| (103,901 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net operating income | |
| (618,193 | ) | |
| 53,660 | | |
| (239,873 | ) | |
| (103,901 | ) |
| Other expenses (income) | |
| | | |
| | | |
| | | |
| | |
| Interest | |
| 45,665 | | |
| 553 | | |
| 26,484 | | |
| – | |
| Other income | |
| (33,708 | ) | |
| (1,215 | ) | |
| (1,958 | ) | |
| (50 | ) |
| Total other (income) expenses | |
| 11,957 | | |
| (662 | ) | |
| 24,526 | | |
| (50 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net income | |
$ | (630,150 | ) | |
$ | 54,322 | | |
$ | (266,357 | ) | |
$ | (103,851 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Average common stock outstanding | |
| 7,882,105,374 | | |
| 8,735,827,844 | | |
| 7,850,488,100 | | |
| 8,735,827,844 | |
| Average earnings (loss) per share | |
$ | (0.00008 | ) | |
$ | 0.00001 | | |
$ | 0.00004 | | |
$ | (0.00001 | ) |
The accompanying notes are
an integral part of these unaudited consolidated financial statements.
CHINA INFRASTRUCTURE CONSTRUCTION CORP.
CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
| | |
Nine Months Ended February 28, | |
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| OPERATING ACTIVITIES | |
| | | |
| | |
| Net income (loss) | |
$ | (630,150 | ) | |
$ | 54,321 | |
| Adjustment to reconcile net income | |
| | | |
| | |
| Amortization of right to use asset and liability | |
| (1,629 | ) | |
| – | |
| Loan forgiveness - portion of PPP loans | |
| (31,750 | ) | |
| – | |
| Changes in assets and liabilities | |
| | | |
| | |
| Bank overdraft | |
| – | | |
| – | |
| Accounts receivable | |
| (7,147 | ) | |
| (795 | ) |
| Prepaid Expenses | |
| (1,538 | ) | |
| – | |
| Accounts payable and accrued expenses | |
| 55,626 | | |
| (65,447 | ) |
| Deferred revenue | |
| 31,860 | | |
| (268,469 | ) |
| Increase in related party receivable | |
| – | | |
| (21,631 | ) |
| Net cash provided by operations | |
$ | (584,728 | ) | |
$ | (302,021 | ) |
| FINANCING ACTIVITIES | |
| | | |
| | |
| Cash flows from financing activities | |
| | | |
| | |
| Proceeds from issuance of common shares | |
| 532,500 | | |
| 10,450 | |
| Proceeds from short term loans | |
| 5,465 | | |
| 58,265 | |
| Proceeds from SBA Loans | |
| 5,000 | | |
| 110,200 | |
| Repayment of loans | |
| – | | |
| – | |
| Payment to related party loan | |
| 5,227 | | |
| – | |
| Net cash provided by financing activities | |
| 548,192 | | |
| 178,915 | |
| Net increase (decrease) | |
| (36,536 | ) | |
| (123,106 | ) |
| Cash at beginning of period | |
| 41,322 | | |
| 127,656 | |
| Cash at end of period | |
$ | 4,786 | | |
$ | 4,550 | |
| Supplemental disclosure of cash flow information | |
| | | |
| | |
| Cash paid for interest | |
$ | 17,981 | | |
$ | 533 | |
| Cash paid for Taxes | |
| – | | |
| – | |
| Non-cash investing and financing transactions | |
$ | – | | |
$ | – | |
The accompanying notes are
an integral part of these unaudited consolidated financial statements.
CHINA INFRASTRUCTURE CONSTRUCTION CORP.
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
| | |
Series
A Convertible
Preferred
Stock | | |
Common
Stock | | |
Additional
Paid-In | | |
Accumulated | | |
| |
| | |
Shares | | |
Amount | | |
Shares | | |
Capital | | |
Deficit | | |
Total | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Balance,
May 31, 2020 | |
| 2,500,000 | | |
$ | 2,500 | | |
| 8,675,256,416 | | |
$ | 2,189,365 | | |
$ | (2,605,679 | ) | |
$ | (413,814 | ) |
| Stock issuance
for cash | |
| – | | |
| – | | |
| 3,571,428 | | |
| 9,650 | | |
| – | | |
| 9,650 | |
| Net
income for the quarter | |
| – | | |
| – | | |
| – | | |
| – | | |
| 328,160 | | |
| 328,160 | |
| Balance, August 31,2020 | |
| 2,500,000 | | |
$ | 2,500 | | |
| 8,678,827,844 | | |
$ | 2,199,015 | | |
$ | (2,277,519 | ) | |
$ | (76,004 | ) |
| Stock issuance
for cash | |
| – | | |
| – | | |
| – | | |
| 300 | | |
| – | | |
| 300 | |
| Net
loss for the quarter | |
| – | | |
| – | | |
| – | | |
| – | | |
| (169,988 | ) | |
| (169,988 | ) |
| Balance, November 30, 2020 | |
| 2,500,000 | | |
$ | 2,500 | | |
| 8,678,827,844 | | |
$ | 2,199,315 | | |
$ | (2,447,507 | ) | |
$ | (245,692 | ) |
| Stock issuance
for cash | |
| – | | |
| – | | |
| – | | |
| 500 | | |
| – | | |
| 500 | |
| Net
loss for the quarter | |
| – | | |
| – | | |
| – | | |
| – | | |
| (103,851 | ) | |
| (103,851 | ) |
| Balance,
February 28, 2021 | |
| 2,500,000 | | |
$ | 2,500 | | |
| 8,678,827,844 | | |
$ | 2,199,815 | | |
$ | (2,551,358 | ) | |
$ | (349,043 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, May 31, 2021 | |
| 2,500,000 | | |
$ | 2,500 | | |
| 7,814,238,100 | | |
$ | 2,461,315 | | |
$ | (2,764,985 | ) | |
$ | (301,170 | ) |
| Stock issuance for cash | |
| – | | |
| – | | |
| 36,134,739 | | |
| 82,500 | | |
| – | | |
| 82,500 | |
| Net loss for the quarter | |
| – | | |
| – | | |
| – | | |
| – | | |
| (171,287 | ) | |
| (171,287 | ) |
| Balance, August 31,2021 | |
| 2,500,000 | | |
$ | 2,500 | | |
| 7,850,372,839 | | |
$ | 2,543,815 | | |
$ | (2,936,272 | ) | |
$ | (389,957 | ) |
| Issuance of common stocks | |
| – | | |
| – | | |
| 51,893,939 | | |
| 95,000 | | |
| – | | |
| 95,000 | |
| Net loss for the quarter | |
| – | | |
| – | | |
| – | | |
| – | | |
| (192,506 | ) | |
| (192,506 | ) |
| Balance, November 30, 2021 | |
| 2,500,000 | | |
$ | 2,500 | | |
| 7,902,266,778 | | |
$ | 2,638,815 | | |
$ | (3,128,778 | ) | |
$ | (487,463 | ) |
| Stock issuance for cash | |
| – | | |
| – | | |
| 363,333,333 | | |
| 355,000 | | |
| – | | |
| 355,000 | |
| Net income for the quarter | |
| – | | |
| – | | |
| – | | |
| – | | |
| (266,357 | ) | |
| (266,357 | ) |
| Balance, February 28, 2022 | |
| 2,500,000 | | |
$ | 2,500 | | |
| 8,265,600,111 | | |
$ | 2,993,815 | | |
$ | (3,395,135 | ) | |
$ | (398,820 | ) |
The accompanying notes are
an integral part of these unaudited consolidated financial statements.
CHINA INFRASTRUCTURE CONSTRUCTION CORP.
Notes to Consolidated Financial
Statements
February 28, 2022
Note 1 – Organization and Business
Organization and Operations
China Infrastructure Construction Corp., a Colorado
corporation (the “Company”), was formed on February 28, 2003, as a limited liability company under the corporate name Fidelity
Aircraft Partners LLC. On December 16, 2009, it converted to a corporation under the name Fidelity Aviation Corporation, and on August
24, 2009, it changed its corporate name to China Infrastructure Construction Corp. On February 28, 2018, the Company changed its name
to Hippocrates Direct Healthcare, Inc. and on July 4, 2018, it resumed its present name. The Company provides educational systems focused
on medical cannabis in cities throughout the United States and six countries in Latin America. The Company provides services in therapeutic
areas of clinical trials and services relating to sleep disorders through its sleep center in Houston, Texas. The Company offered concierge
medicine at an affordable price through a membership-based model through its wholly owned subsidiary, Hippocrates Direct Healthcare,
LLC, a Texas limited liability company, formed on September 11, 2017; this business was discontinued during the quarter ended August
31, 2020.
Acquisition of Precision Research Institute,
LLC
On March 31, 2019, the Company acquired all of
the outstanding units in Precision Research Institute, LLC, a Texas limited liability company (“PRI”) that was formed on
May 18, 2016, from the Company’s then-president for nominal consideration. On August 20, 2020, PRI was merged with and into the
Company.
This acquisition was accounted for using the
acquisition method of accounting and is based on the historical consolidated financial statements of the Company and Precision Research
Institute, LLC. The acquisition method of accounting is set forth in Accounting Standards Codification (“ASC”) 805, Business
Combinations, and uses the fair value concepts defined in ASC 820, Fair Value Measurement. Under the acquisition method of accounting,
the assets acquired and the liabilities assumed are generally recorded as of the consummation of the acquisition at their respective
fair values and added to those of the Company. The Company’s financial statements issued after the consummation of the acquisition
reflect these fair-value adjustments, but the Company’s prior financial statements will not retroactively be restated.
Merger with Pharmacology University, Inc.
On December 19, 2019, Pharmacology University,
Inc., a Delaware corporation (“PUI”), was merged with and into the Company pursuant to an Agreement and Plan of Merger, dated
as of November 7, 2019. (the “PU Merger Agreement”). Under this agreement, the Company issued 4,875,000,000 shares of the
Common Stock to the holders of the common stock of PUI and also issued 2,000,000 shares of its Series A Convertible Preferred Stock to
the president of PUI and who became the Company’s president upon the consummation of the merger. These issuances resulted in a
change of control. In a related transaction, an officer, director and controlling stockholder of the Company, who held 4,500,000,000
shares of Common Stock, sold 3,000,000,000 such shares to the Company for $600 pursuant to a Stock Purchase Agreement, dated November
7, 2019, as amended (the “Merger SPA”).
This merger was accounted for using the acquisition
method of accounting and is based on the historical consolidated financial statements of the Company and PUI as set forth in Accounting
Standards Codification (“ASC”) 805, Business Combinations, and uses the fair value concepts defined in ASC 820, Fair Value
Measurement. Under the acquisition method of accounting, the assets acquired and the liabilities assumed are generally recorded as of
the consummation of the merger at their respective fair values and added to those of the Company. Financial statements and reported results
of operations of the Company issued after the consummation of the merger reflect these adjustments, but the Company’s prior financial
statements have not been retroactively restated.
Note 2 – Summary of Significant Accounting
Policies
Basis of Presentation
The consolidated financial statements and notes
thereto have been prepared by management and are unaudited. The unaudited consolidated financial statements have been prepared using
the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
These unaudited consolidated financial statements
should be read in conjunction with the audited financial statements and related notes thereto for the year ended May 31, 2021, filed
with the OTC Markets Group Inc. on April 1, 2022.
The audited financial statements for the fiscal
year ended May 31, 2021, were prepared using the accrual method of accounting, whereas prior financial statements were prepared using
the accrual method.
Principles of Consolidation
The accompanying consolidated financial statements
include all of the accounts of the Company and all of its subsidiaries at May 31, 2021, and May 31, 2020. All significant intercompany
balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in accordance
with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant
estimates include assumptions about the collection of accounts and notes receivable, the valuation and recognition of stock-based compensation
expense, and valuation allowance for deferred tax assets and useful lives of fixed assets.
Cash and cash equivalents
Cash equivalents are short-term, highly liquid
investments that are readily convertible to cash with original maturities of three months or less at the date acquired. The Company had
no cash equivalents at February 28, 2022, or February 28, 2021.
Revenue recognition
The Company applies Accounting Standards Codification
(“ASC”) 606, Revenue from Contracts with Customers (“new revenue standard”) to all contracts using the modified
retrospective method.
Under ASC 606, revenue is recognized based on
the following five-step model:
| |
· |
Identification of the contract with a customer |
| |
|
|
| |
· |
Identification of the performance obligations in the contract |
| |
· |
Determination of the transaction price |
| |
|
|
| |
· |
Allocation of the transaction price to the performance obligations
in the contract |
| |
|
|
| |
· |
Recognition of revenue when, or as, the Company satisfies a performance
obligation |
The Company’s revenue is currently generated
from clinical trials, consulting fees, franchise fees and seminar fees and is disaggregated as follows:
A performance obligation is a contractual promise
to transfer a distinct product or service to a customer and is the unit of account in the new revenue standard. The contract transaction
price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.
Each contract has a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable
from other promises in the contracts and, therefore, not distinct. Revenue for contracts that satisfy the criteria for overtime recognition
is recognized as the work progresses. The majority of the Company’s revenue is derived from services provided to customers and
is executed typically over a period that is typically between 1 to 12 months. Its contracts will continue to be recognized over time
because of the continuous transfer of control to the customer as services are rendered to customers. Payments made by customers in advance
of services being rendered are recorded as deferred revenue. Contract modification sometimes occurs in the Company’s clinical trials
business. Contracts are modified to account for changes in the contract specifications or requirements.
Share-Based Payments
ASC 718,
“Compensation – Stock Compensation,” prescribes accounting and reporting standards for all share-based
payment transactions. ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based
Payment Accounting aligns accounting for share-based payments issued to nonemployees to that of employees under the existing guidance
of Topic 718, with certain exceptions. The Company follows FASB guidance related to equity-based payments, which requires that equity-based
compensation be accounted for using a fair value method and recognized as expense in the accompanying consolidated statements of operations.
Equity-based compensation expense has been recognized as compensation expense.
Income taxes
The Company accounts for income taxes in accordance
with Accounting Standards Codification No. 740, “Income Taxes” (“ASC 740”). This codification prescribes
the use of the asset and liability method whereby deferred tax asset and liability account balances are determined based on differences
between financial reporting and tax bases of assets and liabilities and for carryforward tax losses. Deferred taxes are measured using
the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation
allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it is more likely than not that some portion
or all of the deferred tax asset will not be realized.
Deferred tax liabilities and assets are classified
as current or non-current based on the classification of the related asset or liability for financial reporting, or according to the
expected reversal dates of the specific temporary differences, if not related to an asset or liability for financial reporting.
The Company accounts for uncertain tax positions
in accordance with the provisions of ASC 740, which provides guidance as to the determination of whether tax benefits claimed or expected
to be claimed on a tax return should be recorded in the unaudited consolidated financial statements, under which a company may recognize
the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination
by the taxing authorities, based on the technical merits of the position.
The tax benefits recognized in the unaudited
consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood
of being realized upon ultimate settlement. Accordingly, the Company would report a liability for unrecognized tax benefits resulting
from uncertain tax positions taken or expected to be taken in a tax return. The Company elects to recognize any interest and penalties,
if any, related to unrecognized tax benefits in tax expense.
Earnings per Share
The Company computes basic and diluted earnings
per share amounts in accordance with Accounting Standards Codification Topic 260, “Earnings per Share.” Basic earnings
per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common shares
outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options
and other commitments to issue Common Stock were exercised or equity awards vest resulting in the issuance of f that could share in the
earnings of the Company. As of February 28, 2022, the Company had no dilutive securities.
Fair Value of Financial Instruments
The Company’s financial instruments consist
primarily of cash, accounts payable and accrued liabilities, notes payable – related parties, and due to related parties.
Under the Financial Account Standards Board Accounting
Standards Codification (the “FASB ASC”), the Company is permitted to elect to measure financial instruments and certain other
items at fair value, with the change in fair value recorded in earnings. The Company has elected not to measure any eligible items using
the fair-value option. Consistent with the Fair Value Measurement Topic of the FASB ASC, the Company has implemented guidelines relating
to the disclosure of its methodology for periodic measurement of its assets and liabilities recorded at fair market value.
Fair value is defined as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. A three-tier fair value hierarchy prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority
to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). These tiers include:
| · | Level
1 is defined as observable inputs such as quoted prices for identical instruments in active
markets; |
| · | Level
2 is defined as inputs other than quoted prices in active markets that are either directly
or indirectly observable, such as quoted prices for similar instruments in active markets
or quoted prices for identical or similar instruments in markets that are not active; and |
| · | Level
3 is defined as unobservable inputs in which little or no market data exists, therefore requiring
an entity to develop its own assumptions, such as valuations derived from valuation techniques
in which one more significant inputs or significant value drivers are unobservable. |
The Company’s Level 1 assets and liabilities
primarily include its cash and cash equivalents. Valuations are obtained from readily available pricing sources for market transactions
involving identical assets or liabilities. The carrying amounts of accounts receivable, prepaid expense, accounts payable, accrued liabilities,
advances to or from investors, and notes payable approximate fair value due to the immediate or short-term maturities of these financial
instruments.
Equity Investments
The consolidated financial statements have been
prepared in compliance with ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial
Liabilities, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments,
including requirements to measure most equity investments at fair value with changes in fair value recognized in net income, to perform
a qualitative assessment of equity investments without readily determinable fair values, and to separately present financial assets and
liabilities by measurement category and by type of financial asset on the balance sheet or the accompanying notes to the financial statements.
Leases
The consolidated financial statements have been
prepared in compliance with ASU 2016-02, Leases, which requires an entity to recognize long-term lease arrangements as assets
and liabilities on the balance sheet of the lessee. Under ASU 2016-02, a right-of-use asset and lease obligation has been recorded for
all long-term leases, whether operating or financing, while the income statement reflects lease expense for operating leases and amortization/interest
expense for financing leases.
Cash Flows
The consolidated statements of cash flows have
been prepared in accordance with ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts
and Cash Payments” and ASU 2016-18.
Note 3 – Going Concern
The accompanying unaudited consolidated financial
statements have been prepared in conformity with GAAP, which contemplate the Company’s continuation as a going concern. The Company
has not generated any profits since inception and its current cash balances will not meet its working capital needs. The Company has
incurred a consolidated accumulated deficit of $3,3,395,135 as of February 28, 2022.
The ability of the Company to continue as a going
concern depends on the successful execution of its operating plan, which includes expanding its operations and raising either debt or
equity financing. There is no assurance that the Company will be able to expand its operations or obtain such financing on satisfactory
terms or at all. If the Company is unsuccessful in these endeavors, it may be required to curtail or cease its operations.
The accompanying consolidated financial statements
do not include any adjustments related to the recoverability or classification of asset carrying amounts or the amounts and classification
of liabilities that may result should the Company be unable to continue as a going concern.
Note 4 – Debt
PPP Loan
In May 2020, the Company received a loan of approximately
$31,750 under the Paycheck Protection Program (the “PPP”). The PPP, established as part of the Coronavirus Aid, Relief and
Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times the average
monthly payroll expenses of the qualifying business.
Under the CARES Act, as it was amended on June
5, 2020:
| · | The
loan will be forgiven if its proceeds are used for payroll, mortgage interest, rent, and
utilities during the 24-week period beginning on May 4, 2020, although the Company may elect
to utilize the 8-week period that was in effect prior to the amendment (such 24- or 8-week
period being the “covered period”). The Company has not determined whether it
will make this election. The amount of loan forgiveness will be reduced if less than 60%
of the funds is expended for payroll over the covered period. |
| · | No
interest or principal will be required until the date on which the amount of forgiveness
determined is remitted to the lender, although interest will continue to accrue over this
deferral period. After the deferral period and after taking into account any loan forgiveness
applicable to the loan pursuant to the program, as approved by the SBA, any remaining principal
and accrued interest will be payable in substantially equal monthly installments over the
remaining loan term, at an interest rate of 1% per annum, in the amount and according to
the payment schedule provided by the lender. |
| · | The
Company may apply to the lender to extend the term of the loan to 5 years and expects to
do so, but no assurance can be given that the lender will agree to the extension. |
| · | The
Company may delay the payment of employer payroll taxes until December 31, 2021, with respect
to up to 50% of the amounts due, and until December 31, 2022, with respect to the remaining
amounts due, up to 50%. |
EIDL Loan
In May 2020, the Company received $143,100 from
the Small Business Administration as an Economic Injury Disaster Loan (“EIDL”) to help fund its operations during the Covid-19
pandemic. The loan bears interest at the rate of 3.75% per annum and is payable in monthly installments of $698 over a 30-year period,
with deferral of payments for the first 12 months. An additional $10,000 borrowed under EIDL, which was provided for payroll, was forgiven
and recorded as other income.
In June 2020, the Company received proceeds of
$106,300 from the Small Business Administration through a second EIDL loan to help fund its operations during the Covid-19 pandemic.
The loan bears interest at the rate of 3.75% per annum and is payable in monthly installments of $518 over a 30-year period. An additional
$31,750 under EIDL, which was provided for payroll, was forgiven and recorded as other income as of February 28, 2022.
Short Term Loans
In October 2021, the company obtained a short-term
loan of $32,500 with interest discounted at $7,500. The term of the notes is for six months with a weekly payment of $1,490. As of February
28, 2022, the balance of the loan net of discount was $2,738.
Certain Indebtedness and Lawsuit
Prior to June 20, 2018, the Company had obligations
that totaled $1,844,500 under notes and guarantees of contracts with or in favor of unrelated parties. RA and Associates, Inc. (“RA”)
acquired all of these obligations and, on May 29, 2018, filed a lawsuit against the Company in the Circuit Court of the Tenth Judicial
Circuit, in and for Polk County, Florida, seeking a judgment against the Company for that amount, together with court costs and attorneys’
fees. On June 3, 2018, the Company filed an answer in the lawsuit in which it admitted the allegations set forth in the complaint, and
on June 20, 2018, the Company and RA entered into a Settlement Agreement under which the Company was obligated to issue an indefinite
number of shares of its Common Stock in payment of such indebtedness in one or more tranches, each tranche to be issued at a 50% discount
(subject to increase in certain events) from the Market Price, as defined in the Settlement Agreement. On July 5, 2018, the Circuit Court
approved the Settlement Agreement. As a result, obligations of the Company under this indebtedness were replaced by its obligations under
the Settlement Agreement, and this indebtedness was not recorded as a liability in the consolidated balance sheets. However, these obligations
remained contingent liabilities to the extent not discharged pursuant to the Settlement Agreement.
As the result of issuances of Common Stock under
the Settlement Agreement, the amount of this obligation was reduced to $317,725. On February 27, 2020, the Company and RA entered into
a Termination Agreement under which, among other things, upon payment of $49,000 to RA, the Settlement Agreement was terminated and the
obligations of the Company to RA’s controlling shareholder, which he had assigned to RA, were settled. In addition, the Company
settled its obligations to the other parties who held obligations that had been assigned to RA for a total of $17,510. Accordingly, the
Company has no further liabilities in connection with these obligations.
NOTE 5 – Right of Use Assets and Lease
Liabilities
The company leases real property from unrelated
parties, which are classified as operating leases. The Right of Use (“ROU”) assets for operating leases are included in other
assets on the consolidated balance sheets, with the corresponding liability in liabilities. Lease expense is recognized on a straight-line
basis over the lease term. Renewals and terminations are included in the calculation of the ROU assets and lease liabilities when they
are considered reasonably certain to be exercised. When the implicit rate is unknown, the incremental borrowing rate, based on the commencement
date, is used in determining the present value of lease payments.
The following amounts related
to leases were recorded in the consolidated balance sheets:
| | |
February 28, 2022 | | |
May 31, 2021 | |
| Operating lease asset | |
$ | 68,992 | | |
$ | 94,172 | |
| | |
| | | |
| | |
| Current operating lease liabilities | |
$ | 42,963 | | |
$ | 43,963 | |
| Long-Term operating lease liabilities | |
| 15,104 | | |
| 40,911 | |
| | |
$ | 58,067 | | |
$ | 84,876 | |
NOTE 6 -- Revenue
Most of the Company’s revenue is generated
by the performance of services to customers and recognized at a point in time based on the evaluation of when the customer obtains control
of the products. Revenue is recognized when all performance obligations under the terms of a contract are satisfied and control of the
product has been transferred to the customer. Revenue is recorded when customer acceptance is received and all performance obligations
have been satisfied. Sales of goods typically do not include multiple products and/or service elements.
The tables below summarize information about
the Company’s revenue:
| | |
Three Months Ended February 28, | |
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Clinical trials | |
$ | 30,698 | | |
$ | 67,754 | |
| Seminar Fees | |
| 1,471 | | |
| 21,905 | |
| Franchise Fee | |
| – | | |
| 480 | |
| Other | |
| 333 | | |
| – | |
| Total Revenues | |
$ | 32,492 | | |
$ | 90,138 | |
| | |
Nine Months Ended February 28, | |
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Clinical trials | |
$ | 133,547 | | |
$ | 660,343 | |
| Seminar Fees | |
| 7.657 | | |
| 35,792 | |
| Franchise Fee | |
| – | | |
| 15,790 | |
| Other | |
| 777 | | |
| – | |
| Total Revenues | |
$ | 141,981 | | |
$ | 711,925 | |
NOTE 7 – Income Taxes
The Company provides for income taxes under ASC
740. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between
the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse.
A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax
assets through future operations.
On December 22, 2017, the 2017 Tax Cuts and Jobs
Act (“Tax Act”) was enacted into law, making significant changes to the Internal Revenue Code. These changes included a federal
corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transition of U.S. international
taxation from a worldwide tax system to a territorial system and a one-time transition tax on the mandatory deemed repatriation of foreign
earnings. The Company is required to recognize the effect of the tax law changes in the period of enactment, such as re-measuring its
U.S. deferred tax assets and liabilities as well as reassessing the net realizability of the Company’s deferred tax assets and
liabilities. The Tax Act did not give rise to any material impact on the consolidated balance sheets and consolidated statements of operations
due to the Company’s historical worldwide loss position and the full valuation allowance on its net U.S. deferred tax assets. Due
to changes in ownership provisions of the income tax laws of the United States of America, net operating loss carryforwards of approximately
$2,638,582 and $2,238,633 at February 28, 2022, and May 31, 2021, respectively, for federal income tax reporting purposes are subject
to annual limitations. When a change in ownership occurs, net operating loss carryforwards may be limited as to use in future years.
They typically expire 20 years from when incurred.
Income taxes for 2017 TO 2020 remain subject
to examination.
Note 8 – Stockholders’
Deficit
The Company is authorized to issue 20,010,000,000
of capital stock, of which 20,000,000,000 shares are Common Stock, without par value, and 10,000,000 are preferred stock.
Preferred Stock
The Company has designated 2,500,000 shares of
preferred stock as Series A Convertible Preferred Stock (the “Series A Stock”). Each share of Series A Stock entitles the
holder to receive dividends at the rate determined by the Board. In the event of liquidation, such holders are entitled to be paid out
of the assets of the Corporation available for distribution to its common stockholders, whether from capital, surplus or earnings, and
before any payment is made in respect of the shares of Common Stock, an amount equal to the greater of: (i) the then-current market price
of the Series A Stock, as detailed by the OTC Markets Group, or ten cents ($0.10) per share of Series A Stock, subject to adjustment
for stock dividends, combinations, splits, recapitalizations and the like with respect to the Series A Stock, plus any and all accrued
but unpaid dividends. Each share of Series A Stock is convertible, at the option of the holder, at any time one year after the date of
issuance of such shares, into that number of shares of Common Stock that is equal to the quotient obtained by dividing the Series A Preference
Price then in effect for each share of Series A Stock by the greater of: (i) ten cents ($0.10) per share, or (ii) seventy-five percent
(75%) of the Market Price (as defined) of the Common Stock on the conversion date, subject to adjustment in certain events. The Series
A Stock is not redeemable. The Series A Stock possesses one-half of the voting power of the Company’s stockholders. At February
28, 2022, and May 31, 2020, there were 2,500,000 shares of Series A Stock issued and outstanding.
Common Stock
On December 22, 2020, an officer surrendered
to the Company 279,532,795 shares of Common Stock that had been erroneously issued to him pursuant to the PU Merger Agreement shares
are now held in treasury.
During the nine months ended February 28, 2022,
and February 28, 2021, the Company respectively sold 755,376,490 shares of Common Stock for $532,500 and 372,227,272 shares of Common
Stock for $24,800. During the three months ended February 28, 2022, the Company sold 385,227,272 shares of Common Stock for $280,800;
during the three months ended February 28, 2021, the Company sold no shares of Common Stock.
On December 23, 2020, an officer of the Company
sold 1,000,000,000 shares of Common Stock to the Company for $1,000. As a result, that officer now owns 500,000,000 shares of Common
Stock and 500,000 shares of Series A Preferred.
As of February 28, 2022, and February 28, 2021,
there were respectively 8,265,600,111 and 8,675,256,416 shares of Common Stock issued and outstanding,
Note 8 – Share-Based Compensation
During the three months and nine months ended
February 28, 2022, and February 28, 2021, the Company issued no shares of Common Stock to its employees as additional compensation.
Note 9 – Commitments and Contingencies
The Company accounts for leases under ASC 842.
For leases with terms of 12 months or more, an asset and liability are initially recognized at an amount equal to the present value of
the unpaid lease payments over the remaining lease term. The Company uses the interest rate implicit in the lease, when known, or its
incremental borrowing rate, which is derived from information available at the lease commencement date, including prevailing financial
market conditions, in determining the present value of the unpaid lease payments. The Company leases premises of approximately 4,500
square feet located at 6201 Bonhomme Road, Suites 460S and 466S, Houston, Texas. The lease currently provides for a base rent of $3,381.96
per month, increasing to (i) $3,529.00 per month on July 1, 2020, (ii) $3,676.04 per month on July 1, 2021, and (iii) $3,823.08
per month on July 1, 2022, subject to CPI increase. In addition, two of the Company’s officers lease 1,400 square feet in Houston,
Texas, under a lease the term of which commenced on February 29, 2020, and will expire on March 14, 2022, at a rent of $3,449 per month
(the “Officers’ Lease”); these officers have made a portion of these premises available to the Company for use as office
space on a month-to-month basis, for which the Company pays them $2,817 per month.
The Company is accounting for its lease agreements
as operating leases under ASC 2016-02, Leases, Topic ASC 842. Accordingly, the company has capitalized the present value of the
future lease obligations and is amortizing the related right-of-use asset over the term of the lease. The Company adopted ASC 842 as
of June 1, 2019, and its adoption resulted in an increase in the balance sheet of $155,387 of Right-of-Use Asset and an associated lease
liability. Incremental borrowing rate use was 6%. As of February 28, 2022, and May 31, 2021, the operating lease right-of-use asset and
operating lease liabilities were $71,279 and $ 94,172, respectively.
Note 10 – Related Party Transactions
See Note 1 – Merger with PUI for information
respecting the interest of an officer of the Company in the merger of PUI with and into the Company, Note 6 – Issuance and Surrenders
for information respecting the Company’s purchase of Common Stock from one of its officers and Note 9 for information respecting
the lease of real property to the Company by two of its officers.
During the year ended May 31, 2021, the Company
advanced $15,000 to one of its shareholders, who was an executive officer, of which $12,000 remained outstanding at February 28, 2022.
Note 11 – Off-Balance-Sheet Arrangements
The Company currently has no off-balance sheet
arrangements.
Note 12 – Concentrations
The Company had gross revenue of $141,981 and
$ 711,925, respectively, for the nine months ended February 28, 2022, and February 28, 2021, there were 2 and 1 customers, respectively,
that provided 31 % and 40 % of such revenue.
The Company had gross revenue of $32,492 and
$ 90,138, respectively, for the three months ended February 28, 2022, and February 28, 2021, There were 1 and 5 customers, respectively,
that provided 14% and 89 % of such revenue.
Note 13 – Subsequent Events
During the years ended May 31, 2021, and May
31, 2020, and during the nine months ended February 28, 2022, the COVID-19 pandemic had a material adverse effect on the Company’s
educational business because governmental measures that we imposed to control it resulted in the closing of classrooms and other educational
venues, and also hindered the Company’s franchising and consulting activities. As the pandemic has abated, some of these restrictions
have been removed and the Company is beginning to resume normal operations. If the pandemic does not continue to abate, because of infections
resulting from emerging virus variants or for other reasons, restrictions could be reimposed or increased. The ultimate impact of the
pandemic will depend on future developments, which are highly uncertain and cannot be predicted.
During the quarter beginning March 1, 2022, the
Company issued 517,986,512 shares of Common Stock for proceeds of $300,800 and 20,000,000 shares of Common Stock in consideration of
services.
On March 14, 2022, the Officers’ Lease
expired and on March 15, 2022, these officers entered into a new lease for the same premises, which expires on September 14, 2022, at
the rent of $3,008 per month, and the officers who are the lessees thereunder continued to make a portion of these premises available
to the Company for use as office space, for which the Company is paying them $2,817 per month.
On June 26, 2022, the Company issued 125,000,000
shares of Common Stock for proceeds of $75,000.
On July 20, 2022, the Company filed amended and
restated articles of incorporation with the Secretary of State of the State of Colorado. Among other things, the amended and restated
articles of incorporation:
| · | Amended
the terms of the Company’s Series A Convertible Preferred Stock (i) to change the par
value of the shares of that series from $0.001 per share to no par value per share, (ii)
to change the dividends to which such shares are entitled to receive from an amount at the
discretion of the Board to the dividend to be paid on the shares of Common Stock into which
such shares are convertible, (iii) to reduce the voting power of such shares from 50% of
the Company’s voting power to the voting power of the number of shares of Common Stock
into which such shares are convertible, (iv) to eliminate redemption at the option of the
holder and provide for redemption at the option of the Company for a redemption price of
the number of shares of Common Stock into which the redeemed shares are convertible and (v)
to provide that such shares are senior to the Common Stock and junior to the Series B Convertible
Preferred Stock described below. |
| · | Designated
a series of preferred stock, named Series B Preferred Convertible Preferred Stock, comprising
1,000 shares (“Series B Preferred”). The shares of this series have no par value,
are not entitled to dividends, have no liquidation rights, are not redeemable, are not convertible,
have 60% of the Company’s voting power and rank senior to the Common Stock and Series
A Convertible Preferred Stock. |
| · | Eliminated
the personal liability of directors to the Company or its shareholders for monetary damages
for breach of their fiduciary duties as such to the full extent permitted by law. |
| · | Provided
that the Company indemnify, to the full extent permitted by law, any person who is or was
a director or officer of the Company, and may indemnify any other person against any claim,
liability or expense arising against or incurred by such person made a party to a proceeding
because he is or was a director, officer, agent, fiduciary or employee of the Company or
because he is or was serving another entity as a director, officer, partner, trustee, employee,
fiduciary or agent at the Company’s request. |
Also, on July 20, 2022, the Company adopted the
2022 Equity Incentive Plan, which provides for the grant of incentive and Nonstatutory stock options, stock appreciation rights, restricted
stock, unrestricted stock, restricted stock units and performance awards to directors, officers, employees and consultants, as determined
by the Board, as plan administrator. The Company will recognize as share-based compensation expense all share-based payments to employees
over the requisite service period (generally the vesting period) in its consolidated statements of income based on the fair values of
the awards that are ultimately expected to vest.
On August 15, 2022, the Company issued 1,000
shares of Series B Preferred Preferred to its chief executive officer in exchange for 595,467,205 shares of Common Stock.
Management has evaluated all other subsequent
events when these consolidated financial statements were issued and has determined that none of them requires disclosure herein.
On May 1, 2022, the Company sold $63,250 of its
future receivables to an unrelated party for $50,000. The terms of this sale require the Company to deliver receivables at the rate of
$1,218 per week for one year.
On June 29, 2022, the Company borrowed $12,500
from an unrelated party at an annual rate of interest of 14%.
On August 3, 2022, the Company borrowed $15,000
from an unrelated party at an annual rate of interest of 42.5%.
On August 8, 2022, the Company sold $61,155 of
its future receivables to an unrelated party for $45,000. The terms of this sale require the Company to deliver receivables at the rate
of $3,057 per week for 20 weeks.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of China Infrastructure Construction Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of China Infrastructure Construction Corp. (the Company) as of May 31, 2021, and 2020, and the related consolidated statements
of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended May 31, 2021,
and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the Company as of May 31, 2021, and 2020, and the results of its operations
and its cash flows for each of the years in the two-year period ended May 31, 2021, in conformity with accounting principles generally
accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to
assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 3 to the financial statements,
the Company’s recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2021
raise substantial doubt about its ability to continue as a going concern. These 2021 and 2020 financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Going Concern
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company
has negative working capital at May 31, 2021, has incurred recurring losses and recurring negative cash flow from operating activities,
and has an accumulated deficit which raises substantial doubt about its ability to continue as a going concern. Management’s plans
concerning these matters are also described in Note 3. The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Critical Audit Matters
Critical audit matters arising from the current
period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate
to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or
complex judgments. We determined that there are no critical audit matters.
/s/PWR CPA, LLP
Houston, Texas
PCAOB #6686
|
| We have served as the Company’s auditor since 2021. |
|
Houston, Texas
|
| March 21, 2022 |
CHINA INFRASTRUCTURE
CONSTRUCTION CORP.
CONSOLIDATED
BALANCE SHEETS
| | |
May 31, 2021 | | |
May 31, 2020 | |
| ASSETS | |
| Current assets | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 41,322 | | |
$ | 127,655 | |
| Accounts receivable | |
| 1,295 | | |
| 500 | |
| Related party receivable | |
| 12,000 | | |
| – | |
| Total current assets | |
| 54,617 | | |
| 128,155 | |
| Right of use asset | |
| 94,172 | | |
| 125,970 | |
| TOTAL ASSETS | |
$ | 148,789 | | |
$ | 253,945 | |
| | |
| | | |
| | |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |
| Liabilities | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Accounts payable and accrued expenses | |
$ | 8,281 | | |
$ | 85,641 | |
| Accrued revenue | |
| – | | |
| 268,469 | |
| Accrued rent | |
| 8,063 | | |
| 6,075 | |
| Notes payable | |
| – | | |
| – | |
| Related party payables | |
| 10,808 | | |
| 4,225 | |
| Short term loan | |
| – | | |
| 1,709 | |
| SBA loan | |
| 249,300 | | |
| 143,100 | |
| PPP loan | |
| 88,631 | | |
| 31,750 | |
| Lease liabilities - current | |
| 43,965 | | |
| 42,201 | |
| Total current liabilities | |
| 409,048 | | |
| 583,169 | |
| Lease liabilities - noncurrent | |
| 40,911 | | |
| 84,588 | |
| Total liabilities | |
| 449,959 | | |
| 667,757 | |
| Stockholders' deficiency | |
| | | |
| | |
| Preferred Stock, par value $0.001 per share: 10,000,000 shares
authorized; 2,500,000 shares designated Series A Convertible Preferred stock outstanding at May 31, 2021, and May 31, 2020 | |
| 2,500 | | |
| 2,500 | |
| Common Stock, without par value: 20,000,000,000 shares authorized;
7,814,238,100 and 8,715,256,416 shares issued and outstanding as of May 31, 2021, and May 31, 2020, respectively | |
| – | | |
| – | |
| Additional paid-in capital | |
| 2,461,315 | | |
| 2,189,365 | |
| Accumulated deficit | |
| (2,764,985 | ) | |
| (2,605,677 | ) |
| Total stockholders' deficiency | |
| (301,170 | ) | |
| (413,812 | ) |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | |
$ | 148,789 | | |
$ | 253,945 | |
The accompanying notes are
an integral part of these unaudited consolidated financial statements.
CHINA INFRASTRUCTURE
CONSTRUCTION CORP.
CONSOLIDATED
STATEMENTS OF OPERATION
| | |
Year ended May 31, | |
| | |
2021 | | |
2020 | |
| Revenues | |
$ | 761,737 | | |
$ | 290,233 | |
| Cost of revenues | |
| – | | |
| – | |
| Gross profit | |
| 761,737 | | |
| 290,233 | |
| Cost and expenses | |
| | | |
| | |
| General and administrative | |
| 100,281 | | |
| 121,898 | |
| Contract labor | |
| 263,138 | | |
| 265,972 | |
| Professional fees | |
| 198,496 | | |
| 129,557 | |
| Officer compensation | |
| 211,312 | | |
| 180,241 | |
| Payroll | |
| – | | |
| – | |
| Rent | |
| 72,244 | | |
| 90,235 | |
| Travel | |
| 31,230 | | |
| 62,365 | |
| Interest | |
| 44,343 | | |
| 3,101 | |
| Total operating expenses | |
| 921,045 | | |
| 853,369 | |
| | |
| | | |
| | |
| Operating loss | |
| (159,308 | ) | |
| (563,136 | ) |
| Other income (expense) | |
| – | | |
| 21,984 | |
| Net operating loss before taxes | |
| (159,308 | ) | |
| (541,152 | ) |
| | |
| | | |
| | |
| Income tax provision | |
| – | | |
| – | |
| | |
| | | |
| | |
| Net loss | |
$ | (159,308 | ) | |
$ | (541,152 | ) |
| | |
| | | |
| | |
| Average common stock outstanding | |
| 8,246,111,316 | | |
| 7,581,531,642 | |
| Average loss per share | |
| (0.00002 | ) | |
| (0.00007 | ) |
The accompanying notes are
an integral part of these unaudited consolidated financial statements.
CHINA INFRASTRUCTURE
CONSTRUCTION CORP.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
| | |
Year Ended May 31, | |
| | |
2021 | | |
2020 | |
| OPERATING ACTIVITIES | |
| | | |
| | |
| Net loss | |
$ | (159,308 | ) | |
$ | (548,226 | ) |
| Non-cash compensation | |
| – | | |
| – | |
| Forgiveness of loan | |
| – | | |
| (10,000 | ) |
| Amortization of right to use asset and liability | |
| 3,644 | | |
| 7,074 | |
| Adjustment to reconcile net income | |
| – | | |
| – | |
| Changes in assets and liabilities | |
| | | |
| | |
| Accounts receivable | |
| (795 | ) | |
| (500 | ) |
| Accounts payable and accrued expenses | |
| (77,360 | ) | |
| 77,892 | |
| Deferred revenues | |
| (268,469 | ) | |
| 179,596 | |
| Prepaid expenses | |
| – | | |
| – | |
| Related party payable | |
| (5,417 | ) | |
| 1,025 | |
| Net cash used in operations | |
| (507,705 | ) | |
| (293,139 | ) |
| FINANCING ACTIVITIES | |
| | | |
| | |
| Cash flows from financing activities | |
| | | |
| | |
| Proceeds from issuances of common stock | |
| 261,000 | | |
| 53,955 | |
| Repurchase of common stock | |
| (1,000 | ) | |
| (600 | ) |
| Proceeds (repayment) of short-term loans | |
| (1,709 | ) | |
| 1,181 | |
| Proceeds from short term loan | |
| – | | |
| – | |
| Proceeds from PPP Loans | |
| 56,881 | | |
| 31,750 | |
| Proceeds from SBA loan | |
| 106,200 | | |
| 153,100 | |
| Repayment of loans of acquired subsidiary | |
| – | | |
| (66,500 | ) |
| Non-cash loan settlement | |
| – | | |
| 214,221 | |
| Net cash provided by financing activities | |
| 421,372 | | |
| 387,107 | |
| Net increase (decrease) | |
| (86,333 | ) | |
| 93,968 | |
| Cash at beginning of period | |
| 127,655 | | |
| 33,687 | |
| Cash at end of period | |
$ | 41,322 | | |
$ | 127,655 | |
| | |
| | | |
| | |
| Supplemental disclosure of cash flow information | |
| | | |
| | |
| Cash paid for interest | |
| 44,343 | | |
| 3,101 | |
| Cash paid for taxes | |
| – | | |
| – | |
| Non-cash investing and financing transactions | |
| | | |
| | |
| Stock issuance for acquisition off Pharmacology
University, Inc. | |
$ | – | | |
$ | 843,228 | |
The accompanying notes are
an integral part of these unaudited consolidated financial statements.
CHINA INFRASTRUCTURE
CONSTRUCTION CORP.
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
| | |
Series A Convertible Preferred Stock | | |
Common Stock | | |
Additional paid-in | | |
Accumulated | | |
| |
| | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
Deficit | | |
Total | |
| Balance, June 1, 2019 | |
| 500,000 | | |
$ | 500 | | |
| 4,667,652,762 | | |
$ | – | | |
$ | 1,080,561 | | |
$ | (2,064,524 | ) | |
$ | (983,463 | ) |
| Issuance in settlement of debt | |
| – | | |
| – | | |
| 39,500,000 | | |
| – | | |
| 196,564 | | |
| – | | |
| 196,564 | |
| Issuance as employee benefits | |
| – | | |
| – | | |
| 48,150,000 | | |
| – | | |
| 4,815 | | |
| – | | |
| 4,815 | |
| Issuance to officers | |
| – | | |
| – | | |
| 50,000,000 | | |
| – | | |
| 9,000 | | |
| – | | |
| 9,000 | |
| Issuance of preferred shares to officers | |
| 2,000,000 | | |
| 2,000 | | |
| 40,000,000 | | |
| – | | |
| (2,000 | ) | |
| – | | |
| – | |
| Issuance for services rendered | |
| – | | |
| – | | |
| 50,000,000 | | |
| – | | |
| 50,000 | | |
| – | | |
| 50,000 | |
| Issuance for cash | |
| – | | |
| – | | |
| 394,953,654 | | |
| – | | |
| 261,000 | | |
| – | | |
| 261,000 | |
| Issuance to founders | |
| – | | |
| – | | |
| 4,875,000,000 | | |
| – | | |
| | | |
| – | | |
| – | |
| Repurchase | |
| – | | |
| – | | |
| (3,000,000,000 | ) | |
| – | | |
| (600 | ) | |
| – | | |
| (600 | ) |
| Section 3(a)(10) exchange | |
| – | | |
| – | | |
| 1,550,000,000 | | |
| – | | |
| 590,025 | | |
| – | | |
| 590,025 | |
| Net loss | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| (541,153 | ) | |
| (541,153 | ) |
| Balance, May 31, 2020 | |
| 2,500,000 | | |
$ | 2,500 | | |
| 8,715,256,416 | | |
$ | – | | |
$ | 2,189,365 | | |
$ | (2,605,677 | ) | |
$ | (413,812 | ) |
| Issuance for cash | |
| – | | |
| – | | |
| 98,981,684 | | |
| – | | |
| 272,950 | | |
| – | | |
| 272,950 | |
| Repurchase | |
| – | | |
| – | | |
| (1,000,000,000 | ) | |
| – | | |
| (1,000 | ) | |
| – | | |
| (1,000 | ) |
| Net loss | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| (159,308 | ) | |
| (159,308 | ) |
| Balance, May 31, 2021 | |
| 2,500,000 | | |
$ | 2,500 | | |
| 7,814,238,100 | | |
$ | – | | |
$ | 2,461,315 | | |
$ | (2,764,985 | ) | |
$ | (301,170 | ) |
The accompanying notes are
an integral part of these unaudited consolidated financial statements.
CHINA INFRASTRUCTURE
CONSTRUCTION CORP.
Notes
to Consolidated Financial Statements
May 31, 2021
Note 1 – Organization and Business
Organization and Operations
China Infrastructure Construction Corp., a Colorado
corporation (the “Company”), was formed on February 28, 2003, as a limited liability company under the name Fidelity Aircraft
Partners LLC. On December 16, 2009, it converted to a corporation under the name Fidelity Aviation Corporation, and on August 24, 2009,
it changed its name to China Infrastructure Construction Corp. On February 28, 2018, the Company changed its name to Hippocrates Direct
Healthcare, Inc. and on July 4, 2018, it resumed its present name. The Company provides educational systems focused on medical cannabis
in cities throughout the United States and six countries in Latin America. The Company provides services in therapeutic areas of clinical
trials and services relating to sleep disorders through its sleep center in Houston, Texas. The Company offered concierge medicine at
an affordable price through a membership-based model through its wholly owned subsidiary, Hippocrates Direct Healthcare, LLC, a Texas
limited liability company, formed on September 11, 2017; this business was discontinued during the quarter ended August 31, 2020.
Acquisition of Precision Research Institute,
LLC
On March 31, 2019, the Company acquired all of
the outstanding units in Precision Research Institute, LLC, a Texas limited liability company (“PRI”) that was formed on
May 18, 2016, from the Company’s then-president for nominal consideration. On August 20, 2020, PRI was merged with and into the
Company.
This acquisition was accounted for using the
acquisition method of accounting and is based on the historical consolidated financial statements of the Company and Precision Research
Institute, LLC. The acquisition method of accounting is set forth in Accounting Standards Codification (“ASC”) 805, Business
Combinations, and uses the fair value concepts defined in ASC 820, Fair Value Measurement. Under the acquisition method of accounting,
the assets acquired and the liabilities assumed are generally recorded as of the consummation of the acquisition at their respective
fair values and added to those of the Company. The Company’s financial statements issued after the consummation of the acquisition
reflect these fair value adjustments, but the Company’s prior financial statements will not retroactively be restated.
Merger with Pharmacology University, Inc.
On December 19, 2019, Pharmacology University,
Inc., a Delaware corporation (“PUI”), was merged with and into the Company pursuant to an Agreement and Plan of Merger, dated
as of November 7, 2019. (the “PU Merger Agreement”). Under this agreement, the Company issued 4,875,000,000 shares of the
Common Stock to the holders of the common stock of PUI and also issued 2,000,000 shares of its Series A Convertible Preferred Stock to
the president of PUI and who became the Company’s president upon the consummation of the merger. These issuances resulted in a
change of control. In a related transaction, an officer, director and controlling stockholder of the Company, who held 4,500,000,000
shares of Common Stock, sold 3,000,000,000 such shares to the Company for $600 pursuant to a Stock Purchase Agreement, dated November
7, 2019, as amended (the “Merger SPA”).
This merger was accounted for using the acquisition
method of accounting and is based on the historical consolidated financial statements of the Company and PUI as set forth in Accounting
Standards Codification (“ASC”) 805, Business Combinations, and uses the fair value concepts defined in ASC 820, Fair Value
Measurement. Financial statements and reported results of operations of the Company issued after the consummation of the merger reflect
these adjustments, but the Company’s prior financial statements will not retroactively be restated.
Note 2 – Summary of Significant Accounting
Policies
Basis of Presentation
The consolidated financial statements and notes
thereto have been prepared by management and have been prepared using the accrual basis of accounting in accordance with accounting principles
generally accepted in the United States of America (“GAAP”).
Principles of Consolidation
The accompanying consolidated financial statements
include all of the accounts of the Company and all of its subsidiaries at May 31, 2021, and May 31, 2020. All significant intercompany
balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in accordance
with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant
estimates include assumptions about the collection of accounts and notes receivable, the valuation and recognition of stock-based compensation
expense, and valuation allowance for deferred tax assets and useful life of fixed assets.
Cash and cash equivalents
Cash equivalents are short-term, highly liquid
investments that are readily convertible to cash with original maturities of three months or less at the date acquired. The Company had
no cash equivalents at May 31, 2021, or May 31, 2020.
Revenue recognition
On January 1, 2018, the Company adopted Accounting
Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“new revenue standard”) to all contracts
using the modified retrospective method. The adoption of the new revenue standard had no material impact on our consolidated financial
statements as it did not require a change in revenue recognition. As such, comparative information has not been restated and continues
to be reported under the accounting standards in effect for those periods.
Revenue is recognized based on the following
five-step model:
| |
· |
Identification of the contract with a customer |
| |
|
|
| |
· |
Identification of the performance obligations in the contract |
| |
|
|
| |
· |
Determination of the transaction price |
| |
|
|
| |
· |
Allocation of the transaction price to the performance obligations
in the contract |
| |
|
|
| |
· |
Recognition of revenue when, or as, the Company satisfies a performance
obligation |
The Company’s revenue is currently generated
from clinical trials, consulting fees, franchise fees and seminar fees and is disaggregated as follows:
A performance obligation is a contractual promise
to transfer a distinct product or service to a customer and is the unit of account in the new revenue standard. The contract transaction
price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.
Each contract has a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable
from other promises in the contracts and, therefore, not distinct. Revenue from contracts that satisfy the criteria for overtime recognition
is recognized as the work progresses. The majority of our revenue is derived from services provided to customers and is executed typically
over a period that is typically between 1 to 12 months. Our contracts will continue to be recognized over time because of the continuous
transfer of control to the customer as services are rendered to customers. Payments made by customers in advance of services being rendered
are recorded as deferred revenue. Contract modification sometimes occurs in our clinical trials business. Contracts are modified to account
for changes in the contract specifications or requirements.
Share-Based Payments
ASC 718,
“Compensation – Stock Compensation,” prescribes accounting and reporting standards for all share-based
payment transactions. In June 2018, FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements
to Nonemployee Share-Based Payment Accounting, which aligns accounting for share-based payments issued to nonemployees to that of
employees under the existing guidance of Topic 718, with certain exceptions. This update supersedes previous guidance for share-based
payments to nonemployees under Subtopic 505-50, Equity – Equity-Based Payments to Non-Employees. This guidance became effective
for the Company on January 1, 2019. Based on its completed analysis, the Company has determined that adopting this guidance will not
have a material impact on its financial statements. The Company follows FASB guidance related to equity-based payments, which requires
that equity-based compensation be accounted for using a fair value method and recognized as expense in the accompanying consolidated
statements of operations. Equity-based compensation expense has been recognized as compensation expense.
Income taxes
The Company accounts for income taxes in accordance
with Accounting Standards Codification No. 740, “Income Taxes” (“ASC 740”). This codification prescribes
the use of the asset and liability method whereby deferred tax asset and liability account balances are determined based on differences
between financial reporting and tax bases of assets and liabilities and for carry-forward tax losses. Deferred taxes are measured using
the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation
allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it is more likely than not that some portion
or all of the deferred tax asset will not be realized.
Deferred tax liabilities and assets are classified
as current or non-current based on the classification of the related asset or liability for financial reporting, or according to the
expected reversal dates of the specific temporary differences, if not related to an asset or liability for financial reporting.
The Company accounts for uncertain tax positions
in accordance with the provisions of ASC 740, which provides guidance as to the determination of whether tax benefits claimed or expected
to be claimed on a tax return should be recorded in the unaudited consolidated financial statements, under which a company may recognize
the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination
by the taxing authorities, based on the technical merits of the position.
The tax benefits recognized in the unaudited
consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood
of being realized upon ultimate settlement. Accordingly, the Company would report a liability for unrecognized tax benefits resulting
from uncertain tax positions taken or expected to be taken in a tax return. The Company elects to recognize any interest and penalties,
if any, related to unrecognized tax benefits in tax expense.
Earnings per Share
The Company computes basic and diluted earnings
per share amounts in accordance with Accounting Standards Codification Topic 260, “Earnings per Share.” Basic earnings
per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common shares
outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options
and other commitments to issue Common Stock were exercised or equity awards vest resulting in the issuance of Common Stock that could
share in the earnings of the Company. As of May 31, 2020, the company has no dilutive securities.
Fair Value of Financial Instruments
The Company’s financial instruments consist
primarily of cash, accounts payable and accrued liabilities, notes payable – related parties, and due to related party.
Under the Financial Account Standards Board Accounting
Standards Codification (“FASB ASC”), we are permitted to elect to measure financial instruments and certain other items at
fair value, with the change in fair value recorded in earnings. We elected not to measure any eligible items using the fair value option.
Consistent with the Fair Value Measurement Topic of the FASB ASC, we implemented guidelines relating to the disclosure of our methodology
for periodic measurement of our assets and liabilities recorded at fair market value.
Fair value is defined as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. A three-tier fair value hierarchy prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority
to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). These tiers include:
| · | Level
1, defined as observable inputs such as quoted prices for identical instruments in active
markets; |
| · | Level
2, defined as inputs other than quoted prices in active markets that are either directly
or indirectly observable, such as quoted prices for similar instruments in active markets
or quoted prices for identical or similar instruments in markets that are not active; and |
| · | Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring
an entity to develop its own assumptions, such as valuations derived from valuation techniques
in which one more significant inputs or significant value drivers are unobservable. |
Our Level 1 assets and liabilities primarily
include our cash and cash equivalents. Valuations are obtained from readily available pricing sources for market transactions involving
identical assets or liabilities. The carrying amounts of accounts receivable, prepaid expense, accounts payable, accrued liabilities,
advances to or from investors, and notes payable approximate fair value due to the immediate or short-term maturities of these financial
instruments.
Recently Issued Accounting Standards
In January 2016, the FASB issued ASU 2016-01,
Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 addresses
certain aspects of recognition, measurement, presentation, and disclosure of financial instruments, including requirements to measure
most equity investments at fair value with changes in fair value recognized in net income, to perform a qualitative assessment of equity
investments without readily determinable fair values, and to separately present financial assets and liabilities by measurement category
and by type of financial asset on the balance sheet or the accompanying notes to the financial statements. ASU 2016-01 will be effective
for the Company beginning on January 1, 2018, and will be applied by means of a cumulative-effect adjustment to the balance sheet, except
for effects related to equity securities without readily determinable values, which will be applied prospectively. Management has reviewed
this pronouncement and has determined that it would not have a material impact on the consolidated financial statements.
In February 2016, FASB issued ASU 2016-02, Leases,
which requires an entity to recognize long-term lease arrangements as assets and liabilities on the balance sheet of the lessee. Under
ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all long-term leases, whether operating or financing, while
the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The amendments
also require certain new quantitative and qualitative disclosures regarding leasing arrangements. ASU 2016-02 will be effective for the
Company beginning on June 1, 2019. Lessees must apply a modified retrospective transition approach for leases existing at, or entered
into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted.
In August 2016, the FASB issued ASU 2016-15,
“Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”).
ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of
cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a
retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as
of the earliest date practicable.
In November 2016, the FASB issued ASU 2016-18,
“Statement of Cash Flows (Topic 230)”, requiring that the statement of cash flows explain the change in the total cash, cash
equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This guidance is effective for fiscal
years, and interim reporting periods therein, beginning after December 15, 2017, with early adoption permitted. The provisions of this
guidance are to be applied using a retrospective approach, which requires application of the guidance for all periods presented. Management
has reviewed this pronouncement and has determined that it would not have a material impact on the consolidated financial statements.
Note 3 – Going Concern
The accompanying unaudited consolidated financial
statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”),
which contemplate the Company’s continuation as a going concern. The Company has not generated any profits since inception and
its current cash balances will not meet its working capital needs. The Company has incurred a consolidated accumulated deficit of $2,729,253
as of May 31, 2021.
The ability of the Company to continue as a going
concern depends on the successful execution of its operating plan, which includes expanding its operations and raising either debt or
equity financing. There is no assurance that the Company will be able to expand its operations or obtain such financing on satisfactory
terms or at all. If the Company is unsuccessful in these endeavors, it may be required to curtail or cease its operations.
The accompanying consolidated financial statements
do not include any adjustments related to the recoverability or classification of asset carrying amounts or the amounts and classification
of liabilities that may result should the Company be unable to continue as a going concern.
Note 4 – Debt
PPP Loan
In May 2020, the Company received a loan of approximately
$31,750 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic
Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times the average monthly payroll
expenses of the qualifying business.
On April 21, 2021, pursuant to the provisions
of the CARES Act, the Company applied for forgiveness of the loan, which was approved in full for a total of $31,750, which was recorded
as other income.
EIDL Loan
In May 2020, the Company received $143,100 from
the Small Business Administration as an Economic Injury Disaster Loan (“EIDL”) to help fund its operations during the Covid-19
pandemic. The loan bears interest at the rate of 3.75% per annum and is payable in monthly installments of $698 over a 30-year period,
with deferral of payments for the first 12 months. An additional $10,000 borrowed under EIDL, which was provided for payroll, was forgiven
and recorded as other income.
In June 2020, the Company received proceeds of
$106,300 from the Small Business Administration through a second EIDL loan to help fund its operations during the Covid-19 pandemic.
The loan bears interest at the rate of 3.75% per annum and is payable in monthly installments of $518 over a 30-year period. An additional
$4,000 under EIDL, which was provided for payroll was forgiven and recorded as other income.
Line of Credit
On November 16, 2020, the Company received proceeds
of $15,000 under a line of credit provided by an unrelated party with a limit of $15,000. Borrowings under the line of credit bear interest
at the rate of 4.17% per month. Balances of $0 and $1,709 were outstanding at May 31, 2021, and May 31, 2020, respectively.
Short-Term Loans
On January 14, 2021, the Company entered into
a financing agreement of future receipt sale with an unrelated party for total future receipts of $32,850 for a purchase price of $22,500.
The weekly payment for this loan is $1,027. This loan was repaid on May 4, 2021.
On December 10, 2020, the Company entered into
a cash advance agreement with an unrelated party for the sale of $63,900 of receivables for a purchase price of $45,000. The weekly payment
for this loan was $1,997. This loan was repaid on May 4, 2021.
Certain Indebtedness and Lawsuit
Prior to June 20, 2018, the Company had obligations
that totaled $1,844,500 under notes, guarantees on contracts with or in favor of unrelated parties. RA and Associates, Inc. (“RA”)
acquired all of these obligations and on May 29, 2018, filed a lawsuit against the Company in the Circuit Court of the Tenth Judicial
Circuit, in and for Polk County, Florida, seeking a judgment against the Company for that amount, together with court costs and attorneys’
fees. On June 3, 2018, the Company filed an answer in the lawsuit in which it admitted the allegations set forth in the complaint, and
on June 20, 2018, the Company and RA entered into a Settlement Agreement under which the Company was obligated to issue an indefinite
number of shares of its Common Stock in payment of such indebtedness in one or more tranches, each tranche to be issued at a 50% discount
(subject to increase in certain events) from the Market Price, as defined in the Settlement Agreement. On July 5, 2018, the Circuit Court
approved the Settlement Agreement. As a result, obligations of the Company under this indebtedness were replaced by its obligations under
the Settlement Agreement, and this indebtedness was not recorded as a liability in the consolidated balance sheets. However, these obligations
remained contingent liabilities to the extent not discharged pursuant to the Settlement Agreement.
As the result of issuances of Common Stock under
the Settlement Agreement, the amount of these obligations was reduced to $317,725. On February 27, 2020, the Company and RA entered into
a Termination Agreement under which, among other things, upon payment of $49,000 to RA, the Settlement Agreement was terminated and the
obligations of the Company to RA’s controlling shareholder, which he had assigned to RA, were settled. In addition, the Company
settled its obligations to the other parties who held obligations that had been assigned to RA for a total of $17,510. Accordingly, the
Company has no further liabilities in connection with these obligations.
NOTE 5 – Right of Use Assets and Lease
Liabilities
The company leases real property from unrelated
parties under leases that are classified as operating leases. The Right of Use (“ROU”) assets for operating leases are included
in other assets on the consolidated balance sheets, with the corresponding liability in liabilities. Lease expense is recognized on a
straight-line basis over the lease term. Renewals and terminations are included in the calculation of the ROU assets and lease liabilities
when they are considered to be reasonably certain to be exercised. When the implicit rate is unknown, the incremental borrowing rate,
based on the commencement date, is used in determining the present value of lease payments.
The following amounts related
to leases were recorded in the consolidated balance sheets:
| | |
May 31, | |
| | |
2021 | | |
2020 | |
| | |
| | |
| |
| Operating lease asset | |
$ | 94,172 | | |
$ | 125,790 | |
| | |
| | | |
| | |
| Current operating lease liabilities | |
$ | 43,965 | | |
$ | 42,201 | |
| Long-Term operating lease liabilities | |
| 40,911 | | |
| 84,588 | |
| | |
$ | 94,876 | | |
$ | 126,789 | |
NOTE 6 -- Revenue
Most of the Company’s revenue is generated
by the performance of services to customers and recognized at a point in time based on the evaluation of when the customer obtains control
of the products. Revenue is recognized when all performance obligations under the terms of a contract are satisfied, and control of the
product has been transferred to the customer. Revenue is recorded when customer acceptance is received, and all performance obligations
have been satisfied. Sales of goods typically do not include multiple products and/or service elements.
The table below summarizes information about
our revenue:
| | |
Years ended May 31, | |
| | |
2021 | | |
2020 | |
| | |
| | |
| |
| Clinical trials | |
$ | 706,008 | | |
$ | 84,980 | |
| Consulting fees | |
| 17,289 | | |
| 142,782 | |
| Franchise Fee | |
| – | | |
| 17,361 | |
| Seminar Fees | |
| 38,440 | | |
| 44,799 | |
| Merchandise | |
| – | | |
| 310 | |
| Total Revenues | |
$ | 761,737 | | |
$ | 290,233 | |
NOTE 7 – Income Taxes
The Company provides for income taxes under ASC
740. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between
the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse.
A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax
assets through future operations.
On December 22, 2017, the 2017 Tax Cuts and Jobs
Act (“Tax Act”) was enacted into law, making significant changes to the Code. These changes included a federal corporate
tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transition of U.S. international taxation
from a worldwide tax system to a territorial system and a one-time transition tax on the mandatory deemed repatriation of foreign earnings.
The Company is required to recognize the effect of the tax law changes in the period of enactment, such as re-measuring its U.S. deferred
tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. The Tax Act did not
give rise to any material impact on the consolidated balance sheets and consolidated statements of operations due to the Company’s
historical worldwide loss position and the full valuation allowance on its net U.S. deferred tax assets. The reconciliation of taxes
at the federal and state statutory rate to the Company’s provision for income taxes for the years ended May 31, 2021, and May 31,
2020, was as follows:
| May 31, 2021 |
| Income tax expense (benefit) at the statutory rate | |
$ | (141,571 | ) |
| Valuation allowance | |
| 141,871 | |
| Income tax expense per books | |
$ | – | |
| May 31, 2020 | |
| Income tax expense (benefit) at the statutory rate | |
$ | (551,426 | ) |
| Valuation allowance | |
| 551,426 | |
| Income tax expense per books | |
$ | – | |
Due to changes in ownership provisions of the
income tax laws of the United States of America, net operating loss carryforwards of approximately $2,729,253 and $2,598,605 at May 31,
2021, and May 31, 2020, respectively, for federal income tax reporting purposes are subject to annual limitations. When a change in ownership
occurs, net operating loss carryforwards may be limited as to use in future years. They typically expire 20 years from when incurred.
Income taxes for 2017 to 2020 remain subject
to examination.
Note 8– Stockholders’ Deficit
The Company is authorized to issue 20,010,000,000
of capital stock, of which 20,000,000,000 shares are Common Stock, without par value, and 10,000,000 are preferred stock.
Preferred Stock
The Company has designated 2,500,000 shares of
preferred stock as Series A Convertible Preferred Stock (the “Series A Stock”). Each share of Series A Stock entitles the
holder to receive dividends at the rate determined by the Board. In the event of liquidation, such holders are entitled to be paid out
of the assets of the Corporation available for distribution to its common stockholders, whether from capital, surplus or earnings, and
before any payment is made in respect of the shares of Common Stock, an amount equal to the greater of: (i) the then-current market price
of the Series A Stock, as detailed by OTC, or ten cents ($0.10) per share of Series A Stock, subject to adjustment for stock dividends,
combinations, splits, recapitalizations and the like with respect to the Series A Stock, plus all accrued but unpaid dividends. Each
share of Series A Stock is convertible, at the option of the holder, at any time one year after the date of issuance of such shares,
into that number of shares of Common Stock that is equal to the quotient obtained by dividing the Series A Preference Price then in effect
for each share of Series A Stock by the greater of: (i) ten cents ($0.10) per share, or (ii) seventy-five percent (75%) of the Market
Price (as defined) of the Common Stock on the conversion date, subject to adjustment in certain events. and is not redeemable. The Series
A Stock possesses one-half of the voting power of the Company’s stockholders. At May 31, 2021, and May 31, 2020, there were 2,500,000
shares of Series A Stock issued and outstanding.
Common Stock
Issuances and Surrenders
On December 20, 2019, under the PU Merger Agreement,
the Company issued 4,875,000,000 shares of Common Stock to an officer of the Company.
On December 22, 2020, the company officer surrendered
to the Company 279,532,795 shares of Common Stock that had been erroneously issued to him pursuant to the PU Merger Agreement.
During the year ended May 31, 2021, the Company
sold 153,457,142 shares of Common Stock for $262,000 and during the year ended May 31, 2020, the Company sold 117,797,617 shares of Common
Stock for $183,868.
During the year May 31, 2020, the Company 102,650,000
shares of Common Stock under an employee benefit plan.
On December 23, 2020, an officer of the Company
sold 1,000,000,000 shares of Common Stock to the Company for $1,000. As a result, that officer now owns 500,000,000 shares of Common
Stock and 500,000 shares of Series A Preferred.
As of May 31, 2021, and May 31, 2020, there were
7,814,238,100 and 8,715,256,416 shares of Common Stock issued and outstanding.
Note 8 – Share-Based Compensation
During the years ended May 31, 2021, and May
31, 2020, the Company issued 102,650,0000 and 0 shares of Common Stock, respectively, to its employees as additional compensation. The
Company expensed $10,265 and $ 0, respectively, based upon the market price for these shares on the various dates on which they were
issued.
Note 9 – Commitments and Contingencies
The Company accounts for leases under ASC 842.
For leases with terms of 12 months or more, an asset and liability are initially recognized at an amount equal to the present value of
the unpaid lease payments over the remaining lease term. The Company uses the interest rate implicit in the lease, when known, or its
incremental borrowing rate, which is derived from information available at the lease commencement date, including prevailing financial
market conditions, in determining the present value of the unpaid lease payments. The Company leases premises of approximately 4,500
square feet located at 6201 Bonhomme Road, Suites 460S and 466S, Houston, Texas. The lease currently provides for base rent of $3,381.96
per month, increasing to (i) $3,529.00 per month on July 1, 2020, (ii) $3,676.04 per month on July 1, 2021, and (iii) $3,823.08
per month on July 1, 2022, subject to CPI increase. In addition, two of the Company’s officers lease 1,400 square feet in Houston,
Texas, under a lease the term of which commenced on February 29, 2020, and will expire on March 14, 2022, at a rent of $3,449 per month;
these officers have made a portion of these premises available to the Company for use as office space on a month-to-month basis, for
which the Company pays them $2,817 per month.
The Company is accounting for its lease agreements
as operating leases under ASC 2016-02, Leases Topic ASC 842. Accordingly, the company has capitalized the present value of the future
lease obligations and is amortizing the related right-of-use asset over the term of the lease. The Company adopted ASC 842 as of June
1, 2019, and its adoption resulted in an increase in the balance sheet of $155,387 of Right-of-Use Asset and associated Lease Liability.
Incremental borrowing rate use was 6%. As of May 31, 2021, and May 31, 2020, the operating lease right-of-use asset and operating lease
liabilities were $94,172 and $87,642, respectively.
Note 10 – Related Party Transactions
See Note 1 – Merger with PUI for information
respecting the interest of an officer of the Company in the merger of PUI with and into the Company; Note 6 – Issuance and Surrenders
for information respecting the Company’s purchase of Common Stock from one of its officers and Note 9 for information respecting
the lease of real property to the Company by two of its officers. During the year ended May 31, 2021, the Company advanced $15,000 to
one of its shareholders, of which $12,000 remains outstanding.
Note 11 – Off-Balance-Sheet Arrangements
The Company has no off-balance sheet arrangements.
Note 12 – Concentration of Risk
The Company has gross revenue of $761,737 and
$290,232 for the years ending May 31, 2021, and May 31, 2020, respectively.
The Company had 11 customers that provided 70%
of gross revenue for the year ended May 31, 2021, and 4 customers that provided 90% of gross revenue for the year ended May 31, 2020.
Note 13 – Subsequent Events
During the years ended May 31, 2021, and May
31, 2020, the COVID-19 pandemic had a material adverse effect on the Company’s educational business because governmental measures
taken to control it resulted in the closing of classrooms and other educational venues, and also hindered the Company’s franchising
and consulting activities. As the pandemic has abated, some of these restrictions have been removed and the Company is beginning to resume
normal operations. If the pandemic does not continue to abate, because of infections resulting from emerging virus variants or for other
reasons, restrictions could be reimposed or increased. The ultimate extent of the impact of the pandemic will depend on future developments,
which are highly uncertain and cannot be predicted.
During the fiscal year beginning June 1, 2021,
the Company issued 451,362,011 shares of Common Stock to 12 persons, for $500,000.
Management has evaluated all other subsequent
events when these consolidated financial statements were issued and has determined that none of them requires disclosure herein.
PART II — INFORMATION NOT REQUIRED IN
PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses expected
to be incurred by us in connection with the issuance and distribution of the securities being registered. No portion of such expenses
will be borne by the Selling Stockholders.
| SEC Registration | |
$ | 463.50 | |
| Legal Fees and Expenses* | |
$ | 50,000 | |
| Accounting Fees* | |
$ | 4,000 | |
| Miscellaneous* | |
$ | 5,000 | |
| Total | |
$ | 59,463.50 | |
Item 14. Indemnification of Directors and Officers.
Under Section 7-109-102 of the Colorado Business
Corporation Act (the “CBCA”), a corporation may indemnify a person made a party to a proceeding because he is or was a director
against liability incurred in the proceeding if (a) his conduct was in good faith and (b) he reasonably believed (i) in
the case of conduct in an official capacity with the corporation, that such conduct was in the corporation’s best interests; and
(ii) in all other cases, that such conduct was at least not opposed to the corporation’s best interests and (c) in the
case of any criminal proceeding, the person had no reasonable cause to believe that his conduct was unlawful. However, a corporation
may not indemnify a director under this section (a) in connection with a proceeding by or in the right of the corporation in which
he was adjudged liable to the corporation; or (b) in connection with any other proceeding charging that he derived an improper personal
benefit, whether or not involving action in an official capacity, in which proceeding he was adjudged liable on the basis that he derived
an improper personal benefit. The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent is not, of itself, determinative that the director did not meet the requisite standard of conduct. Indemnification
permitted under this section in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses
incurred in connection with the proceeding.
The CBCA further provides that, unless limited
by its articles of incorporation, a corporation shall indemnify a person who was wholly successful, on the merits or otherwise, in the
defense of any proceeding to which the person was a party because the person is or was a director or officer of the corporation, against
reasonable expenses incurred by the person in connection with the proceeding. The Registrant’s articles of incorporation contain
no such limitation. In addition, a director or officer, who is or was a party to a proceeding, may apply for indemnification to the court
conducting the proceeding or to another court of competent jurisdiction. The CBCA allows a corporation to indemnify and advance expenses
to an officer, employee, fiduciary or agent of the corporation to the same extent as a director.
Pursuant to the foregoing, the Registrant’s
amended and restated articles of incorporation require it to indemnify, to the full extent permitted by law, any person who is or was
a director or officer of the Registrant, and may indemnify any other person against any claim, liability or expense arising against or
incurred by such person made a party to a proceeding because he is or was a director, officer, agent, fiduciary or employee of the Registrant
or because he is or was serving another entity as a director, officer, partner, trustee, employee, fiduciary or agent at the Company’s
request.
Under Section 7-108-402 of the CBCA, a corporation
may, in its articles of incorporation, eliminate or limit the personal liability of a director to the corporation or to its shareholders
for monetary damages for breach of his fiduciary duty as a director, except that such provision may not eliminate or limit the liability
of a director to the corporation or to its shareholders for monetary damages for any breach of his duty of loyalty to the corporation
or to its shareholders, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, unlawful
distributions or any transaction from which he directly or indirectly derived an improper personal benefit. No such provision may eliminate
or limit the liability of a director to the corporation or to its shareholders for monetary damages for any act or omission occurring
before the date when such provision became effective. As permitted by the CBCA, the Registrant’s amended and restated articles
of incorporation provide that the personal liability of the Company’s directors to the Company or its stockholders is limited to
the full extent permitted by the CBCA.
In addition, Section 7-108-402 provides that no director or officer
shall be personally liable for any injury to person or property arising out of a tort committed by an employee unless he was personally
involved in the situation giving rise to the litigation or unless he committed a criminal offense in connection with such situation,
without restricting other common-law protections and rights that he may have.
Section 7-109-108 of the CBCA provides that a
corporation may purchase and maintain insurance on behalf of a person who is or was a director, officer, employee, fiduciary or agent
of the corporation, or who, while a director, officer, employee, fiduciary or agent of the corporation, is or was serving at the request
of the corporation as a director, officer, partner, trustee, employee, fiduciary or agent of another entity or an employee benefit plan,
against liability asserted against or incurred by the person in that capacity or arising from the person’s status as a director,
officer, employee, fiduciary or agent, whether or not the corporation would have power to indemnify the person against the same liability
under the CBCA. The Registrant has not purchased such insurance.
Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions,
the registrant has been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
Item 15. Recent sales of unregistered securities.
On December 20, 2019, the Registrant issued 4,790,072,957
shares of Common Stock as merger consideration in respect of the merger of PUI with and into the Registrant to 23 persons pursuant to
the exemption from registration afforded by Section 4(a)(2) of the Securities Act. Of these shares, (i) 4,595,467,025 shares were issued
to the chief executive officer of PUI, who became the chief executive officer and a director of the Registrant pursuant to the related
merger agreement and (ii) the remainder were issued to 22 persons who had purchased them from PUI over a period of years prior to
the merger.
On January 5, 2020, the Registrant issued 90,000,000
shares of Common Stock to two persons for $90,000 pursuant to the exemption from registration afforded by Section 4(a)(2) of the Securities
Act. Of these shares, 40,000,000 were issued to a director of the Registrant.
On January 5, 2020, the Registrant issued 47,650,000
shares of Common Stock to 13 persons in exchange for shares of PUI that they had received as employee benefits over a period of years
prior to the merger pursuant to the exemption from registration afforded by Section 4(a)(2) of the Securities Act.
On January 5, 2020, the Registrant issued 10,250,000
shares of Common Stock to 13 persons who were not residents of the United States persons in exchange for shares of PUI that they had
received as employee benefits over a period of years prior to the merger. By virtue of the foreign status of these persons, these issuances
were not subject to the registration provisions of the Securities Act.
In addition, the Company has issued unregistered
shares of Common Stock as follows:
| Date | |
No. of Shares | | |
Class of Securities | |
Value ($) | | |
Transaction Type | |
Exemption Claimed |
| 01/24/20 | |
| 1,000,000 | | |
Common Stock | |
| 1,000 | | |
Employee benefit | |
4(a)(2) of the Securities Act |
| 02/15/20 | |
| 2,000,000 | | |
Common Stock | |
| 2,000 | | |
Employee benefit | |
4(a)(2) of the Securities Act |
| 02/15/20 | |
| 150,000 | | |
Common Stock | |
| 150 | | |
Employee benefit | |
4(a)(2) of the Securities Act |
| 02/15/20 | |
| 250,000 | | |
Common Stock | |
| 250 | | |
Employee benefit | |
4(a)(2) of the Securities Act |
| 02/19/20 | |
| 500,000 | | |
Common Stock | |
| 500 | | |
Employee benefit | |
4(a)(2) of the Securities Act |
| 02/19/20 | |
| 5,000,000 | | |
Common Stock | |
| 5,000 | | |
Employee benefit | |
4(a)(2) of the Securities Act |
| 02/19/20 | |
| 500,000 | | |
Common Stock | |
| 500 | | |
Employee benefit | |
4(a)(2) of the Securities Act |
| 02/19/20 | |
| 1,000,000 | | |
Common Stock | |
| 1,000 | | |
Employee benefit | |
4(a)(2) of the Securities Act |
| 02/19/20 | |
| 250,000 | | |
Common Stock | |
| 250 | | |
Employee benefit | |
4(a)(2) of the Securities Act |
| 02/19/20 | |
| 1,000,000 | | |
Common Stock | |
| 1,000 | | |
Employee benefit | |
4(a)(2) of the Securities Act |
| 03/15/20 | |
| 7,000,000 | | |
Common Stock | |
| 9,800 | | |
Cash | |
4(a)(2) of the Securities Act |
| 03/15/20 | |
| 5,000,000 | | |
Common Stock | |
| 5,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 03/16/20 | |
| 2,143,000 | | |
Common Stock | |
| 3,000 | | |
Cash | |
4(a)(2) of the Securities Act; Foreign |
| 03/16/20 | |
| 6,429,000 | | |
Common Stock | |
| 9,000 | | |
Cash | |
4(a)(2) of the Securities Act; Foreign |
| 04/24/20 | |
| 7,142,857 | | |
Common Stock | |
| 10,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 04/24/20 | |
| 62,500,000 | | |
Common Stock | |
| 12,500 | | |
Cash | |
4(a)(2) of the Securities Act |
| 05/08/20 | |
| 500,000 | | |
Common Stock | |
| 500 | | |
Employee benefit | |
4(a)(2) of the Securities Act |
| 06/26/20 | |
| 7,000,000 | | |
Common Stock | |
| 9,800 | | |
Cash | |
4(a)(2) of the Securities Act |
| 06/26/20 | |
| 50,000,000 | | |
Common Stock | |
| 10,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 06/26/20 | |
| 3,571,428 | | |
Common Stock | |
| 5,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 03/15/21 | |
| 50,000,000 | | |
Common Stock | |
| 150,000 | | |
Settlement of gation | |
4(a)(2) of the Securities Act; Foreign |
| 03/15/21 | |
| 7,500,000 | | |
Common Stock | |
| 22,500 | | |
Cash | |
4(a)(2) of the Securities Act |
| 03/26/21 | |
| 13,392,857 | | |
Common Stock | |
| 3,750 | | |
Cash | |
4(a)(2) of the Securities Act |
| 04/09/21 | |
| 1,893,939 | | |
Common Stock | |
| 5,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 04/09/21 | |
| 8,928,571 | | |
Common Stock | |
| 10,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 04/09/21 | |
| 8,152,174 | | |
Common Stock | |
| 15,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 04/09/21 | |
| 10,080,645 | | |
Common Stock | |
| 25,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 04/21/21 | |
| 3,750,000 | | |
Common Stock | |
| 9,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 04/28/21 | |
| 10,714,286 | | |
Common Stock | |
| 10,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 04/29/21 | |
| 178,571,429 | | |
Common Stock | |
| 50,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 05/01/21 | |
| 6,944,444 | | |
Common Stock | |
| 15,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 05/08/21 | |
| 2,500,000 | | |
Common Stock | |
| 5,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 05/10/21 | |
| 36,764,706 | | |
Common Stock | |
| 50,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 05/18/21 | |
| 2,500,000 | | |
Common Stock | |
| 5,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 05/21/21 | |
| 12,500,000 | | |
Common Stock | |
| 2,500 | | |
Cash | |
4(a)(2) of the Securities Act |
| 05/24/21 | |
| 3,750,000 | | |
Common Stock | |
| 7,500 | | |
Cash | |
4(a)(2) of the Securities Act |
| 06/03/21 | |
| 8,928,857 | | |
Common Stock | |
| 9,800 | | |
Cash | |
4(a)(2) of the Securities Act |
| 06/11/21 | |
| 14,705,882 | | |
Common Stock | |
| 20,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 06/25/21 | |
| 6,250,000 | | |
Common Stock | |
| 10,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 06/26/21 | |
| 6,250,000 | | |
Common Stock | |
| 10,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 09/21/21 | |
| 10,000,000 | | |
Common Stock | |
| 40,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 11/30/21 | |
| 40,000,000 | | |
Common Stock | |
| 50,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 11/30/21 | |
| 1,893,939 | | |
Common Stock | |
| 2,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 01/04/22 | |
| 55,555,555 | | |
Common Stock | |
| 50,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 01/04/22 | |
| 27,777,778 | | |
Common Stock | |
| 25,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 01/04/22 | |
| 10,000,000 | | |
Common Stock | |
| 10,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 01/04/22 | |
| 200,000,000 | | |
Common Stock | |
| 200,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 01/07/22 | |
| 30,000,000 | | |
Common Stock | |
| 30,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 01/21/22 | |
| 20,000,000 | | |
Common Stock | |
| 20,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 01/24/22 | |
| 10,000,000 | | |
Common Stock | |
| 10,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 01/31/22 | |
| 10,000,000 | | |
Common Stock | |
| 10,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 03/02/22 | |
| 20,000,000 | | |
Common Stock | |
| 12,000 | | |
Services | |
4(a)(2) of the Securities Act |
| 03/03/22 | |
| 94,117,647 | | |
Common Stock | |
| 84,700 | | |
Cash | |
4(a)(2) of the Securities Act |
| 03/09/22 | |
| 11,111,111 | | |
Common Stock | |
| 1,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 03/11/22 | |
| 55,000,000 | | |
Common Stock | |
| 38,500 | | |
Cash | |
4(a)(2) of the Securities Act |
| 03/28/22 | |
| 70,588,234 | | |
Common Stock | |
| 70,600 | | |
Cash | |
4(a)(2) of the Securities Act |
| 03/28/22 | |
| 41,025,641 | | |
Common Stock | |
| 41,025 | | |
Cash | |
4(a)(2) of the Securities Act |
| 04/01/22 | |
| 55,555,555 | | |
Common Stock | |
| 50,000 | | |
Cash | |
4(a)(2) of the Securities Act |
| 06/26/22 | |
| 125,000,000 | | |
Common Stock | |
| 50,000 | | |
Cash | |
4(a)(2) of the Securities Act |
The proceeds of the securities that were issued for cash were used
for general corporate purposes.
Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
Exhibit
Number
| Description |
| 3.1 | Amended and Restated
Articles of Organization, filed with the Secretary of State of the State of Colorado on July 20,
2022. |
| 3.2 | By-Laws. |
| 5.1 | Opinion of Barry J. Miller PLLC. To be filed by amendment. |
| 10.1 | Loan Authorization and Agreement, dated May 22, 2020,
by and between the Registrant and the Small Business Administration (included related note and security agreement). |
| 10.2 | Loan Authorization and Agreement, dated June 10, 2020,
by and between the Registrant and the Small Business Administration (included related note and security agreement). |
| 10.3+ | 2022 Incentive Award Plan. |
| 10.4 | Lease, dated July 1, 2016, by and between 6201 Bonhomme,
L.P. as landlord and Precision Research Institute, L.L.C., s tenant (includes amendments). |
| 10.5 | Apartment Lease, dated March 15, 2022, by and between
SPUSG HSTN North Tower, as Lessor, and Dante Picato and Henry Levinski, as tenants. |
| 10.6 | U.S. Small Business Administration Note, dated March
20, 2021, made by Elizabeth Hernandez and assumed by the Registrant. |
| 10.7 | U.S. Small Business Note, dated April 16, 2021, made
by Elizabeth Hernandez and assumed by the Registrant. |
| 10.8 | Forward Purchase Agreement (Fixed ACH Delivery), dated
May 13, 2022, by and between Kapitos LLC and the Registrant. |
| 10.9 | First Electronic Bank Revolving Credit Agreement,
dated December 10, 2020, by and between Registrant and First Electronic Bank. |
| 10.10 | Business Line of Credit Agreement, dated October
8, 2019, by and between Headway Capital, LLC and Pharmacology University, Inc. |
| 10.11 | Future Receivables Sale and Purchase Agreement, dated
as of August 8, 2022, by and between Park Funding and the Registrant. |
| 23.1 | Consent of PWR CPA, LLP. |
| 23.2 | Consent of Barry J. Miller PLLC. To be included in Exhibit 5.1. |
| 24 | Power of Attorney. Included on the signature page. |
| 107 | Filing Fee Table. |
+ Indicates management contract or Compensatory
Plan.
(b) Financial
Statement Schedules.
All schedules are omitted because the required
information is either not present, not present in material amounts or is presented within the consolidated financial statements included
in the Prospectus that is part of this registration statement.
Item 17. Undertakings.
The undersigned hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
| (i) | To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933; |
| (ii) | To reflect in the prospectus
any facts or events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the “Calculation of Registration Fee” table
in the effective registration statement; and |
| (iii) | To include any material information
with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement. |
(2) That,
for the purpose of determining liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination
of the offering.
(4) That,
for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b)
as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses
filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used
after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is
part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify
any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
(5) That,
for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution
of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant
to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to
the purchaser and will be considered to offer or sell such securities to such purchaser:
| (i) | Any preliminary prospectus or
prospectus of the undersigned registrant relating to the offering required to be filed pursuant
to Rule 424; |
| (ii) | Any free writing prospectus
relating to the offering prepared by or on behalf of the undersigned registrant or used or
referred to by the undersigned registrant; |
| (iii) | The portion of any other free
writing prospectus relating to the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering
made by the undersigned registrant to the purchaser. |
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1933, the registrant has duly caused this registration statement report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, Texas.
Date: August 24, 2022
| |
CHINA INFRASTRUCTURE CONSTRUCTION CORP. |
| |
|
| |
By: /s/ Dante Picazo |
| |
Dante Picazo |
| |
Chief Executive Officer and |
| |
Chief Accounting Officer |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that we,
the undersigned officers and directors of China Infrastructure Construction Corp., a Colorado corporation (the “Company”),
do hereby constitute and appoint Dante Picazo and Henry Levinski, and each of them, as the true and lawful attorneys-in-fact and agents
of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, to sign
in any and all capacities (including, without limitation, the capacities listed below), the registration statement, any and all amendments
(including post-effective amendments) to the registration statement and any and all successor registration statements of the Registrant,
including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto,
and all other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each and every act and anything necessary to be done to enable
the registrant to comply with the provisions of the Securities Act and all the requirements of the Securities and Exchange Commission,
as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his or her substitute, or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities
Act, this registration statement has been signed below by the following persons in the capacities set forth opposite their names and
on the dates indicated.
| Person |
|
Title |
|
Date |
| |
|
|
|
|
| /s/ Dante Picazo |
|
Chief Executive Officer and Director |
|
August 24, 2022 |
| Dante Picazo |
|
(Principal Executive Officer and Principal Accounting Officer) |
|
|
| |
|
|
|
|
| /s/ Henry Levinski |
|
Vice President and Director |
|
August 24, 2022 |
| Henry Levinski |
|
|
|
|
| |
|
|
|
|
| /s/ Jose Torres |
|
Secretary and Director |
|
August 24, 2022 |
| Jose Torres |
|
|
|
|
Exhibit 3.1
CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION AMENDED AND RESTATED ARTICLES OF INCORPORATION
Pursuant
to Sections 7-110-103 and 7-110-107 of the Colorado Business Corporation Act, CHINA INFRASTRUCTURE CONSTRUCTION CORPORATION, a
corporation organized and existing under the laws of Colorado, hereby amends and restates its Restated Articles of Incorporation and
certifies that:
FIRST:
The name of the Corporation is CHINA INFRASTRUCTURE CONSTRUCTION CORPORATION.
SECOND:
The Corporation’s Restated Articles of Incorporation, as previously amended, are hereby restated and further amended to read
in their entirety as follows:
ARTICLE
I: The name of the Corporation is CHINA INFRASTRUCTURE CONSTRUCTION CORP.
ARTICLE
II: The Corporation may engage in any lawful business activity and shall have all lawful powers in connection therewith.
ARTICLE
III: The Corporation’s existence shall be perpetual.
ARTICLE
IV: The Corporation’s principal place of business is 6201 Bonhomme Rd. Suite 466S, Houston, TX 77036.
ARTICLE
V: The address of the Corporation’s registered office in the State of Colorado is 7700 East Arapahoe Rd., Suite 220, Centennial,
CO 80112-1268. The name of the Corporation’s registered agent at such address is Business Filings Incorporated.
ARTICLE
VI: The by-laws previously filed with the Secretary of State are hereby rescinded and by-laws shall hereafter be adopted, amended,
altered or repealed as prescribed by the Colorado Business Corporation Act (the “CBCA”).
ARTICLE
VII:
(a) The
number of directors of the Corporation shall be fixed in accordance with the Corporation’s by-laws.
(b) To the
full extent permitted by law, no director of the Corporation shall have any personal liability to the Corporation or its shareholders
for monetary damages for breach of his fiduciary duty as a director. Any repeal or modification of the previous sentence shall not adversely affect any right or protection of a director with respect to any act or omission occurring prior to such repeal or modification.
Nothing contained herein will be construed to deprive any director of his right to all defenses ordinarily available to a director, nor
will anything herein be construed to deprive any director of any right that he may have for contribution from any other director or another
person.
(c) The
Corporation shall indemnify, to the full extent permitted by law, any person who is or was a director or officer of the Corporation,
and may indemnify any other person, against any claim, liability or expense arising against or incurred by such person made a party to
a proceeding because he is or was a director, officer, agent, fiduciary or employee of the Corporation or because he is or was serving
another entity as a director, officer, partner, trustee, employee, fiduciary or agent at the Corporation’s request. The Corporation
shall, before the final disposition of a proceeding, pay for or reimburse the reasonable expenses incurred by an individual who is a
party to a proceeding because that person is a director of the Corporation to the full extent permitted by, but only in accordance with,
the CBCA.
ARTICLE
VIII: The capital stock of the Corporation is twenty billion ten million (20,010,000,000) shares, of which twenty billion (20,000,000,000)
shares shall be common stock, without par value (“Common Stock”), and ten million (10,000,000) shall be shares of preferred
stock. The preferred stock may be issued in series and the board of directors may determine, in whole or in part, the preferences, limitations,
and relative rights, within the limits set forth in the CBCA, of any such series.
(a) Series
A Convertible Preferred Stock. The preferences, limitations, and relative rights of the Series A Convertible Preferred Stock
(the “Series A Preferred Stock”) are as follows:
(1)
Amount and Par Value.
The Series
A Preferred Stock shall comprise two million five hundred thousand (2,500,000) shares of preferred stock, which shall be without par
value.
(2)
Rank.
The Series
A Preferred Stock shall be senior to the Common Stock and subordinate to all other series of preferred stock.
(3)
Dividends and Distributions.
In the event
that a record date is fixed for the determination of holders of the Common Stock entitled to receive a dividend or other distribution
(whether payable in cash, securities, or other property), each share of Series A Preferred Stock shall be entitled to receive, on the
date on which such dividend or other distribution is paid or made to the holders of Common Stock, a dividend or distribution equal
to the dividend or distribution that would be paid and in the same kind of property (whether cash, securities or other property) on the
number of shares of Common Stock into which such share of Series A Preferred Stock is convertible immediately prior to such record
date. Shares of Series A Preferred Stock shall not be entitled to any dividends or distributions otherwise than as set forth in this
Section (a)(3), or in the event of liquidation, as set forth in Section (4) of this Article VIII.
(4)
Liquidation.
In the
event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary (a “Liquidation Event”),
the holders of the outstanding shares of Series A Preferred Stock shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders, whether from capital, surplus funds or earnings, and before any payment is made in respect
of the shares of Common Stock, an amount equal to the greater of: (i) the Market price of the Series A Preferred Stock on the date of
the liquidation, or (ii) ten cents ($0.10) per share of Series A Preferred Stock plus accrued but unpaid dividends (the “Series
A Preference Price”). “Market Price,” as of any date, means (A) the average of the closing prices for the Common Stock
as reported by the alternative trading system known as “OTC Link” for the ten (10) consecutive trading days immediately preceding
such date, whether or not the Common Stock trades on any or all of such days, or (B) if OTC Link is not the principal trading system
for the Common Stock, the average of the closing prices as reported by the principal trading market or system on which the Common Stock
is quoted during the same period or (C) if Market Price cannot be determined as of such date as provided in clause (A) or (B) of this
sentence, the fair market value of a share of Common Stock as determined in good faith by the board of directors, which determination
shall be final and binding. Shares of Series A Preferred Stock shall not be entitled to any distribution in connection with a Liquidation
Event otherwise than as set forth in this Section (4).
(5)
Redemption.
(i) Redemption
at the Option of the Corporation. The Series A Preferred Stock is subject to redemption, as a whole or in part, at any time or
from time to time, as determined by the board of directors in its discretion. Upon redemption, each share of Series A Preferred Stock
shall receive as the full redemption payment the number of shares of Common Stock into which it is then convertible. The board of directors
shall select the shares of Series A Preferred to be redeemed in its sole and unfettered discretion and need not do so on a pro-rata basis.
In connection with a redemption, the board shall adopt a resolution authorizing the redemption and stating the date of the redemption,
the number of shares of Series A Preferred Stock to be redeemed and the names of the holders thereof, and the Corporation shall comply
with the provisions of the CBCA relating to redemptions. On the date of the redemption, the holders of the redeemed shares of Series
A Preferred Stock shall, without any action on their part, become holders of the shares of Common Stock that they are entitled to receive
by virtue of the redemption and shall have no rights as the holders of Series A Preferred Stock that were redeemed. The shares of Common
Stock issued upon redemption shall be issued in uncertificated form and may be certificated or sold, pledged or otherwise disposed
of only upon the surrender of certificates representing the shares of Series A Preferred Stock that were redeemed; provided that,
if a holder of shares of Series A Preferred Stock shall, as an incident of such surrender, deliver to the Corporation a certificate representing
more than the number of shares of Series A Preferred that were redeemed, he shall be issued a certificate representing the number of
shares that were not redeemed. Holders of Series A Preferred Stock shall be given notice of any redemption at their addresses as they
appear on the books of the Corporation.
(ii) Redemption
at the Option of the Holder. Shares of Series A Preferred Stock shall not be redeemable at the option of any holder or holders
thereof.
(6)
Voting.
Each share
of Series A Preferred Stock shall be entitled to one vote for each share of Common Stock into which it is convertible. Except where the
CBCA provides otherwise, the holders of shares of Series A Preferred Stock shall vote as a group with the holders of Common Stock.
(7)
Conversion.
The holders
of Series A Preferred Stock shall have the following conversion rights (“Conversion Rights”):
(i) Right
to Convert. Each share of Series A Preferred Stock should be convertible, at the option of the holder thereof, into that number
of shares of Common Stock of the Corporation which is equal to the quotient obtained by dividing (A) the Series A Preference Price that
would be in effect for each share of Series A Preferred Stock if the Corporation were liquidated on the Conversion Date by (B) the Series
A Conversion Price, as adjusted in accordance with the provisions of this Section (a)(7). “Series A Conversion Price” shall
mean the greater of (i) ten cents ($0.10) per share or (ii) seventy-five percent (75%) of the Market Price of the Common Stock on the
Conversion Date.
(ii) Mechanics
of Conversion. Each holder of outstanding shares of Series A Preferred Stock who desires to convert the same into shares of Common
Stock shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation together with written
notice stating that such holder elects to convert the same and the number of shares of Series A Preferred Stock being converted (the
“Conversion Notice”). Thereupon, the Corporation shall issue and deliver to such holder a certificate or certificates for
the number of shares of Common Stock to which such holder is entitled and shall promptly pay all declared but unpaid dividends on the
shares of Series A Preferred Stock that were converted. Such conversion shall be deemed to have been made on the date of such surrender
of the certificate or certificates representing the shares of Series A Preferred Stock to be converted together with the Conversion Notice
(the “Conversion Date”) and the person entitled to receive the shares of Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder of such shares of Common Stock on the Conversion Date.
(iii) Adjustment
for Stock Splits and Combinations. If the Corporation effects a division of the outstanding shares of Common Stock, the Series
A Conversion Price shall be proportionately decreased and, conversely, if the Corporation at any time or combines the outstanding shares
of Common Stock, the Series A Conversion Price shall be proportionately increased. Any adjustment under this Section (iii) shall be effective
on the close of business on the date such division or combination becomes effective.
(iv) Adjustment
for Certain Dividends and Distributions. If the Corporation pays or fixes a record date for the determination of holders of
shares of Common Stock entitled to receive a dividend or other distribution in the form of shares of Common Stock, other than to the
holders of Series A Preferred Stock in connection with the full or partial redemption thereof, or rights or options for the purchase
of, or securities convertible into, Common Stock, in each such event, the Series A Conversion Price shall be decreased, as of the time
of such payment or, in the event a record date is fixed, as of the close of business on such record date, by multiplying the Series A
Conversion Price by a fraction (1) the numerator of which shall be the total number of shares of Common Stock outstanding immediately
prior to the time of such payment or the close of business on such record date and (2) the denominator of which shall be (a) the total
number of shares of Common Stock outstanding immediately prior to the time of such payment or the close of business on such record date
plus (b) the number of shares of Common Stock issuable in payment of such dividend or distribution or upon exercise of such option or
right of conversion; provided, however, that if a record date is fixed and such dividend is not fully paid or such other distribution
is not fully made on the date fixed therefor, the Series A Conversion Price shall not be decreased as of the close of business on such
record date as hereinabove provided as to the portion not fully paid or distributed and, thereafter, the Series A Conversion Price shall
be decreased pursuant to this Section (iv) as of the date or dates of actual payment of such dividend or distribution.
(v) Adjustments
for Other Dividends and Distributions. If the Corporation at any time or from time to time fixes a record date for the determination
of holders of shares of Common Stock entitled to receive, a dividend or other distribution in the form of securities of the Corporation
other than (i) shares of Common Stock or (ii) rights or options for the purchase of, or securities convertible into, Common Stock, in
each such event, provision shall be made so that the holders of outstanding shares of Series A Preferred Stock shall receive upon conversion
thereof, in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation that
they would have received had their respective shares of Series A Preferred Stock been converted into shares of Common Stock on the date
of such event and had such holders thereafter, from the date of such event to and including the actual Conversion Date of their shares,
retained such securities, subject to all other adjustments called for during such period under Section (a) of this Article VIII with
respect to the rights of the holders of the shares of Series A Preferred Stock.
(vi) Adjustment
for Reclassification, Exchange and Substitution. If the number of shares of Common Stock issuable upon conversion of the shares
of Series A Preferred Stock is changed into the same or a different number of shares of any other class or classes of stock or other
securities, whether by recapitalization, reclassification or otherwise (other than a recapitalization, division or combination of shares
or stock dividend or a reorganization, merger, consolidation or sale of assets provided for elsewhere in Section (a)) of this Article
VIII, then in any such event each holder of outstanding shares of Series A Preferred Stock shall have the right thereafter to convert
such shares of Series A Preferred Stock into the same kind and amount of stock and other securities receivable upon such recapitalization,
reclassification or other change, as the maximum number of shares of Common Stock into which such shares of Series A Preferred Stock
could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment
as provided in this Section (a) of this Article VIII.
(vii) Reorganizations,
Mergers, Consolidations and Sales of Assets. If there is a capital reorganization of the Common Stock (other than a recapitalization,
division, combination, reclassification or exchange of shares provided for elsewhere in this Section (a) of this Article VIII, a merger
or consolidation of the Corporation into or with another corporation or a sale of all or substantially all of the Corporation’s
properties and assets to any other person, then, as a part of such capital reorganization, merger, consolidation or sale, provision shall
be made such that: (A) the holders of shares of Series A Preferred Stock shall thereafter receive upon conversion thereof the number
of shares of stock or other securities or property of the Corporation, or of the successor corporation resulting from such merger or
consolidation or sale, to which a holder of the number of shares of Common Stock into which their shares of Series A Preferred Stock
were convertible would have been entitled on such capital reorganization, merger, consolidation or sale; and (B) the provisions of
Section (a) of this Article VIII (including adjustment of the Series A Conversion Price and the number of shares into which the shares
of Series A Preferred Stock may be converted) shall be applicable after that event and be as nearly equivalent to such Conversion Prices
and number of shares as may be practicable. In any such case, appropriate adjustment shall be made in accordance with the provisions
of Section (a) of this Article VIII with respect to the rights of the holders of the outstanding shares of Series A Preferred Stock after
the capital reorganization, merger, consolidation or sale.
(viii) Fractional
Shares. No fractional shares of Common Stock shall be issued upon conversion of the shares of Series A Preferred Stock. If
any fractional shares result from a conversion, the total number of shares of Common Stock issued upon such conversion shall be rounded
up to the next whole number.
(ix) No
Reservation of Common Stock Issuable Upon Conversion. The Corporation shall not be required to reserve shares of Common Stock
for issuance upon conversion of shares of Series A Preferred Stock.
(x) Taxes.
Each holder of Series A Preferred Stock shall pay any and all taxes, including, without limitation, issue, transfer and income taxes,
and other governmental charges that may be imposed in respect of the issue or delivery of shares of Common Stock upon conversion of his
shares of Series A Preferred Stock.
(xi) No
Reissuance. No share or shares of Series A Preferred Stock acquired by the Corporation by reason of conversion, redemption, purchase
or otherwise shall be reissued as Series A Preferred Stock, and all such shares shall be canceled, retired and returned to the status
of undesignated and unissued shares of preferred stock.
(b) Series
B Convertible Preferred Stock. There is hereby designated and established a series of preferred stock entitled Series B Convertible
Preferred Stock (the “Series B Preferred Stock”), preferences, limitations, and relative rights of the Series B Convertible
Preferred Stock which was heretofore designated and established by the board of directors, are as follows:
(1)
Amount and Par Value.
The Series
B Preferred Stock shall comprise one thousand (1,000 shares) of preferred stock, which shall be without par value.
(2)
Rank.
The Series
B Preferred Stock shall be senior to the Common Stock and the Series A Preferred Stock and shall have such preferences, limitations,
and relative rights with respect to a series of preferred stock that may hereafter be designated as the board of directors may determine,
provided that the voting rights of the Series B Preferred Stock set forth in Section (b)(6) of this Article VIII shall not be
diminished without the unanimous consent of all of the holders of the Series B Preferred Stock.
(3)
Dividends and Distributions.
The Series
B Preferred Stock shall not be entitled to receive any dividend or distribution whatsoever.
(4)
Liquidation.
If a Liquidation
Event shall occur, the shares of Series B Preferred Stock shall not be entitled to receive any distribution of cash or other property
whatsoever.
(5)
Redemption.
The Series
B Preferred Stock shall not be redeemable at the option of the holder or the Corporation.
(6)
Voting.
The holders
of the Series B Preferred Stock shall vote as a group with the holders of all other classes and series of the Corporation’s capital
stock and shall have sixty percent (60%) of the voting power of the Corporation on all matters presented to shareholders for their consideration
and action, except that the holders of the Series B Preferred Stock shall vote as a separate voting group on all matters affecting their
rights as such or as otherwise specified in the CBCA.
(7)
Conversion.
The holders
of Series B Preferred Stock shall have no conversion rights.
(8) Certain
Actions. No merger, consolidation, sale of all or substantially all of the Corporation’s assets or amendment or restatement
of the Articles of Incorporation shall be authorized without the favorable vote of the holders of the Series B Preferred Stock voting
as a separate voting group, except in the case of the merger of a subsidiary with and into the Corporation in which the Corporation
is the surviving entity. No series of preferred stock having voting rights equal or superior to the voting rights of the Series B Preferred
Stock shall be designated without the unanimous vote of all of the holders thereof.
(c) Common
Stock. Each outstanding share of Common stock shall be entitled to one vote on each matter submitted to a vote of shareholders
and, subject to the rights and privileges of the holders of series of preferred stock, to such other rights and privileges as are prescribed
by the CBCA.
ARTICLE
IX: All actions taken and instruments signed in the name and on behalf of the Corporation under the corporate name “China
Infrastructure Construction Corp.” from December 4, 2019, to the date of the filing of these Amended and Restated Articles of Incorporation
shall have the same effect with respect to the Corporation as if they had been taken or signed in the name and on behalf of the Corporation
under its correct corporate name.
ARTICLE
X: In the event that any provision of Article VIII of these Amended and Restated Articles of Incorporation shall be found by a court
to be invalid or unenforceable, said Article VIII shall be rescinded in its entirety and shall be replaced by the provisions of Article
Eighth of the Amended and Restated Articles of Incorporation filed with the Secretary of State of Colorado on December 4, 2019.
THIRD:
This instrument (i) correctly sets forth the provisions of the Articles of Incorporation of the Corporation, as amended and restated;
and (ii) the Articles of Incorporation of the Corporation, as amended and restated, (A) were proposed, approved, and recommended for
shareholder approval by the board of directors of the Corporation pursuant to resolutions duly adopted by the unanimous consent of the
directors on March 31, 2022, (B) were adopted by the consent of each voting group entitled to vote on the adoption thereof on March 31,
2022, such that shareholders in each such voting group holding shares having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all of the shares entitled to vote thereon were present and voted
consented to such action in writing and (C) subject to Article X of the Amended and Restated Articles of Incorporation, as amended and
restated, supersede all Articles of Incorporation of the Corporation, any amendments thereto and restatements thereof, heretofore filed
with the Secretary of State of the State of Colorado.
IN WITNESS
WHEREOF, China Infrastructure Construction Corporation has caused these Amended and Restated Articles of Incorporation to be signed
on its behalf by its chief executive officer, thereunto duly authorized, this eighteenth day of July 2022.
CHINA
INFRASTRUCTURE CONSTRUCTION CORPORATION
By: /s/
Dante Picazo
Dante
Picazo
Chief Executive
Officer
Exhibit 3.2
BYLAWS
OF
CHINA INFRASTRUCTURE CONSTRUCTION CORP.
TABLE OF CONTENTS
Page
| ARTICLE I OFFICES |
1 |
| Section 1.1 |
Principal Office |
1 |
| Section 1.2 |
Registered Office |
1 |
| ARTICLE II SHAREHOLDERS |
1 |
| Section 2.1 |
Annual Meeting of Shareholders |
1 |
| Section 2.2 |
Special Meetings of Shareholders |
1 |
| Section 2.3 |
Place of Shareholder Meetings |
1 |
| Section 2.4 |
Notice of Meeting of Shareholders |
1 |
| Section 2.5 |
Meeting of All Shareholders |
3 |
| Section 2.6 |
Closing of Transfer Books or Fixing of Record Date |
3 |
| Section 2.7 |
Shareholder List |
3 |
| Section 2.8 |
Quorum |
4 |
| Section 2.9 |
Action by Shareholders at a Meeting |
4 |
| Section 2.10 |
Proxies |
4 |
| Section 2.11 |
Voting |
5 |
| Section 2.12 |
Advance Notice of Shareholder Business |
6 |
| Section 2.13 |
Conduct of Meetings |
7 |
| Section 2.14 |
Action by Shareholders Without a Meeting |
7 |
| Section 2.15 |
Acceptance of Votes |
8 |
| Section 2.16 |
Remote Participation in Shareholder’s Meeting; Meetings Held Solely by Remote Participation |
9 |
| ARTICLE III BOARD OF DIRECTORS |
9 |
| Section 3.1 |
General Powers |
9 |
| Section 3.2 |
Performance of Duties |
9 |
| Section 3.3 |
Number, Tenure and Qualifications |
10 |
| Section 3.4 |
Nominations |
10 |
| Section 3.5 |
Regular Meetings |
11 |
| Section 3.6 |
Special Meetings |
11 |
| Section 3.7 |
Notice |
11 |
| Section 3.8 |
Quorum |
12 |
| Section 3.9 |
Action by Directors at a Meeting |
12 |
| Section 3.10 |
Action Without Meeting |
12 |
| Section 3.11 |
Participation by Electronic Means |
12 |
| Section 3.12 |
Vacancies |
12 |
| Section 3.13 |
Resignation |
12 |
| Section 3.14 |
Removal |
12 |
| Section 3.15 |
Committees |
13 |
| Section 3.16 |
Compensation |
13 |
| Section 3.17 |
Presumption of Assent |
13 |
| Section 3.18 |
Chairman of the Board; Person Presiding at Meetings |
13 |
| ARTICLE IV OFFICERS |
14 |
| Section 4.1 |
Officers |
14 |
| Section 4.2 |
Election and Term of Office |
14 |
| Section 4.3 |
Removal and Resignation |
14 |
| Section 4.4 |
Vacancies |
14 |
| Section 4.5 |
President |
14 |
| Section 4.6 |
Vice President |
15 |
| Section 4.7 |
Chief Financial Officer |
15 |
| Section 4.8 |
Secretary |
15 |
| Section 4.9 |
Assistant Officers |
16 |
| Section 4.10 |
Sureties and Bonds |
16 |
| Section 4.11 |
Salaries |
16 |
| ARTICLE V |
EXECUTION OF INSTRUMENTS |
16 |
| ARTICLE VI |
CERTIFICATES FOR SHARES |
17 |
| Section 6.1 |
Certificates |
17 |
| Section 6.2 |
Consideration for Shares |
17 |
| Section 6.3 |
Lost or Destroyed Certificates |
18 |
| Section 6.4 |
Transfer of Shares |
18 |
| Section 6.5 |
Transfer Agent, Registrars and Paying Agents |
18 |
| Section 6.6 |
Restrictions on Stock |
18 |
| ARTICLE VII |
INSURANCE |
19 |
| ARTICLE VIII |
DISTRIBUTIONS |
19 |
| ARTICLE IX |
CORPORATE SEAL |
19 |
| ARTICLE X |
AMENDMENTS |
19 |
| ARTICLE XI |
INDEMNIFICATION AND LIMITATION OF LIABILITY |
19 |
| ARTICLE XII |
FISCAL YEAR |
19 |
| ARTICLE XIII |
EMERGENCY BYLAWS |
20 |
| ARTICLE XIV |
MISCELLANEOUS |
20 |
| Section 13.1 |
Receipt of Notices by the Corporation |
20 |
| Section 13.2 |
Construction |
20 |
| Section 13.3 |
Conflicts |
20 |
| Section 13.4 |
Definitions |
20 |
BYLAWS
OF
CHINA
INFRASTRUCTURE CONSTRUCTION CORP.
ARTICLE I – OFFICES
Section
1.1. Principal Office. The principal office of the Corporation shall be located in the City of Houston, Texas, or in such
other place as the Board of directors of the Corporation (the “Board”) may from time to time determine. The Corporation may
also have offices at such other places as the Board may from time to time determine or the business of the Corporation may require.
Section
1.2. Registered Office. The registered office of the Corporation required by the Colorado Business Corporation Act (the
“CBCA”) to be maintained in the state of Colorado at such location as the Board may from time to time determine. If the Corporation
has an office in the state of Colorado it may, but need not be, identical with such office.
ARTICLE
II – SHAREHOLDERS
Section
2.1. Annual Meeting of Shareholders.
Section
2.1.1. Time of Meeting. The annual meeting of the shareholders shall be held at such time on such day of each year as shall
be fixed annually by the Board in accordance with the CBCA, for the purpose of electing directors and for the transaction of such other
business as may properly come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the state of Colorado,
such meeting shall be held on the next succeeding business day.
Section
2.1.2. Election of Directors. If the election of directors shall not be held on the day designated herein for any annual
meeting of shareholders, or at any adjournment thereof, the Board shall cause the election to be held at a special meeting of the shareholders
at a time fixed by the Board.
Section
2.2. Special Meetings of Shareholders. Special meetings of the shareholders may be called for any purpose or purposes by
the president or by the Board or as provided by the CBCA. The president shall call a special meeting of the shareholders if the Corporation
receives one or more written demands for a special meetings, stating the purpose or purposes for holding the meeting, signed and dated
by the holders of shares representing at least 10 percent of all votes entitled to be cast on any issue proposed to be considered at
the meeting. Only business within the purpose or purposes described in the notice of the meeting required by Section 2.4.1 may be conducted
at a special shareholders’ meeting.
Section
2.3. Place of Shareholder Meetings. The Board may designate any place, within or outside the state of Colorado, as the
place of meeting for any annual or special meeting of shareholders called by the Board. If no designation is made, or if a special meeting
is called otherwise than by the president or Board, the place of meeting shall be the principal office of the Corporation designated
as provided in Section 1.1.
Section
2.4. Notice of Meeting of Shareholders.
Section
2.4.1. General Notice Provisions. Written notice stating the place, day and hour of a meeting of shareholders and, in case
of a special meeting, the purpose or purposes for which the meeting is called, shall, unless otherwise prescribed by statute, be given
not less than ten nor more than 60 days before the date of the meeting, except that if the number of authorized shares is to be increased,
at least 30 days’ notice shall be given.
Section
2.4.2. Notice of Meeting. Notice of a special meeting shall include a description of the purpose or purposes of the meeting.
Notice of an annual meeting need not include a description of the purpose or purposes of the meeting except the purpose or purposes shall
be stated with respect to:
(a) an amendment
to or restatement of the articles of incorporation;
(b) a merger
or share exchange in which the Corporation is a party and, with respect to a share exchange, in which the Corporation’s shares
will be acquired;
(c) a sale,
lease, exchange or other disposition, other than in the usual and regular course of business, of all or substantially all of the property
of the Corporation and its subsidiaries;
(d) the
liquidation of dissolution of the Corporation;
(e) any
other purpose for which a statement of purpose is required by the CBCA.
Section
2.4.3. Manner of Notice. Notice shall be given personally or by mail, private carrier, telegraph, teletype, electronically
transmitted facsimile or other form of wire or wireless communication or in any other way permitted by the CBCA by or at the direction
of the president, the secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed and if in a comprehensible form, such notice shall be deemed to be given and effective when deposited in the United
States mail, addressed to the shareholder at the shareholder’s address as it appears in the Corporation’s current record
of shareholders, with postage prepaid. If notice is given other than by mail, and provided that such notice is in a comprehensible form,
the notice shall be deemed to be given and effective on the date received by the shareholder.
Section
2.4.4. Expense of Notice. If requested by the person or persons lawfully calling such meeting, the notice shall be given
at the expense of the Corporation.
Section
2.4.5. Adjournment. When a meeting is adjourned to another date, time or place, notice need not be given of the new date,
time or place if the new date, time or place of such meeting is announced before adjournment of the meeting at which the adjournment
is taken. At the adjourned meeting, there may be transacted any business that might have been transacted at the original meeting. If
the adjournment is for more than 120 days, or if a new record date is fixed for the adjourned meeting, a new notice of the adjourned
meeting shall be given to each shareholder of record entitled to vote at the meeting as of the new record date.
Section
2.4.6. Waiver of Notice. A shareholder may waive notice of a meeting before or after the time and date of the meeting by
a writing signed by such shareholder. Such waiver shall be delivered to the Corporation for filing with the corporate records. By attending
a meeting either in person or by proxy, a shareholder shall have waived objection to lack of notice or defective notice of the meeting,
unless he objects at the beginning of the meeting to the holding of the meeting or the transaction of business at the meeting because
of lack of notice or defective notice. By attending the meeting, the shareholder shall also have waived any objection to consideration
in the meeting of a particular matter not within the purpose or purposes described in the meeting notice, unless he objects to considering
the matter when it is presented.
Section
2.4.7. Change of Address. No notice need be sent to a shareholder if three successive notices mailed to his last known
address have been returned as undeliverable until such time as another address for such shareholder is provided to the Corporation by
such shareholder. In order to be entitled to receive notice of any meeting, a shareholder shall advise the Corporation in writing of
any change in his mailing address.
Section
2.5. Meeting of All Shareholders. If all of the shareholders shall meet at any time and place, either within or outside
the state of Colorado, and consent to holding of a meeting at such time and place, such meeting shall be valid without call or notice,
and at such meeting any business may be transacted.
Section
2.6. Closing of Transfer Books or Fixing of Record Date.
Section
2.6.1. Closure of Books in General. In order to determine the shareholders entitled to notice of or to vote at any meeting
of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any distribution, or in order to make a determination
of shareholders for any other purpose, the Board may provide that the share transfer books shall be closed for a stated period not to
exceed, in any case, 70 days.
Section
2.6.2. Closure of Books for Shareholder Meetings. If the share transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately
preceding such meeting.
Section
2.6.3. Board Action in Lieu of Closing Books. In lieu of closing the share transfer books, the Board may fix in advance
the record date for any such determination of shareholders, such date in any case to be not more than 70 days, and, in case of a meeting
of shareholders, not less than ten days prior to the date on which the particular action, requiring such determination of shareholders,
is to be taken.
Section
2.6.4. Fixing Record Date in Lieu of Closing Books. If the share transfer books are not closed and no record date is fixed
for determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive
payment of a distribution, the date on which notice of the meeting is mailed or the date on which the resolution of the Board declaring
such distribution is adopted, as the case may be, shall be the record date for such determination of shareholders.
Section
2.6.5. Provisions Applicable to Adjournment. When a determination of shareholders entitled to vote at a meeting of shareholders
has been made as provided in sections 2.6.1 through 2.6.4, such determination shall apply to any adjournment of such meeting unless it
is adjourned to a date more than 120 days after the date fixed for the original meeting, in which case the Board shall make a new determination
as provided in this section.
Section
2.7. Shareholders’ List.
The officer
or agent having charge of the stock transfer books for shares of the Corporation shall make a complete record of the shareholders entitled
to be given notice of the meeting, arranged in alphabetical order, with the address of and the number of shares held by each. The record
shall be kept on file at the principal office of the Corporation, whether within or without the State of Colorado, and shall be subject
to inspection by any shareholder for any purpose germane to the meeting at any time during usual business hours. Such record shall be
produced and kept open beginning at the earlier of ten days before the meeting for which the list was prepared or two business days after
notice of the meeting is given, and continuing through the meeting and any adjournment thereof. Such record shall also be available at
the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting for
the purposes thereof.
The original
stock transfer books shall be the prima facie evidence as to the identity of the shareholders entitled to examine the record or transfer
books or to vote at any meeting of shareholders.
Section
2.7.3. Shareholders Entitled to Inspection. The original stock transfer books shall be prima facie evidence as to
the shareholders entitled to examine the records or transfer books or to vote at any meeting of shareholders.
Section
2.8. Quorum.
Section
2.8.1. Majority Required. A majority of the vote is entitled to be cast on the matter by a voting group, represented in
person or by proxy, shall constitute a quorum of that voting group for action on that matter. If no specific voting group is designated
in the articles of incorporation or under the CBCA for a particular matter, all outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall constitute a voting group. The shareholders present at a duly organized meeting may continue
to transact business until adjournment, notwithstanding the withdrawal during such meeting of that number of shareholders whose absence
would cause there to be less than a quorum.
Section
2.8.2. Adjournment. In the absence of a quorum at any meeting, a majority of the shares so represented may adjourn the
meeting from time to time for a period not to exceed 120 days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. At such adjourned
meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the original
meeting.
Section
2.9. Action by Shareholders. If a quorum is present at a meeting of shareholders, an action of the shareholders is approved
if a majority of the votes within each class present at the meeting approves the action and such action shall be the act of the shareholders,
unless the vote of a greater proportion or number or voting by groups is required by the CBCA or the articles of incorporation.
Section
2.10. Proxies.
Section
2.10.1. Appointment. At any meeting of shareholders, a shareholder may vote by proxy by signing an appointment form or
similar writing, either personally or by his attorney-in- fact. A shareholder may also appoint a proxy by an electronic transmission
to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization, or similar agent
duly authorized by the person who will be the holder of the proxy to receive the transmission; such transmission must set forth or be
submitted with information from which it can be determined that the shareholder authorized the electronic transmission. If it is determined
that an electronic transmission is valid, the person making that determination shall specify the information upon which the person relied.
Section
2.10.2. Submission and Effectiveness. The appointment form or similar writing shall be filed with the secretary of the
Corporation before or at the time of the meeting. The appointment of a proxy is effective when received by the Corporation, including
receipt by the Corporation of an appointment by electronic submission. An appointment is valid for the term specified in the appointment
form and, if no term is specified, is valid for 11 months unless the appointment is irrevocable.
Section
2.10.3. Substitution of Original. A copy, facsimile, telecommunication, or other reliable reproduction of the document,
including any electronic transmission, may be substituted or used in lieu of the original document for any and all purposes for which
the original document could be used if the copy, facsimile, telecommunication, or other reproduction is a complete reproduction of the
entire original document.
Section
2.10.4. Revocation.
(a) Revocation
of a proxy does not affect the right of the Corporation to accept the proxy’s authority unless:
(i) the
Corporation had notice that the appointment was coupled with an interest and notice that such interest is extinguished is received by
the secretary or other officer or agent authorized to tabulate votes before the proxy exercises the proxy’s authority under the
appointment; or
(ii) other
notice of the revocation of the appointment is received by the secretary or other officer or agent authorized to tabulate votes before
the proxy exercises the proxy’s authority under the appointment.
(b) The
appearance at a shareholders’ meeting of the shareholder who granted a proxy and his voting in person on any matter subject to
a vote at such meeting shall revoke a revocable proxy.
(c) The
death or incapacity of the shareholder appointing a proxy does not affect the right of the Corporation to accept the proxy’s authority
unless notice of the death or incapacity is received by the secretary or other officer or agent authorized to tabulate votes before the
proxy exercises his authority under the appointment.
(d) The
Corporation shall not be required to recognize an irrevocable appointment if it has received a writing revoking the appointment signed
by the shareholder either personally or by his attorney-in-fact, notwithstanding that the revocation may be a breach of an obligation
of the shareholder to another person not to revoke the appointment.
Section 2.11. Voting.
Section 2.11.1. Manner. At all meetings of shareholders, voting shall be taken by ballot, and the secretary or inspector of election
shall record the name of the shareholder voting, the number of shares voted, and, if such vote shall be by proxy, the name of the proxy
holder.
Section
2.11.2. Entitlement to Vote.
(a) Each
share of the Corporation’s capital stock shall have the voting rights and each class or series thereof shall have the voting power
provided in the articles of incorporation upon each matter submitted to a vote at a meeting of shareholders. Fractional shares shall
be entitled to a corresponding fractional vote on each such matter. If two or more persons hold shares as co- tenants or fiduciaries
and the vote for those shares is cast in a name that purports to be the name of at least one of them and the person voting in person
or signing a proxy vote appears to be acting on behalf of all the cotenants or fiduciaries, the Corporation shall accept such vote. If
more than one cotenant or fiduciary votes, the act of the majority shall bind all of the votes, and if the votes are evenly divided,
each cotenant or fiduciary may vote the shares proportionately according to his beneficial interest.
(b) At each
election of directors, the number of candidates equaling the number of directors to be elected having the highest number of votes cast
in favor of their election, shall be elected as directors.
(c) Except
as otherwise ordered by a court of competent jurisdiction upon a finding that the purpose of Section 7-107-202(b) of the CBCA would not
be violated in the circumstances presented to the court, the shares of the Corporation are not entitled to be voted if they are owned,
directly or indirectly, by a second corporation, domestic or foreign, and the first corporation owns, directly or indirectly, a majority
of the shares entitled to vote for directors of the second corporation; provided that the Corporation may vote shares in a fiduciary
capacity, including its own shares.
(d) Redeemable
shares are not entitled to vote after notice of their redemption has been given to their holders and a sum sufficient to redeem them
has been deposited with a bank, trust company or other financial institution under an irrevocable obligation to pay the holders the redemption
price upon surrender of the shares.
2.12.
Advance Notice of Shareholder Business.
Only such
business shall be conducted as shall have been properly brought before a meeting of the shareholders of the Corporation. To be properly
brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board, (b) otherwise properly brought before the meeting by or at the direction of the Board, or (c) a proper matter
for shareholder action under the CBCA that has been properly brought before the meeting by a shareholder (i) who is a shareholder of
record on the date of the giving of the notice provided for in this Section 2.12 and on the record date for the determination of shareholders
entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 2.12. For such business
to be considered properly brought before the meeting by a shareholder, he must, in addition to any other applicable requirements, have
given timely notice in proper form of his intent to bring such business before such meeting. To be timely, such notice must be delivered
to or mailed and received by the secretary of the Corporation at its principal office not later than the close of business on the 90th
day, nor earlier than the close of business on the 120th day, prior to the anniversary date of the immediately preceding annual meeting;
provided, however, that in the event that no annual meeting was held in the previous year or the annual meeting is called for
a date that is not within 30 days before or after such anniversary date, notice by the shareholder to be timely must be so received not
later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or public
disclosure of the date of the meeting was made, whichever occurs first.
To be in
proper form, a shareholder’s notice to the secretary shall be in writing and shall set forth:
(a) the
name and record address of the shareholder who intends to propose the business and the class or series and number of shares of capital
stock of the Corporation which are owned beneficially or of record by such shareholder;
(b) a representation
that the shareholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to introduce the business specified in the notice;
(c) a brief
description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual
meeting;
(d) any
material interest of the shareholder in such business; and
(e) such
other information as is required to be provided by the shareholder pursuant to Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”).
Notwithstanding
the foregoing, in order to include information with respect to a shareholder proposal in the proxy statement and form of proxy for a
shareholder’s meeting, shareholders must provide notice as required by, and otherwise comply with the requirements of, the Exchange
Act and the regulations promulgated thereunder.
No business
shall be conducted at an annual meeting of shareholders except business brought before the annual meeting in accordance with the procedures
set forth in this Section 2.12. The chairman of the meeting may refuse to acknowledge the proposal of any business not made in compliance
with the foregoing procedure.
Section
2.13. Conduct of Meetings.
Meetings
of shareholders shall be presided over by the chairman of the Board or, in the absence thereof, by such person as the chairman of the
Board shall appoint, or, in the absence thereof or in the event that the chairman shall fail to make such appointment, any officer of
the corporation elected by the Board. In the absence of the secretary, the secretary of the meeting shall be such person as the chairman
of the meeting appoints.
The Board
shall be entitled to make such rules or regulations for the conduct of meetings of shareholders as it shall deem necessary, appropriate
or convenient. Subject to such rules and regulations, if any, the chairman of the meeting shall have the right and authority to prescribe
such rules, regulations and procedures and to do all acts as, in the judgment of such chairman, are necessary, appropriate or convenient
for the proper conduct of the meeting, including without limitation establishing an agenda of business of the meeting, rules or regulations
to maintain order, restrictions on entry to the meeting after the time fixed for commencement thereof and the fixing of the date and
time of the opening and closing of the polls for each matter upon which the shareholders will vote at a meeting (and shall announce such
at the meeting).
Section
2.14. Action by Shareholders Without a Meeting.
Any action
required or permitted by the CBCA to be taken at a shareholders’ meeting if (i) all of the shareholders entitled to vote thereon
consent to such action in writing; or (b) the shareholders holding shares having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all of the shares entitled to vote thereon were present and voted
consent to such action in writing. Such written consent of the shareholders entitled to vote has the same force and effect as a unanimous
vote of such shareholders. Action taken pursuant to this Section 2.14 is effective as of the date the Corporation receives the last document
necessary to effect the action unless all of the documents necessary to effect the action state another date as the effective date of
the action, in which case the stated date is the effective date of the action. A consent given by electronic transmission is delivered
to the corporation upon the earliest of: (i) When the consent enters an information processing system, if any, designated by the Corporation
for receiving consents if the electronic transmission is in a form capable of being processed by that system and the corporation is able
to retrieve that electronic transmission. Whether the corporation has designated an information processing system to receive consents
is determined by the articles of incorporation, by the bylaws, or from the context and surrounding circumstances, including the conduct
of the corporation, (ii) when a paper reproduction of the consent is delivered to the Corporation’s principal office of business
or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of shareholders or members are
recorded, (iii) when a paper reproduction of the consent is delivered to the Corporation’s registered office in the State of Colorado
by hand or by certified or registered mail, return receipt requested; or (iv) When delivered in such other manner, if any, provided by
resolution of the Board. A consent given by electronic transmission is delivered under this section even if no person is aware of its
receipt. Receipt of an electronic acknowledgment from an information processing system establishes that a consent given by electronic
transmission was received but does not, by itself, establish that the content sent corresponds to the content received. Any shareholder
who has signed a document describing and consenting to action taken pursuant to this Section 2.14 may revoke the consent by a document
signed and dated by the shareholder describing the action and stating that his prior consent thereto is revoked, if the document is received
by the Corporation prior to the effectiveness of the action. The record date for determining shareholders entitled to take action without
a meeting is the date the Corporation first receives a writing upon which the action is taken.
Section
2.15. Acceptance of Votes. If the name signed on a vote, consent, waiver, proxy appointment, or proxy appointment revocation
corresponds to the name of a shareholder, the Corporation, if acting in good faith, is entitled to accept the vote, consent, waiver,
proxy appointment or proxy appointment revocation and give it effect as the act of the shareholder. If the name signed on a vote, consent,
waiver, proxy appointment or proxy appointment revocation does not correspond to the name of a shareholder, the Corporation, if acting
in good faith, is nevertheless entitled to accept the vote, consent, waiver, proxy appointment or proxy appointment revocation and to
give it effect as the act of the shareholder if:
(a) the
shareholder is an entity and the name signed purports to be that of an officer or agent of the entity;
(b) the
name signed purports to be that of an administrator, executor, guardian or conservator representing the shareholder and, if the Corporation
requests, evidence of fiduciary status acceptable to the Corporation has been presented with respect to the vote, consent, waiver, proxy
appointment or proxy appointment revocation;
(c) the
name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the Corporation requests, evidence
of this status acceptable to the Corporation has been presented with respect to the vote, consent, waiver, proxy appointment or proxy
appointment revocation;
(d) the
name signed purports to be that of a pledgee, beneficial owner or attorney-in-fact of the shareholder and, if the Corporation requests,
evidence acceptable to the Corporation of the signatory’s authority to sign for the shareholder has been presented with respect
to the vote, consent, waiver, proxy appointment or proxy appointment revocation;
(e) two
or more persons are the shareholder as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-tenants
or fiduciaries, and the person signing appears to be acting on behalf of all the co-tenants or fiduciaries; or
(f) the
acceptance of the vote, consent, waiver, proxy appointment or proxy appointment revocation is otherwise proper under rules established
by the Corporation that are not inconsistent with this Section 2.15.
The Corporation
is entitled to reject a vote, consent, waiver, proxy appointment or proxy appointment revocation if the secretary, inspector of election,
or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the
signature on it or about the signatory’s authority to sign for the shareholder.
Neither
the Corporation, an inspector, nor its officers nor any agent who accepts or rejects a vote, consent, waiver, proxy appointment or proxy
appointment revocation in good faith and in accordance with the standards of this Section 2.15 shall be liable in damages for the consequences
of the acceptance or rejection.
Section
2.16. Remote Participation in Shareholders’ Meetings; Meetings Held Solely by Remote Participation.
Section
2.16.1. Remote Participation. Shareholders of any class or series of shares may participate in any meeting of shareholders
by means of remote communication to the extent the Board authorizes participation for that class or series. Participation as a shareholder
by means of remote communication shall be subject to such guidelines and procedures as the Board adopts and shall be in conformity with
Section 2.17.2.
Section
2.16.2. Presence at Remote Meeting. Shareholders participating in a shareholders’ meeting by means of remote communication
shall be deemed present and may vote at such a meeting if the corporation has implemented reasonable measures to (i) verify that each
person participating remotely as a shareholder is a shareholder and (ii) provide the shareholders a reasonable opportunity to participate
in the meeting and to vote on matters submitted to the shareholders, including an opportunity to communicate and to read or hear the
proceedings of the meeting, substantially concurrently with the proceedings.
Section
2.16.3. Meetings Held Solely by Remote Participation. The Board may determine that a meeting of shareholders will not be
held at any place and instead will be held solely by means of remote communication, and if it does so, the Corporation shall implement
the measures specified in Section 2.17.2.
ARTICLE
III – BOARD OF DIRECTORS
Section
3.1. General Powers. All corporate powers shall be exercised by or under the authority of, and the business and affairs
of the corporation managed under the direction of, the Board.
Section
3.2. Performance of Duties.
Section
3.2.1. Standard of Care. A director of the Corporation shall perform that director’s duties as a director, including
that director’s duties as a member of any committee of the Board upon which the director may serve, in good faith, in a manner
in which that director reasonably believes to be in the best interests of the Corporation, and with such care as an ordinarily prudent
person in a like position would use under similar circumstances. Subject to the provisions of the CBCA, a director who so performs his
duties shall not have any liability to the shareholders or otherwise by reason of being or having been a director.
Section
3.2.2. Reliance Upon Other Persons and Written Materials. In the performance of his duties, a director or officer shall
be entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, if prepared
or presented by persons and groups listed in paragraphs (a), (b), and (c) of this Section, but the director shall not be considered to
be acting in good faith if that director has knowledge concerning the matter in question that would cause such reliance to be unwarranted.
The persons and groups on whose information, opinions, reports, and statements a director is entitled to rely are:
(a) one
or more officers or employees of the Corporation whom the director or officer reasonably believes to be reliable and competent with respect
to the information, opinions, reports or statements;
(b) one
or more legal counsel, public accountants or other persons retained by the corporation as to matters involving expertise or skills the
director or officer reasonably believes are within the person’s professional or expert competence;
(c) In the
case of a director, a committee of the Board of which the director is not a member if the director reasonably believes the committee
merits confidence; and
(d) In the
case of an officer, the Board or any committee of the Board.
Section
3.3. Number, Tenure and Qualifications. The Board shall comprise not less than one nor more than nine members, as may be
fixed from time to time by resolution of the Board. Directors shall be natural persons at least 18 years of age, but need not be, shareholders
nor residents of the state of Colorado. Each director shall hold office until his successor shall have been elected and qualified.
Section
3.4. Nominations.
Only persons
who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except
as may be otherwise provided in the articles of incorporation with respect to the right of holders of a series of the preferred stock
of the Corporation to nominate and elect a specified number of directors. To be properly brought before an annual meeting of shareholders,
or any special meeting of shareholders called for the purpose of electing directors, nominations for the election of director must be
(a) specified in the notice of meeting (or any supplement thereto), (b) made by or at the direction of the Board (or any duly authorized
committee thereof) or (c) made by any shareholder of the Corporation (i) who is a shareholder of record on the date of the giving of
the notice provided for in this Section 3.4 and on the record date for the determination of shareholders entitled to vote at such meeting
and
(ii) who
complies with the notice procedures set forth in Section 3.4.
In addition
to any other applicable requirements, for a nomination to be made by a shareholder, such shareholder must have given timely notice thereof
in proper written form to the secretary of the Corporation. To be timely, a shareholder’s notice to the secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation, in the case of an annual meeting, in accordance with
the provisions set forth in Section 2.12, and, in the case of a special meeting of shareholders called for the purpose of electing directors,
not later than the close of business on the 10th day following the day on which notice of the date of the special meeting was mailed
or public disclosure of the date of the special meeting was made, whichever first occurs.
To be in
proper written form, said shareholder’s notice must set forth:
(a) as
to each person whom the shareholder proposes to nominate for election as a director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital
stock of the Corporation which are owned beneficially or of record by the person, (iv) a description of all arrangements or understandings
between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations
are to be made by the shareholder, and (v) any other information relating to such person that is required to be disclosed in solicitations
of proxies for elections of directors, or is otherwise required, in each case pursuant to Regulation 14A promulgated under the Exchange
Act (including without limitation such person’s written consent to being named in the proxy statement, if any, as a nominee and
to serving as a director if elected); and
(b) as to
such shareholder giving notice, the information required to be provided pursuant to Section 2.12.
Subject
to the rights of any holders of any series of the preferred stock of the Corporation, no person shall be eligible for election as a director
of the Corporation unless nominated in accordance with the procedures set forth in this Section 3.4. If the chairman of the meeting properly
determines that a nomination was not made in accordance with the foregoing procedures, he shall declare to the meeting that the nomination
was defective and such defective nomination shall be disregarded.
Section
3.5. Regular Meetings. A regular meeting of the Board shall be held without notice immediately after, and at the same place
as, the annual meeting of the shareholders or at such other time and place as the Board may select. The Board may provide, by resolution,
the time and place, either within or without the state of Colorado, for the holding of additional regular meetings without other notice
than such resolution.
Section
3.6. Special Meetings. Special meetings of the Board may be called by or at the request of the president or any two directors.
Special meeting shall be held at the principal office of the Corporation, unless a majority of the Board agrees otherwise.
Section
3.7. Notice. Except as to regular meetings of directors for which no notice is required, written notice of meetings need
not described the purpose thereof and shall be given as follows:
Section
3.7.1. Means of Notice. By mail to each director at his business address at least 5 business days prior to the meeting,
by overnight courier at least 2 business days prior to the meeting or by personal delivery, facsimile or e-mail or other electronic transmission
at least 24 hours prior to the meeting to the business address of each director.
Section
3.7.2. When Effective. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail,
so addressed, with postage thereon prepaid and if sent by courier, when delivered to the courier, so addressed, with all of the courier’s
fees prepaid. If notice is given by facsimile, such notice shall be deemed to be delivered when an answerback or other confirmation of
the receipt of the facsimile has been received by the sender. If notice is by email or other electronic transmission, such notice shall
be deemed to be delivered when delivery of the message is confirmed on the sender’s computer electronic message system or acknowledged
by or on behalf of the recipient.
Section
3.7.3. Waiver. A director may at any time waive notice of a meeting in a writing signed by him. The attendance of a director
at any meeting shall constitute a waiver of notice thereof, unless, at the beginning of the meeting or promptly upon his later arrival,
he objects to holding the meeting or transacting business thereat meeting because of lack of notice or defective notice and does not
thereafter vote for or assent to action taken at the meeting; or (b) if notice was given of a particular purpose of the meeting, he objects
to transacting business with respect to the such purpose and does not thereafter vote for or assent to action taken at the meeting with
respect to such purpose.
Section
3.8. Quorum. A majority of the number of directors fixed pursuant to section 3.3 of this Article III, or if no such number
is fixed or if there is a vacancy in the Board, a majority of the directors immediately before the meeting begins, shall constitute a
quorum for the transaction of business at any meeting of the Board, but if less than such majority is present at a meeting, a majority
of the directors present may adjourn the meeting from time to time without further notice.
Section
3.9. Action by Directors at a Meeting. Except as otherwise required by the CBCA or by the articles of incorporation, the
affirmative vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board.
Section
3.10. Action Without Meeting.
Section
3.10.1. Written Consents. Any action required or permitted to be taken at a meeting of the Board or any committee designated
by the Board may be taken without a meeting if all members of the Board or committee consent thereto in writing.
Section
3.10.2. When Effective; Effect. Action taken under this Section 3.10 is effective when all directors of the Board or committee
have signed a consent, unless the consent specifies a different effective date. Such consent has the same force and effect as a unanimous
vote of the directors or committee members and may be stated as such in any document or certificate.
Section
3.11. Participation by Electronic Means. The Board may permit any director to participate in a regular or special meeting
by, or conduct the meeting through the use of, any means of communication by which all directors participating may hear each other during
the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.
Section
3.12. Vacancies.
Section
3.12.1. Manner of Filling. A vacancy on the Board, including a vacancy resulting from an increase in the number of directors
in accordance with section 3.3 of this Article III, may be filled by the shareholders or by the Board. If the directors remaining in
office constitute fewer than a quorum of the Board, the directors may fill the vacancy by the affirmative vote of the majority of all
directors remaining in office.
Section
3.12.2. Term of Director Filling Vacancy. The term of a director elected to fill a vacancy by the Board shall hold office
until the next annual meeting of shareholders and the term of a director elected to fill a vacancy by shareholders shall hold office
for the unexpired term of that director’s predecessor in office, except that, if the director’s predecessor had been elected
to fill a vacancy by the Board, the term of a director elected by the shareholders shall be the unexpired term of the last predecessor
elected by the shareholders.
Section
3.13. Resignation. A director may resign at any time by giving written notice to the Corporation. Such resignation of any
director shall take effect upon receipt thereof or at such later time as shall be specified in such notice; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it effective.
Section
3.14. Removal. Directors may be removed in the manner provided in the CBCA.
Section
3.15. Committees. The Board may create one or more committees and appoint one or more members of the Board to serve on
them any of which shall have such authority in the management of the Corporation as the Board shall designate and as shall be prescribed
by the CBCA. To the extent provided in the resolution creating a committee, it shall have all the authority of the Board, except that
no such committee shall have the authority to (i) authorize distributions, (ii) approve or propose to shareholders actions or proposals
required by the CBCA to be approved by shareholders, (iii) fill vacancies on the Board or any committees thereof, (iv) amend the articles
of incorporation, (v) adopt, amend or repeal these bylaws, (vi) approve a plan of conversion or plan of merger not requiring shareholder
approval, (vii) authorize or approve the reacquisition of shares unless pursuant to a formula or method prescribed by the Board, or (viii)
authorize or approve the issuance or sale of shares, or contract for the sale of shares or determine the designations and preferences,
limitations and relative rights of a class or series of shares, except that the Board may authorize a committee to do so within limits
specifically prescribed by the Board.
The provisions
of this Article III that govern meetings, notice, waiver of notice, quorum, voting requirements and action without a meeting, shall apply,
mutatis mutandis, to committees of the Board and their members. Neither the designation of any such committee, the delegation
of authority to such committee, nor any action by such committee pursuant to its authority shall alone constitute compliance by any member
of the Board or a member of the committee in question with his responsibility to conform to the standard of care set forth in Article
III, Section 3.2, of these bylaws.
Section
3.16. Compensation. By resolution of the Board and irrespective of any personal interest of any of the directors, or the
Board, each director may be paid that director’s expenses, if any, of attendance at each meeting of the Board, and may be paid
a stated salary as director or a fixed sum for attendance at each meeting of the Board or both. No such payment shall preclude any director
from serving the Corporation in any other capacity and receiving compensation therefor.
Section
3.17. Presumption of Assent. A director who is present at a meeting of the Board or committee of the Board at which action
on any matter is taken and who does not vote in favor of such action shall be presumed to have assented to the action taken unless:
(a) he objects
at the beginning of the meeting, or promptly upon his arrival thereat, to the holding of or the transaction of business at the meeting
and does not vote for or assent to any action taken at the meeting;
(b) he contemporaneously
requests that his dissent or abstention as to any specific action taken be entered in the minutes of the meeting; ore causes written
notice of his dissent or abstention as to any specific action to be received by the presiding officer of the meeting before its adjournment
or by the secretary of the Corporation promptly after the adjournment of the meeting.
The right
to dissent to a specific action taken at a meeting of the Board or a committee of the Board shall not be available to a director who
voted in favor of such action.
Section
3.18. Chairman of the Board; Person Presiding at Meetings. The directors shall choose one of their number to be chairman
of the board (the “Chairman”). The Chairman shall, if present, preside at each meeting of the Board. The Chairman shall perform
all such duties as may from time to time be assigned to him by the Board. In the absence of the Chairman at a meeting of the Board, the
directors present at the meeting shall elect a chairman and in the event that they fail to do so, the director who has served longest
as such that be the chairman.
ARTICLE
IV – OFFICERS
Section
4.1. Offices. The Corporation shall have a president, a chief financial officer and a secretary, each of whom shall be
elected by the Board. The Board may elect or appoint one of more vice presidents and such other officers and assistant officers as it
may deem necessary. More than one office may be held by the same person, except for the offices of president and secretary. An officer
shall be at least 18 years of age.
Section
4.2. Election and Term of Office. The officers of the Corporation required to be elected by the Board shall be elected
annually by the Board at the meeting of the Board to be held after the annual meeting of the shareholders. If the election of the officers
shall not be held at such meeting, such election shall be held as soon thereafter as practicable. Each officer shall hold office for
the ensuing year and until his successor shall have been appointed or until he shall resign or shall have been removed in the manner
hereinafter provided or until his death or incapacity. The appointment of an officer does not itself create contract rights and his removal
does not affect the officer’s contract rights, if any, with the Corporation.
Section
4.3. Removal and Resignation.
Section
4.3.1. Removal. An officer may be removed by the Board at any time, with or without cause, but such removal shall be without
prejudice to his contract rights, if any.
Section
4.3.2. Resignation. An officer may resign at any time by giving written notice of resignation to the Corporation. The resignation
shall be effective when it is so given unless the notice specifies a later effective date. If a resignation is made effective at a later
date, the Board may permit the officer to remain in office until the effective date and may fill the pending vacancy before the effective
date if the Board provides that the successor does not take office until the effective date, or the Board may remove the officer at any
time before the effective date and may fill the resulting vacancy.
Section
4.4. Vacancies. A vacancy in any office may be filled by the Board for the unexpired portion of its term.
Section
4.5. President. The president shall be the chief executive officer of the Corporation and, for purposes of reports and
other materials filed with the United States Securities and Exchange Commission (the “SEC”) and other regulatory authorities,
its principal executive officer. Subject to the control of the Board, the president act as the general manager of the Corporation and,
subject to the control of the Board, have general supervision, direction and control of the business and affairs of the Corporation.
The president may affix the signature of the Corporation to all deeds, conveyances, mortgages, leases, obligations, bonds, certificates
and other papers and instruments in writing which have been authorized by the Board or which, in his judgment, should be executed on
behalf of the Corporation, except in cases where the signing and execution thereof shall be expressly delegated by the Board or these
bylaws to another officer or agent of the Corporation or shall be required by law to be otherwise signed or executed. The president shall
have such additional authority and duties as are appropriate and customary for the office of president and chief executive officer, except
as they may be expanded or limited by the Board from time to time. If the Corporation does not have a chief financial officer, the President
shall serve in that capacity, unless the Board appoints another officer so to serve; provided that, in such event, the president
may delegate the powers and duties set forth in Section 4.7(b), (c) and (d) to a vice president.
Section
4.6. Vice President. The titles, powers and duties of the vice president or vice presidents shall be prescribed by the
Board. In case of the absence, disability or death of the President, the vice president, or one of the vice presidents, shall exercise
all of his powers and perform all of his duties. If there is more than one vice president, the order in which the vice presidents shall
succeed to the powers and duties of the president shall be as fixed by the Board.
Section
4.7. Chief Financial Officer.
The Chief
Financial Officer shall:
(a) Supervise
and control the keeping and maintaining of adequate and correct accounts of the Corporation’s properties and business transactions,
including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, surplus and shares. The books of account
shall at all reasonable times be open to inspection by any director.
(b) Have
the custody of all funds, securities, evidences of indebtedness and other valuable documents of the Corporation and, at his discretion,
to cause any or all thereof to be deposited for the account of the Corporation with such depository as may be designated from time to
time by the Board.
(c) Receive
or cause to be received, and to give or cause to be given, receipts and acquittances for moneys paid in for the account of the Corporation.
(d) Disburse,
or cause to be disbursed, all funds of the Corporation as may be directed by the president or the Board, taking proper vouchers for such
disbursements.
(e) Render
to the, the president or to the Board, whenever either may require, accounts of all transactions as chief financial officer and of the
financial condition of the Corporation.
(f) Generally
to do and perform all such duties as pertain to such office and as may be required by the Board or these bylaws.
The chief
financial officer shall be the Corporation’s principal financial officer for purposes of reports and other materials filed with
the United States Securities and Exchange Commission (the “SEC”) and other regulatory authorities.
Section
4.8. Secretary. The secretary shall:
(a) Keep
a book of minutes at the principal executive office of the Corporation, or such other place as the Board may direct, of all meetings
of its directors and shareholders with the time and place of holding, whether regular or special, and, if special, how authorized, the
notice thereof given, the names of those present at directors’ meetings, the number of shares present or represented at shareholders’
meetings and the proceedings thereof.
(b) Keep
the seal of the Corporation and to affix the same to all instruments which may require it.
(c) Keep
or cause to be kept at the principal executive office of the Corporation, or at the office of the transfer agent or agents, a record
of the shareholders of the Corporation, giving the names and addresses of all shareholders and the number and class of shares held by
each shareholder, the number and date of any certificates issued for shares, appropriate records with respect to uncertificated shares
issued, the number and date of cancellation of every certificate surrendered for cancellation and the number and date of every replacement
certificate or the appropriate records for uncertificated shares issued for surrendered, lost, stolen or destroyed certificates.
(d) Keep
a supply of certificates for shares of the Corporation, to fill in and sign all certificates issued or prepare the initial transaction
statement or written statements for uncertificated shares, and to make a proper record of each such issuance; provided that so
long as the Corporation shall have one or more duly appointed and acting transfer agents of the shares, or any class or series of shares,
of the Corporation, such duties with respect to such shares shall be performed by such transfer agent or transfer agents.
(e) Transfer
upon the share books of the Corporation any and all shares of the Corporation; provided that so long as the Corporation shall
have one or more duly appointed and acting transfer agents of the shares, or any class or series of shares, of the Corporation, such
duties with respect to such shares shall be performed by such transfer agent or transfer agents, and the method of transfer of each share
shall be subject to the reasonable regulations of the transfer agent to which the shares are presented for transfer and, also, if the
Corporation then has one or more duly appointed and acting registrars, subject to the reasonable regulations of the registrar to which
a new certificate or a new issuance of shares is presented for registration; and provided, further, that no shares shall be issued, recorded
or delivered or, if issued, recorded or delivered, shall have any validity whatsoever until and unless it has been signed or authenticated,
as applicable, in the manner provided by the CBCA.
(f) Make
service and publication of all notices that may be necessary or proper and without command or direction from anyone. In case of the absence,
disability, refusal or neglect of the Secretary to make service or publication of any notices, then such notices may be served and/or
published by the president or a vice president, or by any person thereunto authorized by either of them or by the Board or by the holders
of a majority of the outstanding shares of the Corporation.
(g) Generally
to do and perform all such duties as pertain to such office and as may be required by the Board or these bylaws.
Section
4.9. Assistant Officers. The Board may elect or delegate to the president the right to appoint such other officers as may
be necessary or desirable for the business of the Corporation. Such officers may include one or more assistant secretaries and assistant
treasurers, who shall have the power and authority to act in place of the officer to whom they are elected or appointed as an assistant
in the event of the officer’s inability or unavailability to act in such officer’s capacity.
Section
4.10. Sureties and Bonds. If the Board shall so require, an officer shall execute to the Corporation a bond in such sum
and with such surety or sureties as the Board may direct. The bond shall be conditioned upon his faithful performance of his duties to
the Corporation, including responsibility for all property, funds or securities of the Corporation which may come into his hands.
Section
4.11. Salaries. The salaries of the officers may be fixed from time to time by the Board and no officer shall be prevented
from receiving such salary by reason of the fact that the officer is also a director of the Corporation.
ARTICLE
V – EXECUTION OF INSTRUMENTS
All corporate
instruments and documents shall be signed by the president or by such other officer or officers or other person or persons as the Board
may from time to time designate and when required shall be countersigned, verified or acknowledged by the secretary.
ARTICLE
VI – CERTIFICATES FOR SHARES
Section
6.1. Certificates. The Board may authorize the issuance of shares in certificated or uncertificated form. Within a reasonable
time after the issuance or transfer of shares without certificates, the Corporation shall send to the shareholder a written statement
of the information required on certificates by the CBCA. The fact that the shares are uncertificated form shall have no effect on the
rights and obligations of the holders thereof. If shares are certificated, they shall be signed, either manually or by facsimile, by
the president a vice president and the secretary or an assistant secretary. If an officer who has signed or whose facsimile signature
has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, such certificate may nonetheless
be issued by the Corporation with the same effect as if he were such officer at the date of its issue. All certificates shall be consecutively
numbered, and the names of the owners, the number of shares, and the date of issue shall be entered on the books of the Corporation.
Each certificate representing shares shall state upon its face:
(a) that
the Corporation is organized under the laws of Colorado;
(b) the
name of the shareholder;
(c) the
number and class of the shares and the designation of the series, if any, that the certificate represents;
(d) the
par value, if any, of each share represented by the certificate;
(e) If required
by the CBCA or, if not so required, to the extent that the Board may direct, a summary on the front or the back of the certificate, of
the designations, preferences, limitations, and relative rights applicable to each class or series, the variations in preferences, limitations,
and rights determined for each series, and the authority of the Board to determine variations for future classes or series or a conspicuous
statement, on the front or the back of the certificate, that the Corporation will furnish to the shareholder, on request in writing and
without charge, information concerning the designations, preferences, limitations, and relative rights applicable to each class, the
variations in preferences, limitations, and rights determined for each series, and the authority of the Board to determine variations
for future classes or series; and
(f) A statement
of any restrictions imposed by agreement of shareholders or the Corporation or law upon the transfer of the shares represented by the
certificate or a conspicuous statement, on the front or the back of the certificate, that the Corporation will furnish to the shareholder,
on request in writing and without charge, information concerning such restrictions.
Section
6.2. Consideration for Shares. Certificated or uncertificated shares shall not be issued until the shares represented thereby
are fully paid. The Board may authorize the issuance of shares for consideration consisting of any tangible or intangible property or
benefit to the Corporation, including cash, promissory notes, services performed or other securities of the Corporation. Future services
shall not constitute payment or partial payment for shares of the Corporation. The promissory note of a subscriber or an affiliate of
a subscriber shall not constitute payment or partial payment for shares of the Corporation unless the note is negotiable and is secured
by collateral, other than the shares being purchased, having a fair market value at least equal to the principal amount of the note.
For purposes of this Section, “promissory note” means a negotiable instrument on which there is an obligation to pay independent
of collateral and does not include a nonrecourse note.
Section
6.3. Lost or Destroyed Certificates. The Board may direct that a new certificate or certificates be issued in place of
any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate to be lost or destroyed. When authorizing such issue of a new certificate or certificates
the Board may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate
or certificates to give the Corporation a bond in such sum and with such surety or sureties as it may direct as indemnity against any
claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed.
Section
6.4. Transfer of Shares.
Section
6.4.1. Transfers. Upon surrender to the Corporation or a transfer agent of the Corporation of a stock certificate duly
endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, a guarantee of an institution satisfactory
to the Corporation that (i) the signature of the endorser is genuine, (ii) the endorser was an appropriate person to endorse the certificate
(or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person) and (iii) the endorser
had legal capacity to sign, and receipt of such documentary stamps as may be required by law and evidence of compliance with all applicable
securities laws and other restrictions, the Corporation shall issue a new certificate or certificates to the person entitled thereto,
and cancel the old certificate. Every such transfer of stock shall be entered on the stock books of the Corporation which shall be kept
at its principal office or by the Corporation’s duly appointed transfer agent.
Section
6.4.2. Claimants to Shares. Except as otherwise expressly provided in these bylaws or the CBCA, the Corporation shall be
entitled to treat the registered holder of any shares of the Corporation as the owner thereof for all purposes, and the Corporation shall
not be bound to recognize any equitable or other claim to, or interest in, such shares or rights deriving from such shares on the part
of any person other than the registered holder, including without limitation any purchaser, assignee or transferee of such shares or
rights deriving from such shares, unless and until such other person becomes the registered holder of such shares, whether or not the
Corporation shall have either actual or constructive notice of the claimed interest of such other person.
Section
6.5. Transfer Agent, Registrars and Paying Agents. The Board may and if required by law shall appoint one or more transfer
agents, registrars and agents for making payment upon any class of stock, bond, debenture or other security of the Corporation. Such
agents and registrars may be located either within or outside Colorado.
Section
6.6. Restrictions on Transfer. The Corporation may restrict the transfer of any shares issued by the Corporation in any
manner permitted by law or that that is not inconsistent with the articles of incorporation or applicable law. Without limitation, A
restriction on the transfer or registration of transfer of shares may: (i) obligate the shareholder first to offer to the Corporation
or other persons, separately, consecutively, or simultaneously, an opportunity to acquire the restricted shares; (ii) obligate the Corporation
or other persons, separately, consecutively, or simultaneously, to acquire the restricted shares; (iii) require, as a condition to such
a transfer or registration, that any one or more persons, including the Corporation or the holders of any of its shares, approve the
transfer or registration, if the requirement is not manifestly unreasonable; or (iv) prohibit the transfer or the registration of a transfer
of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable. The Corporation
shall restrict the transfer of stock in compliance with federal or state securities laws or as otherwise required by law. The certificate
representing any shares so restricted shall bear a legend in accordance with the provisions of the CBCA respecting such restriction.
ARTICLE
VII –INSURANCE
Pursuant
to action of the Board, notwithstanding any interest of the directors in the action, the Corporation may purchase and maintain insurance,
in such scope and amounts as the Board deems appropriate, on behalf of any person who is or was a director, officer, employee, fiduciary
or agent of the Corporation, or who, while a director, officer, employee, fiduciary or agent of the Corporation, or who, while a director,
officer, employee, fiduciary or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee, fiduciary or agent of any other foreign or domestic profit or nonprofit corporation or of any partnership,
joint venture, trust, profit or nonprofit unincorporated association, limited liability company, other enterprise or employee benefit
plan, against any liability asserted against, or incurred by, him in that capacity or arising out of his status as such, whether or not
the Corporation would have the power to indemnify him against such liability under the provisions of the articles of incorporation, Article
XI or applicable law. Any such insurance may be procured from any insurance company designated by the Board, whether such insurance company
is formed under the laws of Colorado or any other jurisdiction of the United States or elsewhere, including any insurance company in
which the Corporation has an equity interest or any other interest, through stock ownership or otherwise.
ARTICLE
VIII – DISTRIBUTIONS
The Board
may from time to time declare, and the Corporation may pay, distributions, including dividends, on its outstanding shares in the manner
and upon the terms and conditions provided by the CBCA, the articles of incorporation and the provisions relating to such shares.
ARTICLE
IX – CORPORATE SEAL
The Board
may provide for a corporate seal, which shall be circular in form and bear the name of the Corporation, the state of incorporation, and
the words “CORPORATE SEAL” OR “SEAL.” The seal on the certificates for shares or on any corporate obligation
for the payment of money may be a facsimile, engraved or printed. The absence of the corporate seal on any instrument shall not affect
its validity or enforceability, unless applicable law provides otherwise.
ARTICLE
X – AMENDMENTS
These bylaws
may be amended, repealed or adopted by the shareholders as provided in the CBCA or by the Board.
ARTICLE
XI – INDEMNIFICATION AND LIMITATION OF LIABILITY
The officers,
directors and agents of the Corporation shall be indemnified and the liability of directors shall be limited as provided in the articles
of incorporation, subject to the provisions of the CBCA.
ARTICLE
XII – FISCAL YEAR
The fiscal
year of the Corporation shall begin on June 1 of each year and end on May 31 of the following year.
ARTICLE
XIII – EMERGENCY BYLAWS
The provisions
of this Article XIII shall be operative during any period in which a quorum of the directors cannot readily be obtained because of some
catastrophic event, notwithstanding any different provision in these bylaws or in the articles of incorporation or in the CBCA. To the
extent not inconsistent with the provisions of this Article XIII, the bylaws provided in the preceding articles shall remain in effect
during such emergency and upon its termination the Emergency bylaws shall cease to be operative.
During any
such period:
(a) A meeting
of the Board may be called by any officer or director of the corporation. Notice of the time and place of the meeting shall be given
by the person calling the meeting to such of the directors as it may be feasible to reach by any available means of communication. Such
notice shall be given at such time in advance of the meeting as circumstances permit in the judgment of the person calling the meeting.
(b) At any
such meeting of the Board, a quorum shall consist of the number of directors in attendance at such meeting.
(c) The
Board, before or during any such period, may, effective during any such period, change the principal office or designate several alternative
principal offices or regional offices or authorize the officers so to do.
(d) The
Board, before or during any such period, may provide, and from time to time modify, lines of succession in the event that, during such
a period, any or all officers or agents of the corporation shall for any reason be rendered incapable of discharging their duties.
ARTICLE
XIV – MISCELLANEOUS
Section
14.1. Receipt of Notices by the Corporation. Notices, shareholder consents to action, and other documents or writings shall
be deemed to have been received by the Corporation (i) 5 days after they are received at the registered office of the Corporation and
(ii) when they are actually received (A) at the principal office of the Corporation (as that office is designated in the most recent
document filed by the Corporation with the secretary of state for Colorado designating a principal office) addressed to the attention
of the secretary of the Corporation and (B) by the secretary of the Corporation or by any other person authorized from time to time by
the Board or the president to receive such writings, wherever he may be found.
Section
14.2. Construction. The masculine gender is used in these bylaws for the convenience of brevity only and shall be interpreted
to include the feminine and neuter genders as appropriate. Where the context or construction requires, all words used in the plural shall
be deemed to have been used in the singular and vice versa, and the present tense shall include the past and future tense, and
vice versa. The titles of the articles and sections of these bylaws shall be ignored in the construction thereof.
Section
14.3. Conflicts. In the event of conflict between these bylaws on the one hand and the articles of incorporation or applicable
law on the other hand, the latter shall control.
Section
14.4. Definitions. Except as otherwise specifically provided in these bylaws, all terms used in these bylaws shall have
the same definition as in the CBCA.
Exhibit 10.1
| SBA Loan #2144067805 |
Application #3300716650 |
U.S.
Small Business Administration
Economic
Injury Disaster Loan
LOAN
AUTHORIZATION AND AGREEMENT
Date: 05.22.2020
(Effective Date)
On the above
date, this Administration (SBA) authorized (under Section 7(b) of the Small Business Act, as amended) a Loan (SBA Loan #2144067805) to
Pharmacology University, Inc. (Borrower) of 5665 Arapaho Road Suite 1923 dallas Texas 75248 in the amount of one hundred and forty-three
thousand two hundred and 00/100 Dollars ($143,200.00), upon the following conditions:
PAYMENT
| · | | Installment payments, including principal and interest, of $698.00 Monthly, will begin
Twelve (12) months from the date of the promissory Note. The balance of principal and interest will be payable Thirty (30)
years from the date of the promissory Note. |
INTEREST
| · | | Interest will accrue at the rate of 3.75% per annum and will accrue only on funds
actually advanced from the date(s) of each advance. |
PAYMENT
TERMS
| · | | Each payment will be applied first to interest accrued to the date of receipt of each payment,
and the balance, if any, will be applied to principal. |
| · | | Each payment will be made when due even if at that time the full amount of the Loan has not
yet been advanced or the authorized amount of the Loan has been reduced. |
COLLATERAL
| · | | For loan amounts of greater than $25,000, Borrower hereby grants to SBA, the secured party
hereunder, a continuing security interest in and to any and all “Collateral” as described herein to secure payment and performance
of all debts, liabilities and obligations of Borrower to SBA hereunder without limitation, including but not limited to all interest,
other fees and expenses (all hereinafter called “Obligations”). The Collateral includes the following property that Borrower
now owns or shall acquire or create immediately upon the acquisition or creation thereof: all tangible and intangible personal property,
including, but not limited to: (a) inventory, (b) equipment, (c) instruments, including promissory notes (d) chattel paper, including
tangible chattel paper and electronic chattel paper, (e) documents, (f) letter of credit rights, (g) accounts, including health-care
insurance receivables and credit card receivables, (h) deposit accounts, (i) commercial tort claims, (j) general intangibles, including
payment intangibles and software and (k) as-extracted collateral as such terms may from time to time be defined in the Uniform Commercial
Code. The security interest Borrower grants includes all accessions, attachments, accessories, parts, supplies and replacements for the
Collateral, all products, proceeds and collections thereof and all records and data relating thereto. |
| · | | For loan amounts of $25,000 or less, SBA is not taking a security interest in any collateral. |
REQUIREMENTS
RELATIVE TO COLLATERAL
| · | | Borrower will not sell or transfer any collateral (except normal inventory turnover in the
ordinary course of business) described in the "Collateral" paragraph hereof without the prior written consent of SBA. |
| · | | Borrower will neither seek nor accept future advances under any superior liens on the collateral
securing this Loan without the prior written consent of SBA. |
USE OF
LOAN PROCEEDS
| · | | Borrower will use all the proceeds of this Loan solely as working capital to alleviate economic
injury caused by disaster occurring in the month of January 31, 2020 and continuing thereafter and to pay Uniform Commercial Code (UCC)
lien filing fees and a third-party UCC handling charge of $100 which will be deducted from the Loan amount stated above. |
REQUIREMENTS
FOR USE OF LOAN PROCEEDS AND RECEIPTS
| · | | Borrower will obtain and itemize receipts (paid receipts, paid invoices or cancelled checks)
and contracts for all Loan funds spent and retain these receipts for 3 years from the date of the final disbursement. Prior to each subsequent
disbursement (if any) and whenever requested by SBA, Borrower will submit to SBA such itemization together with copies of the receipts. |
| · | | Borrower will not use, directly or indirectly, any portion of the proceeds of this Loan to
relocate without the prior written permission of SBA. The law prohibits the use of any portion of the proceeds of this Loan for voluntary
relocation from the business area in which the disaster occurred. To request SBA's prior written permission to relocate, Borrower will
present to SBA the reasons therefore and a description or address of the relocation site. Determinations of (1) whether a relocation
is voluntary or otherwise, and (2) whether any site other than the disaster-affected location is within the business area in which the
disaster occurred, will be made solely by SBA. |
| · | | Borrower will, to the extent feasible, purchase only American-made equipment and products
with the proceeds of this Loan. |
| · | | Borrower will make any request for a loan increase for additional disaster-related damages
as soon as possible after the need for a loan increase is discovered. The SBA will not consider a request for a loan increase received
more than two (2) years from the date of loan approval unless, in the sole discretion of the SBA, there are extraordinary and
unforeseeable circumstances beyond the control of the borrower. |
DEADLINE
FOR RETURN OF LOAN CLOSING DOCUMENTS
| · | | Borrower will sign and return the loan closing documents to SBA within 2 months of the
date of this Loan Authorization and Agreement. By notifying the Borrower in writing, SBA may cancel this Loan if the Borrower fails
to meet this requirement. The Borrower may submit and the SBA may, in its sole discretion, accept documents after 2 months of the date
of this Loan Authorization and Agreement. |
COMPENSATION
FROM OTHER SOURCES
| · | | Eligibility for this disaster Loan is limited to disaster losses that are not compensated
by other sources. Other sources include but are not limited to: (1) proceeds of policies of insurance or other indemnifications, (2)
grants or other reimbursement (including loans) from government agencies or private organizations, (3) claims for civil liability against
other individuals, organizations or governmental entities, and (4) salvage (including any sale or re-use) of items of damaged property. |
| · | | Borrower will promptly notify SBA of the existence and status of any claim or application
for such other compensation, and of the receipt of any such compensation, and Borrower will promptly submit the proceeds of same (not
exceeding the outstanding balance of this Loan) to SBA. |
| · | | Borrower hereby assigns to SBA the proceeds of any such compensation from other sources and
authorizes the payor of same to deliver said proceeds to SBA at such time and place as SBA shall designate. |
| · | | SBA will in its sole discretion determine whether any such compensation from other sources
is a duplication of benefits. SBA will use the proceeds of any such duplication to reduce the outstanding balance of this Loan, and Borrower
agrees that such proceeds will not be applied in lieu of scheduled payments. |
DUTY
TO MAINTAIN HAZARD INSURANCE
| · | | Within 12 months from the date of this Loan Authorization and
Agreement the Borrower will provide proof of an active and in effect hazard insurance policy including fire, lightning, and extended
coverage on all items used to secure this loan to at least 80% of the insurable value. Borrower will not cancel such coverage and will
maintain such coverage throughout the entire term of this Loan. BORROWER MAY NOT BE ELIGIBLE FOR EITHER ANY FUTURE DISASTER ASSISTANCE
OR SBA FINANCIAL ASSISTANCE IF THIS INSURANCE IS NOT MAINTAINED AS STIPULATED HEREIN THROUGHOUT THE ENTIRE TERM OF THIS LOAN. Please
submit proof of insurance to: U.S. Small Business Administration, Office of Disaster Assistance, 14925 Kingsport Rd, Fort Worth, TX.
76155. |
BOOKS
AND RECORDS
| · | | Borrower will maintain current and proper books of account in a manner satisfactory to SBA
for the most recent 5 years until 3 years after the date of maturity, including extensions, or the date this Loan is paid in full, whichever
occurs first. Such books will include Borrower's financial and operating statements, insurance policies, tax returns and related filings,
records of earnings distributed and dividends paid and records of compensation to officers, directors, holders of 10% or more of Borrower's
capital stock, members, partners and proprietors. |
| · | | Borrower authorizes SBA to make or cause to be made, at Borrower's expense and in such a
manner and at such times as SBA may require: (1) inspections and audits of any books, records and paper in the custody or control of
Borrower or others relating to Borrower's financial or business conditions, including the making of copies thereof and extracts therefrom,
and (2) inspections and appraisals of any of Borrower's assets. |
| · | | Borrower will furnish to SBA, not later than 3 months following the expiration of Borrower's
fiscal year and in such form as SBA may require, Borrower's financial statements. |
| · | | Upon written request of SBA, Borrower will accompany such statements with an 'Accountant's
Review Report' prepared by an independent public accountant at Borrower's expense. |
| · | | Borrower authorizes all Federal, State and municipal authorities to furnish reports of examination,
records and other information relating to the conditions and affairs of Borrower and any desired information from such reports, returns,
files, and records of such authorities upon request of SBA. |
LIMITS
ON DISTRIBUTION OF ASSETS
| · | | Borrower will not, without the prior written consent of SBA, make any distribution of Borrower’s
assets, or give any preferential treatment, make any advance, directly or indirectly, by way of loan, gift, bonus, or otherwise, to any
owner or partner or any of its employees, or to any company directly or indirectly controlling or affiliated with or controlled by Borrower,
or any other company. |
EQUAL
OPPORTUNITY REQUIREMENT
| · | | If Borrower has or intends to have employees, Borrower will post SBA Form 722, Equal Opportunity
Poster (copy attached), in Borrower's place of business where it will be clearly visible to employees, applicants for employment, and
the general public. |
DISCLOSURE
OF LOBBYING ACTIVITIES
·
Borrower agrees to the attached Certification Regarding Lobbying Activities
BORROWER’S CERTIFICATIONS
Borrower
certifies that:
| · | | There has been no substantial adverse change in Borrower's financial condition (and organization,
in case of a business borrower) since the date of the application for this Loan. (Adverse changes include, but are not limited to: judgment
liens, tax liens, mechanic's liens, bankruptcy, financial reverses, arrest or conviction of felony, etc.) |
| · | | No fees have been paid, directly or indirectly, to any representative (attorney, accountant,
etc.) for services provided or to be provided in connection with applying for or closing this Loan, other than those reported on SBA
Form 5 Business Disaster Loan Application'; SBA Form 3501 COVID-19 Economic Injury Disaster Loan Application; or SBA Form 159, 'Compensation
Agreement'. All fees not approved by SBA are prohibited. |
| · | | All representations in the Borrower's Loan application (including
all supplementary submissions) are true, correct and complete and are offered to induce SBA to make this Loan. |
| · | | No claim or application for any other compensation for disaster losses has been submitted
to or requested of any source, and no such other compensation has been received, other than that which Borrower has fully disclosed to
SBA. |
| · | | Neither the Borrower nor, if the Borrower is a business, any principal who owns at least
50% of the Borrower, is delinquent more than 60 days under the terms of any: (a) administrative order; (b) court order; or (c) repayment
agreement that requires payment of child support. |
| · | | Borrower certifies that no fees have been paid, directly or indirectly, to any representative
(attorney, accountant, etc.) for services provided or to be provided in connection with applying for or closing this Loan, other than
those reported on the Loan Application. All fees not approved by SBA are prohibited.If an Applicant chooses to employ an Agent, the compensation
an Agent charges to and that is paid by the Applicant must bear a necessary and reasonable relationship to the services actually performed
and must be comparable to those charged by other Agents in the geographical area. Compensation cannot be contingent on loan approval.
In addition, compensation must not include any expenses which are deemed by SBA to be unreasonable for services actually performed or
expenses actually incurred. Compensation must not include charges prohibited in 13 CFR 103 or SOP 50-30,
Appendix 1. If the compensation exceeds $500 for a disaster home loan or $2,500 for a disaster business loan, Borrower must
fill out the Compensation Agreement Form 159D which will be provided for Borrower upon request or can be found on the SBA website. |
| · | | Borrower certifies, to the best of its, his or her knowledge and belief, that the certifications
and representations in the attached Certification Regarding Lobbying are true, correct and complete and are offered to induce SBA to
make this Loan. |
CIVIL
AND CRIMINAL PENALTIES
| · | | Whoever wrongfully misapplies the proceeds of an SBA disaster loan shall be civilly liable
to the Administrator in an amount equal to one-and-one half times the original principal amount of the loan under 15 U.S.C. 636(b). In
addition, any false statement or misrepresentation to SBA may result in criminal, civil or administrative sanctions including, but not
limited to: 1) fines, imprisonment or both, under 15 U.S.C. 645, 18 U.S.C. 1001, 18 U.S.C. 1014, 18 U.S.C. 1040, 18 U.S.C. 3571, and
any other applicable laws; 2) treble damages and civil penalties under the False Claims Act, 31 U.S.C. 3729; 3) double damages and civil
penalties under the Program Fraud Civil Remedies Act, 31 U.S.C. 3802; and 4) suspension and/or debarment from all Federal procurement
and non-procurement transactions. Statutory fines may increase if amended by the Federal Civil Penalties Inflation Adjustment Act Improvements
Act of 2015. |
RESULT
OF VIOLATION OF THIS LOAN AUTHORIZATION AND AGREEMENT
| · | | If Borrower violates any of the terms or conditions of this Loan Authorization and Agreement,
the Loan will be in default and SBA may declare all or any part of the indebtedness immediately due and payable. SBA's failure to exercise
its rights under this paragraph will not constitute a waiver. |
| · | | A default (or any violation of any of the terms and conditions) of any SBA Loan(s) to Borrower
and/or its affiliates will be considered a default of all such Loan(s). |
DISBURSEMENT
OF THE LOAN
| · | | Disbursements will be made by and at the discretion of SBA Counsel, in accordance with this
Loan Authorization and Agreement and the general requirements of SBA. |
| · | | Disbursements may be made in increments as needed. |
| · | | Other conditions may be imposed by SBA pursuant to general requirements of SBA. |
| · | | Disbursement may be withheld if, in SBA's sole discretion, there has been an adverse change
in Borrower's financial condition or in any other material fact represented in the Loan application, or if Borrower fails to meet any
of the terms or conditions of this Loan Authorization and Agreement. |
| · | | NO DISBURSEMENT WILL BE MADE LATER THAN 6 MONTHS FROM THE DATE OF THIS LOAN AUTHORIZATION
AND AGREEMENT UNLESS SBA, IN ITS SOLE DISCRETION, EXTENDS THIS DISBURSEMENT PERIOD. |
PARTIES
AFFECTED
| · | | This Loan Authorization and Agreement will be binding upon Borrower and Borrower's successors
and assigns and will inure to the benefit of SBA and its successors and assigns. |
RESOLUTION
OF BOARD OF DIRECTORS
| · | | Borrower shall, within 180 days of receiving any disbursement of this Loan, submit the appropriate
SBA Certificate and/or Resolution to the U.S. Small Business Administration, Office of Disaster Assistance, 14925 Kingsport Rd, Fort
Worth, TX. 76155. |
ENFORCEABILITY
| · | | This Loan Authorization and Agreement is legally binding, enforceable and approved upon Borrower’s
signature, the SBA’s approval and the Loan Proceeds being issued to Borrower by a government issued check or by electronic debit
of the Loan Proceeds to Borrower’ banking account provided by Borrower in application for this Loan. |
/s/ James
E. Rivera
James E.
Rivera
Associate
Administrator
U.S. Small
Business Administration
The undersigned
agree(s) to be bound by the terms and conditions herein during the term of this Loan, and further agree(s) that no provision stated herein
will be waived without prior written consent of SBA. Under penalty of perjury of the United States of America, I hereby certify that
I am authorized to apply for and obtain a disaster loan on behalf of Borrower, in connection with the effects of the COVID-19 emergency.
Pharmacology
University, Inc.
/s/ Henry Levinski
Henry Levinski,
Owner/Officer
Date: 05.22.2020
Note:
Corporate Borrowers must execute Loan Authorization and Agreement in corporate name, by a duly authorized officer. Partnership Borrowers
must execute in firm name, together with signature of a general partner. Limited Liability entities must execute in the entity name by
the signature of the authorized managing person.
 |
U.S. Small Business Administration
NOTE
(SECURED DISASTER LOANS) |
Date: 05.22.2020
Loan Amount: $143,200.00
Annual Interest Rate: 3.75% |
| SBA Loan # 2144067805 |
Application #3300716650 |
1. PROMISE
TO PAY: In return for a loan, Borrower promises to pay to the order of SBA the amount of one hundred and forty-three thousand
two hundred and 00/100 Dollars ($143,200.00), interest on the unpaid principal balance, and all other amounts required by
this Note.
2. DEFINITIONS:
A) “Collateral” means any property taken as security for payment of this Note or any guarantee of this Note. B) “Guarantor”
means each person or entity that signs a guarantee of payment of this Note. C) “Loan Documents” means the documents
related to this loan signed by Borrower, any Guarantor, or anyone who pledges collateral.
3. PAYMENT
TERMS: Borrower must make all payments at the place SBA designates. Borrower may prepay this Note in part or in full at any time,
without notice or penalty. Borrower must pay principal and interest payments of $698.00 every month beginning
Twelve (12) months from the date of the Note. SBA will apply each installment payment first to pay interest accrued to
the day SBA receives the payment and will then apply any remaining balance to reduce principal. All remaining principal and accrued interest
is due and payable Thirty (30) years from the date of the Note.
4. DEFAULT:
Borrower is in default under this Note if Borrower does not make a payment when due under this Note, or if Borrower: A) Fails
to comply with any provision of this Note, the Loan Authorization and Agreement, or other Loan Documents; B) Defaults on any other
SBA loan; C) Sells or otherwise transfers, or does not preserve or account to SBA’s satisfaction for, any of the Collateral
or its proceeds; D) Does not disclose, or anyone acting on their behalf does not disclose, any material fact to SBA; E) Makes,
or anyone acting on their behalf makes, a materially false or misleading representation to SBA; F) Defaults on any loan or agreement
with another creditor, if SBA believes the default may materially affect Borrower’s ability to pay this Note; G) Fails to
pay any taxes when due; H) Becomes the subject of a proceeding under any bankruptcy or insolvency law; I) Has a receiver
or liquidator appointed for any part of their business or property; J) Makes an assignment for the benefit of creditors; K)
Has any adverse change in financial condition or business operation that SBA believes may materially affect Borrower’s ability
to pay this Note; L) Dies; M) Reorganizes, merges, consolidates, or otherwise changes ownership or business structure without
SBA’s prior written consent; or, N) Becomes the subject of a civil or criminal action that SBA believes may materially affect
Borrower’s ability to pay this Note.
5. SBA’S
RIGHTS IF THERE IS A DEFAULT: Without notice or demand and without giving up any of its rights, SBA may: A) Require immediate
payment of all amounts owing under this Note; B) Have recourse to collect all amounts owing from any Borrower or Guarantor (if
any); C) File suit and obtain judgment; D) Take possession of any Collateral; or E) Sell, lease, or otherwise dispose
of, any Collateral at public or private sale, with or without advertisement.
6. SBA’S
GENERAL POWERS: Without notice and without Borrower’s consent, SBA may: A) Bid on or buy the Collateral at its sale
or the sale of another lienholder, at any price it chooses; B) Collect amounts due under this Note, enforce the terms of this
Note or any other Loan Document, and preserve or dispose of the Collateral. Among other things, the expenses may include payments for
property taxes, prior liens, insurance, appraisals, environmental remediation costs, and reasonable attorney’s fees and costs.
If SBA incurs such expenses, it may demand immediate reimbursement from Borrower or add the expenses to the principal balance; C)
Release anyone obligated to pay this Note; D) Compromise, release, renew, extend or substitute any of the Collateral; and
E) Take any action necessary to protect the Collateral or collect amounts owing on this Note.
7. FEDERAL
LAW APPLIES: When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. SBA
may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using
such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower
may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.
8. GENERAL
PROVISIONS: A) All individuals and entities signing this Note are jointly and severally liable. B) Borrower waives all suretyship
defenses. C) Borrower must sign all documents required at any time to comply with the Loan Documents and to enable SBA to acquire,
perfect, or maintain SBA’s liens on Collateral. D) SBA may exercise any of its rights separately or together, as many times
and in any order it chooses. SBA may delay or forgo enforcing any of its rights without giving up any of them. E) Borrower may
not use an oral statement of SBA to contradict or alter the written terms of this Note. F) If any part of this Note is unenforceable,
all other parts remain in effect. G) To the extent allowed by law, Borrower waives all demands and notices in connection with
this Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any defenses based upon any claim that
SBA did not obtain any guarantee; did not obtain, perfect, or maintain a lien upon Collateral; impaired Collateral; or did not obtain
the fair market value of Collateral at a sale. H) SBA may sell or otherwise transfer this Note.
9. MISUSE
OF LOAN FUNDS: Anyone who wrongfully misapplies any proceeds of the loan will be civilly liable to SBA for one and onehalf times
the proceeds disbursed, in addition to other remedies allowed by law.
10. BORROWER’S
NAME(S) AND SIGNATURE(S): By signing below, each individual or entity acknowledges and accepts personal obligation and full liability
under the Note as Borrower.
Pharmacology University, Inc.
/s/ Henry
Levinski
Henry
Levinski, Owner/Officer
| |
U.S. Small
Business Administration
Security
Agreement
|
| Borrower: |
Pharmacology University, Inc. |
| Secured Party: |
The Small Business Administration, an Agency of the U.S. Government |
1. DEFINITIONS.
Unless otherwise
specified, all terms used in this Agreement will have the meanings ascribed to them under the Official Text of the Uniform Commercial
Code, as it may be amended from time to time, (“UCC”). “SBA” means the Small Business Administration, an Agency
of the U.S. Government.
2.
GRANT OF SECURITY INTEREST.
For value
received, the Borrower grants to the Secured Party a security interest in the property described below in paragraph 4 (the “Collateral”).
3.
OBLIGATIONS SECURED.
This Agreement
secures the payment and performance of: (a) all obligations under a Note dated 05.22.2020, made by Pharmacology University, Inc., made
payable to Secured Lender, in the amount of $143,200.00 (“Note”), including all costs and
expenses (including reasonable attorney’s fees), incurred by Secured Party in the disbursement, administration and collection of
the loan evidenced by the Note; (b) all costs and expenses (including reasonable attorney’s fees), incurred by Secured Party in
the protection, maintenance and enforcement of the security interest hereby granted; (c) all obligations of the Borrower in any other
agreement relating to the Note; and (d) any modifications, renewals, refinancings, or extensions of the foregoing obligations.
4.
COLLATERAL DESCRIPTION.
The
Collateral in which this security interest is granted includes the following property that Borrower now owns or shall acquire or
create immediately upon the acquisition or creation thereof: all tangible and intangible personal property, including, but not
limited to: (a) inventory, (b) equipment, (c) instruments, including promissory notes (d) chattel paper, including tangible chattel
paper and electronic chattel paper, (e) documents, (f) letter of credit rights, (g) accounts, including health-care insurance
receivables and credit card receivables, (h) deposit accounts, (i) commercial tort claims, (j) general intangibles, including
payment intangibles and software and (k) as-extracted collateral as such terms may from time to time be defined in the Uniform
Commercial Code. The security interest Borrower grants includes all accessions, attachments, accessories, parts, supplies and
replacements for the Collateral, all products, proceeds and collections thereof and all records and data relating thereto.
5.
RESTRICTIONS ON COLLATERAL TRANSFER.
Borrower
will not sell, lease, license or otherwise transfer (including by granting security interests, liens, or other encumbrances in) all or
any part of the Collateral or Borrower’s interest in the Collateral without Secured Party’s written or electronically communicated
approval, except that Borrower may sell inventory in the ordinary course of business on customary terms. Borrower may collect and use
amounts due on accounts and other rights to payment arising or created in the ordinary course of business, until notified otherwise by
Secured Party in writing or by electronic communication.
6.
MAINTENANCE AND LOCATION OF COLLATERAL; INSPECTION; INSURANCE.
Borrower
must promptly notify Secured Party by written or electronic communication of any change in location of the Collateral, specifying the
new location. Borrower hereby grants to Secured Party the right to inspect the Collateral at all reasonable times and upon reasonable
notice. Borrower must: (a) maintain the Collateral in good condition; (b) pay promptly all taxes, judgments, or charges of any kind levied
or assessed thereon; (c) keep current all rent or mortgage payments due, if any, on premises where the Collateral is located; and (d)
maintain hazard insurance on the Collateral, with an insurance company and in an amount approved by Secured Party (but in no event less
than the replacement cost of that Collateral), and including such terms as Secured Party may require including a Lender’s Loss
Payable Clause in favor of Secured Party. Borrower hereby assigns to Secured Party any proceeds of such policies and all unearned premiums
thereon and authorizes and empowers Secured Party to collect such sums and to execute and endorse in Borrower’s name all proofs
of loss, drafts, checks and any other documents necessary for Secured Party to obtain such payments.
7.
CHANGES TO BORROWER’S LEGAL STRUCTURE, PLACE OF BUSINESS, JURISDICTION OF ORGANIZATION, OR NAME.
Borrower
must notify Secured Party by written or electronic communication not less than 30 days before taking any of the following actions: (a)
changing or reorganizing the type of organization or form under which it does business; (b) moving, changing its place of business or
adding a place of business; (c) changing its jurisdiction of organization; or (d) changing its name. Borrower will pay for the preparation
and filing of all documents Secured Party deems necessary to maintain, perfect and continue the perfection of Secured Party’s security
interest in the event of any such change.
8.
PERFECTION OF SECURITY INTEREST.
Borrower
consents, without further notice, to Secured Party’s filing or recording of any documents necessary to perfect, continue, amend
or terminate its security interest. Upon request of Secured Party, Borrower must sign or otherwise authenticate all documents that Secured
Party deems necessary at any time to allow Secured Party to acquire, perfect, continue or amend its security interest in the Collateral.
Borrower will pay the filing and recording costs of any documents relating to Secured Party’s security interest. Borrower ratifies
all previous filings and recordings, including financing statements and notations on certificates of title. Borrower will cooperate with
Secured Party in obtaining a Control Agreement satisfactory to Secured Party with respect to any Deposit Accounts or Investment Property,
or in otherwise obtaining control or possession of that or any other Collateral.
9.
DEFAULT.
Borrower
is in default under this Agreement if: (a) Borrower fails to pay, perform or otherwise comply with any provision of this Agreement; (b)
Borrower makes any materially false representation, warranty or certification in, or in connection with, this Agreement, the Note, or
any other agreement related to the Note or this Agreement; (c) another secured party or judgment creditor exercises its rights against
the Collateral; or (d) an event defined as a “default” under the Obligations occurs. In the event of default and if Secured
Party requests, Borrower must assemble and make available all Collateral at a place and time designated by Secured Party. Upon default
and at any time thereafter, Secured Party may declare all Obligations secured hereby immediately due and payable, and, in its sole discretion,
may proceed to enforce payment of same and exercise any of the rights and remedies available to a secured party by law including those
available to it under Article 9 of the UCC that is in effect in the jurisdiction where Borrower or the Collateral is located. Unless
otherwise required under applicable law, Secured Party has no obligation to clean or otherwise prepare the Collateral for sale or other
disposition and Borrower waives any right it may have to require Secured Party to enforce the security interest or payment or performance
of the Obligations against any other person.
10.
FEDERAL RIGHTS.
When SBA
is the holder of the Note, this Agreement will be construed and enforced under federal law, including SBA regulations. Secured Party
or SBA may use state or local procedures for filing papers, recording documents, giving notice, enforcing security interests or liens,
and for any other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax
or liability. As to this Agreement, Borrower may not claim or assert any local or state law against SBA to deny any obligation, defeat
any claim of SBA, or preempt federal law.
11.
GOVERNING LAW.
Unless SBA
is the holder of the Note, in which case federal law will govern, Borrower and Secured Party agree that this Agreement will be governed
by the laws of the jurisdiction where the Borrower is located, including the UCC as in effect in such jurisdiction and without reference
to its conflicts of laws principles.
12.
SECURED PARTY RIGHTS.
All rights
conferred in this Agreement on Secured Party are in addition to those granted to it by law, and all rights are cumulative and may be
exercised simultaneously. Failure of Secured Party to enforce any rights or remedies will not constitute an estoppel or waiver of Secured
Party’s ability to exercise such rights or remedies. Unless otherwise required under applicable law, Secured Party is not liable
for any loss or damage to Collateral in its possession or under its control, nor will such loss or damage reduce or discharge the Obligations
that are due, even if Secured Party’s actions or inactions caused or in any way contributed to such loss or damage.
13.
SEVERABILITY.
If any provision
of this Agreement is unenforceable, all other provisions remain in effect.
14.
BORROWER CERTIFICATIONS.
Borrower
certifies that: (a) its Name (or Names) as stated above is correct; (b) all Collateral is owned or titled in the Borrower’s name
and not in the name of any other organization or individual; (c) Borrower has the legal authority to grant the security interest in the
Collateral; (d) Borrower’s ownership in or title to the Collateral is free of all adverse claims, liens, or security interests
(unless expressly permitted by Secured Party); (e) none of the Obligations are or will be primarily for personal, family or household
purposes; (f) none of the Collateral is or will be used, or has been or will be bought primarily for personal, family or household purposes;
(g) Borrower has read and understands the meaning and effect of all terms of this Agreement.
15.
BORROWER NAME(S) AND SIGNATURE(S).
By signing
or otherwise authenticating below, each individual and each organization becomes jointly and severally obligated as a Borrower under
this Agreement.
Pharmacology
University, Inc.
/s/ Henry
Levinski
Henry
Levinski, Owner/Officer
Date: 05.22.2020
Exhibit
10.2
| SBA Loan #1330047907 |
Application #3300750589 |
U.S.
Small Business Administration
Economic
Injury Disaster Loan
LOAN
AUTHORIZATION AND AGREEMENT
Date: 06.10.2020
(Effective Date)
On the above
date, this Administration (SBA) authorized (under Section 7(b) of the Small Business Act, as amended) a Loan (SBA Loan #1330047907) to
Precision Research Institute LLC (Borrower) of 6201 Bonhomme Road, Suite 460-S Houston Texas 77036 in the amount of one hundred and six
thousand three hundred and 00/100 Dollars ($106,300.00), upon the following conditions:
PAYMENT
| · | | Installment payments, including principal and interest, of $518.00 Monthly, will begin
Twelve (12) months from the date of the promissory Note. The balance of principal and interest will be payable Thirty (30)
years from the date of the promissory Note. |
INTEREST
| · | | Interest will accrue at the rate of 3.75% per annum and will accrue only on funds
actually advanced from the date(s) of each advance. |
PAYMENT
TERMS
| · | | Each payment will be applied first to interest accrued to the date of receipt of each payment,
and the balance, if any, will be applied to principal. |
| · | | Each payment will be made when due even if at that time the full amount of the Loan has not
yet been advanced or the authorized amount of the Loan has been reduced. |
COLLATERAL
| · | | For loan amounts of greater than $25,000, Borrower hereby grants to SBA, the secured party
hereunder, a continuing security interest in and to any and all “Collateral” as described herein to secure payment and performance
of all debts, liabilities and obligations of Borrower to SBA hereunder without limitation, including but not limited to all interest,
other fees and expenses (all hereinafter called “Obligations”). The Collateral includes the following property that Borrower
now owns or shall acquire or create immediately upon the acquisition or creation thereof: all tangible and intangible personal property,
including, but not limited to: (a) inventory, (b) equipment, (c) instruments, including promissory notes (d) chattel paper, including
tangible chattel paper and electronic chattel paper, (e) documents, (f) letter of credit rights, (g) accounts, including health-care
insurance receivables and credit card receivables, (h) deposit accounts, (i) commercial tort claims, (j) general intangibles, including
payment intangibles and software and (k) as-extracted collateral as such terms may from time to time be defined in the Uniform Commercial
Code. The security interest Borrower grants includes all accessions, attachments, accessories, parts, supplies and replacements for the
Collateral, all products, proceeds and collections thereof and all records and data relating thereto. |
| · | | For loan amounts of $25,000 or less, SBA is not taking a security interest in any collateral. |
REQUIREMENTS
RELATIVE TO COLLATERAL
| · | | Borrower will not sell or transfer any collateral (except normal inventory turnover in the
ordinary course of business) described in the "Collateral" paragraph hereof without the prior written consent of SBA. |
| · | | Borrower will neither seek nor accept future advances under any superior liens on the collateral
securing this Loan without the prior written consent of SBA. |
USE OF
LOAN PROCEEDS
| · | | Borrower will use all the proceeds of this Loan solely as working capital to alleviate economic
injury caused by disaster occurring in the month of January 31, 2020 and continuing thereafter and to pay Uniform Commercial Code (UCC)
lien filing fees and a third-party UCC handling charge of $100 which will be deducted from the Loan amount stated above. |
REQUIREMENTS
FOR USE OF LOAN PROCEEDS AND RECEIPTS
| · | | Borrower will obtain and itemize receipts (paid receipts, paid invoices or cancelled checks)
and contracts for all Loan funds spent and retain these receipts for 3 years from the date of the final disbursement. Prior to each subsequent
disbursement (if any) and whenever requested by SBA, Borrower will submit to SBA such itemization together with copies of the receipts. |
| · | | Borrower will not use, directly or indirectly, any portion of the proceeds of this Loan to
relocate without the prior written permission of SBA. The law prohibits the use of any portion of the proceeds of this Loan for voluntary
relocation from the business area in which the disaster occurred. To request SBA's prior written permission to relocate, Borrower will
present to SBA the reasons therefore and a description or address of the relocation site. Determinations of (1) whether a relocation
is voluntary or otherwise, and (2) whether any site other than the disaster-affected location is within the business area in which the
disaster occurred, will be made solely by SBA. |
| · | | Borrower will, to the extent feasible, purchase only American-made equipment and products
with the proceeds of this Loan. |
| · | | Borrower will make any request for a loan increase for additional disaster-related damages
as soon as possible after the need for a loan increase is discovered. The SBA will not consider a request for a loan increase received
more than two (2) years from the date of loan approval unless, in the sole discretion of the SBA, there are extraordinary and
unforeseeable circumstances beyond the control of the borrower. |
DEADLINE
FOR RETURN OF LOAN CLOSING DOCUMENTS
| · | | Borrower will sign and return the loan closing documents to SBA within 2 months of the
date of this Loan Authorization and Agreement. By notifying the Borrower in writing, SBA may cancel this Loan if the Borrower fails
to meet this requirement. The Borrower may submit and the SBA may, in its sole discretion, accept documents after 2 months of the date
of this Loan Authorization and Agreement. |
COMPENSATION
FROM OTHER SOURCES
| · | | Eligibility for this disaster Loan is limited to disaster losses that are not compensated
by other sources. Other sources include but are not limited to: (1) proceeds of policies of insurance or other indemnifications, (2)
grants or other reimbursement (including loans) from government agencies or private organizations, (3) claims for civil liability against
other individuals, organizations or governmental entities, and (4) salvage (including any sale or re-use) of items of damaged property. |
| · | | Borrower will promptly notify SBA of the existence and status of any claim or application
for such other compensation, and of the receipt of any such compensation, and Borrower will promptly submit the proceeds of same (not
exceeding the outstanding balance of this Loan) to SBA. |
| · | | Borrower hereby assigns to SBA the proceeds of any such compensation from other sources and
authorizes the payor of same to deliver said proceeds to SBA at such time and place as SBA shall designate. |
| · | | SBA will in its sole discretion determine whether any such compensation from other sources
is a duplication of benefits. SBA will use the proceeds of any such duplication to reduce the outstanding balance of this Loan, and Borrower
agrees that such proceeds will not be applied in lieu of scheduled payments. |
DUTY
TO MAINTAIN HAZARD INSURANCE
| · | | Within 12 months from the date of this Loan Authorization and
Agreement the Borrower will provide proof of an active and in effect hazard insurance policy including fire, lightning, and extended
coverage on all items used to secure this loan to at least 80% of the insurable value. Borrower will not cancel such coverage and will
maintain such coverage throughout the entire term of this Loan. BORROWER MAY NOT BE ELIGIBLE FOR EITHER ANY FUTURE DISASTER ASSISTANCE
OR SBA FINANCIAL ASSISTANCE IF THIS INSURANCE IS NOT MAINTAINED AS STIPULATED HEREIN THROUGHOUT THE ENTIRE TERM OF THIS LOAN. Please
submit proof of insurance to: U.S. Small Business Administration, Office of Disaster Assistance, 14925 Kingsport Rd, Fort Worth, TX.
76155. |
BOOKS
AND RECORDS
| · | | Borrower will maintain current and proper books of account in a manner satisfactory to SBA
for the most recent 5 years until 3 years after the date of maturity, including extensions, or the date this Loan is paid in full, whichever
occurs first. Such books will include Borrower's financial and operating statements, insurance policies, tax returns and related filings,
records of earnings distributed and dividends paid and records of compensation to officers, directors, holders of 10% or more of Borrower's
capital stock, members, partners and proprietors. |
| · | | Borrower authorizes SBA to make or cause to be made, at Borrower's expense and in such a
manner and at such times as SBA may require: (1) inspections and audits of any books, records and paper in the custody or control of
Borrower or others relating to Borrower's financial or business conditions, including the making of copies thereof and extracts therefrom,
and (2) inspections and appraisals of any of Borrower's assets. |
| · | | Borrower will furnish to SBA, not later than 3 months following the expiration of Borrower's
fiscal year and in such form as SBA may require, Borrower's financial statements. |
| · | | Upon written request of SBA, Borrower will accompany such statements with an 'Accountant's
Review Report' prepared by an independent public accountant at Borrower's expense. |
| · | | Borrower authorizes all Federal, State and municipal authorities to furnish reports of examination,
records and other information relating to the conditions and affairs of Borrower and any desired information from such reports, returns,
files, and records of such authorities upon request of SBA. |
LIMITS
ON DISTRIBUTION OF ASSETS
| · | | Borrower will not, without the prior written consent of SBA, make any distribution of Borrower’s
assets, or give any preferential treatment, make any advance, directly or indirectly, by way of loan, gift, bonus, or otherwise, to any
owner or partner or any of its employees, or to any company directly or indirectly controlling or affiliated with or controlled by Borrower,
or any other company. |
EQUAL
OPPORTUNITY REQUIREMENT
| · | | If Borrower has or intends to have employees, Borrower will post SBA Form 722, Equal Opportunity
Poster (copy attached), in Borrower's place of business where it will be clearly visible to employees, applicants for employment, and
the general public. |
DISCLOSURE
OF LOBBYING ACTIVITIES
·
Borrower agrees to the attached Certification Regarding Lobbying Activities
BORROWER’S CERTIFICATIONS
Borrower
certifies that:
| · | | There has been no substantial adverse change in Borrower's financial condition (and organization,
in case of a business borrower) since the date of the application for this Loan. (Adverse changes include, but are not limited to: judgment
liens, tax liens, mechanic's liens, bankruptcy, financial reverses, arrest or conviction of felony, etc.) |
| · | | No fees have been paid, directly or indirectly, to any representative (attorney, accountant,
etc.) for services provided or to be provided in connection with applying for or closing this Loan, other than those reported on SBA
Form 5 Business Disaster Loan Application'; SBA Form 3501 COVID-19 Economic Injury Disaster Loan Application; or SBA Form 159, 'Compensation
Agreement'. All fees not approved by SBA are prohibited. |
| · | | All representations in the Borrower's Loan application (including
all supplementary submissions) are true, correct and complete and are offered to induce SBA to make this Loan. |
| · | | No claim or application for any other compensation for disaster losses has been submitted
to or requested of any source, and no such other compensation has been received, other than that which Borrower has fully disclosed to
SBA. |
| · | | Neither the Borrower nor, if the Borrower is a business, any principal who owns at least
50% of the Borrower, is delinquent more than 60 days under the terms of any: (a) administrative order; (b) court order; or (c) repayment
agreement that requires payment of child support. |
| · | | Borrower certifies that no fees have been paid, directly or indirectly, to any representative
(attorney, accountant, etc.) for services provided or to be provided in connection with applying for or closing this Loan, other than
those reported on the Loan Application. All fees not approved by SBA are prohibited.If an Applicant chooses to employ an Agent, the compensation
an Agent charges to and that is paid by the Applicant must bear a necessary and reasonable relationship to the services actually performed
and must be comparable to those charged by other Agents in the geographical area. Compensation cannot be contingent on loan approval.
In addition, compensation must not include any expenses which are deemed by SBA to be unreasonable for services actually performed or
expenses actually incurred. Compensation must not include charges prohibited in 13 CFR 103 or SOP 50-30,
Appendix 1. If the compensation exceeds $500 for a disaster home loan or $2,500 for a disaster business loan, Borrower must
fill out the Compensation Agreement Form 159D which will be provided for Borrower upon request or can be found on the SBA website. |
| · | | Borrower certifies, to the best of its, his or her knowledge and belief, that the certifications
and representations in the attached Certification Regarding Lobbying are true, correct and complete and are offered to induce SBA to
make this Loan. |
CIVIL
AND CRIMINAL PENALTIES
| · | | Whoever wrongfully misapplies the proceeds of an SBA disaster loan shall be civilly liable
to the Administrator in an amount equal to one-and-one half times the original principal amount of the loan under 15 U.S.C. 636(b). In
addition, any false statement or misrepresentation to SBA may result in criminal, civil or administrative sanctions including, but not
limited to: 1) fines, imprisonment or both, under 15 U.S.C. 645, 18 U.S.C. 1001, 18 U.S.C. 1014, 18 U.S.C. 1040, 18 U.S.C. 3571, and
any other applicable laws; 2) treble damages and civil penalties under the False Claims Act, 31 U.S.C. 3729; 3) double damages and civil
penalties under the Program Fraud Civil Remedies Act, 31 U.S.C. 3802; and 4) suspension and/or debarment from all Federal procurement
and non-procurement transactions. Statutory fines may increase if amended by the Federal Civil Penalties Inflation Adjustment Act Improvements
Act of 2015. |
RESULT
OF VIOLATION OF THIS LOAN AUTHORIZATION AND AGREEMENT
| · | | If Borrower violates any of the terms or conditions of this Loan Authorization and Agreement,
the Loan will be in default and SBA may declare all or any part of the indebtedness immediately due and payable. SBA's failure to exercise
its rights under this paragraph will not constitute a waiver. |
| · | | A default (or any violation of any of the terms and conditions) of any SBA Loan(s) to Borrower
and/or its affiliates will be considered a default of all such Loan(s). |
DISBURSEMENT
OF THE LOAN
| · | | Disbursements will be made by and at the discretion of SBA Counsel, in accordance with this
Loan Authorization and Agreement and the general requirements of SBA. |
| · | | Disbursements may be made in increments as needed. |
| · | | Other conditions may be imposed by SBA pursuant to general requirements of SBA. |
| · | | Disbursement may be withheld if, in SBA's sole discretion, there has been an adverse change
in Borrower's financial condition or in any other material fact represented in the Loan application, or if Borrower fails to meet any
of the terms or conditions of this Loan Authorization and Agreement. |
| · | | NO DISBURSEMENT WILL BE MADE LATER THAN 6 MONTHS FROM THE DATE OF THIS LOAN AUTHORIZATION
AND AGREEMENT UNLESS SBA, IN ITS SOLE DISCRETION, EXTENDS THIS DISBURSEMENT PERIOD. |
PARTIES
AFFECTED
| · | | This Loan Authorization and Agreement will be binding upon Borrower and Borrower's successors
and assigns and will inure to the benefit of SBA and its successors and assigns. |
RESOLUTION
OF BOARD OF DIRECTORS
| · | | Borrower shall, within 180 days of receiving any disbursement of this Loan, submit the appropriate
SBA Certificate and/or Resolution to the U.S. Small Business Administration, Office of Disaster Assistance, 14925 Kingsport Rd, Fort
Worth, TX. 76155. |
ENFORCEABILITY
| · | | This Loan Authorization and Agreement is legally binding, enforceable and approved upon Borrower’s
signature, the SBA’s approval and the Loan Proceeds being issued to Borrower by a government issued check or by electronic debit
of the Loan Proceeds to Borrower’ banking account provided by Borrower in application for this Loan. |
/s/ James
E. Rivera
James E.
Rivera
Associate
Administrator
U.S. Small
Business Administration
The undersigned
agree(s) to be bound by the terms and conditions herein during the term of this Loan, and further agree(s) that no provision stated herein
will be waived without prior written consent of SBA. Under penalty of perjury of the United States of America, I hereby certify that
I am authorized to apply for and obtain a disaster loan on behalf of Borrower, in connection with the effects of the COVID-19 emergency.
Precision
Research Institute LLC
/s/ Elizabeth Henandez
Elizabeth
Hernandez, Owner/Officer
Date: 06.10.2020
Note:
Corporate Borrowers must execute Loan Authorization and Agreement in corporate name, by a duly authorized officer. Partnership Borrowers
must execute in firm name, together with signature of a general partner. Limited Liability entities must execute in the entity name by
the signature of the authorized managing person.
CERTIFICATION
REGARDING LOBBYING
For loans over $150,000, Congress requires
recipients to agree to the following:
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1. |
Appropriated funds may NOT be used for lobbying. |
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2. |
Payment of non-federal funds for lobbying must be reported on Form SF-LLL. |
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3. |
Language of this certification must be incorporated into all contracts and subcontracts exceeding
$100,000. |
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4. |
All contractors and subcontractors with contracts exceeding $100,000 are required to certify and
disclose accordingly. |
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CERTIFICATION
REGARDING LOBBYING
Certification for Contracts, Grants, Loans,
and Cooperative Agreements
Borrower and all Guarantors (if any) certify, to the best of its, his
or her knowledge and belief, that:
(1) No Federal appropriated
funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an
officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in
connection with awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of
any cooperative agreement, and the extension, continuation, renewal, or modification of any Federal contract, grant, loan, or cooperative
agreement.
(2) If any funds other than
Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee
of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this
Federal loan, the undersigned shall complete and submit Standard Form LLL, "Disclosure Form to Report Lobbying," in accordance
with its instructions.
(3) The undersigned shall require
that the language of this certification be included in the award documents for all sub-awards at all tiers (including subcontracts, sub-grants,
and contracts under grants, loans, and co-operative agreements) and that all sub-recipients shall certify and disclose accordingly.
This certification is a material representation of fact upon which
reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering
into this transaction imposed by Section 1352, Title 31, U.S. Code. Any person who fails to file the required certification shall be subject
to a civil penalty of not less than $10,000.00 and not more than $100,000.00 for each such failure
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This Statement of Policy is Posted
In Accordance with Regulations of the
Small Business
Administration |
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This Organization Practices
Equal
Employment Opportunity
We do not discriminate on the ground of race, color, religion, sex,
age, disability or national origin in the hiring, retention, or promotion of employees; nor in determining their rank, or the compensation
or fringe benefits paid them.
This Organization Practices
Equal
Treatment of Clients
We do not discriminate on the basis of race, color, religion, sex,
marital status, disability, age or national origin in services or accommodations offered or provided to our employees, clients or guests.
These policies and this
notice comply with regulations of the
United States Government.
Please report violations of this policy to:
Administrator
Small Business Administration
Washington, D.C. 20416
In order for the public and your employees to know their rights under 13 C.F.R Parts 112, 113, and 117,
Small Business Administration Regulations, and to conform with the directions of the Administrator of SBA, this poster must be displayed
where it is clearly visible to employees, applicants for employment, and the public.
Failure to display the poster as required in accordance with SBA Regulations may be considered evidence of noncompliance
and subject you to the penalties contained in those Regulations.
NOTE
A PROPERLY SIGNED
NOTE IS
REQUIRED PRIOR
TO ANY
DISBURSEMENT
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U.S. Small Business Administration
NOTE
(SECURED DISASTER LOANS) |
Date: 06.10.2020
Loan Amount: $106,300.00
Annual Interest Rate: 3.75% |
| SBA Loan # 1330047907 |
Application #3300750589 |
1. PROMISE
TO PAY: In return for a loan, Borrower promises to pay to the order of SBA the amount of one hundred and six thousand three hundred
and 00/100 Dollars ($106,300.00), interest on the unpaid principal balance, and all other amounts required by this Note.
2. DEFINITIONS:
A) “Collateral” means any property taken as security for payment of this Note or any guarantee of this Note. B) “Guarantor”
means each person or entity that signs a guarantee of payment of this Note. C) “Loan Documents” means the documents
related to this loan signed by Borrower, any Guarantor, or anyone who pledges collateral.
3. PAYMENT
TERMS: Borrower must make all payments at the place SBA designates. Borrower may prepay this Note in part or in full at any time,
without notice or penalty. Borrower must pay principal and interest payments of $518.00 every month beginning
Twelve (12) months from the date of the Note. SBA will apply each installment payment first to pay interest accrued to
the day SBA receives the payment and will then apply any remaining balance to reduce principal. All remaining principal and accrued interest
is due and payable Thirty (30) years from the date of the Note.
4. DEFAULT:
Borrower is in default under this Note if Borrower does not make a payment when due under this Note, or if Borrower: A) Fails
to comply with any provision of this Note, the Loan Authorization and Agreement, or other Loan Documents; B) Defaults on any other
SBA loan; C) Sells or otherwise transfers, or does not preserve or account to SBA’s satisfaction for, any of the Collateral
or its proceeds; D) Does not disclose, or anyone acting on their behalf does not disclose, any material fact to SBA; E) Makes,
or anyone acting on their behalf makes, a materially false or misleading representation to SBA; F) Defaults on any loan or agreement
with another creditor, if SBA believes the default may materially affect Borrower’s ability to pay this Note; G) Fails to
pay any taxes when due; H) Becomes the subject of a proceeding under any bankruptcy or insolvency law; I) Has a receiver
or liquidator appointed for any part of their business or property; J) Makes an assignment for the benefit of creditors; K)
Has any adverse change in financial condition or business operation that SBA believes may materially affect Borrower’s ability
to pay this Note; L) Dies; M) Reorganizes, merges, consolidates, or otherwise changes ownership or business structure without
SBA’s prior written consent; or, N) Becomes the subject of a civil or criminal action that SBA believes may materially affect
Borrower’s ability to pay this Note.
5. SBA’S
RIGHTS IF THERE IS A DEFAULT: Without notice or demand and without giving up any of its rights, SBA may: A) Require immediate
payment of all amounts owing under this Note; B) Have recourse to collect all amounts owing from any Borrower or Guarantor (if
any); C) File suit and obtain judgment; D) Take possession of any Collateral; or E) Sell, lease, or otherwise dispose
of, any Collateral at public or private sale, with or without advertisement.
6. SBA’S
GENERAL POWERS: Without notice and without Borrower’s consent, SBA may: A) Bid on or buy the Collateral at its sale
or the sale of another lienholder, at any price it chooses; B) Collect amounts due under this Note, enforce the terms of this
Note or any other Loan Document, and preserve or dispose of the Collateral. Among other things, the expenses may include payments for
property taxes, prior liens, insurance, appraisals, environmental remediation costs, and reasonable attorney’s fees and costs.
If SBA incurs such expenses, it may demand immediate reimbursement from Borrower or add the expenses to the principal balance; C)
Release anyone obligated to pay this Note; D) Compromise, release, renew, extend or substitute any of the Collateral; and
E) Take any action necessary to protect the Collateral or collect amounts owing on this Note.
7. FEDERAL
LAW APPLIES: When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. SBA
may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using
such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower
may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.
8. GENERAL
PROVISIONS: A) All individuals and entities signing this Note are jointly and severally liable. B) Borrower waives all suretyship
defenses. C) Borrower must sign all documents required at any time to comply with the Loan Documents and to enable SBA to acquire,
perfect, or maintain SBA’s liens on Collateral. D) SBA may exercise any of its rights separately or together, as many times
and in any order it chooses. SBA may delay or forgo enforcing any of its rights without giving up any of them. E) Borrower may
not use an oral statement of SBA to contradict or alter the written terms of this Note. F) If any part of this Note is unenforceable,
all other parts remain in effect. G) To the extent allowed by law, Borrower waives all demands and notices in connection with
this Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any defenses based upon any claim that
SBA did not obtain any guarantee; did not obtain, perfect, or maintain a lien upon Collateral; impaired Collateral; or did not obtain
the fair market value of Collateral at a sale. H) SBA may sell or otherwise transfer this Note.
9. MISUSE
OF LOAN FUNDS: Anyone who wrongfully misapplies any proceeds of the loan will be civilly liable to SBA for one and onehalf times
the proceeds disbursed, in addition to other remedies allowed by law.
10. BORROWER’S
NAME(S) AND SIGNATURE(S): By signing below, each individual or entity acknowledges and accepts personal obligation and full liability
under the Note as Borrower.
Precision
Research Institute LLC
/s/ Elizabeth Henandez
Elizabeth
Hernandez, Owner/Officer
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U.S. Small
Business Administration
Security
Agreement
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| Borrower: |
Precision Research Institute LLC |
| Secured Party: |
The Small Business Administration, an Agency of the U.S. Government |
1. DEFINITIONS.
Unless otherwise
specified, all terms used in this Agreement will have the meanings ascribed to them under the Official Text of the Uniform Commercial
Code, as it may be amended from time to time, (“UCC”). “SBA” means the Small Business Administration, an Agency
of the U.S. Government.
2.
GRANT OF SECURITY INTEREST.
For value
received, the Borrower grants to the Secured Party a security interest in the property described below in paragraph 4 (the “Collateral”).
3.
OBLIGATIONS SECURED.
This Agreement
secures the payment and performance of: (a) all obligations under a Note dated 06.10.2020, made by Precision Research Institute LLC ,
made payable to Secured Lender, in the amount of $106,300.00 (“Note”), including all costs
and expenses (including reasonable attorney’s fees), incurred by Secured Party in the disbursement, administration and collection
of the loan evidenced by the Note; (b) all costs and expenses (including reasonable attorney’s fees), incurred by Secured Party
in the protection, maintenance and enforcement of the security interest hereby granted; (c) all obligations of the Borrower in any other
agreement relating to the Note; and (d) any modifications, renewals, refinancings, or extensions of the foregoing obligations.
4.
COLLATERAL DESCRIPTION.
The
Collateral in which this security interest is granted includes the following property that Borrower now owns or shall acquire or
create immediately upon the acquisition or creation thereof: all tangible and intangible personal property, including, but not
limited to: (a) inventory, (b) equipment, (c) instruments, including promissory notes (d) chattel paper, including tangible chattel
paper and electronic chattel paper, (e) documents, (f) letter of credit rights, (g) accounts, including health-care insurance
receivables and credit card receivables, (h) deposit accounts, (i) commercial tort claims, (j) general intangibles, including
payment intangibles and software and (k) as-extracted collateral as such terms may from time to time be defined in the Uniform
Commercial Code. The security interest Borrower grants includes all accessions, attachments, accessories, parts, supplies and
replacements for the Collateral, all products, proceeds and collections thereof and all records and data relating thereto.
5.
RESTRICTIONS ON COLLATERAL TRANSFER.
Borrower
will not sell, lease, license or otherwise transfer (including by granting security interests, liens, or other encumbrances in) all or
any part of the Collateral or Borrower’s interest in the Collateral without Secured Party’s written or electronically communicated
approval, except that Borrower may sell inventory in the ordinary course of business on customary terms. Borrower may collect and use
amounts due on accounts and other rights to payment arising or created in the ordinary course of business, until notified otherwise by
Secured Party in writing or by electronic communication.
6.
MAINTENANCE AND LOCATION OF COLLATERAL; INSPECTION; INSURANCE.
Borrower
must promptly notify Secured Party by written or electronic communication of any change in location of the Collateral, specifying the
new location. Borrower hereby grants to Secured Party the right to inspect the Collateral at all reasonable times and upon reasonable
notice. Borrower must: (a) maintain the Collateral in good condition; (b) pay promptly all taxes, judgments, or charges of any kind levied
or assessed thereon; (c) keep current all rent or mortgage payments due, if any, on premises where the Collateral is located; and (d)
maintain hazard insurance on the Collateral, with an insurance company and in an amount approved by Secured Party (but in no event less
than the replacement cost of that Collateral), and including such terms as Secured Party may require including a Lender’s Loss
Payable Clause in favor of Secured Party. Borrower hereby assigns to Secured Party any proceeds of such policies and all unearned premiums
thereon and authorizes and empowers Secured Party to collect such sums and to execute and endorse in Borrower’s name all proofs
of loss, drafts, checks and any other documents necessary for Secured Party to obtain such payments.
7.
CHANGES TO BORROWER’S LEGAL STRUCTURE, PLACE OF BUSINESS, JURISDICTION OF ORGANIZATION, OR NAME.
Borrower
must notify Secured Party by written or electronic communication not less than 30 days before taking any of the following actions: (a)
changing or reorganizing the type of organization or form under which it does business; (b) moving, changing its place of business or
adding a place of business; (c) changing its jurisdiction of organization; or (d) changing its name. Borrower will pay for the preparation
and filing of all documents Secured Party deems necessary to maintain, perfect and continue the perfection of Secured Party’s security
interest in the event of any such change.
8.
PERFECTION OF SECURITY INTEREST.
Borrower
consents, without further notice, to Secured Party’s filing or recording of any documents necessary to perfect, continue, amend
or terminate its security interest. Upon request of Secured Party, Borrower must sign or otherwise authenticate all documents that Secured
Party deems necessary at any time to allow Secured Party to acquire, perfect, continue or amend its security interest in the Collateral.
Borrower will pay the filing and recording costs of any documents relating to Secured Party’s security interest. Borrower ratifies
all previous filings and recordings, including financing statements and notations on certificates of title. Borrower will cooperate with
Secured Party in obtaining a Control Agreement satisfactory to Secured Party with respect to any Deposit Accounts or Investment Property,
or in otherwise obtaining control or possession of that or any other Collateral.
9.
DEFAULT.
Borrower
is in default under this Agreement if: (a) Borrower fails to pay, perform or otherwise comply with any provision of this Agreement; (b)
Borrower makes any materially false representation, warranty or certification in, or in connection with, this Agreement, the Note, or
any other agreement related to the Note or this Agreement; (c) another secured party or judgment creditor exercises its rights against
the Collateral; or (d) an event defined as a “default” under the Obligations occurs. In the event of default and if Secured
Party requests, Borrower must assemble and make available all Collateral at a place and time designated by Secured Party. Upon default
and at any time thereafter, Secured Party may declare all Obligations secured hereby immediately due and payable, and, in its sole discretion,
may proceed to enforce payment of same and exercise any of the rights and remedies available to a secured party by law including those
available to it under Article 9 of the UCC that is in effect in the jurisdiction where Borrower or the Collateral is located. Unless
otherwise required under applicable law, Secured Party has no obligation to clean or otherwise prepare the Collateral for sale or other
disposition and Borrower waives any right it may have to require Secured Party to enforce the security interest or payment or performance
of the Obligations against any other person.
10.
FEDERAL RIGHTS.
When SBA
is the holder of the Note, this Agreement will be construed and enforced under federal law, including SBA regulations. Secured Party
or SBA may use state or local procedures for filing papers, recording documents, giving notice, enforcing security interests or liens,
and for any other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax
or liability. As to this Agreement, Borrower may not claim or assert any local or state law against SBA to deny any obligation, defeat
any claim of SBA, or preempt federal law.
11.
GOVERNING LAW.
Unless SBA
is the holder of the Note, in which case federal law will govern, Borrower and Secured Party agree that this Agreement will be governed
by the laws of the jurisdiction where the Borrower is located, including the UCC as in effect in such jurisdiction and without reference
to its conflicts of laws principles.
12.
SECURED PARTY RIGHTS.
All rights
conferred in this Agreement on Secured Party are in addition to those granted to it by law, and all rights are cumulative and may be
exercised simultaneously. Failure of Secured Party to enforce any rights or remedies will not constitute an estoppel or waiver of Secured
Party’s ability to exercise such rights or remedies. Unless otherwise required under applicable law, Secured Party is not liable
for any loss or damage to Collateral in its possession or under its control, nor will such loss or damage reduce or discharge the Obligations
that are due, even if Secured Party’s actions or inactions caused or in any way contributed to such loss or damage.
13.
SEVERABILITY.
If any provision
of this Agreement is unenforceable, all other provisions remain in effect.
14.
BORROWER CERTIFICATIONS.
Borrower
certifies that: (a) its Name (or Names) as stated above is correct; (b) all Collateral is owned or titled in the Borrower’s name
and not in the name of any other organization or individual; (c) Borrower has the legal authority to grant the security interest in the
Collateral; (d) Borrower’s ownership in or title to the Collateral is free of all adverse claims, liens, or security interests
(unless expressly permitted by Secured Party); (e) none of the Obligations are or will be primarily for personal, family or household
purposes; (f) none of the Collateral is or will be used, or has been or will be bought primarily for personal, family or household purposes;
(g) Borrower has read and understands the meaning and effect of all terms of this Agreement.
15.
BORROWER NAME(S) AND SIGNATURE(S).
By signing
or otherwise authenticating below, each individual and each organization becomes jointly and severally obligated as a Borrower under
this Agreement.
Precision
Research Institute LLC
/s/ Elizabeth Henandez
Elizabeth
Hernandez, Owner/Officer
Date: 06.10.2020
Exhibit 10.3
CHINA INFRASTRUCTURE CONSTRUCTION
CORP.
2022 EQUITY INCENTIVE PLAN
ARTICLE I
GENERAL
1.1
Purpose. The purpose of the China Infrastructure Construction Corp. 2022 Equity Incentive Plan is to help the Company
to secure and retain the services of Employees, Directors and Consultants, to provide incentives for such persons to exert maximum efforts
for the success of the Company and any Affiliate and to provide a means by which such persons may be given an opportunity to benefit
from increases in the value of the Common Stock through the granting of Awards.
1.2
Adoption Date; Effective Date. The Plan will come into existence on the Adoption Date, but no Award may be granted
prior to the Effective Date.
ARTICLE II
DEFINITIONS
As used in the Plan, the following
definitions apply to the capitalized terms indicated below:
(1)
“Acquiring Entity” means the surviving or acquiring corporation (or its parent company) in connection
with a Change in Control.
(2)
“Adoption Date” means the date on which the Plan is first approved by the Board.
(3)
“Affiliate” means, at the time of determination, any “parent” or “subsidiary”
of the Company, as the terms “Affiliate,” “Parent” and “Subsidiary” are defined in Rule 405 promulgated
under the Securities Act. The Board may determine the time or times at which “parent” or “subsidiary” status
is determined within the foregoing definition.
(4)
“Applicable Law” means any applicable securities, federal, state, foreign, material local or municipal
law, or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, listing rule, regulation,
judicial decision, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the
authority of any Governmental Body.
(5)
“ATS” means a trading system that is not required to register as a national securities exchange under
the exemption afforded by Rule 3a1-1(a) under the Exchange Act and complies with the requirements set forth in Rules 300-303 of Regulation
ATS.
(6)
“Available Shares” means the number of shares available for issuance under the Plan as set forth in Section
4.1.
(7)
“Award” means any right to receive Common Stock, cash or other property granted under the Plan (including
an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, an RSU Award, an SAR, a Performance Award or any Other
Award).
(8)
“Award Agreement” means a written agreement between the Company and a Participant setting forth the terms
and conditions of an Award. An Award Agreement may also include a separate Grant Notice and an agreement containing a written summary
of the general terms and conditions applicable to the related Award, in addition to those set forth under the Plan and which may be
provided to a Participant along with the Grant Notice.
(9)
“Board” means the Board of Directors of the Company (or its designee). Any decision or determination
made by the Board shall be a decision or determination that is made in the sole discretion of the Board (or its designee), and such decision
or determination shall be final and binding on all Participants
(10)
“Capitalization Adjustment” means any change that is made in, or other events that occur with respect
to, the Common Stock subject to the Plan or subject to any Award after the Effective Date without the receipt of consideration by the
Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than
cash, large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or any similar equity restructuring transaction, as that term is used in Statement of Financial Accounting
Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing, the conversion
of any convertible securities of the Company shall not be treated as a Capitalization Adjustment.
(11)
“Cause” has the meaning ascribed to such term in any written agreement between the Participant and the
Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any
of the following events: (i) such Participant’s conviction of or plea of no contest to any felony or any crime involving fraud,
embezzlement or moral turpitude; (ii) such Participant’s attempted commission of, or participation in, a fraud or act of dishonesty
against the Company; (iii) such Participant’s intentional, material violation of any contract or agreement between the Participant
and the Company, of any statutory duty owed to the Company or of any code of ethics or material policies of the Company (including, without
limitation, policies relating to sexual harassment or other prohibited discrimination); (iv) such Participant’s unauthorized use
or disclosure of the Company’s confidential information or trade secrets; (v) the refusal or willful omission by such Participant,
other than due to Disability, to perform any duties required of the Participant, which continues after a period of thirty (30) days following
the Participant’s receipt of notice from the Company that it deems such conduct Cause for termination of employment; or (vi) such
Participant’s gross misconduct.
(12)
“Change in Control” means the occurrence, in a single transaction or a series of related transactions,
of any of the following events:
(a)
during any period of not more than 24 months, individuals who constitute the Board as of the beginning of the period (the “Incumbent
Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming
a director subsequent to the beginning of such period, whose election or nomination for election was approved by a vote of at least two-thirds
of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without written objection to such nomination) will be an Incumbent Director; provided,
further, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or publicly
threatened election contest with respect to directors or as a result of any other actual or publicly threatened solicitation of proxies
by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;
(b)
any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act), is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding
securities eligible to vote for the election of the Board, provided that a Change in Control shall not be deemed to have occurred
on account of the ownership or acquisition of securities of the Company (i) by the Company, (ii) by any employee benefit plan (or related
trust) sponsored or maintained by the Company, (iii) by any underwriter temporarily holding securities pursuant to an offering of
such securities, (iv) pursuant to a Non-Qualifying Transaction (as defined in paragraph (c)
of this definition)), (v) in a transaction approved by the Incumbent Directors or (vi) the acquisition of securities by a person
who is a “person,” as so defined, who, on the Adoption Date, directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the
Board.
(c)
the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company
(directly or indirectly) that requires the approval of the Company’s shareholders, whether for such transaction or the issuance
of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination
(i) the shareholders of the Company immediately prior to such Business Combination Own, directly or indirectly, either (x) outstanding
voting securities representing more than 50% of the combined outstanding voting power of the surviving entity in such Business Combination
(the “Surviving Entity”) or (y) more than 50% of the combined outstanding voting power of the parent of the
Surviving Entity, in each case in substantially the same proportion as their Ownership of the outstanding voting securities of the Company
immediately prior to such Business Combination, (ii) no person (other than any employee benefit plan (or related trust) sponsored or
maintained by the Surviving Entity or the parent), is or becomes the beneficial owner, directly or indirectly, of 50% or more of the
total voting power of the outstanding voting securities eligible to elect directors of the parent (or, if there is no parent, the Surviving
Entity) and (iii) at least a majority of the members of the board of directors of the parent (or, if there is no parent, the Surviving
Entity) following the consummation of the Business Combination were Incumbent Directors at the time of the Board’s approval of
the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the
criteria specified in (i), (ii) and (iii) of this paragraph (c) shall be deemed to be a “Non-Qualifying Transaction”);
(d)
the consummation of a sale of all or substantially all of the consolidated assets of the Company and its Subsidiaries (taken as
a whole) to any “person” or “group” (as such terms are defined in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act); or the Company’s shareholders approve a plan of complete liquidation or dissolution of the Company.
Notwithstanding the foregoing or
any other provision of the Plan, (i) the term Change in Control shall not include a sale of assets, merger or other transaction effected
exclusively for the purpose of changing the domicile of the Company and (ii) a Change in Control will not be deemed to occur solely because
any person acquires beneficial ownership of more than 50% of the outstanding voting securities of the Company as a result of the acquisition
of outstanding voting securities of the Company by the Company which reduces the number of outstanding voting securities of the Company;
provided that if after such acquisition by the Company described in the preceding clause (ii) such person becomes the beneficial
owner of additional voting securities of the Company that increases the percentage of outstanding voting securities of the Company beneficially
owned by such person, a Change in Control will then occur.
(13)
“Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and
guidance thereunder.
(14)
“Commission” means the U.S. Securities and Exchange Commission.
(15)
“Committee” means the Compensation Committee of the Board and any other committee of two or more Directors
to whom authority has been delegated by the Board or Compensation Committee of the Board in accordance with the Plan; provided, however,
that, unless otherwise determined by the Board, the Committee shall consist solely of two or more Qualified Members.
(16)
“Common Stock” means the common stock of the Company.
(17)
“Company” means China Infrastructure Construction Corp., a Colorado corporation.
(18)
“Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate
to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors
of an Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, shall
not cause a Director to be considered a “Consultant” for purposes of the Plan. Notwithstanding the foregoing, a person shall
be treated as a Consultant only if the offer and sale of the Company’s securities to such person may be registered on a Registration
Statement on Form S-8 under the Securities Act.
(19)
“Continuous Service” means a Participant’s service with the Company or an Affiliate, whether as
an Employee, Director or Consultant, that is not interrupted or terminated. A change in the capacity in which the Participant renders
service to the Company or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the Participant renders
such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate,
will not terminate a Participant’s Continuous Service; provided, however, that if the Entity for which a Participant is
rendering services ceases to qualify as an Affiliate, as determined by the Board, such Participant’s Continuous Service will terminate
on the date such Entity ceases to qualify as an Affiliate. To the extent permitted by law, the Board or the chief executive officer of
the Company, in its or his sole discretion, may determine whether Continuous Service will be considered interrupted in the case of (i)
a leave of absence approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave,
or (ii) transfers between the Company, an Affiliate or their successors. Notwithstanding the foregoing, a leave of absence will be
treated as Continuous Service for purposes of vesting in an Award only to such extent as may be provided in the Company’s leave
of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required
by law. In addition, to the extent required for exemption from or compliance with Section 409A, the determination of whether there has
been a termination of Continuous Service will be made, and such term will be construed, in a manner that is consistent with the definition
of “separation from service” as defined under Treasury Regulation Section 1.409A-1(h) (without regard to any alternative
definition thereunder).
(20)
“Director” means a member of the Board.
(21)
“determine” or “determined” means as determined by the Board
or the Committee (or its designee) in its sole discretion.
(22)
“Disability” means, with respect to a Participant, his inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which is expected to result in death or which has lasted
or is expected to last for a continuous period of not less than 12 months, as provided in Section 22(e)(3) of the Code. The Board shall
determine whether a Disability exists based on such medical evidence as the Board deems warranted under the circumstances.
(23)
“Effective Date” means the date on which the Plan is approved by the Board.
(24)
“Employee” means any person employed by the Company or an Affiliate. However, service solely as a Director
or payment of a fee for such services will not cause a Director to be considered an “Employee” for purposes of the Plan.
(25)
“Employer” means the Company or the Affiliate of the Company that employs a Participant.
(26)
”Entity” means a corporation, partnership, limited liability company or other entity.
(27)
“Exchange Act” means the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated
thereunder and the guidance of the Commission or its staff with respect thereto.
(28)
“Fair Market Value” means, as of any date, unless otherwise determined by the Board, the value of the
Common Stock (as determined on a per-share or aggregate basis, as applicable) determined as follows:
(A)
If the Common Stock is listed on any established stock exchange, traded on any established market or quoted on any ATS, Fair Market
Value will be the closing sales price for such stock as quoted on such stock exchange, market or ATS (or the stock exchange, market or
ATS with the highest volume of trading in the Common Stock) on the trading day immediately prior to the date of determination, whether
or not the Common Stock has traded on such trading day, as reported by a source the Board deems reliable.
(B)
In the absence of such stock market, established market or ATS, or if otherwise determined by the Board, Fair Market Value shall
be determined by the Board in good faith and in a manner that complies with Sections 409A and 422 of the Code.
(29)
“Governmental Body” means any (i) nation, state, commonwealth, province, territory, county, municipality,
district or other jurisdiction of any nature; (ii) federal, state, local, municipal, foreign or other government; (iii) governmental or
regulatory body, or quasi-governmental body of any nature (including any governmental division, department, administrative agency or bureau,
commission, authority, instrumentality, official, ministry, fund, foundation, center, organization, unit, body or Entity and any court
or other tribunal, including any tax authority) or other body exercising similar powers or authority; or (iii) self-regulatory organization
(including, without limitation, the Nasdaq Stock Market, New York Stock Exchange and the Financial Industry Regulatory Authority).
(30)
“Grant Notice” means a notice provided to a Participant that he has been granted an Award under the
Plan and which includes his name, the type of Award, the date of grant of the Award, the number of shares of Common Stock subject to
the Award or potential cash payment right, (if any), the vesting schedule for the Award (if any) and other key terms applicable to the
Award.
(31)
“Incentive Stock Option” means an option granted pursuant to Article VI of the Plan that is intended
to be, and qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code.
(32)
“Materially Impair” means any amendment to the terms of the Award that materially adversely affects
a Participant’s rights under the Award. A Participant’s rights under an Award will not be deemed to have been Materially
Impaired by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as a whole, does not materially
impair the Participant’s rights. Without limitation, the following amendments to the terms of an Award shall not Materially Impair
a Participant’s rights under the Award: (i) amendments that imposition of reasonable restrictions on the minimum number of shares
subject to an Option that may be exercised, (ii) amendments that the qualified status of the Award as an Incentive Stock Option under
Section 422 of the Code, (iii) amendments that change the terms of an Incentive Stock Option in a manner that disqualifies, impairs or
otherwise affects the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code, (iv) amendments that
clarify the manner of exemption from, or to bring the Award into compliance with or qualify it for an exemption from, Section 409A, or
(v) amendments that are required to comply with Applicable Laws.
(33)
“Non-Employee Director” means a Director who either (i) is not a current employee or officer of the Company
or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered
as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item
404(a) of Regulation S-K promulgated under the Securities Act (“Regulation S-K”)), does not possess an interest
in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business
relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K or (ii) is otherwise considered a “nonemployee director” for purposes of Rule 16b-3.
(34)
“Non-Exempt Award” means any Award that is subject to, and not exempt from, Section 409A, including
as the result of (i) a deferral of the issuance of the shares subject to the Award which is elected by the Participant or imposed by the
Company or (ii) the terms of any Non-Exempt Severance Agreement.
(35)
“Non-Exempt Director Award” means a Non-Exempt Award granted to a Participant who was a Non-Employee
Director on the applicable grant date.
(36)
“Non-Exempt Severance Arrangement” means a severance arrangement or other agreement between
the Participant and the Company that provides for acceleration of vesting of an Award and issuance of the shares in respect of such Award
upon the Participant’s termination of employment or separation from service (as such term is defined in Section 409A(a)(2)(A)(i)
of the Code (and without regard to any alternative definition thereunder) (“Separation from Service”) and
such severance benefit does not satisfy the requirements for an exemption from the application of Section 409A provided under Treasury
Regulations Section 1.409A-1(b)(4), 1.409A-1(b)(9) or otherwise.
(37)
“Nonstatutory Stock Option” means any option granted pursuant to Article VI of the Plan that does not
qualify as an Incentive Stock Option.
(38)
“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange
Act.
(39)
“Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common
Stock granted pursuant to the Plan.
(40)
“Option Agreement” means a written agreement between the Company and the Optionholder evidencing the
terms and conditions of the Option grant. An Option Agreement will include any Grant Notice for the related Option and any additional
agreement containing a written summary of the general terms and conditions applicable to the related Option and which may be provided
to a Participant along with the Grant Notice. Each Option Agreement shall be subject to the terms and conditions of the Plan.
(41)
“Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such
other person who holds an outstanding Option.
(42)
“Other Award” means an award valued in whole or in part by reference to, or otherwise based on,
Common Stock, including the appreciation in value thereof (including options or stock rights with an exercise price or strike price less
than 100% of the Fair Market Value at the time of grant) that is not an Incentive Stock Option, Nonstatutory Stock Option, SAR, Restricted
Stock Award, RSU Award or Performance Award.
(43)
“Other Award Agreement” means a written agreement between the Company and a holder of an Other Award
evidencing the terms and conditions of an Other Award grant. Each Other Award Agreement shall be subject to the terms and conditions of
the Plan.
(44)
Owner” means a person or Entity that holds securities if such person or Entity, directly or indirectly, through
any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to
direct the voting, with respect to such securities. “Own,” “Owned,”
“Ownership” have correlative meanings.
(45)
“Participant” means an Employee, Director or Consultant to whom an Award is granted or, if applicable,
another person who holds an Award.
(46)
“Performance Award’ means an Award that may vest or may be exercised or a cash award that may vest or
become earned and paid contingent upon the attainment during a Performance Period of specific Performance Goals and which is granted
under the terms and conditions of Section 7.2 pursuant to such terms as are approved by the Board. In addition, to the extent permitted
by Applicable Law and set forth in the applicable Award Agreement, the Board may determine that cash or other property may be used in
payment of Performance Awards.
(47)
“Performance Criteria” means the one or more criteria that the Board selects for purposes of establishing
the Performance Goals for a Performance Period. The Performance Criteria that shall be used to establish such Performance Goals may be,
but are not required to be, based on any one or combination of the following as determined by the Board: earnings (including earnings
per share and net earnings); earnings before interest, taxes and depreciation; earnings before interest, taxes, depreciation and amortization;
total shareholder return; return on equity or average shareholder’s equity; return on assets, investment, or capital employed;
stock price; margin (including gross margin); income (before or after taxes); operating income; operating income after taxes; pre-tax
profit; operating cash flow; sales or revenue targets; increases in revenue or product revenue; expenses and cost reduction goals; improvement
in or attainment of working capital levels; economic value added (or an equivalent metric); market share; cash flow; cash flow per
share; share price performance; debt reduction; customer satisfaction; shareholders’ equity; capital expenditures; debt levels;
operating profit or net operating profit; workforce diversity; growth of net income or operating income; billings; financing; regulatory
milestones; shareholder liquidity; corporate governance and compliance; intellectual property; personnel matters; progress of internal
research; progress of partnered programs; partner satisfaction; budget management; partner or collaborator achievements; internal controls,
including those related to the Sarbanes-Oxley Act of 2002; investor relations, analysts and communication; implementation or completion
of projects or processes; employee retention; number of users, including unique users; strategic partnerships or transactions; establishing
relationships with respect to the marketing, distribution and sale of the Company’s products; supply chain achievements; co-development,
co-marketing, profit sharing, joint venture or other similar arrangements; individual performance goals; corporate development and
planning goals; and other measures of performance selected by the Board or Committee.
(48)
“Performance Goals” means, for a Performance Period, the goal or goals established by the Board for that
Performance Period. Performance Goals may be based on a Company-wide basis, with respect to one or more business units, divisions, Affiliates,
or business segments, and either in absolute terms or relative to the performance of one or more comparable companies or the performance
of one or more relevant indices. Unless otherwise specified by the Board (i) in the Award Agreement at the time the Award is granted or
(ii) in such other document setting forth the Performance Goals at the time the Performance Goals are established, the Board may appropriately make adjustments in the method of calculating the attainment of Performance Goals for a Performance Period, which may include
the following actions: (i) excluding restructuring and/or other nonrecurring charges, (ii) excluding exchange rate effects, (iii) excluding
the effects of changes to generally accepted accounting principles, (iv) excluding the effects of any statutory adjustments to corporate
tax rates, (v) excluding the effects of items that are “unusual” in nature or occur “infrequently” as determined
under generally accepted accounting principles; (vi) excluding the dilutive effects of acquisitions or joint ventures, (vii) assuming
that any business divested by the Company achieved performance objectives at targeted levels during the balance of a Performance Period
following such divestiture, (vii) excluding the effect of any change in the outstanding shares of Common Stock of the Company by reason
of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common shareholders other than regular cash dividends, (ix)
excluding the effects of share-based compensation and the award of bonuses under the Company’s bonus plans, (x) excluding costs
incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting
principles and (xi) excluding goodwill and intangible asset impairment charges that are required to be recorded under generally accepted
accounting principles. In addition, the Board shall have discretion to increase, reduce or eliminate the compensation or economic benefit
due upon attainment of Performance Goals and to define the manner of calculating the Performance Criteria it selects for such Performance
Period. Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement,
as specified in the Award Agreement or the written terms of a Performance Cash Award.
(49)
“Performance Period” means the period selected by the Board over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a Participant’s right to vesting or exercise of an Award. Performance
Periods may be of varying and overlapping duration, at the sole discretion of the Board.
(50)
“Plan” means this Plan.
(51)
“Plan Administrator” means the person, persons or third-party administrator designated by the Company
to administer the day-to-day operations of the Plan and the Company’s other equity incentive programs, if any.
(52)
“Post-Termination Exercise Period’ means the period following termination of a Participant’s
Continuous Service within which an Option or SAR is exercisable, as specified in Section (h) of Article VI.
(53)
“Prospectus” means the document containing the Plan information specified in Section 10(a) of the Securities
Act and the rules and regulations of the Commission.
(54)
“Qualified Member” means a member of the Board who is (i) a “non-employee director” within
the meaning of Rule 16b-3(b)(3) and (ii) “independent” under the listing standards or rules of the securities exchange upon
which the Stock is traded, but only to the extent that such independence is required in order to take a particular action pursuant to
such standards or rules.
(55)
“Restricted Stock Award’ or “RSA” means an Award of shares of Common Stock
that is granted pursuant to the terms and conditions of Section 7.1.
(56)
“Restricted Stock Award Agreement” means a written agreement between the Company and a holder of a
Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. A Restricted Stock Award Agreement includes
any Grant Notice for the related Restricted Stock Award and any agreement containing a written summary of the general terms and conditions
applicable to the related Restricted Stock Award and which may be provided to a Participant along with the Grant Notice. Each Restricted
Stock Award Agreement shall be subject to the terms and conditions of the Plan.
(57)
“RSU Award” or “RSU” means an Award of restricted stock units
representing the right to receive shares of Common Stock that is granted pursuant to the terms and conditions of Section 7.1.
(58)
“RSU Award Agreement” means a written agreement between the Company and a holder of an RSU Award evidencing
the terms and conditions of an RSU Award. An RSU Award Agreement includes any Grant Notice for the related RSU Award and any agreement
containing a written summary of the general terms and conditions applicable to the related RSU Award and which may be provided to a Participant
along with the Grant Notice. Each RSU Award Agreement shall be subject to the terms and conditions of the Plan.
(59)
“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor thereto, as in effect
from time to time.
(60)
“Rule 405” means Rule 405 promulgated under the Securities Act.
(61)
“Section 409A” means Section 409A of the Code, as amended from time to time, and the regulations and
other guidance thereunder.
(62)
“Securities Act” means the Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder and the guidance of the Commission or its staff with respect thereto.
(63)
“Stock Appreciation Right” or “SAR” means a right to receive the appreciation
on Common Stock that is granted pursuant to the terms and conditions of Article VI.
(64)
“SAR Agreement” means a written agreement between the Company and a holder of a SAR evidencing the terms
and conditions of a SAR grant. An SAR Agreement includes any Grant Notice for the related SAR and any agreement containing a written summary
of the general terms and conditions applicable to the related SAR and which may be provided to a Participant along with the Grant Notice.
Each SAR Agreement shall be subject to the terms and conditions of the Plan.
(65)
“Subsidiary” means, with respect to the Company, (i) any corporation of which more than 50% of the outstanding
Common Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether,
at the time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening
of any contingency) is at the time, directly or indirectly, Owned by the Company, and
(ii) any partnership, limited
liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation
in profits or capital contribution) of more than 50%.
(66)
“Ten Percent Shareholder” means a person who Owns (or is deemed to Own pursuant to 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 any Affiliate.
(67)
“Trading Policy” means a policy adopted by the Company that requires directors and executive officers
of the Company who are subject to the reporting and liability provisions of Section 16 of the Exchange Act to sell Company shares only
during certain “window” periods or otherwise restricts their ability to transfer or encumber Company shares, as in effect
from time to time.
ARTICLE
III
ADMINISTRATION
3.1
Administration by Board. The Board shall administer the Plan.
3.2
Powers of Board. The Board shall have the power, subject to, and within the limitations of, the express provisions
of the Plan:
(a)
To determine from time to time (i) which persons eligible under the Plan shall be granted Awards; (ii) when and how each Award
shall be granted, (iii) what type or combination of types of Award shall be granted, (iv) the provisions of each Award (which need not
be identical), including the time or times when a person shall be permitted to receive issuance of Common Stock or other payment pursuant
to an Award, (v) the number of shares of Common Stock or cash equivalent with respect to which an Award shall be granted to each such
person, (vi) the Fair Market Value applicable to an Award and (vii) the terms of any Performance Award that is not valued in whole or
in part by reference to, or otherwise based on, the Common Stock, including the amount of cash payment or other property that may be earned
and the timing of payment.
(b)
To construe and interpret the Plan and Awards granted thereunder and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or any Award Agreement
in a manner and to the extent that it deems necessary or expedient to make the Plan or Award fully effective.
(c)
To settle all controversies regarding the Plan and Awards granted under it.
(d)
To accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest,
notwithstanding the provisions in the Award Agreement stating the time at which it may first be exercised or the time during which it
will vest.
(e)
To prohibit the exercise of any Option, SAR or other exercisable Award (i) during a period of up to 30 days prior to the consummation
of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than
normal cash dividends) of Company assets to shareholders, or any other change affecting the shares of Common Stock or the share price
of the Common Stock including any Change in Control, for reasons of administrative convenience or (ii) if in the judgment of the Board
the Participant has material inside information, during the period in which such information has been made public.
(f)
To suspend or terminate the Plan at any time, provided that such suspension or termination of the Plan shall not Materially
Impair rights and obligations under any Award except with the written consent of the affected Participant.
(g)
To amend the Plan in any respect that the Board deems necessary or advisable; provided, however, that shareholder approval
shall be required for any amendment to the extent required by Applicable Law. Except as provided above, rights under any Award granted
before amendment of the Plan shall not be Materially Impaired by any amendment of the Plan unless such Participant consents in writing.
(h)
To submit any amendment to the Plan for shareholder approval.
(i)
To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but not
limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject to
any specified limits in the Plan that are not subject to Board discretion; provided, however, that a Participant’s rights
under any Award shall not be Materially Impaired by any such amendment unless such Participant consents in writing.
(j)
Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests
of the Company and as are not in conflict with the provisions of the Plan or Awards.
(k)
To adopt such procedures and sub-plans as are necessary or appropriate to permit and facilitate participation in the Plan by, or
take advantage of specific tax treatment for Awards granted to, Employees, Directors or Consultants who are foreign nationals or employed
outside the United States, provided that Board approval shall not be necessary for immaterial modifications to the Plan or any
Award Agreement to ensure or facilitate compliance with the laws of the relevant foreign jurisdiction.
(l)
To effect, at any time and from time to time, subject to the consent of any Participant whose Award is Materially Impaired by such
action, (i) the reduction of the exercise price (or strike price) of any outstanding Option or SAR, (ii) the cancellation of any outstanding
Option or SAR and the grant in substitution therefor of (A) a new Option, SAR, Restricted Stock Award, RSU Award or Other Award, under
the Plan or another equity plan of the Company, covering the same or a different number of shares of Common Stock, (B) cash or (C) other
valuable consideration (as determined by the Board); or (iii) any other action that is treated as a repricing under generally accepted
accounting principles; provided, however, that any such action that constitutes a repricing under then-applicable stock exchange
rules and listing standards shall be subject to the approval of the Company’s shareholders.
3.3
Delegation to Committee.
(a)
General. The Board may delegate some or all of the administration of the Plan to the Committee, subject to Section
3.3(b) below. If the administration of the Plan is delegated to the Committee, the Committee shall have, in connection with the administration
of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate
to another Committee or a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and
references in the Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may retain the authority to
administer the Plan concurrently with any Committee and may, at any time, revest in the Board some or all of the powers previously delegated.
(b)
Rule 16b-3 Compliance. In the event that the Company has a class of securities registered under Section 12 of the
Exchange Act, to the extent that an Award is intended to qualify for the exemption from Section 16(b) of the Exchange Act afforded by
Rule 16b-3 promulgated under the Exchange Act, the Award shall be granted by the Board or a Committee that consists solely of two or more
Non-Employee Directors, as determined under Rule 16b-3(b)(3) of the Exchange Act and thereafter, any action establishing or modifying
the terms of the Award shall be approved by the Board or a Committee meeting such requirements to the extent necessary for such exemption
to remain available. In the event that the Company adopts a Trading Policy, each Participant who receives an Award shall be deemed, by
virtue of his having accepted it, to have agreed to comply with the provisions of such Trading Policy, as they may be amended from time
to time. The Company shall not be liable to any Participant for any violation by him of the provisions of Section 16 of the Exchange
Act or any law relating to insider trading, and the consequences of such violation, notwithstanding his compliance with such Trading Policy.
3.4
Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board or the
Committee in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons.
3.5
Delegation to an Officer. The Board or any Committee may delegate to one or more Officers the authority to do one
or both of the following (i) designate Employees who are not Officers to be recipients of Options and SARs (and, to the extent permitted
by Applicable Law, other types of Awards) and, to the extent permitted by Applicable Law, the terms thereof, and (ii) determine the number
of shares of Common Stock to be subject to such Awards granted to such Employees; provided, however, that the resolutions or charter
adopted by the Board or any Committee evidencing such delegation shall specify the total number of shares of Common Stock that may
be subject to the Awards granted by such Officer and that such Officer may not grant an Award to himself. Any such Awards shall be granted
on the applicable form of Award Agreement most recently approved for use by the Board or the Committee, unless otherwise provided in
the resolutions approving the delegation authority. Notwithstanding anything to the contrary herein, neither the Board nor any Committee
may delegate to an Officer who is acting solely in the capacity of an Officer (and not also as a Director) the authority to determine
the Fair Market Value.
3.6
Available Awards. The Plan provides for the grant of the following Awards: Incentive Stock Options; Nonstatutory
Stock Options, SARs, Restricted Stock Awards, RSU Awards, Performance Awards and Other Awards.
ARTICLE IV
SHARES SUBJECT TO THE PLAN
4.1
Shares Issuable. Subject to adjustment in accordance with Section 4.3 and any adjustments as necessary to implement
any Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued pursuant to Awards shall not exceed
600,000,000 shares.
4.2
Aggregate Incentive Stock Option Limit. Subject to any adjustments to implement any Capitalization Adjustments
and subject to the provisions of Section 422 or 424 of the Code or any successor provisions, the aggregate maximum number of shares that
may be issued pursuant to the exercise of Incentive Stock Options is 600,000,000 shares.
4.3
Available Shares.
(a)
Limit Applies to Common Stock Issued Pursuant to Awards. The Company shall reserve at all times the number of shares
reasonably required to satisfy its obligations to issue shares pursuant to such Awards. Shares issued in connection with a merger or acquisition
as permitted by the rules of any stock exchange or established market shall not reduce the number of shares available for issuance under
the Plan.
(b)
Actions that Do Not Constitute Issuance of Common Stock. The following actions shall not result in an issuance of
shares under the Plan andn accordingly shall not reduce the number of Available Shares: (i) the expiration or termination of any portion
of an Award without the shares covered by such portion of the Award having been issued, (ii) the settlement of any portion of an Award
in cash such that the Participant receives cash instead of Common Stock), (iii) the withholding of shares that would otherwise be issued
by the Company to satisfy the exercise, strike or purchase price of an Award or (iv) the withholding of shares that would otherwise be
issued by the Company to satisfy a tax withholding obligation in connection with an Award.
(c)
Reversion of Previously Issued Shares. The following shares of Common Stock previously issued pursuant to an Award
and accordingly initially deducted from the Available Shares shall be added back to the Available Shares and again become available for
issuance under the Plan: (i) shares that are forfeited back to or repurchased by the Company because of a failure to meet a contingency
or condition required for the vesting of such shares; (ii) shares that are reacquired by the Company to satisfy the exercise, strike
or purchase price of an Award; and (iii) shares that are reacquired by the Company to satisfy a tax withholding obligation in connection
with an Award.
ARTICLE
V
ELIGIBILITY AND LIMITATIONS
5.1
Eligible Award Recipients. Subject to the terms of the Plan, Employees, Directors and Consultants are eligible
to receive Awards; provided, however, that any such individual must be an “employee” of the Company or any of its parents
or subsidiaries within the meaning of General Instruction A.1(a)(1) to Form S-8 if such individual is granted an Award that may be settled
in Common Stock.
5.2
Specific Award Limitations.
(a)
Limitations on Incentive Stock Option Recipients. Incentive Stock Options may be granted only to Employees of the
Company or a “parent corporation” or “subsidiary corporation” thereof, as such terms are defined in Sections 424(e)
and (f) of the Code.
(b)
Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the
time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during
any calendar year (under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit established in the Code)
or otherwise does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit
(according to the order in which they were granted) or otherwise do not comply with such rules shall be treated as Nonstatutory Stock
Options, notwithstanding any contrary provision of the applicable Option Agreement(s).
(c)
Limitations on Incentive Stock Options Granted to Ten Percent Shareholders. A Ten Percent Shareholder may not be
granted an Incentive Stock Option unless (i) the exercise price of such Option is at least 110% of the Fair Market Value on the date
of grant of such Option and (ii) the Option is not exercisable after the expiration of five years from the date of grant of such Option.
5.3
Aggregate Incentive Stock Option Limit. The aggregate maximum number of shares of Common Stock that may be issued
pursuant to the exercise of Incentive Stock Options is the number of shares specified in Section 4.2.
5.4
Non-Employee Director Compensation Limit. The aggregate value of all compensation granted or paid, as applicable,
to any individual for service as a Non-Employee Director with respect to any calendar year, including Awards granted and cash fees paid
by the Company to such Non-Employee Director, shall not exceed (i) $750,000 in total value or (ii) in the event such NonEmployee Director
is first appointed or elected to the Board during such calendar year, $1,000,000 in total value, in each case calculating the value of
any equity awards based on the grant date fair value of such equity awards for financial reporting purposes.
5.5
Minimum Vesting Conditions. The Board or Plan Administrator, as applicable, may impose such restrictions on or conditions
to the vesting (or exercisability with respect to an Option or SAR) as it determines, subject to a minimum vesting period for any Award
of one year from the date of grant; provided, however, that vesting may be accelerated (in whole or in part) upon the occurrence
of a Change in Control or a qualifying separation from service, as set forth in the Plan or the individual Award Agreement; and provided
further, however, that up to 5% of the share reserve set forth in Section 4.1 above may be subject to Awards that do not meet such
vesting (and, if applicable, exercisability) requirements, so long as such Awards are granted by the Board or Compensation Committee
of the Board and not any designee of either the Board or Compensation Committee of the Board. Except as provided in the Award Agreement
or other written agreement between a Participant and the Company or an Affiliate, vesting of Awards shall cease upon termination of
the Participant’s Continuous Service.
ARTICLE VI
OPTIONS AND STOCK APPRECIATION
RIGHTS
Each Option and SAR shall have
such terms and conditions as determined by the Board. Each Option shall be designated in writing as an Incentive Stock Option or Nonstatutory
Stock Option at the time of grant, provided, however, that if an Option is not so designated, such Option shall be
a Nonstatutory Stock Option, and the shares purchased upon exercise of each type of Option shall be separately accounted for. Each SAR
shall be denominated in shares of Common Stock equivalents. The terms and conditions of separate Options and SARs need not be identical,
provided, however, that each Option Agreement and SAR Agreement shall conform (through incorporation by reference of provisions
hereof in the Award Agreement or otherwise) to the substance of each of the following provisions:
(a)
Term. Subject to the provisions of Section 5.2(b) regarding Ten Percent Shareholders, no Option or SAR shall be exercisable
after the expiration of ten years from the date of grant of such Award or such shorter period specified in the Award Agreement.
(b)
Exercise or Strike Price. Subject to the provisions of Section 5.2(b) regarding Ten Percent Shareholders, the exercise
or strike price of each Option or SAR shall not be less than 100% of the Fair Market Value on the date of grant of such Award. Notwithstanding
the foregoing, an Option or SAR may be granted with an exercise or strike price lower than 100% of the Fair Market Value on the date of
grant of such Award if such Award is granted pursuant to an assumption of or substitution for another option or stock appreciation right
pursuant to a Change in Control and consistent with the provisions of Sections 409A and, if applicable, Section 424(a) of the Code.
(c)
Exercise Procedure and Payment of Exercise Price for Options. To exercise an Option, the Participant shall provide
notice of exercise to the Plan Administrator in accordance with the procedures specified in the Option Agreement or otherwise provided
by the Company. The exercise price of an Option may be paid, to the extent permitted by Applicable Law and as determined by the Board,
by one or more of the following methods of payment to the extent provided in the Option Agreement:
(1)
by cash or check, bank draft or money order payable to the Company;
(2)
pursuant to a “cashless exercise” program under Regulation T as promulgated by the Federal Reserve Board that, prior
to the issuance of the Common Stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt
of irrevocable instructions to pay the exercise price to the Company from the sales proceeds;
(3)
by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock that are already owned by the
Participant free and clear of any liens, claims, encumbrances or security interests, with a Fair Market Value on the date of exercise
that does not exceed the exercise price, provided that (i) at the time of exercise, the Common Stock is publicly traded, (ii)
any remaining balance of the exercise price not satisfied by such delivery is paid by the Participant in cash or other permitted form
of payment, (iii) such delivery would not violate any
Applicable Law or agreement restricting
the redemption of the Common Stock, (iv) any certificated shares are endorsed or accompanied by an executed assignment separate from
certificate, and (v) such shares have been held by the Participant for any minimum period necessary to avoid adverse accounting treatment
as a result of such delivery;
(4)
if the Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company shall
reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value on the
date of exercise that does not exceed the exercise price, provided that (i) such shares used to pay the exercise price shall not be exercisable
thereafter and (ii) any remaining balance of the exercise price not satisfied by such net exercise is paid by the Participant in cash
or other permitted form of payment; or
(5)
in any other form of consideration that may be acceptable to the Board and permissible under Applicable Law.
The Board may grant Options that
permit less than all of the above methods of payment (or otherwise restrict the ability to use certain methods) or to grant Options
that require the consent of the Company to utilize a particular method of payment.
(d)
Exercise Procedure and Payment of Appreciation Distribution for SARs. To exercise any SAR, the Participant shall
provide notice of exercise to the Plan Administrator in accordance with the SAR Agreement. The appreciation distribution payable to a
Participant upon the exercise of a SAR shall not be greater than an amount equal to the excess of (i) the aggregate Fair Market Value
on the date of exercise of a number of shares of Common Stock equal to the number of Common Stock equivalents that are vested and being
exercised under such SAR, over (ii) the strike price of such SAR. Such appreciation distribution may be paid to the Participant in the
form of Common Stock or cash (or any combination of Common Stock and cash) or any other form of payment, as determined by the Board and
specified in the SAR Agreement.
(e)
Transferability. Options and SARs may not be transferred to third-party financial institutions for value. The Board
may impose such additional limitations on the transferability of an Option or SAR as it determines. In the absence of any such determination
by the Board, the following restrictions on the transferability of Options and SARs shall apply, provided that, except as explicitly
provided herein, neither an Option nor a SAR may be transferred for consideration and provided, further, that if an Option is an
Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer:
(1)
Restrictions on Transfer. An Option or SAR shall not be transferable, except by will or by the laws of descent and
distribution, and shall be exercisable during the lifetime of the Participant only by the Participant; provided, however, that
the Board may permit the transfer of an Option or SAR in a manner that is not prohibited by applicable tax and securities laws upon the
Participant’s request, including to a trust if the Participant is considered to be the sole beneficial owner of such trust (as determined
under Section 671 of the Code and applicable state law) while such Option or SAR is held in such trust, provided that the Participant
and the trustee enter into a transfer and other agreements required by the Company.
(2)
Domestic Relations Orders. Notwithstanding the foregoing, subject to the execution of transfer documentation in
a format acceptable to the Company and subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred
pursuant to a domestic relations order.
(f)
Termination of Continuous Service for Cause. Except as explicitly otherwise provided in the Award Agreement or other
written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service is terminated for
Cause, the Participant’s Options and SARs shall terminate immediately upon such termination, the Participant shall be prohibited
from exercising any portion (including any vested portion) of such Options and SARs on and after the date of such termination and the
Participant shall have no further right, title or interest in such Options and SARs, the shares of Common Stock subject to such Options
and SARs or any consideration in respect of such Options and SARs.
(g)
Post-Termination Exercise Period Following Termination of Continuous Service for Reasons Other than Cause. Subject
to Section (h) of this Article VI, if a Participant’s Continuous Service terminates for any reason other than for Cause, the Participant
may exercise his Option or SAR to the extent vested, but only within the following period or, if applicable, such other period provided
in the Award Agreement or other written agreement between a Participant and the Company or an Affiliate; provided, however, that
in no event may such Award be exercised after the expiration of its maximum term, as set forth in Section (a) of this Article VI:
(1)
three months following the date of such termination if such termination is a termination without Cause (other than any termination
due to the Participant’s Disability or death);
(2)
12 months following the date of such termination if such termination is due to the Participant’s Disability;
(3)
18 months following the date of such termination if such termination is due to the Participant’s death; or
(4)
18 months following the date of the Participant’s death if such death occurs following the date of such termination, but
during the period such Award is otherwise exercisable (as provided in clauses (1) or (2) above).
Following the date of such termination,
to the extent that the Participant does not exercise such Award within the applicable Post-Termination Exercise Period (or, if earlier,
prior to the expiration of the maximum term of such Award), such unexercised portion of the Award shall terminate, and the Participant
shall have no further right, title or interest in terminated Award, the shares of Common Stock subject to the terminated Award or any
consideration in respect of the terminated Award.
(h)
Restrictions on Exercise; Extension of Exercisability. A Participant may not exercise an Option or SAR at any time
that the issuance of shares of Common Stock upon such exercise would violate Applicable Law. Except as otherwise provided in the Award
Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service
terminates for any reason other than for Cause and, at any time during the last thirty days of the applicable Post-Termination Exercise
Period, (a) the exercise of the Participant’s Option or SAR would be prohibited solely because the issuance of shares of Common
Stock upon such exercise would violate Applicable Law or (b) the immediate sale of any shares of Common Stock issued upon such exercise
would violate the Company’s Trading Policy, the applicable PostTermination Exercise Period shall be extended to the last day
of the calendar month that commences following the date the Award would otherwise expire, with an additional extension of the exercise
period to the last day of the next calendar month to apply if any of the foregoing restrictions apply at any time during such extended
exercise period, generally without limitation as to the maximum permitted number of extensions), provided, however, that in no
event may such Award be exercised after the expiration of its maximum term, as set forth in Section (a) of this Article VI.
(i)
Whole Shares. Options and SARs may be exercised only with respect to whole shares of Common Stock or their equivalents.
ARTICLE VII
AWARDS OTHER THAN OPTIONS AND
STOCK APPRECIATION RIGHTS.
7.1
Restricted Stock Awards and RSU Awards. Each Restricted Stock Award and RSU Award shall have such terms and conditions
as are determined by the Board, provided, however, that each Restricted Stock Award Agreement and RSU Award Agreement shall conform
(through incorporation by reference of the provisions hereof in the Award Agreement or otherwise) to the substance of the following
provisions:
(a)
Form of Award.
(1)
At the Board’s election, shares of Common Stock subject to a Restricted Stock Award may be (A) held in book-entry form subject
to the Company’s instructions until such shares become vested or any other restrictions lapse, or (B) evidenced by a certificate,
which certificate shall be held in such form and manner as determined by the Board. Unless otherwise determined by the Board, a Participant
shall have voting and other rights as a shareholder of the Company with respect to any shares subject to a Restricted Stock Award.
(2)
An RSU Award shall represent a Participant’s right to be issued on a future date the number of shares of Common Stock that
is equal to the number of restricted stock units subject to the RSU Award or the cash equivalent thereof. As a holder of an RSU Award,
a Participant shall be an unsecured creditor of the Company with respect to the Company’s unfunded obligation, if any, to issue
shares of Common Stock in settlement of such Award and nothing contained in the Plan or any RSU Agreement, and no action taken pursuant
to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between a Participant and the
Company or an Affiliate or any other person. A Participant shall not have voting or any other rights as a shareholder of the Company with
respect to any RSU Award unless and until shares are actually issued in settlement of a vested RSU Award.
(b)
Consideration. Restricted Stock Awards and RSU Awards shall be granted in consideration of (i) services to the
Company or an Affiliate or (ii) any other form of consideration as the Board may determine and permissible under Applicable Law.
(c)
Termination of Continuous Service. Except as otherwise provided in the Award Agreement or other written agreement
between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates for any reason, (i) the
Company may receive through a forfeiture condition or a repurchase right any or all of the shares of Common Stock held by the Participant
under his Restricted Stock Award that have not vested as of the date of such termination as set forth in the Restricted Stock Award Agreement
and (ii) any portion of his RSU Award that has not vested shall terminate upon such termination and the Participant shall have no further
right, title or interest in the RSU Award, the shares of Common Stock issuable pursuant to the RSU Award, or any consideration in respect
of the RSU Award.
(d)
Dividends and Dividend Equivalents. Dividends or dividend equivalents may be paid or credited, as applicable, with
respect to any shares of Common Stock subject to a Restricted Stock Award or RSU Award, as determined by the Board and specified in the
Award Agreement).
(e)
Settlement of RSU Awards. An RSU Award may be settled by issuing shares of Common Stock or cash (or any combination
thereof) or in any other form of payment, as determined by the Board and specified in the RSU Award Agreement. At the time of grant, the
Board may determine to impose such restrictions or conditions that delay such delivery to a date following the vesting of the RSU Award,
provided that any such delay in settlement shall comply with the provisions of Section 13.14.
7.2
Performance Awards. With respect to any Performance Award, the length of any Performance Period, the Performance
Goals to be achieved during the Performance Period, the other terms and conditions of such Award, and the measure of whether and to what
degree such Performance Goals have been attained shall be determined by the Board.
7.3
Other Awards. Other Awards may be granted either alone or in addition to Awards provided for under Article VI and
the preceding provisions of this Article VII. Subject to the provisions of the Plan, the Board shall have sole and complete discretion
to determine the persons to whom and the time or times at which such Other Awards shall be granted, the number of shares of Common Stock
(r the cash equivalent thereof to be granted pursuant to such Other Awards and all other terms and conditions of such Other Awards.
ARTICLE
VIII
ADJUSTMENTS UPON CHANGES
IN COMMON STOCK; OTHER CORPORATE EVENTS
8.1
Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board shall appropriately and proportionately
adjust (a) the class or classes and maximum number of shares of Common Stock subject to the Plan, (b) the class or classes and the maximum
number of shares that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 4.2 and (c) the class or
classes and the number of securities and exercise price, strike price or purchase price of Common Stock subject to outstanding Awards.
The Board shall make such adjustments, and its determination shall be final, binding and conclusive. Notwithstanding the foregoing, no
fractional shares or rights for fractional shares of Common Stock shall be created in order to implement any Capitalization Adjustment.
The Board shall determine an equivalent benefit for any fractional shares or fractional shares that may result from the adjustments referred
to in the preceding provisions of this Section 8.1.
8.2
Dissolution or Liquidation. Except as otherwise provided in an Award Agreement, in the event of a dissolution or
liquidation of the Company, all outstanding Awards (other than Awards consisting of vested and outstanding shares of Common Stock not
subject to a forfeiture condition or the Company’s right of repurchase) shall terminate immediately prior to the completion of such
dissolution or liquidation, and the shares of Common Stock subject to the Company’s repurchase rights or subject to a forfeiture
condition may be repurchased or reacquired by the Company notwithstanding that the holder of such Award is providing Continuous Service,
provided, however, that the Board may determine to cause some or all expired or terminated Awards to become fully vested, exercisable
or no longer subject to repurchase or forfeiture before the dissolution or liquidation is completed but contingent on its completion.
8.3
Change in Control.
(a)
The following provisions shall apply to Awards in the event of a Change in Control, except as set forth in Article XI, and unless
otherwise provided in the instrument evidencing the Award or any other written agreement between the Company or any Affiliate and the
Participant or unless otherwise expressly provided by the Board at the time of grant of an Award.
(b)
In the event of a Change in Control, the Board, in its sole discretion, shall take one or more of the following actions with respect
to Awards, contingent upon the closing or completion of the Change in Control:
(1)
settle such Awards for an amount of cash or securities equal to their value, where in the case of Options and SARs, the value of
such Awards, if any, shall be equal to their in-the-money spread value (if any), as determined in the sole discretion of the Board;
(2)
arrange for the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company)
to assume or continue the Award or to substitute a substantially similar award for the Award (including, but not limited to, an Award
to acquire the same consideration paid to the shareholders of the Company pursuant to the Change in Control);
(3)
arrange for the assignment of any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant
to the Award to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company);
(4)
modify the terms of such Awards to add events, conditions or circumstances (including termination of employment within any specified
period after a Change in Control) upon which the vesting of such Awards or lapse of restrictions thereon shall accelerate; deem any performance conditions satisfied at target, maximum or actual performance through closing or provide for the performance conditions to continue
(as is or as adjusted by the Committee) after closing;
(5)
arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by the Company with respect to the Award;
(6)
cancel or arrange for the cancellation of the Award, to the extent not vested or not exercised prior to the effective time of the
Change in Control, in exchange for such cash consideration, if any, as the Board, in its sole discretion, may consider appropriate;
or
(7)
provide that, for at least 20 days prior to the Change in Control, any Options or SARs that would not otherwise become exercisable
prior to the Change in Control shall be exercisable as to all shares of Common Stock subject thereto (but any such exercise shall be
contingent upon and subject to the occurrence of the Change in Control and if the Change in Control does not take place within a specified
period after giving such notice for any reason whatsoever, the exercise shall be null and void) and that any Options or SARs not exercised
prior to the consummation of the Change in Control shall terminate and be of no further force and effect as of the consummation of the
Change in Control.
In the event that the consideration
paid in the Change in Control includes contingent value rights, earnout or indemnity payments or similar payments, the Board shall determine
if Awards settled under clause (1) above are (a) valued at closing, taking into account such contingent consideration (with the value
determined by the Board in its sole discretion), or (b) entitled to a share of such contingent consideration. For the avoidance of doubt,
in the event of a Change in Control where all Options and SARs are settled for an amount (as determined in the sole discretion of the
Board) of cash or securities, the Board may, in its sole discretion, terminate any Option or SAR for which the exercise price is equal
to or exceeds the per-share value of the consideration to be paid in the Change in Control transaction without payment of consideration
therefor. Similar actions to those specified in this Section 8.3 may be taken in the event of a merger or other corporate reorganization
that does not constitute a Change in Control.
The Board need not take the same
action or actions with respect to all Awards or portions thereof or with respect to all Participants.
8.4
Appointment of Shareholder Representative. As a condition to the receipt of an Award under the Plan, a Participant
shall be deemed to have agreed irrevocably that the Award shall be subject to the terms of any agreement governing a Change in Control
involving the Company, including, without limitation, a provision for the appointment of a shareholder representative that is authorized
to act on the Participant’s behalf with respect to any escrow, indemnities and any contingent consideration.
8.5
No Restriction on Right to Undertake Transactions. The grant of any Award under the Plan and the issuance of shares
pursuant to any Award shall not affect or restrict in any way the right or power of the Company or the shareholders of the Company to
make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business,
any merger or consolidation of the Company, any issue of stock or options, rights or options to purchase shares of stock or bonds, debentures,
shares of preferred whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets
or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
ARTICLE
IX
TAX WITHHOLDING
9.1
Withholding Authorization. A Participant, by virtue of his acceptance of an Award, shall be deemed to have agreed
to make adequate provision for any sums required to satisfy any U.S. federal, state, local or foreign tax or social insurance contribution
withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise, vesting or settlement of
such Award, as applicable. The Company shall have no obligation to issue shares of Common Stock subject to an Award unless and until such
obligation is satisfied.
9.2
Satisfaction of Withholding Obligation. To the extent permitted by the terms of an Award Agreement, the Company may,
in its sole discretion, satisfy any U.S. federal, state, local or foreign tax or social insurance withholding obligation relating to an
Award by any of the following means or by a combination thereof: (a) requiring the Participant to tender a cash payment, (b) withholding
shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Award, (c)
withholding cash from an Award settled in cash, (d) withholding payment from any amounts otherwise payable to the Participant including
salary, (e) by allowing a Participant to effectuate a “cashless exercise” pursuant to a program developed under Regulation
T as promulgated by the Federal Reserve Board, (f) by such other method as may be set forth in the Award Agreement or (g) such other method
as may be agreed to by the Board in its discretion.
9.3
No Obligation to Notify or Minimize Taxes; No Liability to Claims. Except as required by Applicable Law, the Company
shall have no duty or obligation to any Participant (i) to advise him as to the time or manner of exercising such Award, (ii) to warn
or otherwise advise him of a pending termination or expiration of an Award or a period in which the Award may not be exercised or (iii)
to minimize the tax consequences of an Award to the holder of such Award. The Company shall not be liable to any Participant for any
adverse tax consequences to him in connection with an Award. A Participant, by virtue of his acceptance of an Award, shall be deemed
to have (i) agreed not to assert any claim against the Company, or any of its Officers, Directors, Employees or Affiliates, related
to tax liabilities arising from such Award or other Company compensation and (ii) acknowledged that he was advised to consult with his
personal tax, financial and other legal advisors regarding the tax consequences of the Award and has either done so or knowingly and
voluntarily declined to do so. Each Participant acknowledges that any Option or SAR granted under the Plan shall be exempt from Section
409A only if the exercise or strike price is at least equal to the “fair market value” of the Common Stock on the date of
grant as determined by the Internal Revenue Service and there is no other impermissible deferral of compensation associated with the
Award. A Participant, by virtue of his acceptance of an Option or SAR, shall be deemed to have agreed not to assert any claim against
the Company, or any of its Officers, Directors, Employees or Affiliates, in the event that the Internal Revenue Service asserts that
such exercise price or strike price is less than the “fair market value” of the Common Stock on the date of grant as subsequently
determined by the Internal Revenue Service.
9.4
Withholding Indemnification. A Participant, by virtue of his acceptance of an Award, shall be deemed to have agreed
that, in the event that the amount of the Company’s or its Affiliate’s withholding obligation in connection with such Award
was greater than the amount actually withheld by the Company or its Affiliates, to indemnify and hold the Company or its Affiliates
harmless from any failure by the Company or its Affiliates to withhold the proper amount.
ARTICLE
X
COVENANTS OF THE COMPANY
The Company shall seek to obtain
from each regulatory commission or agency, as may be deemed to be necessary, having jurisdiction over the Plan such authority as may be
required to grant Awards and to issue and sell shares of Common Stock upon exercise or vesting of the Awards; provided, however, that
this undertaking shall not require the Company to register under the Securities Act the Plan, any Award or any Common Stock issued or
issuable pursuant to any such Award. If, after reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such
regulatory commission or agency the authority that counsel for the Company deems necessary or advisable for the lawful issuance and
sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon
exercise or vesting of such Awards unless and until such authority is obtained. A Participant is not eligible for the grant of an Award
or the subsequent issuance of Common Stock pursuant to the Award if such grant or issuance would violate any Applicable Law.
ARTICLE XI
PROVISIONS RELATING TO AWARDS SUBJECT
TO SECTION 409A
11.1
Interpretation. Unless otherwise expressly provided in an Award Agreement, the Plan and Award Agreements shall be
interpreted to the full extent possible to cause the Plan and the Awards to be exempt from Section 409A and, to the extent not so exempt,
to comply with the requirements of Section 409A. If the Board determines that any Award is not so exempt, the related Award Agreement
shall incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code, and to
the extent that an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into
the Award Agreement. Notwithstanding anything to the contrary in the Plan and unless the Award Agreement specifically provides otherwise,
if the shares of Common Stock are publicly traded, and if a Participant holding an Award that constitutes “deferred compensation”
under Section 409A is a “specified employee” for purposes of Section 409A, no distribution or payment of any amount that
is due because of a “separation from service” (as defined in Section 409A without regard to alternative definitions thereunder)
shall be issued or paid before the date that is six months and one day following the date of such Participant’s “separation
from service” or, if earlier, the date of the Participant’s death, unless such distribution or payment can be made in a manner
that complies with Section 409A, and any amounts so deferred shall be paid in a lump sum on the day after such six-month period elapses,
with the balance paid thereafter on the original schedule.
11.2
Application. Unless the provisions of this Article XI are expressly superseded by the provisions in an Award Agreement,
the provisions of this Article XI shall apply and supersede anything to the contrary set forth in the Award Agreement for a Non-Exempt
Award.
11.3
Non-Exempt Awards Subject to Non-Exempt Severance Arrangements. To the extent a Non-Exempt Award is subject to Section
409A due to application of a Non-Exempt Severance Arrangement, the following provisions shall apply.
(a)
If the Non-Exempt Award vests in the ordinary course during the Participant’s Continuous Service in accordance with the
vesting schedule set forth in the Award Agreement and does not accelerate vesting under the terms of a Non-Exempt Severance Arrangement,
in no event shall the shares be issued in respect of such Non-Exempt Award any later than the later of: (i) December 31 of the calendar
year that includes the applicable vesting date, or (ii) the sixtieth day that follows the applicable vesting date.
(b)
If vesting of the Non-Exempt Award accelerates under the terms of a Non-Exempt Severance Arrangement in connection with the Participant’s
Separation from Service, and such vesting acceleration provisions were in effect as of the date of grant of the Non-Exempt Award and,
therefore, are part of the terms of such Non-Exempt Award as of the date of grant, then the shares shall be earlier issued in settlement
of such Non-Exempt Award upon the Participant’s Separation from Service in accordance with the terms of the Non-Exempt Severance
Arrangement, but in no event later than the 60th day that follows the date of the Participant’s Separation from Service. However,
if at the time that shares issuable to the Participant are subject to the distribution limitations contained in Section 409A applicable
to “specified employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares shall not be issued before the date
that is six months following the date of such Participant’s Separation from Service, or, if earlier, the date of the Participant’s
death that occurs within such six-month period.
(c)
If vesting of a Non-Exempt Award accelerates under the terms of a Non-Exempt Severance Arrangement in connection with a Participant’s
Separation from Service, and such vesting acceleration provisions were not in effect as of the date of grant of the Non-Exempt Award
and, therefore, are not a part of the terms of such Non-Exempt Award on the date of grant, then such acceleration of vesting of the Non-Exempt
Award shall not accelerate the issuance date of the shares, but the shares shall instead be issued on the same schedule as set forth
in the Award Agreement as if they had vested in the ordinary course during the Participant’s Continuous Service, notwithstanding
the vesting acceleration of the Non-Exempt Award. Such issuance schedule is intended to satisfy the requirements of payment on a specified
date or pursuant to a fixed schedule, as provided under Treasury Regulations Section 1.409A-3(a)(4).
ARTICLE
XII
TERMINATION OF THE PLAN
The Board may suspend or terminate
the Plan at any time. No Incentive Stock Options may be granted after the tenth anniversary of the Adoption Date. No Awards may be granted
under the Plan while the Plan is suspended or after it is terminated.
ARTICLE
XII
MISCELLANEOUS
13.1
Source of Shares. The shares issuable under the Plan shall be shares of authorized but unissued or reacquired Common
Stock, including shares repurchased by the Company on the open market or otherwise.
13.2
Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock pursuant to Awards
shall constitute general funds of the Company.
13.3
Corporate Action Constituting Grant of Awards. Corporate action constituting a grant by the Company of an Award to
any Participant shall be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless
of when the instrument, certificate, or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant.
In the event that the Company’s records that document the corporate action approving the grant contain terms that are inconsistent
with those in the Award Agreement or related grant documents as a result of an error in the Award Agreement or related grant documents,
such records shall govern, and no Participant shall have any legally enforceable right to the incorrect term in the Award Agreement or
related grant documents.
13.4
Shareholder Rights. No Participant shall be deemed to be the holder of, or to have any of the rights of a holder
with respect to, any shares of Common Stock subject to such Award unless and until (i) such Participant has satisfied all requirements
for exercise of the Award pursuant to its terms, if applicable, and (ii) the issuance of the Common Stock subject to such Award is reflected in the records of the Company.
13.5 No
Employment or Other Service Rights. Nothing in the Plan, any Award Agreement or any other instrument executed thereunder or
in connection with any Award shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the
capacity in effect at the time the Award was granted or affect the right of the Company or an Affiliate to terminate at shall and
without regard to any future vesting opportunity that a Participant may have with respect to any Award (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such
Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a director of the Company or an Affiliate,
in accordance with Applicable Law and its organizational instruments. Nothing in the Plan, any Award Agreement or any other
instrument executed thereunder or in connection with any Award shall constitute any promise or commitment by the Company or an
Affiliate regarding the fact or nature of future positions, future work assignments, future compensation or any other term or
condition of employment or service or confer any right or benefit under the Award or the Plan unless such right or benefit has
accrued under the terms of the Award Agreement or the Plan.
13.6
Change in Time Commitment. In the event a Participant’s normal level of time commitment in the performance
of his services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee
of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended leave of
absence) after the date of grant of any Award to him, the Board may determine, to the extent permitted by Applicable Law, to (a) make
a corresponding reduction in the number of shares or cash amount subject to any portion of such Award that is scheduled to vest or become
payable after the date of such change in time commitment and (b) in lieu of or in combination with such a reduction, extend the vesting
or payment schedule applicable to such Award. In the event of any such reduction, the Participant shall have no right with respect to
any portion of the Award that is so reduced or extended.
13.7
Execution of Additional Documents. A Participant shall execute any additional documents or instruments necessary
or desirable, as determined in the Plan Administrator’s sole discretion, to carry out the purposes or intent of the Award or facilitate
compliance with securities or other regulatory requirements, in each case at the Plan Administrator’s request.
13.8
Electronic Delivery and Participation. Any reference herein or in an Award Agreement to a “written” agreement
or document shall include any agreement or document delivered electronically, filed publicly at www.sec.gov (or any successor website
thereto) or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant
has access). By accepting an Award, the Participant consents to receive documents by electronic delivery and to participate in the Plan
through any online electronic system established and maintained by the Plan Administrator or another third party selected by the Plan
Administrator.
13.9
Clawback/Recovery. All Awards granted under the Plan shall be subject to recoupment in accordance with any clawback
policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which
the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act
or other Applicable Law and any clawback policy that the Company otherwise adopts, to the extent applicable and permissible under Applicable
Law. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines
necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares of Common Stock
or other cash or property upon the occurrence of Cause. No recovery of compensation under such a clawback policy shall be an event giving
rise to a Participant’s right voluntary to terminate employment upon a “resignation for good reason,” for a “constructive
termination” or any similar term under any plan of or agreement with the Company.
13.10
Securities Law Compliance. A Participant shall not be issued any shares in respect of an Award unless either (i)
the shares are registered under the Securities Act or (ii) the Company has determined that such issuance would be exempt from the registration
requirements of the Securities Act. Each Award also must comply with other Applicable Law governing the Award, and a Participant shall
not receive such shares if the Company determines that such receipt would not be in material compliance with Applicable Law.
13.11
Transfer or Assignment of Awards; Issued Shares. Except as expressly provided in the Plan or an Award Agreement,
Awards granted under the Plan may not be transferred or assigned by the Participant. After the vested shares subject to an Award have
been issued, or in the case of Restricted Stock and similar awards, after the issued shares have vested, the holder of such shares is
free to assign, hypothecate, donate, encumber or otherwise dispose of any interest in such shares provided that any such actions comply
with the provisions of the Plan, the terms of the Trading Policy and Applicable Law.
13.12
Effect on Other Employee Benefit Plans. The value of any Award, as determined upon grant, vesting or settlement,
shall not be included as compensation, earnings, salaries, or other similar terms used when calculating any Participant’s benefits
under any employee benefit plan sponsored by the Company or any Affiliate, except as such plan otherwise expressly provides. The Company
expressly reserves its rights to amend, modify, or terminate any of the Company’s or any Affiliate’s employee benefit plans.
13.13
Severability. If all or any part of the Plan or any Award Agreement is declared by any court or governmental authority
to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of the Plan or such Award Agreement not
declared to be unlawful or invalid. Any Section of the Plan or any Award Agreement (or part of such a Section) so declared to be unlawful
or invalid shall, if possible, be construed in a manner which shall give effect to the terms of such Section or part of a Section to the
fullest extent possible while remaining lawful and valid.
13.14
Deferrals. To the extent permitted by Applicable Law, the Board, in its sole discretion, may determine that the delivery
of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and
may also establish programs and procedures for deferral elections to be made by Participants. Deferrals shall be made in accordance with
the requirements of Section 409A.
13.15
Choice of Law. The Plan and any controversy arising out of or relating to the Plan shall be governed by, and construed
in accordance with, the internal laws of the State of Florida, without regard to conflict of law principles that would result in any application
of any law other than the law of the State of Florida.
13.16
Gender. Wherever a pronoun used in the Plan or any instrument issued pursuant to the Plan connotes a particular gender,
it shall be construed to connote all other genders.
Exhibit 10.4
LEASE C DEFINITION OF LEASE TERMS LANDLORD: 6201 Bonhomme, L.P. TENANT: Precision Research Institute, LLC SUITE: 460S BUILDING: 6201 Bonhomme Rd. ADDRESS: 6201 Bonhomme Rd (name) Houston, TX. 77036 TERM: Two years Zero months OR N/A month - to - month (Tenant initials) COMMENCEMENT DATE: July 1, 2016 BASIC RENT (monthly): $ 1,017.50 TENANT ADDRESS (not in building): SECURITY DEPOSIT: $ 0 .00 Driver’s License #: PHONE #: FAX #: State: Social Security #: EMAIL : elizgomez2008@gmail.com (Tenant shall notify Landlord of any changes to its address or email account) Leasing Representative for Landlord: Stephanie Hughes LANDLORD ADDRESS: 6201 Bonhomme, L.P. (FOR ALL OTHER PURPOSES): 720 N. POST OAK RD., SUITE 500 HOUSTON, TEXAS 77024 (FOR RENT PAYMENTS): PO BOX 4737 Houston, TX 77210 - 4737 SPECIAL PROVISIONS : Tenant agrees to the following rent schedule : From July 01 , 2016 to June 30 , 2017 rent will be $ 1017 . 50 per month . From July 01 , 2017 to June 30 , 2018 rent will be $ 1042 . 94 per month . All rates subject to CPI clause in this Lease . Please see exhibit G . Attested by: Attested by: LANDLORD: 6201 Bonhomme, L.P. TENANT (signature) By: Boxer Property Management Corp. TENANT (print name) (signature) A Texas Corporation (Management Company for Landlord) LEASE PROVISIONS THIS LEASE (“Lease”) is made by and between LANDLORD and TENANT . In consideration of the mutual covenants and agreements herein set forth, and any other consideration, Landlord leases to Tenant and Tenant leases from Landlord the area generally outlined on the floor plan attached hereto as "Exhibit A", including the space and improvements described in “Exhibit B” attached hereto, and hereinafter referred to as the "Premises" which is part of the Building (hereinafter referred to as the "Building"), on the following terms and conditions : 5/27/2016 Date: 6/2/2016 Date: 1 . TERM . The Term of this Lease shall continue, unless sooner terminated as provided hereinafter . If the Term is month - to - month, either party may terminate with a thirty ( 30 ) day written notice . Landlord may increase monthly Rent for any month - to - month lease with a thirty ( 30 ) day written notice to Tenant . In the event Tenant occupies the Premises prior to the Commencement Date, all terms and conditions of the Lease shall apply to the period of occupancy . DocuSign Envelope ID: 5257293A - 0C66 - 43A8 - 8383 - 494EAD469556 8322701712 TX 3917 Spring Arbor Ct Pearland 77584 Elizabeth Hernandez TX 19667574 464735638 DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431CB200117A 1 BPMC.Lease Form.TX.March 2013 Tenant Initials
2. BASIC RENT AND SECURITY DEPOSIT. Except as provided f or in this Lease, Tenant will pay to Landlord without deduction or setoff, Rent for each month of the Lease Term . “Rent” means Basic Rent plus all other amounts payable by Tenant under this Lease, including any charges and late fees . The Security Deposit shall be held by Landlord, without interest, as security for Tenant's performance under this Lease, and not as an advance payment of rent or a measure of Landlord’s damages . Upon an Event of Default (defined below) or any damage to the Building or Premises caused by Tenant, its employees or invitees, Landlord may, without prejudice to any other remedy, use the Security Deposit to cure such Event of Default or repair any damage . Following any application of the Security Deposit, Tenant shall, on demand, restore the Security Deposit to its original amount . If Tenant is not in default hereunder, any remaining balance of the Security Deposit shall be returned to Tenant upon termination of this Lease . If Landlord transfers its interest in the Premises, Landlord may assign the Security Deposit to the transferee and thereafter shall have no further liability for the Security Deposit . Rent is due, and must be received by Landlord, by the first day of every month, at address specified by Landlord . Landlord and its manager will not accept cash payments . Tenant agrees to pay by check, EFT, cashier’s check, or certified funds, only . 3. (a) LANDLORD'S OBLIGATIONS. Landlord will furnish to Tenant at Landlord's expense: (1) water at those points of supply provided for the general use of tenants of the Building; (2) heated and refrigerated air conditioning in season, at such times as Landlord determines, and at such temperatures and in such amounts as reasonably considered necessary by Landlord; service on Sundays, Saturdays, and holidays are optional on the part of the Landlord; (3) janitorial services to the Premises on weekdays other than holidays and window washing as may, in Landlord’s judgment, be reasonably required; (4) passenger elevators (if applicable) for ingress to and egress from the Premises, in common with other tenants; (5) replacement of Building standard light fixtures; and (6) electric lighting for public areas and special service areas of the Building to the extent deemed by the Landlord to be reasonable. (b) Landlord shall furnish electrical current required for normal office use of the Premises. Upon the Commencement Date of the Lease, and thereafter, Tenant shall pay its estimated prorata share, using the rentable square footage of the Premises and the total rentable square footage of the Building, of the actual cost incurred by Landlord of providing electricity to the Premises, the common areas of the Building and the Building (“Electricity Cost”). Tenant shall pay such estimated amount to Landlord in equal monthly installments, in advance on the first day of each month. Landlord shall have the right from time to time during any such calendar year of the Lease Term (as extended herein) to revise the written estimate of Tenant's share of the projected Electricity Cost and Tenant shall pay such revised estimated amount to Landlord in equal monthly installments, in advance on the first day of each month. Within a reasonable period after the end of each calendar year, Landlord shall furnish Tenant a statement indicating in reasonable detail the Electricity Cost for the preceding year and the parties shall, within thirty (30) days thereafter, make any payment or allowance necessary to adjust Tenant's estimated payments to Tenant's actual share of Electricity Cost as indicated by such annual statement. Any payment due to Landlord shall be payable by Tenant on demand from Landlord. Any amount due Tenant shall be credited against installments next becoming due. (c) Failure to furnish, stoppage, or interruption of these services resulting from any cause shall not render Landlord liable in any respect for damages to either person, property or business, or be construed as an eviction of Tenant, work an abatement of rent, or relieve Tenant from performance of its obligations . Should any equipment furnished by Landlord cease to function properly, Landlord shall use reasonable diligence to repair the same promptly . Landlord shall not be obligated to furnish these services if Tenant is in default under this Lease . 4. IMPROVEMENTS . Landlord leases to Tenant the space and improvements constituting the Premises . All other improvements to the Premises shall be installed at Tenant’s expense only in accordance with plans and specifications and by contractors approved, in writing, by Landlord . 5. RELOCATION . Landlord may relocate Tenant to space the same size or larger, and the Basic Rent shall remain the same regardless of the size of the new space . Landlord may also relocate or renovate common areas in its sole discretion, without any obligation to Tenant . 6. USE . Tenant will use the Premises for office purposes only . Tenant shall not : permit more than five ( 5 ) persons per 1 , 000 square feet to occupy the premises at any time ; use or occupy the Building for any purpose which is unlawful or dangerous ; permit the maintenance of any nuisance, disturb the quiet enjoyment for all of the Building, emit offensive odors or conditions into other portions of the Building ; sell, purchase, or give away, or permit the sale, purchase or gift of food in the Building, or use any apparatus which might create undue noise or vibrations . Tenant shall not permit anything to be done which would increase any insurance rates on the Building or its contents, and if there is any increase, then Tenant agrees to pay such increase promptly upon demand therefor by Landlord ; however, any such payment shall not waive Tenant's duty to comply with this Lease . Landlord and any agent thereof does not represent or warrant that the Premises or Building conforms to applicable restrictions, ordinances, requirements, or other matters that may relate to Tenant’s intended use, or with respect to the presence on, in or near the Premises or Building of hazardous substances, biological matter (including, but not limited to, mold, mildew and fungi) or materials which are categorized as hazardous or toxic . Tenant accepts the Premises “as is” in its current size and configuration and agrees that the Rent is not for a specific amount of or per square feet . Landlord does not make any representations as to the suitability, condition, layout, square footage, expenses or operation of the Premises and Building, except as specifically set forth herein, and tenant expressly acknowledges that no such representations have been made . Landlord makes no other warranties, express or implied, or merchantability, marketability, or fitness, and any implied warranties are hereby expressly disclaimed . Tenant must satisfy itself that the Premises may be used as Tenant intends by independently investigating all matters related to its intended use . Tenant agrees that the Landlord, its subsidiaries, and its agents may publicize and use Tenant’s image, likeness, name, as well as the terms of the Lease, for any press releases, industry publications, advertising, social media, and promotion purposes in any type of marketing including its websites . 7. TENANT'S OBLIGATIONS . Tenant will not damage the Building and will pay the cost of repairing any damage done to the Building by Tenant or Tenant's agents, employees, or invitees . Tenant shall take good care of the Premises and keep them free of waste and nuisance . Tenant must immediately notify Landlord in writing of any water leaks, mold, electrical problems, malfunctioning lights, broken or missing locks, or any other condition that might pose a hazard to property, health, or safety . Tenant will keep the Premises and all fixtures in good condition and repair . If Tenant fails to make necessary repairs within fifteen ( 15 ) days after notice from Landlord, Landlord may, at its option, make such repairs and Tenant shall, upon demand, pay Landlord the cost thereof . At the end of the Term, Tenant shall deliver to Landlord the Premises and all improvements in good repair and condition, and all keys to the Premises in Tenant’s possession . Tenant will not make or allow to be made any alterations or physical additions in or to the Premises without prior written consent of Landlord . At the end of the Term, Tenant shall, if Landlord requires, remove all alterations, physical additions or improvements as directed by Landlord and restore the Premises to substantially the same condition as on the Commencement Date . All of Tenant’s fixtures, and any personal property not removed from the Premises at the end of the Term, shall be presumed to have been abandoned by Tenant and shall become the property of the Landlord . 8. INDEMNITY . Landlord shall not be liable for and Tenant will defend, indemnify and hold harmless Landlord from all fines, suits, claims, demands, losses, and actions, including attorney's fees, for any injury to persons or damage to or loss of property on or about the Premises or in or about the Building caused by the Tenant, its employees, invitees, licensees, or by an other person entering the Premises or the Building under express or implied invitation of the Tenant, or arising out of Tenant's use of Premises or Landlord’s maintenance of the Premises, and waive any claims for damage caused by fire, flood, water leaks, wind, ice, snow, hail, explosion, smoke, riot, strike, interruption of utilities, theft, burglary, robbery, assault, vandalism, other persons, environmental contaminants, or other occurrences or casualty losses . This provision is intended to waive any claims against Landlord and its agents for the consequences of their own negligence or fault . This waiver and indemnity obligation shall survive the termination or expiration of the Lease . 9. MORTGAGES . Tenant accepts this Lease subordinate to any deeds of trust, mortgages or other security interests which might now or hereafter constitute a lien upon the Building or the Premises, and shall attorn to the lender thereunder, with such attornment to be effective upon lender's acquisition of the Building . Furthermore, such lender, as successor landlord, shall not be liable for any act, omission or obligation of any prior Landlord and lender shall have the option to reject such attornment . Tenant shall, immediately upon request but in no event more than 7 days after requested, execute such documents, including estoppel letters, as may be required for the purposes of subordinating or verifying this Lease . 10. ASSIGNMENT ; SUBLEASING . Tenant shall not assign this Lease by operation of law or otherwise (including without limitation by transfer of stock, merger, or dissolution), mortgage or pledge the same, or sublet the Premises or any part thereof, without prior written consent of Landlord, which Landlord may DocuSign Envelope ID: 5257293A - 0C66 - 43A8 - 8383 - 494EAD469556 DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431CB200117A 2 BPMC.Lease Form.TX.March 2013 Tenant Initials
grant or deny in its sole discretion. Landlord’s consent to an assignment or subletting shall not release Tenant from any obligation hereunder, and Landlord’s consent shall be required for any subsequent assignment or subletting . If Tenant desires to assign or sublet the Premises, it shall so notify Landlord at least sixty ( 60 ) days in advance, and shall provide Landlord with a copy of the proposed assignment or sublease and any additional information, including financial information, requested by Landlord to allow Landlord to make informed judgments as to the proposed transferee . After receipt of notice, Landlord may elect to : (i) Cancel the Lease as to the Premises or portion thereof proposed to be assigned or sublet ; or (ii) Consent to the proposed assignment or sublease ; and if the Rent and other consideration payable in respect thereof exceeds the Rent payable hereunder, Tenant shall pay to Landlord such excess within ten ( 10 ) days following receipt thereof by Tenant : or (iii) Withhold its consent, which shall be deemed to be elected unless Landlord gives Tenant written notice otherwise . 11. EMINENT DOMAIN . If the Premises are taken or condemned in whole or in part for public purposes or are sold under threat of condemnation, Landlord may terminate this Lease . Landlord shall be entitled to receive the entire award of any condemnation or the proceeds of any sale in lieu thereof . 12. ACCESS . Landlord and its agents may, at any time, enter the Premises to : inspect, supply janitorial or other services ; show the Premises to prospective lenders, purchasers or tenants ; alter, improve, or repair the Premises or the Building (including erecting scaffolding and other necessary structures where reasonably required by the character of the work to be performed, provided the business of Tenant shall be interfered with as little as is reasonably practicable) . Tenant waives any claim for damages for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, or any other loss occasioned by Landlord’s entry into the Premises in accordance with this Section 12 . Landlord shall at all times have a key to the Premises . Landlord may use any means which it deems proper to open any door in an emergency without liability therefor . Landlord reserves the right to prevent access to or close the Building as determined by Landlord for the protection of the Building, its tenants, and visitors . 13. CASUALTY . If the Building should be totally destroyed by casualty or if the Premises or the Building be so damaged that Landlord determines that repairs cannot be completed within one hundred twenty ( 120 ) days after the date of such damage, Landlord may terminate this Lease . Landlord shall not be required to rebuild, repair, or replace any part of the furniture, equipment, fixtures, and other improvements which may have been placed by Tenant in the Premises . Any insurance which may be carried by Landlord or Tenant against loss or damage to the Building or the Premises shall be for the sole benefit of the party carrying such insurance . 14. WAIVER OF SUBROGATION . Tenant waives every claim that arises or may arise in its favor against the Landlord or any other tenant of the Building during the Term, for any injury to or death of any person or any loss of or damage to any of Tenant’s property located within or upon or constituting a part of the Premises, to the extent such injury, death, loss or damage is or could be covered by any insurance policies, whether or not such loss or damage is recoverable thereunder . This waiver shall be in addition to, and not in limitation of, any other waiver or release contained in this Lease . Tenant shall give to each insurance company, which has issued to it any insurance policy covering the Premises or Tenant’s operations, written notice of this waiver and have its insurance policies endorsed, if necessary, to prevent their invalidation by reason of this waiver . This waiver obligation shall survive the termination or expiration of the Lease . 15. HOLDING OVER . If Tenant fails to vacate at the end of the Term, then Tenant shall be a tenant at will and subject to all terms and conditions of the Lease, and, in addition to all other damages and remedies to which Landlord may be entitled, Tenant shall pay, in addition to the other Rent, a daily Basic Rent, payable in full in advance each month, equal to the greater of : (a) twice the Basic Rent payable during the last month of the Term, or (b) the prevailing rental rate in the Building for similar space . 16. TAXES ON TENANT'S PROPERTY . Tenant shall be liable for all taxes levied or assessed against personal property or fixtures placed by Tenant in the Premises . If any such taxes are assessed against Landlord or Landlord's property, Landlord may pay the same, and Tenant shall upon demand, reimburse Landlord therefor . Any claim arising against Tenant by Landlord under this provision shall be assessed interest at fifteen percent ( 15 % ) per year until satisfied . 17. LANDLORDS LIEN . In addition to any statutory Landlord’s lien, Tenant grants to Landlord a security interest to secure payment of all Rent and performance of all of Tenant’s other obligations hereunder, in all equipment, furniture, fixtures, improvements and other personal property located in or on the Premises, and all proceeds therefrom . Such property shall not be removed from the Premises without Landlord’s written consent until all Rent due and all Tenant’s other obligations have been performed . In addition to any other remedies, upon an Event of Default, Landlord may, but is not obligated to, exercise the rights afforded a secured party under the Uniform Commercial Code Secured Transactions for the state in which the Building is located . Tenant grants to Landlord a power of attorney to execute and file financing statements and continuation statements necessary to perfect Landlord’s security interest, which power is coupled with an interest and shall be irrevocable during the Term . Any property left in the Premises at the time of a default, or termination of the Lease for whatever reason, shall be deemed abandoned, and after thirty ( 30 ) days from default or termination, the Landlord and its representative may dispose of it by any means they deem appropriate without notice to Tenant . 18. MECHANIC’S LIENS . Tenant shall not permit any mechanic’s or other liens to be filed against the Premises or the Building for any work performed, materials furnished or obligation incurred by or at the request of Tenant, or Tenant’s agents or employees . Tenant shall, within ten ( 10 ) days following the imposition of any such lien, cause it to be released of record by payment or posting of a proper bond, failing which Landlord may cause it to be released, and Tenant shall immediately reimburse Landlord for all costs incurred in connection therewith . The Tenant's obligations under this section shall survive any termination of or default under the Lease . 19. (a) (b) EVENTS OF DEFAULT . Any of the following shall constitute an event of default (“Event of Default”) hereunder: Any failure by Tenant to pay the Rent when due. Landlord shall not be required to provide Tenant with notice of failure to pay Rent. Any failure by Tenant to observe and perform any provision of this Lease, other than the payment of Rent, that continues for five (5) days after notice to Tenant; however, an Event of Default shall occur hereunder without any obligation of Landlord to give any notice if Landlord has given Tenant notice under this Section 19(b) on at least one occasion during the twelve (12) month interval preceding such failure by Tenant. (c) Tenant or any guarantor of Tenant's obligations hereunder: (1) being unable to meet its obligations as they become due, or being declared insolvent according to any law, (2) having its property assigned for the benefit of its creditors, (3) having a receiver or trustee appointed for itself or its property, (4) having its interest under this Lease levied on under legal process, (5) having any petition filed or other action taken to reorganize or modify its debts or obligations, or (6) having any petition filed or other action taken to reorganize or modify its capital structure if either Tenant or such guarantor is a corporation or other entity. (d) The abandonment of the Premises by Tenant (which shall be conclusively presumed if Tenant is absent from the Premises for ten (10) consecutive days and is late on any payment due Landlord). 20. REMEDIES. Upon any Event of Default, Landlord may, in addition to all other rights and remedies afforded Landlord hereunder or by law or equity, take any of the following actions: (a) Terminate this Lease by written notice to Tenant, in which event Tenant shall immediately surrender the Premises . If Tenant fails to surrender the Premises, Landlord may, without prejudice to any other remedy, enter and take possession of the Premises or any part thereof by changing the door locks or by any other means necessary in Landlord’s sole judgment without being liable for prosecution or any claim for damages . If this Lease is terminated hereunder, Tenant shall pay to Landlord : ( 1 ) all Rent accrued through the date of termination, ( 2 ) all amounts due under Section 21 , ( 3 ) any unamortized commission paid by Landlord in connection with the Lease, and ( 4 ) an amount equal to : (A) the total Rent that Tenant would have been required to pay for the remainder of the Term discounted to present value at a per annum rate equal to the interest rate on one - year Treasury bills as published on the nearest the date this lease is terminated at www . treasury . gov, minus (B) the then present fair rental value of the Premises for such period, similarly discounted ; provided, however, that in no event shall the result of the calculation in this subsection ( 4 ) result in an amount less than fifty percent ( 50 % ) of the total Rent that Tenant would have been required to pay for the remainder of the Term discounted to present value at a per annum rate equal to the interest rate on one - year Treasury bills as published on the nearest the date this lease is terminated by the Wall Street Journal, Southwest Edition . (b) Terminate Tenant’s right to possession of the Premises without terminating this Lease by written notice to Tenant, in which event Tenant shall immediately surrender the Premises . If Tenant fails to surrender the Premises, Landlord may, without prejudice to any other remedy, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part thereof by changing the door locks or by any other means necessary in Landlord’s sole judgment without being liable for prosecution or any claim for damages . If Tenant’s right to DocuSign Envelope ID: 5257293A - 0C66 - 43A8 - 8383 - 494EAD469556 DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431CB200117A possession of the Premises is so terminated, Tenant shall pay to Landlord: (1) all Rent to the date of termination of possession, (2) all amounts due from time to 3 BPMC.Lease Form.TX.March 2013 Tenant Initials
time under Section 21, (3) any unamortized commission paid by Landlord i n connection with the Lease, and (4) all Rent required hereunder to be paid by Tenant during the remainder of the Term, minus any net sums thereafter received by Landlord through reletting the Premises during such period . Landlord shall use reasonable efforts to relet the Premises on such terms and conditions as Landlord, in its sole discretion, may determine (including a term different from the Term, rental concessions, and alterations to, and improvement of, the Premises) ; however, Landlord shall not be obligated to relet the Premises before leasing other portions of the Building . Landlord shall not be liable for, nor shall Tenant’s obligations be diminished because of, Landlord’s failure to relet the Premises or to collect rent due for such reletting . Tenant shall not be entitled to any excess obtained by reletting over the Rent due hereunder . Reentry by Landlord shall not affect Tenant’s obligations for the unexpired Term ; rather, Landlord may, from time to time, bring action against Tenant to collect amounts due by Tenant, without the necessity of Landlord’s waiting until the expiration of the Term . Unless Landlord delivers written notice to Tenant expressly stating that it has elected to terminate this Lease, all actions taken by Landlord to exclude or dispossess Tenant of the Premises shall be deemed to be taken under this Section 20 . (b) . If Landlord elects to proceed under this Section 20 . (b), it may at any time elect to terminate this Lease under Section 20 . (a) . (c) (d) Change the door locks and deny Tenant access to the Premises until such Event of Default is cured. Enter the Premises without being liable for prosecution or any claim for damages and do whatever Tenant is obligated to do under the terms of this Lease . Tenant agrees to reimburse Landlord on demand for any expenses which Landlord may incur in so doing . Tenant further agrees that Landlord shall not be liable for any damages resulting to the Tenant from such action . (e) Tenant expressly waives notice as to the disposal of any property in the Premises as of default, lockout or termination, which has not claimed or redeemed within thirty ( 30 ) days . 21. PAYMENT BY TENANT . Upon any Event of Default, Tenant shall pay to Landlord all costs incurred by Landlord (including court costs, expenses, and reasonable attorneys’ fees) in (a) obtaining possession of the Premises, (b) removing and storing Tenant’s or any other occupants’ property, (c) repairing, restoring, altering, remodeling or otherwise putting the Premises into condition acceptable to a new tenant, (d) if Tenant is dispossessed of the Premises and this Lease is not terminated, reletting all or any part of the Premises (including brokerage commissions, costs of tenant finish work, and all other costs incidental to such reletting), (e) performing Tenant’s obligations which Tenant failed to perform, and (f) enforcing, or advising Landlord of its rights, remedies, and recourses arising out of the Event of Default . After any default in payment by Tenant (i . e . late payment or a returned check), the Landlord may require that Tenant make future payments by certified check, cashier’s check, or money order, for so long as the Landlord may reasonably require . 22. LANDLORD’S LIABILITY . The liability of Landlord and its agents to Tenant for any default by Landlord under the terms of this Lease shall be limited to Tenant’s actual direct, but not consequential, damages therefor and shall be recoverable from the interest of Landlord in the Building, and Landlord shall not be personally liable for any deficiency . Landlord’s reservation of rights under this Lease, such as to enter upon or maintain the Premises, shall not be deemed to create any duty on the part of Landlord to exercise any such right . Landlord expressly advises Tenant that Landlord’s intention is that Tenant shall have full responsibility for, and shall assume all risk to, persons and property while in, on or about the Premises . 23. SURRENDER OF PREMISES . No act of Landlord or its agents during the Term shall be deemed as acceptance of surrender of the Premises . No agreement to accept surrender of the Premises shall be valid unless the same is in writing and signed by the Landlord . 24. ATTORNEYS FEES . If Landlord employs an attorney to interpret, enforce or defend any of its rights or remedies hereunder, Tenant shall pay Landlord’s reasonable attorney’s fees, court costs and expenses incurred in such dispute . 25. FORCE MAJEURE . Whenever a period of time is prescribed for action to be taken by Landlord, Landlord shall not be liable or responsible for, and there shall be excluded from the computation for any such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, governmental laws, regulations, or restrictions, or any other causes of any kind whatsoever which are beyond the control of the Landlord . 26. GOVERNMENTAL REGULATIONS . Tenant will comply with all laws, ordinances, orders, rules and regulations of all governmental agencies having jurisdiction over the Premises with reference to the use, construction, condition or occupancy of the Premises, which includes Tenant’s obligation to secure a certificate of occupancy for the Premises . Tenant agrees that any cabling installed by or for its use during its occupancy shall meet the requirements of all applicable national and local fire and safety codes . 27. 28. APPLICABLE LAW. This Lease shall be governed by and construed pursuant to the laws of the state in which the Building is located. SUCCESSORS AND ASSIGNS. Except as otherwise provided in this Lease, all of the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, successors, and assigns . 29. SEVERABILITY . If any provision of this Lease or the application thereof to any person or circumstances shall be invalid or unenforceable to any extent, the remainder of this Lease and the application of such provisions to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law . 30. NAME . Tenant shall not, without the written consent of Landlord, use the name of the Building for any purpose other than as the address of the business to be conducted by Tenant in the Premises, and in no event shall Tenant acquire any rights in or to such names . 31. NOTICES . Any notice or document required to be delivered hereunder shall be deemed to be delivered whether or not actually received, when deposited in the United States mail, postage prepaid, certified or registered mail, addressed to the parties hereto at their respective addresses set forth above, or when sent by facsimile transmission to the respective numbers set forth above, or delivered to Tenant’s place of business in the Building, and when sent or delivered by Landlord or his representative, including its Management company for the Building . 32. DEFINED TERMS AND MARGINAL HEADINGS . The words "Landlord" and "Tenant" as used herein shall include the plural as well as the singular . If more than one person is named as Tenant, the obligations of such persons are joint and several . The headings and titles to the sections of this Lease are not part of this Lease and shall have no effect upon the construction or interpretation of any part thereof . Captions contained herein are for the convenience of reference only and in no way limit or enlarge the terms or conditions of this Lease . 33. AUTHORITY ; EXECUTION ; ELECTRONIC FILES . If Tenant executes this Lease as a corporation or other entity, each of the persons executing this Lease on behalf of Tenant personally covenants and warrants that Tenant is duly authorized and validly existing, that Tenant is qualified to do business in the state in which the Building is located, that Tenant has full right and authority to enter into this Lease, and that each person signing on behalf of Tenant is authorized to do so . In the event Tenant provides an email address to Landlord, Tenant agrees that Landlord, its representative and agents may contact Tenant via the address, and deliver marketing information and other announcements to such address(es) . The Lease may be executed by the parties in multiple counterparts, which together shall have the full force and effect of a fully executed agreement between the parties . Electronic signatures by either party are valid, and Tenant agrees that the Lease and related documents and records may be created, kept and transmitted as electronic files only . 34. LIQUIDATED DAMAGES . If the Premises are not ready for occupancy by the Commencement Date, unless delayed by Tenant for any reason, the Basic Rent shall not commence until the Premises are ready for occupancy by Tenant . Such allowance for Basic Rent shall be in full settlement for any claim which Tenant might otherwise have by reason of the Premises not being ready for occupancy . 35. INTEGRATED AGREEMENT. This Lease contains the entire agreement of the parties with respect to any matter covered or mentioned in this Lease. No prior agreement, understanding or representation pertaining to any such matter shall be effective for any purpose, and Tenant expressly warrants and represents that no promise or agreement which is not herein expressed has been made to it in executing this Lease, and it is not relying upon any statement or representation of Landlord or its agent and Tenant is relying on its own judgment in executing this Lease. No provision of this Lease may be amended or added to except by an agreement in writing signed by the parties or their respective successors in interest . 36. LATE FEE. If Rent is not received by Landlord on or before the fifth (5th) day of any month, Tenant shall pay immediately upon written notice from Landlord a late fee equal to fifteen percent (15%) of the cumulative amount of Rent due, including Basic Rent and all other amounts payable by Tenant under this Lease, including any charges and previously assessed late fees. Failure by Tenant to make immediate payment of the delinquent Rent plus the late fee DocuSign Envelope ID: 5257293A - 0C66 - 43A8 - 8383 - 494EAD469556 DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431CB200117A 4 BPMC.Lease Form.TX.March 2013 Tenant Initials
shall constitute an Event of Default. This provision, expressly, does not re lieve the Tenant’s obligation to pay Rent on the first of each month and is not a waiver by the Landlord to require payment on the first day of each month. 37. INTEREST ON SUMS EXPENDED BY LANDLORD . All sums paid and all expenses incurred by Landlord in performing Tenant’s duties hereunder or curing Events of Default shall accrue interest at the rate of fifteen percent ( 15 % ) per annum from the date of payment of such amount by Landlord . In no event, however, shall the charges permitted under this Section 37 or elsewhere in this Lease, to the extent the same are considered to be interest under applicable law, exceed the maximum lawful rate of interest . 38. INSURANCE . In support of its obligations hereunder, including those of indemnity, Tenant agrees to maintain, at Tenant's sole cost and expense, insurance policies covering Tenant's aforesaid indemnity with respect to Tenant's use and occupancy of the Premises, as well as coverage for theft and damage . Such policies shall be issued in the name of Tenant and Landlord as their interest may appear, or shall contain an "additional insured" endorsement in favor of Landlord, and with limits of liability of at least ONE MILLION DOLLARS ( $ 1 , 000 , 000 . 00 ) per occurrence for bodily injury and TWO HUNDRED THOUSAND DOLLARS ( $ 200 , 000 . 00 ) per occurrence for property damage . Duplicate originals of such policies and endorsements shall be delivered to Landlord within thirty ( 30 ) days from the execution date hereof . This indemnity and waiver obligation shall survive the termination or expiration of the Lease . 39. RENTAL ADJUSTMENT. If the Term exceeds one (1) year, one (1) year after the commencement of this Lease and each one (1) year anniversary thereafter, the Basic Rent shall be increased in accordance with the cost of living changes in the "Consumer Price Index” for all Urban Consumers - U. S. City Average as published by the Bureau of Labor Statistics, United States Department of Labor, ("BLS Consumer Price Index"). The BLS Consumer Price Index figure for the month and year in which this Lease commences is the “base” figure in the computation of adjustment of Basic Rent. At the beginning of each one (1) year period as provided herein, the BLS Consumer Price Index for the then - current month shall be determined and the rent commencing with the start of each such one (1) year period shall be adjusted by increasing the Basic Rent proportionately, as the said BLS Consumer Price Index for the month has increased as compared with the base BLS Consumer Price Index provided above. If the BLS Consumer Price Index decreases, Basic Rent shall not decrease. 40. RULES . Tenant shall abide by attached Building Rules and Regulations “Rules - 1 ”, which are incorporated herein by reference, and which may be reasonably changed or amended, at any time, by Landlord to promote a safe, orderly and professional Building environment . 41. PARKING . Tenant and all Tenants’ employees shall comply with all municipal, subdivisional or other restrictive covenants imposed on Landlord . Vehicles shall be towed at owner’s expense for any of the following violations : (a) parking in any area other than as specifically designated by Landlord ; or (b) lack of a properly displayed parking permit, if issued by Landlord ; or (c) parking across stripes marking the parking spaces . Landlord, at its sole discretion, may designate the specific space or area in which vehicles shall be parked and may change the same from time to time . Landlord may make, modify, or enforce rules and regulations relating to the parking of vehicles, and Tenant hereby agrees to obey such rules and regulations . Tenant shall only use a prorata share of parking spaces as designated by Landlord . In the event the Building does not possess parking, Landlord shall not be responsible for providing parking . BUILDING RULES AND REGULATIONS 1. No sign, picture, advertisement, name or notice shall be inscribed, displayed or affixed on or to any part of the inside of the Building or the Premises without the prior written consent of Landlord and Landlord shall have the right to remove any such item at the expense of Tenant . All approved signs or lettering on doors and the building directory shall be printed, painted, affixed or inscribed at the expense of Tenant by a person approved by Landlord . Tenant shall not place anything near the glass of any window, door, partition or wall which may appear unsightly from outside the Premises ; provided, however, that Landlord may furnish and install a Building standard window covering at all exterior windows . Tenant shall not, without written consent of Landlord, cover or otherwise sunscreen any window . 2. Landlord shall approve in writing, prior to installation, any attachment of any object affixed to walls, ceilings, or doors other than pictures and similar items. 3. The directory of the Building will be provided exclusively for the display of the name and location of Tenant only, and Landlord reserves the right to exclude any other names therefrom . 4. The sidewalks, halls, passages, exits, entrances, elevators and stairways shall not be obstructed by Tenant or used by Tenant for any purpose other than ingress to and egress from the Premises . The halls, passages, exits, entrances, elevators, stairways, balconies and roof are not for the use of the general public and the Landlord shall in all cases retain the right to control and prevent access thereto by all persons whose presence in the judgment of the Landlord shall be prejudicial to the safety, character, reputation and interests of the Building and its tenants, provided that nothing herein contained shall be construed to prevent such access to persons with whom the Tenant normally deals in the ordinary course of Tenant's business, unless such persons are engaged in illegal activities . No tenant and no employees or invitees of any tenant shall go upon the roof of the Building . Tenant shall not prop open the entry doors to Building or Premises . 5. No additional locks or bolts of any kind shall be placed upon any of the doors or windows of the Premises or the Building by Tenant, nor shall any changes be made in existing locks or the mechanisms thereof without the prior written consent of the Landlord . Tenant must, upon the termination of its tenancy, return to Landlord all keys to the Premises . If Tenant fails to return any such key, Tenant shall pay to Landlord the cost of changing the locks to the Premises if Landlord deems it necessary to change such locks . 6. The toilet rooms, urinals, wash bowls and other apparatus in the Premises or Building shall not be used for any purpose other than that of which they were constructed and no foreign substance of any kind whatsoever shall be thrown therein . The expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by Tenant . 7. Tenant shall not overload the floor of the Premises, mark on, or drive nails, screw or drill into the partitions, woodwork or plaster or in any way deface the Premises or any part thereof . No boring, cutting or stringing of wires shall be permitted except with the prior written consent of and as the Landlord may direct . 8. No furniture, freight or equipment of any kind shall be brought into the Building without the consent of Landlord and all moving of same into or out of the Building shall be done at such time and in such manner as Landlord shall designate . Landlord shall have the right to prescribe the weight, size and position of all safes and other heavy equipment brought into the Building and also the times and manner of moving the same in and out of the Building and any damage caused by moving or maintaining such safe or other property shall be repaired at the expense of Tenant . There shall not be used in any space, or in the public halls, of the Building, either by any tenant or others, any hand trucks except those equipped with rubber tires and side guards . 9. Tenant shall not employ any person or persons for the purpose of cleaning the Premises without the consent of Landlord . Landlord shall be in no way responsible to Tenant for any loss of property from the Premises or other damage caused by Landlord’s janitorial service or any other person . Janitorial service will not include the cleaning of carpets and rugs, other than vacuuming . If the Premises requires more than building standard janitorial service, such excess service shall be at Tenant’s cost . 10. No Tenant shall place anything in the hallways of the Building. No trash shall be placed in the common area. 11. Tenant shall only be permitted use as general office space. No tenant shall occupy or permit any portion of the Premises to be occupied for lodging or DocuSign Envelope ID: 5257293A - 0C66 - 43A8 - 8383 - 494EAD469556 DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431CB200117A 5 BPMC.Lease Form.TX.March 2013 Tenant Initials
sleeping or for any illegal purposes or permit any pet within the Premises o r Building. 12. Tenant shall not use or keep in the Premises or the Building any combustible fluid or material, including the use of space heaters, and shall not permit any open flame, including candles, incense, etc. 13. Landlord will direct electricians as to where and how telephone wiring shall be located. No boring or cutting for wires will be allowed without the written consent of Landlord. The location of telephones, call boxes and other office equipment affixed to the Premises shall be subject to the approval of Landlord. 14. No Tenant shall lay linoleum or other similar floor covering so that same shall be affixed to the floor of the Premises in any way except by a paste, or other material, which may easily be removed with water, the use of cement or other similar adhesive materials being expressly prohibited . The method of affixing any such linoleum or other similar floor covering to the floor, as well as the method of affixing carpets or rugs to the Premises, shall be subject to approval by Landlord . The expense of repairing any damage resulting from a violation of this rule shall be borne by the tenant by whom, or by whose agents, employees, or invitees, the damage shall have been caused . 15. Tenant shall provide and use chair pads and carpet protectors at all desk and furniture locations . 16. No furniture, packages, supplies, equipment or merchandise will be received in the Building or carried up or down in the elevators, except between such hours and in such elevators as shall be designated by Landlord. 17. On Saturdays, Sundays and legal holidays and on any other days between the hours of 6 : 00 p . m . and 6 : 30 a . m . , Landlord reserves the right to keep all doors to the Building locked, and access to the Building, or to the halls, corridors, elevators or stairways in the Building or to the Premises may be refused unless the person seeking access is an employee of the Building or is properly identified as a tenant of the Building . The Landlord shall in no case be liable for damages for any error with regard to the admission to or exclusion from the Building of any person . In case of natural disaster, hurricane, tornado, evacuation, invasion, mob, riot, public excitement, or other commotion, the Landlord reserves the right to prevent access to the Building during the continuance of the same by closing the doors or closure of the Building for the safety of the tenants and protection of property in the Building . 18. Access to the Building and parking may be controlled by the use of electronic card key or by other method deemed necessary by Landlord . Tenant shall be issued card keys or other ingress/egress devices and a deposit for each card or device shall be paid upon issuance of the cards . In the event that Tenant shall damage or lose the card key(s) or device(s), then Tenant's deposit for such card or device will be forfeited, and Tenant will be required to pay another equal deposit . 19. Smoking is prohibited in the Premises and common areas of the Building at all times . 20. In order to receive a refund of its security deposit, if any, Tenant agrees to provide a forwarding address to Landlord, in writing, on or before the termination date of the Lease . Tenant agrees that it waives any rights and remedies with regard to the security deposit if it fails to provide such forwarding address to Landlord, in writing, on or before the termination date of the Lease, including waiver of the right to receive a refund and to receive a description of damages and charges . Landlord shall have sixty ( 60 ) days from the date Tenant surrenders the premises and Landlord’s receipt of Tenant’s forwarding address, to refund the security deposit and/or provide a written description of damages and charges . 21. Landlord reserves the right to charge Tenant, and require payment in advance, for services and/or expenses not required of Landlord under this Lease, or incurred in relation to the Lease . Such charges include, but are not limited to, processing “bounced” checks, changing locks, reviewing and signing lien waivers, lease assignments, sublet documents, providing after hours HVAC rates, etc . A list of charges can be obtained from the Landlord’s representative . The charges are based on the cost to the Landlord or its management company to provide the service which is charged for, and are subject to change at anytime without notice . 22. Landlord reserves the right to exclude or expel from the Building any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation of any of the Rules and Regulations of the Building. Rules - 1 DocuSign Envelope ID: 5257293A - 0C66 - 43A8 - 8383 - 494EAD469556 DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431CB200117A 6 BPMC.Lease Form.TX.March 2013 Tenant Initials
MECH JAN 421S 419S 418S 417S 414S 413S 410S 409S 416S 415S 412S 411S 401S 402S 404S 406S 408S 407S 424S 423S 426S 428S 430S 432S 434S 450S 420S 455S 454S 474S 452S 475S 472S 470S 482S 480S 478S 468S 476S MECH 460S 462S 464S 466S Up Up Recept ion 403 sq. ft . Recept ion 364 sq.ft . Recept ion 255 sq. ft . DocuSign Envelope ID: 5257293A - 0C66 - 43A8 - 8383 - 494EAD469556 DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431CB200117A EXHIBIT “A” 6201 Bonhomme Rd Houston, TX. 77036 (Address) Fourth (Floor) 7 BPMC.Lease Form.TX.March 2013 Tenant Initials
EXHIBIT “B” 6201 Bonhomme Rd Houston, TX. 77036 (Address) 460S (Suite) DocuSign Envelope ID: 5257293A - 0C66 - 43A8 - 8383 - 494EAD469556 DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431CB200117A 8 BPMC.Lease Form.TX.March 2013 Tenant Initials
C EXHIBIT “G” - GUARANTY Landlord : 6201 Bonhomme, L.P. Tenant : Precision Research Institute, LLC Premises : 6201 Bonhomme Rd Houston, TX. 77036 Commencement Date: July 1, 2016 Name of guarantor: Elizabeth Hernandez Guarantor’s Address : 3917 Spring Arbor Ct , Pearland TX 77584 To induce Landlord to enter into the Lease and for other consideration, Guarantor aggress that - 1. Guarantor guarantees the performance of Tenant’s obligations under the Lease, and any renewal(s) and extension(s) thereof, including any increased amounts of rent. 2. This is a primary, irrevocable, and unconditional guaranty of payment and performance and not of collection and is independent of Tenant’s obligations under the Lease. 3. Guarantor will make all payments to Landlord at Landlord’s address set forth in the Lease. 4. This guaranty will remain in effect regardless of any modification or extension of the Lease. 5. Guarantor’s obligations will not be diminished by any compromise or release agreed on by Tenant and Landlord or by discharge, limitation, or modification of Tenant’s obligations in any bankruptcy or other debtor relief proceeding. Guarantor waives any right to require that Landlord bring any legal action against Tenant before, simultaneously with, or after enforcing its rights and remedies hereunder against Guarantor. Landlord shall not be required to make any demand on Tenant, apply any security deposit being held by Landlord on behalf of Tenant or any other credit in favor of Tenant, or otherwise pursue or exhaust its remedies against Tenant before, simultaneously with, or after enforcing its rights and remedies hereunder against Guarantor. 6. If there is more than one guarantor, the obligations of each guarantor will be joint and several. 7. Texas (State) law applies to the guaranty. Guarantor waives its rights 1. To notices of acceptance, modification, renewal, extension, and default and any other notice. 2. To claim any defense arising out of lack of diligence; any failure to pursue Tenant; loss of impairment of any right of subrogation or reimbursement; release of any other guarantor or collateral; death, insolvency, or lack of corporate authority of Tenant; and waiver, release, or election, based on Landlord’s or Tenant’s rights and obligations under the Lease and the enforcement of its terms. The prevailing party in any dispute arising out of this guaranty will be entitled to recover reasonable attorney’s fees. Guarantor Signature Elizabeth Hernandez Guarantor Printed Name 5/27/2016 Date DocuSign Envelope ID: 5257293A - 0C66 - 43A8 - 8383 - 494EAD469556 DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431CB200117A 9 BPMC.Lease Form.TX.March 2013 Tenant Initials
C ACCEPTANCE OF PREMISES BUILDING NAME: 6201 Bonhomme Rd. ADDRESS: 6201 Bonhomme Rd Houston, TX. 77036 As the tenant of suite # 460S , I hereby certify that I have accepted the premises, and all tenant improvements as set forth in the Lease agreement have been completed in a manner satisfactory and acceptable to me. TENANT (signature and title) Elizabeth Hernandez TENANT (print name) 5/27/2016 Date DocuSign Envelope ID: 5257293A - 0C66 - 43A8 - 8383 - 494EAD469556 DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431CB200117A 10 BPMC.Lease Form.TX.March 2013 Tenant Initials
TENANT (signature and title) Elizabeth Hernandez TENANT (print name) 5/27/2016 Date DocuSign Envelope ID: 5257293A - 0C66 - 43A8 - 8383 - 494EAD469556 DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431C B T 2 0 e 0 n 1 a 1 7 n A t Representation Letter Information about Brokerage Services Before working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner’s agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyer’s agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly. IF THE BROKER REPRESENTS THE OWNER: The broker becomes the owner’s agent by entering into an agreement with the owner, usually through a written listing agreement, or by agreeing to act as a subagent by accepting an offer of sub agency from the listing broker. A subagent may work in a different real estate office. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owner’s agent anything the buyer would not want the owner to know because an owner’s agent must disclose to the owner any material information known to the agent. IF THE BROKER REPRESENTS THE BUYER: The broker becomes the buyer’s agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyer’s agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyer’s agent anything the owner would not want the buyer to know because a buyer’s agent must disclose to the buyer any material information known to the agent. IF THE BROKER ACTS AS AN INTERMEDIARY: A broker may act as an intermediary between the parties if the broker complies with The Texas Real Estate License Act. The broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker’s obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Texas Real Estate License Act. A broker who acts as an intermediary in a transaction: (1) shall treat all parties honestly; (2) may not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner; (3) may not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and (4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by The Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property. With the parties’ consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under that Act and associated with the broker to communicate with and carry out instructions of the other party. If you choose to have a broker represent you, you should enter into a written agreement with the broker that clearly establishes the broker’s obligations and your obligations. The agreement should state how and by whom the broker will be paid. You have the right to choose the type of representation, if any, you wish to receive. Your payment of a fee to a broker does not necessarily establish that the broker represents you. If you have any questions regarding the duties and responsibilities of the broker, you should resolve those questions before proceeding. TENANT REPRESENTATION Tenant certifies that (broker) represents Tenant in the negotiation and/or site selection of commercial space for lease. Check if none . 11 BPMC.Lease Form.TX.March 2013 Tenant Initials
TENANT (signature and title) Elizabeth Hernandez TENANT (print name) 5/27/2016 Date City of Houston Smoking Ordinance Report Created by Linda Figler Reviewed & Revised by CKC/JKR DocuSign Envelope ID: 5257293A - 0C66 - 43A8 - 8383 - 494EAD469556 DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431CB200117A TENANT NOTIFICATION The City of Houston recently passed an amendment to the existing City Smoking Ordinance. In order to comply with the ordinance, the Landlord is responsible for notifying you, our valued tenant, about what this means for you. Here is a synopsis of what the ordinance requires. Effective November 26, 2002: Smoking is not allowed within 25 feet of any building entrance, interior or exterior. Smoking is not allowed in the building. This includes inside of the individual tenant suites and any of the tenant offices. An exception to the City Ordinance occurs if the following ventilation requirements are met: The “exception area”, or other exempt areas within a building, must have either a) a completely separate ventilation system from the building system, or b) a system that provides an air exchange at least every 15 minutes, and exhausts all exchanged air through ductwork directly to the exterior of the building. The exhausted air cannot be drawn into any occupied non - smoking area of the building. The ventilation system must be designed so that the air pressure where smoking is allowed is neutral to any adjacent occupied non - smoking area. The cost to install any such “exception area” is solely at the tenant’s expense. The amended ordinance also requires that each employer must adopt, implement and maintain a written employee smoking policy. The policy must accommodate the preference of non - smoking employees to work in a smoke free environment. A written copy of the policy must be provided to your employees within three weeks of the adoption of the policy. A written copy of the policy must be provided to all new employees at the inception of their employment. The ordinance is enforced by the City of Houston, Department of Health & Human Services Bureau of Occupational Health. Concerns or complaints should be directed to that office. We anticipate and appreciate your cooperation in complying with the new ordinance. 12 BPMC.Lease Form.TX.March 2013 Tenant Initials
NEW TENANT SIGN INFORMATION BUILDING NAME and ADDRESS: 6201 Bonhomme Rd. - 6201 Bonhomme Rd Houston, TX. 77036 Please fill out the space below in the manner you would like the door sign to read. DOOR SIGN: SUITE #: 460S Precision Research Institute, LLC LOBBY DIRECTORY: SUITE #: 460S Precision Research Institute, LLC Tenants Signature and Authorization Date Do not write below the line – to be filled out by management Please return collateral to the following address: Attn: Authorized Signature & Printed Name DocuSign Envelope ID: 5257293A - 0C66 - 43A8 - 8383 - 494EAD469556 5/27/2016 DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431CB200117A 13 BPMC.Lease Form.TX.March 2013 Tenant Initials
JANITORIAL AUTHORIZATION BUILDING NAME and ADDRESS: 6201 Bonhomme Rd. - 6201 Bonhomme Rd Houston, TX. 77036 COMPANY NAME and SUITE: Precision Research Institute, LLC, Suite # 460S ALARM COMPANY and CODE (if applicable): Tenant Initials: Please DO NOT clean any portion of the suite. Please clean the entire suite - no special instructions. Please clean all areas of the suite with the exception of: Special Instructions: Tenant Signature and Authorization Date DocuSign Envelope ID: 5257293A - 0C66 - 43A8 - 8383 - 494EAD469556 5/27/2016 DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431CB200117A 14 BPMC.Lease Form.TX.March 2013 Tenant Initials
TENANT CONTACT INFORMATION AND AUTHORIZED SIGNATURES Building Name: 6201 Bonhomme Rd. Precision Research Institute, LLC 6201 Bonhomme Rd Houston, TX. 77036 Suite #: 460S Tenant Name: Address: Phone No: 8322701712 Fax No: E - mail Address: elizgomez2008@gmail.com Please list below persons to be contacted in case of an emergency. Emergency numbers will remain confidential and are used only in the event of an emergency involving the Premises. 1. Name: Residence Phone: Mobile Phone: Residence Phone: Mobile Phone: Residence Phone: Mobile Phone: 2. Name: 3. Name: CORPORATE OFFICE: ACCOUNTING: Contact: Address: City, State, Zip: Phone: Fax: Email: Contact: Address: City, State,Zip: Phone: Fax: Email: PERSON(S) AUTHORIZED TO APPROVE BILLABLE SERVICES (locks, keys and other billable services): Name : Name : Name : Phone : Phone : Phone : Building management is often asked to grant access to the Premises by one of your employees when they have locked themselves out of their office or when they have left their keys at home, etc. Please list the names of those who management is allowed to let into the Premises upon presenting proper identification. If you choose not to list anyone then building management will not be allowed to open the door to the Premises unless it is for the owners of the business who are personally known by building management. Name : Name : Name : Name : ID #/State : ID #/State : ID #/State : ID #/State : MARKETING RELEASE: In the event Tenant permits photo(s) to be taken of Tenant by Landlord or its representative, Tenant grants Landlord and its management company a non - exclusive, transferable, royalty free, worldwide license to the use thereof. Authorized Signature and Printed Name: Date DocuSign Envelope ID: 5257293A - 0C66 - 43A8 - 8383 - 494EAD469556 Lazaro Gomez Lynda Hudgins Bill Hudgins Ana Gutierrez 5/27/2016 DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431CB200117A 15 BPMC.Lease Form.TX.March 2013 Tenant Initials
DocuSign Envelope ID: C29C8842 - B009 - 4317 - AE1B - 431CB200117A
C FIRST ( 1 st ) AMENDMENT TO THE LEASE BETWEEN Precision Research Institute, LLC AND 6201 Bonhomme, L . P . . Landlord and Tenant agree to add Exhibits “ A ” and “B” with Exhibits “C” and “D” in regards to lease space commonly known as “Suite 460 S " at the 6201 Bonhomme Rd _ office building . Tenant’s new space is commonly known as “Suite 462 S, 464 S ” at the 6201 Bonhomme Rd . office building . Tenant’s Rent shall increase by $ 0 . 00 per month, and the security deposit shall increase by $ 0 . 00 . Landlord and Tenant agree to continue to lease the space commonly known as "Suite 460 S " at the 6201 Bonhomme Rd . office building under the following terms and conditions : Three (3) year(s) and Ten (10) month(s) at: $1,017.50 per month from September 1, 2016 to October 31, 2016 $1,971.42 per month from November 1, 2016 to June 30, 2017 $2,019.50 per month from July 1, 2017 to June 30, 2018 $2,067.58 per month from July 1, 2018 to June 30, 2019 $2,115.67 per month from July 1, 2019 to June 30, 2020 These rates are subject to the “CPI” month used for the “CPI” clause in the original Lease, as such month may be reset by any renewal amendment(s) thereto . The term shall begin on September 1 , 2016 . Tenant currently has $ 0 . 00 on file as a security deposit . Landlord’s address for Rent payments: 6201 Bonhomme, L.P. PO BOX 4737 Houston, TX 77210 - 4737 Landlord’s address for all purposes other than rent payments : 720 N . Post Oak Rd . , suite 500 Houston, Texas 77024 If Tenant fails to pay Rent on or before the fifth ( 5 th ) day of any month, Tenant shall pay Landlord a late fee equal to fifteen percent ( 15 % ) of the amount of Rent due, which shall be paid by Tenant to Landlord immediately upon written notice from Landlord . Failure by Tenant to make immediate payment of the delinquent Rent plus late fee shall constitute an Event of Default . This provision, expressly, does not relieve the Tenant’s obligation to pay Rent on the first of each month and is not a waiver by the Landlord to require payment on the first day of each month . Landlord shall furnish electrical current required for normal office use of the Premises . Upon the Commencement Date of the Lease, and thereafter, Tenant shall pay its estimated prorata share, using the rentable square footage of the Premises and the total rentable square footage of the Building, of the actual cost incurred by Landlord of providing electricity to the Premises, the common areas of the Building and the Building (“Electricity Cost”) . Tenant shall pay such estimated amount to Landlord in equal monthly installments, in advance on the first day of each month . Landlord shall have the right from time to time during any such calendar year of the Lease Term (as extended herein) to revise the written estimate of Tenant's share of the projected Electricity Cost and Tenant shall pay such revised estimated amount to Landlord in equal monthly installments, in advance on the first day of each month . Within a reasonable period after the end of each calendar year, Landlord shall furnish Tenant a statement indicating in reasonable detail the Electricity Cost for the preceding year and the parties shall, within thirty ( 30 ) days thereafter, make any payment or allowance necessary to adjust Tenant's estimated payments to Tenant's actual share of Electricity Cost as indicated by such annual statement . Any payment due to Landlord shall be payable by Tenant on demand from Landlord . Any amount due Tenant shall be credited against installments next becoming due . In the event Term exceeds one ( 1 ) year, one ( 1 ) year after the commencement of this Term and each one ( 1 ) year anniversary thereafter, basic rent hereunder shall be increased in accordance with the cost of living changes in the “Consumer Price Index” for all Urban Consumers - U . S . City Average” as published by the Bureau of Labor Statistics, United States Department of Labor ("BLS Consumer Price Index") . The BLS Consumer Price Index figure for month and year in which this Term commences is the “base” figure in the computation of adjustment of basic rent . At the beginning of each one ( 1 ) year period as provided in this paragraph, the BLS Consumer Price Index for the current month thereto shall be determined and the rent commencing with the start of each such one ( 1 ) year period shall be adjusted by increasing the basic rent proportionately, as the said BLS Consumer Price Index for the month has increased as compared with base BLS Consumer Price Index provided above . If the BLS Consumer Price Index decreases, basic rent shall remain the same as the previous period . In order to receive a refund of its security deposit, if any, Tenant agrees to provide a forwarding address to Landlord, in writing, on or before the termination date of the Lease . Tenant agrees that it waives any rights and remedies with regard to the security deposit if it DocuSign Envelope ID: 4AA567A6 - A9D3 - 4EE5 - A85B - BC5FFF7ED3D7 DocuSign Envelope ID: CE2AD70A - 61E7 - 4E73 - 9C8B - C4E2C7035FC0
LANDLORD: 6201 Bonhomme, L.P. TENANT (signature) BY: Boxer Property Management Corp. A Texas Corporation Management Company for Landlord TENANT (print name and title) Date (signature) Date DocuSign Envelope ID: 4AA567A6 - A9D3 - 4EE5 - A85B - BC5FFF7ED3D7 9/2/2016 Elizabeth Hernandez DocuSign Envelope ID: CE2AD70A - 61E7 - 4E73 - 9C8B - C4E2C7035FC0 fails to provide such forwarding address to Landlord, in writing, on or before the termination date of the Lease, including waiver of the right to receive a refund and to receive a description of damages and charges . Landlord shall have sixty ( 60 ) days from the date Tenant surrenders the premises and Landlord’s receipt of Tenant’s forwarding address, to refund the security deposit and/or provide a written description of damages and charges . Landlord reserves the right to charge Tenant, and require payment in advance, for services and/or expenses not required of Landlord under this Lease, or incurred in relation to the Lease . Such charges include, but are not limited to, processing “bounced” checks, changing locks, reviewing and signing lien waivers, lease assignments, sublet documents, providing after hours HVAC rates, etc . A list of charges can be obtained from the Landlord’s representative . The charges are based on the cost to the Landlord or its management company to provide the service which is charged for, and are subject to change at any time without notice . The Lease may be executed by the parties in multiple counterparts, which together shall have the full force and effect of a fully executed agreement between the parties. Electronic signatures by either party are valid, and Tenant agrees that the Lease and related documents and records may be created, kept and transmitted as electronic files only. All other provisions of the Lease shall remain the same. Attested by: Attested by: 9/29/2016
EXHIBIT “C” 6201 Bonhomme Rd Houston, TX. 77036 (Address) Fourth (Floor) MECH JAN 421S 419S 418S 417S 414S 413S 410S 409S 416S 415S 412S 411S 401S 402S 404S 406S 408S 407S 424S 423S 426S 428S 430S 432S 434S 450S 420S 455S 454S 474S 452S 475S 472S 470S 482S 480S 478S 468S 476S MECH 460S 462S 466S Up Up 400C 402C Office 207 sq. ft. Office 368 sq. ft. Office 464S 198 sq. ft. Office 173 sq. ft. DocuSign Envelope ID: 4AA567A6 - A9D3 - 4EE5 - A85B - BC5FFF7ED3D7 DocuSign Envelope ID: CE2AD70A - 61E7 - 4E73 - 9C8B - C4E2C7035FC0 Tenant Initials
EXHIBIT “D” 6201 Bonhomme Rd Houston, TX. 77036 (Address) 462S,464S (Suite) 462S 464S DocuSign Envelope ID: 4AA567A6 - A9D3 - 4EE5 - A85B - BC5FFF7ED3D7 DocuSign Envelope ID: CE2AD70A - 61E7 - 4E73 - 9C8B - C4E2C7035FC0 Tenant Initials
C ACCEPTANCE OF PREMISES BUILDING NAME: 6201 Bonhomme Rd. ADDRESS: 6201 Bonhomme Rd Houston, TX. 77036 As the tenant of suite # 462S, 464S I hereby certify that I have accepted the premises, and all tenant improvements as set forth in the Lease agreement have been completed in a manner satisfactory and acceptable to me. TENANT (signature and title) Elizabeth Hernandez TENANT (print name) 9/2/2016 Date DocuSign Envelope ID: 4AA567A6 - A9D3 - 4EE5 - A85B - BC5FFF7ED3D7 DocuSign Envelope ID: CE2AD70A - 61E7 - 4E73 - 9C8B - C4E2C7035FC0
C Tenant Representation Letter Information about Brokerage Services Before working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner’s agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyer’s agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly. IF THE BROKER REPRESENTS THE OWNER: The broker becomes the owner’s agent by entering into an agreement with the owner, usually through a written listing agreement, or by agreeing to act as a subagent by accepting an offer of sub agency from the listing broker . A subagent may work in a different real estate office . A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first . The buyer should not tell the owner’s agent anything the buyer would not want the owner to know because an owner’s agent must disclose to the owner any material information known to the agent . IF THE BROKER REPRESENTS THE BUYER: The broker becomes the buyer’s agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyer’s agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyer’s agent anything the owner would not want the buyer to know because a buyer’s agent must disclose to the buyer any material information known to the agent. IF THE BROKER ACTS AS AN INTERMEDIARY: A broker may act as an intermediary between the parties if the broker complies with The Texas Real Estate License Act. The broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker’s obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Texas Real Estate License Act. A broker who acts as an intermediary in a transaction: (1) shall treat all parties honestly; (2) may not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner; (3) may not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and (4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by The Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property. With the parties’ consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under that Act and associated with the broker to communicate with and carry out instructions of the other party. If you choose to have a broker represent you, you should enter into a written agreement with the broker that clearly establishes the broker’s obligations and your obligations. The agreement should state how and by whom the broker will be paid. You have the right to choose the type of representation, if any, you wish to receive. Your payment of a fee to a broker does not necessarily establish that the broker represents you. If you have any questions regarding the duties and responsibilities of the broker, you should resolve those questions before proceeding. TENANT REPRESENTATION Tenant certifies that (broker) represents Tenant in the negotiation and/or site selection of commercial space for lease . Check if none . TENANT (signature and title) Elizabeth Hernandez TENANT (print name) 9/2/2016 Date DocuSign Envelope ID: 4AA567A6 - A9D3 - 4EE5 - A85B - BC5FFF7ED3D7 DocuSign Envelope ID: CE2AD70A - 61E7 - 4E73 - 9C8B - C4E2C7035FC0
C SECOND ( 2 nd) AMENDMENT TO THE LEASE BETWEEN Precision Research Institute, LLC AND 6201 Bonhomme, L . P . . Landlord and Tenant agree to replace Exhibits “ C ” and “ D ” with Exhibits “ E ” and “ F ” in regards to lease space commonly known as “Suite 460 S " at the 6201 Bonhomme Rd . _ office building . Tenant’s new space is commonly known as “Suite 466 S” at the 6201 Bonhomme Rd . office building . Tenant’s Rent shall increase by $ 1 , 122 . 25 per month, and the security deposit shall increase by $ 0 . 00 Landlord and Tenant agree to continue to lease the space commonly known as "Suite 460 S” " at the 6201 Bonhomme Rd . office building under the following terms and conditions : Four ( 4) year (s) and Nine (9) month(s) at: $ 3234.92 per month from October 1, 2018 to June 30, 2019. $ 3381.96 per month from July 1, 2019 to June 30, 2020. $ 3529.00 per month from July 1, 2020 to June 30, 2021. $ 3676.04 per month from July 1, 2021 to June 30, 2022. $ 3823.08 per month from July 1, 2022 to June 30, 2023. These rates are subject to the “CPI” month used for the “CPI” clause in the original Lease, as such month may be reset by any renewal amendment(s) thereto. The term shall begin on October 1, 2018 . Tenant currently has $ 0.00 on file as a security deposit. Landlord’s address for Rent payments: 6201 Bonhomme, L.P. . PO BOX 4737 Houston 77210 - 4737 The current building rules and regulations for the property are hereby incorporated by reference as part of the Lease, and replace any existing rules and regulations made a part of the Lease, if any. Upon request from Tenant, the management company will provide a copy. If Tenant fails to pay Rent on or before the fifth ( 5 th ) day of any month, Tenant shall pay Landlord a late fee equal to fifteen percent ( 15 % ) of the amount of Rent due, which shall be paid by Tenant to Landlord immediately upon written notice from Landlord . Failure by Tenant to make immediate payment of the delinquent Rent plus late fee shall constitute an Event of Default . This provision, expressly, does not relieve the Tenant’s obligation to pay Rent on the first of each month and is not a waiver by the Landlord to require payment on the first day of each month . In the event that the cost of electricity per kilowatt hour (“kwh”) for the electricity serving the Building increases by thirty percent ( 30 % ) or more from the Commencement Date of this Amendment, Landlord may pass through any such increase (including all charges assessed as part of the electricity bill) above the thirty percent ( 30 % ) threshold to Tenant based on Tenant’s pro - rata share of the total square footage of the Building . Tenant agrees to pay such charge immediately upon receipt of written notice thereof . Landlord and its management company shall calculate said charges, and its determination shall be binding on all parties . In the event Term exceeds one ( 1 ) year, one ( 1 ) year after the commencement of this Term and each one ( 1 ) year anniversary thereafter, basic rent hereunder shall be increased in accordance with the cost of living changes in the “Consumer Price Index” for all Urban Consumers - U . S . City Average” as published by the Bureau of Labor Statistics, United States Department of Labor ("BLS Consumer Price Index") . The BLS Consumer Price Index figure for month and year in which this Term commences is the “base” figure in the computation of adjustment of basic rent . At the beginning of each one ( 1 ) year period as provided in this paragraph, the BLS Consumer Price Index for the current month thereto shall be determined and the rent commencing with the start of each such one ( 1 ) year period shall be adjusted by increasing the basic rent proportionately, as the said BLS Consumer Price Index for the month has increased as compared with base BLS Consumer Price Index provided above . If the BLS Consumer Price Index decreases, basic rent shall remain the same as the previous period . In order to receive a refund of its security deposit, if any, Tenant agrees to provide a forwarding address to Landlord, in writing, on or before the termination date of the Lease . Tenant agrees that it waives any rights and remedies with regard to the security deposit if it fails to provide such forwarding address to Landlord, in writing, on or before the termination date of the Lease, including waiver of the right to receive a refund and to receive a description of damages and charges . Landlord shall have sixty ( 60 ) days from the date Tenant surrenders the premises and Landlord’s receipt of Tenant’s forwarding address, to refund the security deposit and/or provide a written description of damages and charges . Landlord reserves the right to charge Tenant, and require payment in advance, for services and/or expenses not required of Landlord under this Lease, or incurred in relation to the Lease . Such charges include, but are not limited to, processing “bounced” checks, DocuSign Envelope ID: 875E72FF - 87F4 - 4603 - 9970 - 102685086340 DocuSign Envelope ID: F2950944 - 7ED0 - 4AB2 - 8BF9 - F15663AB04D6 BPMC01/15renewal.expansion.amendment
BY: Boxer Property Management Corp. A Texas Corporation TENANT (print name and title) Management Company for Landlord Date (signature) Date DocuSign Envelope ID: 875E72FF - 87F4 - 4603 - 9970 - 102685086340 9/7/2018 DocuSign Envelope ID: F2950944 - 7ED0 - 4AB2 - 8BF9 - F15663AB04D6 changing locks, reviewing and signing lien waivers, lease assignments, sublet documents, providing after hours HVAC rates, etc . A list of charges can be obtained from the Landlord’s representative . The charges are based on the cost to the Landlord or its management company to provide the service which is charged for, and are subject to change at anytime without notice . The Lease may be executed by the parties in multiple counterparts, which together shall have the full force and effect of a fully executed agreement between the parties. Electronic signatures by either party are valid, and Tenant agrees that the Lease and related documents and records may be created, kept and transmitted as electronic files only. Special Provisions: Please See: Improvement Agreement and Exhibit “Y.” All other provisions of the Lease shall remain the same. Attested by: Attested by: LANDLORD: 6201 Bonhomme, L.P. TENANT (signature) Elizabeth Hernandez 9/12/2018 BPMC01/15renewal.expansion.amendment
EXHIBIT “E” 6201 Bonhomme Rd Houston, TX. 77036 (Address) Fourth 4 th Floor) MECH JAN 421S 419S 418S 417S 414S 413S 410S 409S 416S 415S 412S 411S 401S 402S 404S 406S 408S 407S 424S 423S 426S 428S 430S 432S 434S 450S 420S 455S 454S 474S 452S 475S 472S 470S 482S 480S 478S 468S 476S MECH 460S 466S Up Up 400C 402C Recept i on 2935s q.ft. Tenant Initials DocuSign Envelope ID: 875E72FF - 87F4 - 4603 - 9970 - 102685086340 DocuSign Envelope ID: F2950944 - 7ED0 - 4AB2 - 8BF9 - F15663AB04D6 BPMC01/15renewal.expansion.amendment
EXHIBIT “F” 6201 Bonhomme Rd Houston, TX. 77036 (Address) 466S (Suite) Tenant Initials DocuSign Envelope ID: 875E72FF - 87F4 - 4603 - 9970 - 102685086340 DocuSign Envelope ID: F2950944 - 7ED0 - 4AB2 - 8BF9 - F15663AB04D6 BPMC01/15renewal.expansion.amendment
EXHIBIT “Y” Tenant Improvement Allowance Landlord agrees to provide Tenant with a tenant improvement allowance in the amount of $3,357.75 for Tenant Improvements to the Premises (Tenant Improvement Allowance). If the Tenant chooses not to use the Tenant Improvement Allowance towards Tenant Improvements, it may be credited towards the Tenant’s rent subject to the following provisions. Tenant agrees that the Tenant Improvement Allowance shall only be used/credited during the first twelve (12) months from the commencement date of the Lease. Tenant agrees that the Landlord will apply the Tenant Improvement Allowance as follows: (Please INITIAL one option) The Tenant Improvement allowance shall be applied evenly over the first three (3) month(s) of the Lease. (Oct, Nov, Dec 2018) The Tenant Improvement allowance shall be applied evenly over the first 12 months of the Lease. Tenant agrees to forfeit the Tenant Improvement Allowance if the Tenant is in default of the Lease. Tenant agrees that the Tenant Improvement Allowance does not affect Tenant’s obligation to pay its first month’s rent and security deposit under the terms and condition of the Lease. Tenant shall pay its first month’s rent in the amount of $ , and its security deposit in the amount of $ on or before . TENANT (signature and title) Elizabeth Hernandez TENANT (print name) 9/7/2018 Date DocuSign Envelope ID: 875E72FF - 87F4 - 4603 - 9970 - 102685086340 DocuSign Envelope ID: F2950944 - 7ED0 - 4AB2 - 8BF9 - F15663AB04D6 BPMC01/15renewal.expansion.amendment
Date DocuSign Envelope ID: 875E72FF - 87F4 - 4603 - 9970 - 102685086340 TENANT (signature) Elizabeth Hernandez TENANT (print name) Boxerpropmancorp1/02.improvementagreement DocuSign Envelope ID: F2950944 - 7ED0 - 4AB2 - 8BF9 - F15663AB04D6 IMPROVEMENT AGREEMENT Precision Research Institute, LLC (Tenant) does hereby agree to pay Landlord the sum of $ 0 . 00 towards the improvements to the Premises “Suite 466 S” at 6201 Bonhomme Rd office building . These improvements shall be at the Landlord’s sole cost and expense . In the event that these improvements delay the occupancy of the Premises by Tenant, Tenant shall not be released from its Rent obligations, which will begin on the original commencement date . 1) Demolish one (1) standard duplex outlet 2) Demolish one (1) fire/horn strobe 3) Relocate fire/horn strobe 4) Add 3x9 cased opening 5) Install one (1) new door and frame 6) Install 1 lot of carpet patch 7) Paint 153 rsf of wall 9/7/2018 BPMC01/15renewal.expansion.amendment
Lease Renewals for Tenants Utilizing Payment Portal Autopay If you are currently using the Autopay feature through the Boxer Tenant Payment Portal at www.BoxerProperty.com , please note you must log in and select the new monthly amount for your rent payment. If your lease renewal occurred after the 12th day of the month, you may need to make the next month’s payment via one - time payment; the Payment Portal Autopay will then be effective the 1st day of the next following month. Lease Renewals for Tenants with Automatic Bank Draft (ACH) If you have enrolled with Boxer Property to automatically draft your bank account for rent via ACH, please request to convert from ACH to a Boxer Tenant Portal Account by registering through the Tenant Center at www.BoxerProperty.com. Please acknowledge your understanding of this requirement by initialing here . DocuSign Envelope ID: 875E72FF - 87F4 - 4603 - 9970 - 102685086340 DocuSign Envelope ID: F2950944 - 7ED0 - 4AB2 - 8BF9 - F15663AB04D6 BPMC01/15renewal.expansion.amendment
C ACCEPTANCE OF PREMISES BUILDING NAME: 6201 Bonhomme Rd. ADDRESS: 6201 Bonhomme Rd Houston, TX. 77036 (Address) As the tenant of suite # 466S , I hereby certify that I have accepted the premises, and all tenant improvements as set forth in the Lease agreement have been completed in a manner satisfactory and acceptable to me. TENANT (signature and title) Elizabeth Hernandez TENANT (print name) 9/7/2018 Date DocuSign Envelope ID: 875E72FF - 87F4 - 4603 - 9970 - 102685086340 DocuSign Envelope ID: F2950944 - 7ED0 - 4AB2 - 8BF9 - F15663AB04D6 BPMC01/15renewal.expansion.amendment
C Tenant Representation Letter Information about Brokerage Services Before working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner’s agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyer’s agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly. IF THE BROKER REPRESENTS THE OWNER: The broker becomes the owner’s agent by entering into an agreement with the owner, usually through a written listing agreement, or by agreeing to act as a subagent by accepting an offer of sub agency from the listing broker. A subagent may work in a different real estate office. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owner’s agent anything the buyer would not want the owner to know because an owner’s agent must disclose to the owner any material information known to the agent. IF THE BROKER REPRESENTS THE BUYER: The broker becomes the buyer’s agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyer’s agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyer’s agent anything the owner would not want the buyer to know because a buyer’s agent must disclose to the buyer any material information known to the agent. IF THE BROKER ACTS AS AN INTERMEDIARY: A broker may act as an intermediary between the parties if the broker complies with The Texas Real Estate License Act. The broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker’s obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Texas Real Estate License Act. A broker who acts as an intermediary in a transaction: (1) shall treat all parties honestly; (2) may not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner; (3) may not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and (4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by The Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property. With the parties’ consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under that Act and associated with the broker to communicate with and carry out instructions of the other party. If you choose to have a broker represent you, you should enter into a written agreement with the broker that clearly establishes the broker’s obligations and your obligations. The agreement should state how and by whom the broker will be paid. You have the right to choose the type of representation, if any, you wish to receive. Your payment of a fee to a broker does not necessarily establish that the broker represents you. If you have any questions regarding the duties and responsibilities of the broker, you should resolve those questions before proceeding. TENANT REPRESENTATION Tenant certifies that (broker) represents Tenant in the negotiation and/or site selection of commercial space for lease. Check ܈ if none. TENANT (signature and title) Elizabeth Hernandez TENANT (print name) 9/7/2018 Date DocuSign Envelope ID: 875E72FF - 87F4 - 4603 - 9970 - 102685086340 DocuSign Envelope ID: F2950944 - 7ED0 - 4AB2 - 8BF9 - F15663AB04D6 BPMC01/15renewal.expansion.amendment
LANDLORD: 6201 Bonhomme, L.P. BY: Boxer Property Management Corp. A Texas Corporation Management Company for Landlord TENANT (signature) TENANT NAME (print name) 12/26/2018 DATE (signature) DATE DocuSign Envelope ID: 2C9EB2D9 - 4884 - 4413 - 8FDE - 3BD7DB1ED28D Elizabeth Hernandez DocuSign Envelope ID: 639B6DBE - 606B - 47FF - 9886 - 46389171A8EE THIRD (3rd) ADDENDUM TO THE LEASE BETWEEN Precision Research Institute, LLC (TENANT) AND 6201 Bonhomme, L.P. (LANDLORD). Tenant agrees ( 2 ) reserved parking spaces as designated by Landlord at a rate of $ 70 . 00 plus applicable taxes per month, which is due with rent payments beginning on 04 / 01 / 2019 and month - to - month . Initial one : parking space/s shall be available to Tenant between the hours of 6 : 00 am to 7 : 30 pm, Monday through Friday, and 6 : 00 am to 3 : 00 pm Saturdays . Parking is reserved for the vehicle belonging to the tenant only, and vehicle must display a reserved permit issued by Landlord . parking space/s shall be available to Tenant twenty four (24) hours per day, seven days per week. Parking is reserved for the vehicle belonging to the tenant only, and vehicle must display a reserved permit issued by Landlord. Landlord reserves the right to increase or decrease the monthly rental for said parking spaces with thirty (30) days’ written notice to Tenant. Upon expiration of this agreement the parking permit card (if applicable) must be returned immediately, in working condition. Landlord has the exclusive right to immediately terminate this agreement with written notice to Tenant. Landlord assumes no responsibility whatsoever for loss or damage of the vehicle or its contents, however, caused. Vehicle/s shall be limited in size and weight as designated by the Landlord. Vehicles must be properly insured, in good working condition and properly licensed by the controlling governmental authority. Vehicles may not be left in the parking lot for more than twenty four (24) hours at a time. Vehicles left in the parking lot for more than twenty four (24) hours are subject to immediate removal by Landlord or its representatives at Tenant’s sole cost and expense. Tenant hereby acknowledges receipt of Parking Permit/Card Number N/A and understands that this permit must be displayed at all times when the vehicle/s is parked on the subject lot. There will be a charge of $ 0.00 per card, for the replacement of this parking permits card. Tenant shall pay in addition to the monthly parking fee, a one - time non - refundable fee of $0.00 for each permit or card issued. Tenant’s driver’s license number and State of issuance : 19667574 - Texas These rates are subject to the “CPI” month used for the “CPI” clause in the original Lease, as such month may be reset by any renewal amendment(s) thereto. All other provisions of the Lease shall remain the same. The Lease may be executed by the parties in multiple counterparts, which together shall have the full force and effect of a fully executed agreement between the parties. Electronic signatures by either party are valid, and Tenant agrees that the Lease and related documents and records may be created, kept and transmitted as electronic files only. Attested by: 3/14/2019 Bpmpkgadd 1/15 blc
LANDLORD: 6201 Bonhomme, L.P. BY: Boxer Property Management Corp. A Texas Corporation Management Company for Landlord TENANT (signature) TENANT NAME (print name and title) 3/28/2019 Date (signature) Date DocuSign Envelope ID: B26B6F31 - CB70 - 4EEB - BCA5 - 94DD9ABB7489 Elizabeth Hernandez DocuSign Envelope ID: C77591EC - 46DC - 4F82 - 9328 - 9ED6C1A8378B FOURTH (4th) ADDENDUM TO THE LEASE BETWEEN Precision Research Institute, LLC (TENANT) AND 6201 Bonhomme, L.P. (LANDLORD). Tenant agrees ( 2 ) reserved parking spaces as designated by Landlord at a rate of $ 70 . 00 plus applicable taxes per month, which is due with rent payments beginning on 10 / 01 / 2019 and month - to - month . Initial one : parking space/s shall be available to Tenant between the hours of 6 : 00 am to 7 : 30 pm, Monday through Friday, and 6 : 00 am to 3 : 00 pm Saturdays . Parking is reserved for the vehicle belonging to the tenant only, and vehicle must display a reserved permit issued by Landlord . parking space/s shall be available to Tenant twenty four (24) hours per day, seven days per week. Parking is reserved for the vehicle belonging to the tenant only, and vehicle must display a reserved permit issued by Landlord. Landlord reserves the right to increase or decrease the monthly rental for said parking spaces with thirty (30) days’ written notice to Tenant. Upon expiration of this agreement the parking permit card (if applicable) must be returned immediately, in working condition. Landlord has the exclusive right to immediately terminate this agreement with written notice to Tenant. Landlord assumes no responsibility whatsoever for loss or damage of the vehicle or its contents, however, caused. Vehicle/s shall be limited in size and weight as designated by the Landlord. Vehicles must be properly insured, in good working condition and properly licensed by the controlling governmental authority. Vehicles may not be left in the parking lot for more than twenty four (24) hours at a time. Vehicles left in the parking lot for more than twenty four (24) hours are subject to immediate removal by Landlord or its representatives at Tenant’s sole cost and expense. Tenant hereby acknowledges receipt of Parking Permit/Card Number N/A and understands that this permit must be displayed at all times when the vehicle/s is parked on the subject lot. There will be a charge of $0.00 per card, for the replacement of this parking permits card. Tenant shall pay in addition to the monthly parking fee, a one - time non - refundable fee of $0.00 for each permit or card issued. Tenant’s driver’s license number and State of issuance: 19667574 - Texas>> . These rates are subject to the “CPI” month used for the “CPI” clause in the original Lease, as such month may be reset by any renewal amendment(s) thereto. All other provisions of the Lease shall remain the same. The Lease may be executed by the parties in multiple counterparts, which together shall have the full force and effect of a fully executed agreement between the parties. Electronic signatures by either party are valid, and Tenant agrees that the Lease and related documents and records may be created, kept and transmitted as electronic files only. Attested by: 5/6/2019 Bpmpkgadd 1/15 blc
Exhibit 10.5
A. Apartment (Par. 2) Street Address: 1625 Main St Apartment No. 202N City: Houston State: TX Zip: 77002 B. Initial Lease Term. Begins: 03/15/2022 Ends at 11:59 p.m. on: 09/14/2022 C. Monthly Base Rent (Par. 3) $ 3008.00 E. Security Deposit (Par. 5) $ 3999.00 Note that this amount does not include any Animal Deposit, which would be reflected in an Animal Addendum. F. Notice of Termination or Intent to Move Out (Par. 4) A minimum of 6 0 days’ written notice of termination or intent to move out required at end of initial Lease term or during renewal period If the number of days isn’t filled in, notice of at least 30 days is required . D. Prorated Rent $ 1658.87 X due for the remainder of 1st month or for 2nd month G. Late Fees (Par. 3.3) Initial Late Fee Daily Late Fee X 10 % of one month’s monthly base rent or 0 % of one month’s monthly base rent for days or $ 311.98 $ 0.00 for days Due if rent unpaid by 11:59 p.m. on the 5th (3rd or greater) day of the month H. Returned Check or Rejected Payment Fee (Par. 3.4) $ 75.00 J. Optional Early Termination Fee (Par. 7.2) $ Notice of 60 days is required. You are not eligible for early termination if you are in default. Fee must be paid no later than 30 days after you give us notice If values are blank or “0,” then this section does not apply. K. Animal Violation Charge (Par. 12.2) Initial charge of $ 100.00 per animal (not to exceed $100 per animal) and A daily charge of $ 10.00 per animal (not to exceed $10 per day per animal) I. Reletting Charge (Par. 7.1) A reletting charge of $ 0.00 (not to exceed 85% of the highest monthly Rent during the Lease term) may be charged in certain default situations L. Additional Rent - Monthly Recurring Fixed Charges. You will pay separately for these items as outlined below and/or in separate addenda, Special Provisions or an amendment to this Lease. Animal rent $ 0 . 0 0 Cable/satellite $ Concierge trash $ Internet $ Package service $ Pest control $ 2 . 0 0 Storage $ Stormwater/drainage $ Washer/Dryer $ Other : Trash/Recyclin g Fla t Fe e $ 15 . 0 0 Other : $ Other : $ Other : $ M. Other Variable Charges. You will pay separately for gas, water, wastewater, electricity, trash/recycling, utility billing fees and other items as outlined in separate addenda, Special Provisions or an amendment to this Lease. Utility Connection Charge or Transfer Fee : $ 50.00 (not to exceed $50) to be paid within 5 days of written notice (Par. 3.5) Special Provisions. See Par. 32 or additional addenda attached. The Lease cannot be changed unless in writing and signed by you and us. This Lease is valid only if filled out before January 1, 2024. Apartment Lease Contract This is a binding contract. Read carefully before signing. This Lease Contract (“Lease”) is between you, the resident(s) as listed below and us. The terms “you” and “your” refer to all residents. The terms “we,” “us,” and “our” refer to the owner listed below. PARTIES Residents Henry Levinski, Dante Picazo Owner SPUS9 HSTN North Tower LP Occupants LEASE DETAILS 3/21/2022 12:21 PM Apartment Lease Contract ©2022, Texas Apartment Association, Inc. Blue Moon eSignature Services Document ID: 306414080 Page 1 of 6
LEASE TERMS AND CONDITIONS 1. Definitions. The following terms are commonly used in this Lease: 1. “Residents” are those listed in “Residents” above who sign the Lease and are authorized to live in the apartment. 2. “Occupants” are those listed in this Lease who are also autho - rized to live in the apartment, but who do not sign the Lease. 3. “Owner” may be identified by an assumed name and is the owner only and not property managers or anyone else. 4. “Including” in this Lease means “including but not limited to.” 5. “Community Policies” are the written apartment rules and policies, including property signage and instructions for care of our property and amenities, with which you, your occupants, and your guests must comply. 6. “Rent” is monthly base rent plus additional monthly recurring fixed charges. 2. Apartment. You are leasing the apartment listed above for use as a private residence only. 2.1. Access. In accordance with our Community Policies, you’ll receive access information or devices for your apartment and mailbox, and other access devices including: _ G arage . 2. Measurements. Any dimensions and sizes provided to you relating to the apartment are only approximations or estimates; actual dimensions and sizes may vary. 3. Representations. You agree that designations or accredi - tations associated with the property are subject to change. 3. Rent. You must pay your Rent on or before the 1st day of each month (due date) without demand. There are no exceptions regarding the payment of Rent, and you agree not paying Rent on or before the 1st of each month is a material breach of this Lease. 1. Payments. You will pay your Rent by any method, manner and place we specify in accordance with our Community Policies. Cash is not acceptable without our prior written permission. You cannot withhold or offset Rent unless authorized by law. We may, at our option, require at any time that you pay Rent and other sums due in one single payment by any method we specify. 2. Application of Payments. Payment of each sum due is an independent covenant, which means payments are due regardless of our performance. When we receive money, other than water and wastewater payments subject to government regulation, we may apply it at our option and without notice first to any of your unpaid obligations, then to accrued rent. We may do so regardless of notations on checks or money orders and regardless of when the obligations arose. All sums other than Rent and late fees are due upon our demand. After the due date, we do not have to accept any payments. 3. Late Fees. If we don’t receive your monthly base rent in full when it’s due, you must pay late fees as outlined in Lease Details. 4. Returned Payment Fee. You’ll pay the fee listed in Lease Details for each returned check or rejected electronic payment, plus initial and daily late fees if applicable, until we receive full payment in an acceptable method. 5. Utilities and Services. You’ll pay for all utilities and services, related deposits, and any charges or fees when they are due and as outlined in this Lease. Television channels that are provided may be changed during the Lease term if the change applies to all residents. If your electricity is interrupted, you must use only battery - operated lighting (no flames). You must not allow any utilities (other than cable or Internet) to be cut off or switched for any reason — including disconnection for not paying your bills — until the Lease term or renewal period ends. If a utility is individually metered, it must be connected in your name and you must notify the provider of your move - out date. If you delay getting service turned on in your name by the Lease’s start date or cause it to be transferred back into our name before you surrender or abandon the apartment, you’ll be liable for the charge listed above (not to exceed $50 per billing period), plus the actual or estimated cost of the utilities used while the utility should have been billed to you. If your apartment is individually metered and you change your retail electric provider, you must give us written notice. You must pay all applicable provider fees, including any fees to change service back into our name after you move out. 6. Lease Changes. Lease changes are only allowed during the Lease term or renewal period if governed by Par. 10, specified in Special Provisions in Par. 32, or by a written addendum or amendment signed by you and us. At or after the end of the initial Lease term, Rent increases will become effective with at least 5 days plus the number of days’ advance notice contained in Box F on page 1 in writing from us to you. Your new Lease, which may include increased Rent or Lease changes, will begin on the date stated in any advance notice we provide (without needing your signature) unless you give us written move - out notice under Par. 25, which applies only to the end of the current Lease term or renewal period. 4. Automatic Lease Renewal and Notice of Termination. This Lease will automatically renew month - to - month unless either party gives written notice of termination or intent to move out as required by Par. 25 and specified on page 1. If the number of days isn’t filled in, no - tice of at least 30 days is required. 5. Security Deposit. The total security deposit for all residents is due on or before the date this Lease is signed. Any animal deposit will be designated in an animal addendum. Security deposits may not be ap - plied to Rent without our prior written consent. 5.1. Refunds and Deductions. You must give us your advance notice of move out as provided by Par. 25 and forwarding address in writing to receive a written description and itemized list of charges or refund. In accordance with our Community Policies and as allowed by law, we may deduct from your security deposit any amounts due under the Lease. If you move out early or in response to a notice to vacate, you’ll be liable for rekeying charges. Upon receipt of your move - out date and forwarding address in writing, the security deposit will be returned (less lawful deductions) with an itemized accounting of any deductions, no later than 30 days after surrender or abandonment, unless laws provide otherwise. Any refund may be by one payment jointly payable to all residents and distributed to any one resident we choose, or distributed equally among all residents. 6. Insurance. Our insurance doesn’t cover the loss of or damage to your personal property. You will be required to have liability insur - ance as specified in our Community Policies or Lease addenda un - less otherwise prohibited by law. If you have insurance covering the apartment or your personal belongings at the time you or we suffer or allege a loss, you agree to require your insurance carrier to waive any insurance subrogation rights. Even if not required, we urge you to obtain your own insurance for losses due to theft, fire, flood, water, pipe leaks and similar occurrences. Most renter’s insurance policies don’t cover losses due to a flood. 7. Reletting and Early Lease Termination. This Lease may not be ter - minated early except as provided in this Lease. 1. Reletting Charge. You’ll be liable for a reletting charge as listed in Lease Details, (not to exceed 85% of the highest monthly Rent during the Lease term) if you: (A) fail to move in, or fail to give written move - out notice as required in Par. 25; (B) move out without paying Rent in full for the entire Lease term or renewal period; (C) move out at our demand because of your default; or (D) are judicially evicted. The reletting charge is not a termination, cancellation or buyout fee and does not release you from your obligations under this Lease, including liability for future or past - due Rent, charges for damages or other sums due. The reletting charge is a liquidated amount covering only part of our damages — for our time, effort, and expense in finding and processing a replacement resident. These damages are uncertain and hard to ascertain — particularly those relating to inconvenience, paperwork, advertising, showing apartments, utilities for showing, checking pros - pects, overhead, marketing costs, and locator - service fees. You agree that the reletting charge is a reasonable estimate of our damages and that the charge is due whether or not our reletting attempts succeed. 2. Early Lease Termination Procedures. In addition to your termination rights referred to in 7.3 or 8.1 below, if this provision applies under Lease Details, you may terminate the Lease prior to the end of the Lease term if all of the following occur: (a) as outlined in Lease Details, you give us written notice of early termination, pay the early termination fee and specify the date by which you’ll move out; (b) you are not in default at any time and do not hold over; and (c) you repay all rent concessions, credits or discounts you received during the Lease term. If you are in default, the Lease remedies apply. 3. Special Termination Rights . You may have the right under Texas law to terminate the Lease early in certain situations involving military deployment or transfer, family violence, certain sexual offenses, stalking or death of a sole resident . 8 . Delay of Occupancy . We are not responsible for any delay of your occupancy caused by construction, repairs, cleaning, or a previous resident’s holding over . This Lease will remain in force subject to (1) abatement of Rent on a daily basis during delay, and (2) your right to terminate the Lease in writing as set forth below. Rent abatement and Lease termination do not apply if the delay is for cleaning or re - pairs that don’t prevent you from moving into the apartment. 8.1. Termination. If we give written notice to you of a delay in occupancy when or after the Lease begins, you may termi - nate the Lease within 3 days after you receive written notice. If we give you written notice before the date the Lease begins and the notice states that a construction or other delay is expected and that the apartment will be ready for you to occupy on a specific date, you may terminate the Lease within 7 days after receiving written notice. After proper termination, you are entitled only to refund of any deposit(s) and any Rent you paid. 3/21/2022 12:21 PM Apartment Lease Contract ©2022, Texas Apartment Association, Inc. Blue Moon eSignature Services Document ID: 306414080 Page 2 of 6
9. Care of Unit and Damages. You must promptly pay or reimburse us for loss, damage, consequential damages, government fines or charges, or cost of repairs or service in the apartment community because of a Lease or Community Policies violation; improper use, negligence, or other conduct by you, your invitees, your occupants, or your guests; or, as allowed by law, any other cause not due to our negligence or fault, except for damages by acts of God to the extent they couldn’t be mitigated by your action or inaction. Unless damage or wastewater stoppage is due to our negligence, we’re not liable for — and you must pay for — repairs and replace - ments occurring during the Lease term or renewal period, includ - ing: (A) damage from wastewater stoppages caused by improper objects in lines exclusively serving your apartment; (B) damage to doors, windows, or screens; and (C) damage from windows or doors left open. RESIDENT LIFE 10. Community Policies. Community Policies become part of the Lease and must be followed. We may make changes, including addi - tions, to our written Community Policies, and those changes can be - come effective immediately if the Community Policies are distributed and applicable to all units in the apartment community and do not change the dollar amounts in Lease Details. 1. Photo/Video Release. You give us permission to use any photograph, likeness, image or video taken of you while you are using property common areas or participating in any event sponsored by us. 2. Disclosure of Information. At our sole option, we may, but are not obligated to, share and use information related to this Lease for law - enforcement, governmental, or business purposes. At our request, you authorize any utility provider to give us information about pending or actual connections or disconnections of utility service to your apartment. 3. Guests. We may exclude from the apartment community any guests or others who, in our sole judgment, have been violating the law, violating this Lease or our Community Policies, or disturbing other residents, neighbors, visitors, or owner representatives. We may also exclude from any outside area or common area anyone who refuses to show photo identification or refuses to identify himself or herself as a resident, an authorized occupant, or a guest of a specific resident in the community. Anyone not listed in this Lease cannot stay in the apartment for more than 3 days in one week without our prior written consent, and no more than twice that many days in any one month. If the previous space isn’t filled in, 2 days total per week will be the limit. 4. Notice of Convictions and Registration. You must notify us within 15 days if you or any of your occupants: (A) are convicted of any felony, (B) are convicted of any misdemeanor involving a controlled substance, violence to another person, or destruction of property, or (C) register as a sex offender. Informing us of a criminal conviction or sex - offender registration doesn’t waive any rights we may have against you. 5. Odors and Noise. You agree that odors, smoke and smells including those related to cooking and everyday noises or sounds are all a normal part of a multifamily living environment and that it is impractical for us to prevent them from penetrating your apartment. 11. Conduct. You agree to communicate and conduct yourself in a law - ful, courteous and reasonable manner at all times when interacting with us, our representatives and other residents or occupants. Any acts of unlawful, discourteous or unreasonable communication or conduct by you, your occupants or guests is a breach of this Lease. You must use customary diligence in maintaining the apartment, keeping it in a sanitary condition and not damaging or littering the common areas. Trash must be disposed of at least weekly. You will use your apartment and all other areas, including any balconies, with reasonable care. We may regulate the use of passageways, patios, balconies, porches, and activities in common areas. 1. Prohibited Conduct. You, your occupants, and your guests will not engage in unlawful, discourteous or unreasonable behavior including, but not limited to, any of the following activities: (a) criminal conduct; manufacturing, delivering, or possessing a controlled substance or drug parapher - nalia; engaging in or threatening violence; possessing a weapon prohibited by state law; discharging a firearm in the apartment community; or, except when allowed by law, displaying or possessing a gun, knife, or other weapon in the common area, or in a way that may alarm others ; (b) behaving in a loud, obnoxious or dangerous manner ; (c) disturbing or threatening the rights, comfort, health, safety, or convenience of others, including us, our agents, or our representatives; (d) disrupting our business operations; (e) storing anything in closets containing water heaters or gas appliances; (f) tampering with utilities or telecommunication equipment; (g) bringing hazardous materials into the apartment community; (h) using windows for entry or exit; (i) heating the apartment with gas - operated appliances; (j) making bad - faith or false allegations against us or our agents to others; (k) smoking of any kind, that is not in accordance with our Community Policies or Lease addenda; (l) using glass containers in or near pools; or (m) conducting any kind of business (including child - care services) in your apartment or in the apartment community — except for any lawful business conducted “at home” by computer, mail, or telephone if customers, clients, patients, employees or other business associates do not come to your apartment for business purposes. 12. Animals. No living creatures of any kind are allowed, even tempo - rarily, anywhere in the apartment or apartment community un - less we’ve given written permission. If we allow an animal, you must sign a separate Animal Addendum and, except as set forth in the ad - dendum, pay an animal deposit and applicable fees and additional monthly rent, as applicable. An animal deposit is considered a gener - al security deposit. You represent that any requests, statements and representations you make, including those for an assistance or sup - port animal, are true, accurate and made in good faith. Feeding stray, feral or wild animals is a breach of this Lease. 12.1. Removal of Unauthorized Animal. We may remove an unauthorized animal by (1) leaving, in a conspicuous place in the apartment, a written notice of our intent to remove the animal within 24 hours; and (2) following the procedures of Par. 14. We may: keep or kennel the animal; turn the animal over to a humane society, local authority or rescue organization; or return the animal to you if we consent to your request to keep the animal and you have completed and signed an Animal Addendum and paid all fees. When keeping or kenneling an animal, we won’t be liable for loss, harm, sickness, or death of the animal unless due to our negligence. You must pay for the animal’s reasonable care and kenneling charges. 12.2. Violations of Animal Policies and Charges. If you or any guest or occupant violates the animal restrictions of this Lease or our Community Policies, you’ll be subject to charges, damages, eviction, and other remedies provided in this Lease, including animal violation charges listed in Lease Details from the date the animal was brought into your apartment until it is removed. If an animal has been in the apartment at any time during your term of occupancy (with or without our consent), we’ll charge you for all cleaning and repair costs, including defleaing, deodorizing, and shampooing. Initial and daily animal - violation charges and animal - removal charges are liquidated damages for our time, inconvenience, and overhead in enforcing animal restrictions and Community Policies. 13. Parking. You may not be guaranteed parking. We may regulate the time, manner, and place of parking of all motorized vehicles and other modes of transportation, including bicycles and scooters, in our Community Policies. In addition to other rights we have to tow or boot vehicles under state law, we also have the right to remove, at the expense of the vehicle owner or operator, any vehicle that is not in compliance with our Community Policies. 14. When We May Enter. If you or any other resident, guest or occupant is present, then repair or service persons, contractors, law officers, government representatives, lenders, appraisers, prospective resi - dents or buyers, insurance agents, persons authorized to enter under your rental application, or our representatives may peacefully enter the apartment at reasonable times for reasonable business purposes. If nobody is in the apartment, then any such person may enter peace - fully and at reasonable times (by breaking a window or other means when necessary) for reasonable business purposes if written notice of the entry is left in a conspicuous place in the apartment immediately after the entry. We are under no obligation to enter only when you are present, and we may, but are not obligated to, give prior notice or make appointments. 3/21/2022 12:21 PM Apartment Lease Contract ©2022, Texas Apartment Association, Inc. Blue Moon eSignature Services Document ID: 306414080 Page 3 of 6
15. Requests, Repairs and Malfunctions. 1. Written Requests Required. If you or any occupant needs to send a request — for example, for repairs, installations, services, ownership disclosure, or security - related matters — it must be written and delivered to our designated representative in accordance with our Community Policies (except for fair - housing accommodation or modification requests or situations involving imminent danger or threats to health or safety, such as fire, smoke, gas, explosion, or crime in progress). Our written notes regarding your oral request do not constitute a written request from you. Our complying with or responding to any oral request doesn’t waive the strict requirement for written notices under this Lease. A request for maintenance or repair by anyone residing in your apartment constitutes a request from all residents. The time, manner, method and means of performing maintenance and repairs, including whether or which vendors to use, are within our sole discretion. 2. Your Requirement to Notify. You must promptly notify us in writing of air conditioning or heating problems, water leaks or moisture, mold, electrical problems, malfunctioning lights, broken or missing locks or latches, or any other condition that poses a hazard or threat to property, health, or safety. Unless we instruct otherwise, you are required to keep the apartment cooled or heated according to our Community Policies. Air conditioning problems are normally not emergencies. 3. Utilities. We may change or install utility lines or equipment serving the apartment if the work is done reasonably without substantially increasing your utility costs. We may turn off equipment and interrupt utilities as needed to perform work or to avoid property damage or other emergencies. If utilities malfunction or are damaged by fire, water, or similar cause, you must notify our representative immediately. 4. Your Remedies. We’ll act with customary diligence to make repairs and reconnections within a reasonable time, taking into consideration when casualty - insurance proceeds are received. Unless required by statute after a casualty loss, or during equipment repair, your Rent will not abate in whole or in part. “Reasonable time” accounts for the severity and nature of the problem and the reasonable availability of materials, labor, and utilities. If we fail to timely repair a condition that materially affects the physical health or safety of an ordinary resident as required by the Texas Property Code, you may be entitled to exercise remedies under Α 92.056 and Α 92.0561 of the Texas Property Code. If you follow the procedures under those sections, the following remedies, among others, may be available to you: (1) termination of the Lease and an appropriate refund under 92.056(f); (2) have the condition repaired or remedied according to Α 92.0561; (3) deduct from the Rent the cost of the repair or remedy according to Α 92.0561; and 4) judicial remedies according to Α 92.0563. 16. Our Right to Terminate for Apartment Community Damage or Closure. If, in our sole judgment, damages to the unit or building are significant or performance of needed repairs poses a danger to you, we may terminate this Lease and your right to possession by giving you at least 7 days’ written notice. If termination occurs, you agree we’ll refund only prorated rent and all deposits, minus lawful deduc - tions. We may remove your personal property if, in our sole judg - ment, it causes a health or safety hazard or impedes our ability to make repairs. 1. Property Closure. We also have the right to terminate this Lease and your right to possession by giving you at least 30 days’ written notice of termination if we are demolishing your apartment or closing it and it will no longer be used for residential purposes for at least 6 months, or if any part of the property becomes subject to an eminent domain proceeding. 17. Assignments and Subletting. You may not assign this Lease or sub - let your apartment. You agree that you won‘t rent, offer to rent or license all or any part of your apartment to anyone else unless other - wise agreed to in advance by us in writing. You agree that you won‘t accept anything of value from anyone else for the use of any part of your apartment. You agree not to list any part of your apartment on any lodging or short - term rental website or with any person or ser - vice that advertises dwellings for rent. 18. Security and Safety Devices. We’ll pay for missing security de - vices that are required by law. You’ll pay for: (A) rekeying that you request (unless we failed to rekey after the previous resi - dent moved out); and (B) repairs or replacements because of misuse or damage by you or your family, your occupants, or your guests. You must pay immediately after the work is done unless state law authorizes advance payment. You must also pay in advance for any additional or changed security devices you request. 3/21/2022 12:21 PM Texas Property Code secs. 92.151, 92.153, and 92.154 require, with some exceptions, that we provide at no cost to you when occupancy begins: (A) a window latch on each window; (B) a doorviewer (peep - hole or window) on each exterior door; (C) a pin lock on each sliding door; (D) either a door - handle latch or a security bar on each sliding door; (E) a keyless bolting device (deadbolt) on each exterior door; and (F) either a keyed doorknob lock or a keyed deadbolt lock on one entry door. Keyed locks will be rekeyed after the prior resident moves out. The rekeying will be done either before you move in or within 7 days after you move in, as required by law. If we fail to in - stall or rekey security devices as required by law, you have the right to do so and deduct the reasonable cost from your next Rent pay - ment under Texas Property Code sec. 92.165(1). We may deactivate or not install keyless bolting devices on your doors if (A) you or an occupant in the dwelling is over 55 or disabled, and (B) the require - ments of Texas Property Code sec. 92.153(e) or (f) are satisfied. 1. Smoke Alarms and Detection Devices. We’ll furnish smoke alarms or other detection devices required by law or city ordinance. We may install additional detectors not so required. We’ll test them and provide working batteries when you first take possession of your apartment. Upon request, we’ll provide, as required by law, a smoke alarm capable of alerting a person with a hearing impairment. You must pay for and replace batteries as needed, unless the law provides otherwise. We may replace dead or missing batteries at your expense, without prior notice to you. Neither you nor your guests or occupants may disable alarms or detectors. If you damage or disable the smoke alarm or remove a battery without replacing it with a working battery, you may be liable to us under Texas Property Code sec. 92.2611 for $100 plus one month’s Rent, actual damages, and attorney’s fees. 2. Duty to Report. You must immediately report to us any missing, malfunctioning or defective security devices, smoke alarms or detectors. You’ll be liable if you fail to report malfunctions, or fail to report any loss, damage, or fines resulting from fire, smoke, or water. 19. Resident Safety and Loss. Unless otherwise required by law, none of us, our employees, agents, or management companies are liable to you, your guests or occupants for any damage, personal injury, loss to personal property, or loss of business or personal income, from any cause, including but not limited to: negligent or intention - al acts of residents, occupants, or guests; theft, burglary, assault, vandalism or other crimes; fire, flood, water leaks, rain, hail, ice, snow, smoke, lightning, wind, explosions, interruption of utilities, pipe leaks or other occurrences unless such damage, injury or loss is caused exclusively by our negligence. We do not warrant security of any kind. You agree that you will not rely upon any security measures taken by us for personal security, and that you will call 911 and local law enforcement authorities if any security needs arise. You acknowledge that we are not equipped or trained to provide personal security services to you, your guests or occupants. You rec - ognize that we are not required to provide any private security ser - vices and that no security devices or measures on the property are fail - safe. You further acknowledge that, even if an alarm or gate ame - nities are provided, they are mechanical devices that can malfunc - tion. Any charges resulting from the use of an intrusion alarm will be charged to you, including, but not limited to, any false alarms with police/fire/ambulance response or other required city charges. 20. Condition of the Premises and Alterations. 20.1. As - Is. We disclaim all implied warranties. You accept the apartment, fixtures, and furniture as is, except for conditions materially affecting the health or safety of ordinary persons. You’ll be given an Inventory and Condition Form at or before move - in. You agree that after completion of the form or within 48 hours after move - in, whichever comes first, you must note on the form all defects or damage, sign the form, return it to us, and the form accurately reflects the condition of the premises for purposes of determining any refund due to you when you move out. Otherwise, everything will be considered to be in a clean, safe, and good working condition. You must still send a separate request for any repairs needed as provided by Par. 15.1. 20.2. Standards and Improvements. Unless authorized by law or by us in writing, you must not perform any repairs, painting, wallpapering, carpeting, electrical changes, or otherwise alter our property. No holes or stickers are allowed inside or outside the apartment. Unless our Community Policies state otherwise, we’ll permit a reasonable number of small nail holes for hanging pictures on sheetrock walls and in grooves of wood - paneled walls. No water furniture, washing machines, dryers, extra phone or television outlets, alarm systems, Apartment Lease Contract ©2022, Texas Apartment Association, Inc. Blue Moon eSignature Services Document ID: 306414080 Page 4 of 6
cameras, video or other doorbells, or lock changes, additions, or rekeying is permitted unless required by law or we’ve consented in writing. You may install a satellite dish or antenna, but only if you sign our satellite - dish or antenna lease addendum, which complies with reasonable restrictions allowed by federal law. You must not alter, damage, or remove our property, including alarm systems, detection devices, appliances, furniture, telephone and television wiring, screens, locks, or security devices. When you move in, we’ll supply light bulbs for fixtures we furnish, including exterior fixtures operated from inside the apartment; after that, you’ll replace them at your expense with bulbs of the same type and wattage. Your improvements to the apartment (made with or without our consent) become ours unless we agree otherwise in writing. 21. Notices. Written notice to or from our employees, agents, or management companies constitutes notice to or from us. Notices to you or any other resident of the apartment constitute notice to all residents. Notices and requests from any resident constitute notice from all residents. Only residents can give notice of Lease termination and intent to move out under Par. 7.3. All notices and documents will be in English and, at our option, in any other language that you read or speak. 21.1. Electronic Notice. Notice may be given electronically by us to you if allowed by law. If allowed by law and in accordance with our Community Policies, electronic notice from you to us must be sent to the email address and/or portal specified in Community Policies. Notice may also be given by phone call or to a physical address if allowed in our Community Policies. You represent that you have provided your current email address to us, and that you will notify us in the event your email address changes . EVICTION AND REMEDIES 22. Liability. Each resident is jointly and severally liable for all Lease obligations. If you or any guest or occupant violates the Lease or our Community Policies, all residents are considered to have violated the Lease. 1. Indemnificationby You. You’lldefend, indemnify and hold us and our employees, agents, and management company harmless from all liability arising from your conduct or requests to our representatives and from the conduct of or requests by your invitees, occupants or guests. 23. Default by Resident. 1. Acts of Default. You’ll be in default if: (A) you don’t timely pay Rent, including monthly recurring charges, or other amounts you owe; (B) you or any guest or occupant violates this Lease, our Community Policies, or fire, safety, health, criminal or other laws, regardless of whether or where arrest or conviction occurs; (C) you give incorrect, incomplete, or false answers in a rental application or in this Lease; or (D) you or any occupant is charged, detained, convicted, or given deferred adjudication or pretrial diversion for (1) an offense involving actual or potential physical harm to a person, or involving the manufacture or delivery of a controlled substance, marijuana, or drug paraphernalia as defined in the Texas Controlled Substances Act, or (2) any sex - related crime, including a misdemeanor. 2. Eviction. If you default, including holding over, we may end your right of occupancy by giving you at least a 24 - hour written notice to vacate. Termination of your possession rights doesn’t release you from liability for future Rent or other Lease obligations. After giving notice to vacate or filing an eviction suit, we may still accept Rent or other sums due; the filing or acceptance doesn’t waive or diminish our right of eviction or any other contractual or statutory right. Accepting money at any time doesn’t waive our right to damages, to past or future Rent or other sums, or to our continuing with eviction proceedings. In an eviction, Rent is owed for the full rental period and will not be prorated. 3. Acceleration. Unless we elect not to accelerate Rent, all monthly Rent for the rest of the Lease term or renewal period will be accelerated automatically without notice or demand (before or after acceleration) and will be immediately due if, without our written consent: (A) you move out, remove property in preparing to move out, or you or any occupant gives oral or written notice of intent to move out before the Lease term or renewal period ends; and (B) you haven’t paid all Rent for the entire Lease term or renewal period. Remaining Rent will also be accelerated if you’re judicially evicted or move out when we demand because you’ve defaulted. If you don’t pay the first month’s Rent when or before the Lease begins, all future Rent for the Lease term will be automatically accelerated without notice and become immediately due. We also may end your right of occupancy and recover damages, future Rent, attorney’s fees, court costs, and other lawful charges. 4. Holdover. You or any occupant or guest must not hold over beyond the date contained in: (1) your move - out notice, (2) our notice to vacate, (3) our notice of non - renewal, or (4) a written agreement specifying a different move - out date. If a holdover occurs, then you’ll be liable to us for all Rent for the full term of the previously signed lease of a new resident who can’t occupy because of the holdover, and at our option, we may extend the Lease term and/or increase the Rent by 25% by delivering written notice to you or your apartment while you continue to hold over. 5. Other Remedies. We may report unpaid amounts to credit agencies as allowed by law. If we or our debt collector tries to collect any money you owe us, you agree that we or the debt collector may contact you by any legal means. If you default, you will pay us, in addition to other sums due, any rental discounts or concessions agreed to in writing that have been applied to your account. We may recover attorney’s fees in connection with enforcing our rights under this Lease. All unpaid amounts you owe bear interest at the rate provided by Texas Finance Code Section 304.003(c) from the due date. You must pay all collection - agency fees if you fail to pay sums due within 10 days after you are mailed a letter demanding payment and stating that collection - agency fees will be added if you don’t pay all sums by that deadline. You are also liable for a charge (not to exceed $150) to cover our time, cost and expense for any eviction proceeding against you, plus our attorney’s fees and expenses, court costs, and filing fees actually paid. 24. Representatives’ Authority and Waivers. Our representatives (in - cluding management personnel, employees, and agents) have no authority to waive, amend, or terminate this Lease or any part of it unless in writing and signed, and no authority to make promises, rep - resentations, or agreements that impose security duties or other ob - ligations on us or our representatives, unless in writing and signed. No action or omission by us will be considered a waiver of our rights or of any subsequent violation, default, or time or place of performance. Our choice to enforce, not enforce or delay enforcement of written - no - tice requirements, rental due dates, acceleration, liens, or any other rights isn’t a waiver under any circumstances. Delay in demanding sums you owe is not a waiver. Except when notice or demand is required by law, you waive any notice and demand for performance from us if you default. Nothing in this Lease constitutes a waiver of our remedies for a breach under your prior lease that occurred before the Lease term begins. All remedies are cumulative. Exercising one remedy won’t constitute an election or waiver of other remedies. All provisions regarding our nonliability or nonduty apply to our employees, agents, and manage - ment companies. No employee, agent, or management company is personally liable for any of our contractual, statutory, or other obliga - tions merely by virtue of acting on our behalf. END OF THE LEASE TERM 25. Move - Out Notice. Before moving out, you must give our represen - tative advance written move - out notice as stated in Par. 4, even if the Lease has become a month - to - month lease. The move - out date can’t be changed unless we and you both agree in writing. Your move - out notice must comply with each of the following: (a) Unless we require more than 30 days’ notice, if you give notice on the first day of the month you intend to move out, move out will be on the last day of that month . (b) Your move - out notice must not terminate the Lease before the end of the Lease term or renewal period. (c) If we require you to give us more than 30 days’ written notice to move out before the end of the Lease term, we will give you 1 written reminder not less than 5 days nor more than 90 days before your deadline for giving us your written move - out notice. If we fail to give a reminder notice, 30 days’ written notice to move out is required. (d) You must get from us a written acknowledgment of your notice. 26. Move - Out Procedures. 26. 1. Cleaning. You must thoroughly clean the apartment, including doors, windows, furniture, bathrooms, kitchen appliances, patios, balconies, garages, carports, and storage rooms. You must follow move - out cleaning instructions if they have been provided. If you don’t clean adequately, you’ll be liable for reasonable cleaning charges — including charges for cleaning carpets, draperies, furniture, walls, etc. that are soiled beyond normal wear (that is, wear or soiling that occurs without negligence, carelessness, accident, or abuse). 3/21/2022 12:21 PM Apartment Lease Contract ©2022, Texas Apartment Association, Inc. Blue Moon eSignature Services Document ID: 306414080 Page 5 of 6
26.2. Move - Out Inspection. We may, but are not obligated to, provide a joint move - out inspection. Our representatives have no authority to bind or limit us regarding deductions for repairs, damages, or charges. Any statements or estimates by us or our representative are subject to our correction, modi - fication, or disapproval before final accounting or refunding. 27. Surrender and Abandonment. You have surrendered the apartment when: (A) the move - out date has passed and no one is living in the apartment in our reasonable judgment; or (B) apartment keys and ac - cess devices listed in Par. 2.1 have been turned in to us — whichever happens first. You have abandoned the apartment when all of the following have occurred: (A) everyone appears to have moved out in our reasonable judgment; (B) you’ve been in default for nonpayment of Rent for 5 consecutive days, or water, gas, or electric service for the apartment not connected in our name has been terminated or transferred; and (C) you’ve not responded for 2 days to our notice left on the inside of the main entry door stating that we consider the apartment aban - doned. An apartment is also considered abandoned 10 days after the death of a sole resident. 1. The Ending of Your Rights. Surrender, abandonment, or judicial eviction ends your right of possession for all purposes and gives us the immediate right to clean up, make repairs in, and relet the apartment; determine any security - deposit deductions; and remove or store property left in the apartment. 2. Removal and Storage of Property. We, or law officers, may — but have no duty to — remove or store all property that in our sole judgment belongs to you and remains in the apartment or in common areas (including any vehicles you or any occupant or guest owns or uses) after you’re judicially evicted or if you surrender or abandon the apartment. We’re not liable for casualty, loss, damage, or theft. You must pay reasonable charges for our packing, removing and storing any property. Except for animals, we may throw away or give to a charitable organization all personal property that is: (1) left in the apartment after surrender or abandonment; or (2) left outside more than 1 hour after writ of possession is executed, following judicial eviction. An animal removed after surrender, abandonment, or eviction may be kenneled or turned over to a local authority, humane society, or rescue organization. GENERAL PROVISIONS AND SIGNATURES 28. TAA Membership. We, the management company representing us, or any locator service that you used confirms membership in good standing of both the Texas Apartment Association and the affiliated local apartment association for the area where the apartment is located at the time of signing this Lease. If not, the following applies: (A) this Lease is voidable at your option and is unenforceable by us (except for property damages); and (B) we may not recover past or future rent or other charges. The above remedies also apply if both of the following occur: (1) the Lease is automatically renewed on a month - to - month basis more than once after membership in TAA and the local association has lapsed; and (2) neither the owner nor the man - agement company is a member of TAA and the local association during the third automatic renewal. A signed affidavit from the affiliated local apartment association attesting to nonmembership when the Lease or renewal was signed will be conclusive evidence of nonmembership. Governmental entities may use TAA forms if TAA agrees in writing. Name, address and telephone number of locator service (if applicable): 29. Severability and Survivability. If any provision of this Lease is invalid or unenforceable under applicable law, it won’t invalidate the remain - der of the Lease or change the intent of the parties. Paragraphs 10.1, 10.2, 16, 27 and 31 shall survive the termination of this Lease. This Lease binds subsequent owners. 30. Controlling Law. Texas law governs this Lease. All litigation arising under this Lease and all Lease obligations must be brought in the county, and precinct if applicable, where the apartment is located. 31. Waivers. By signing this Lease, you agree to the following: 1. Class Action Waiver. You agree that you will not participate in any class action claims against us or our employees, agents, or management company. You must file any claim against us individually, and you expressly waive your right to bring, represent, join or otherwise maintain a class action, collective action or similar proceeding against us in any forum. YOU UNDERSTAND THAT, WITHOUT THIS WAIVER, YOU COULD BE A PARTY IN A CLASS ACTION LAWSUIT. BY SIGNING THIS LEASE, YOU ACCEPT THIS WAIVER AND CHOOSE TO HAVE ANY CLAIMS DECIDED INDIVIDUALLY. THE PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE THE TERMINATION OR EXPIRATION OF THIS LEASE. 31.2. Force Majeure. If we are prevented from completing substan - tial performance of any obligation under this Lease by occurrences that are beyond our control, including but not limited to, an act of God, strikes, epidemics, war, acts of terrorism, riots, flood, fire, hurricane, tornado, sabotage or governmental regulation, then we shall be excused from any further performance of obligations to the fullest extent allowed by law. 32. Special Provisions. The following, or attached Special Provisions and any addenda or Community Policies provided to you, are part of this Lease and supersede any conflicting provisions in this Lease. Before submitting a rental application or signing this Lease, you should review the documents and may consult an attorney. You are bound by this Lease when it is signed. An electronic signature is binding. This Lease is the entire agreement between you and us. You are NOT relying on any oral representations. Resident or Residents ( all sign below ) (Name of Resident) Date signed (Name of Resident) Date signed (Name of Resident) Date signed (Name of Resident) Date signed Owner or Owner’s Representative (signing on behalf of owner) 03/15/2022 (Name of Resident) Date signed 03/21/2022 (Name of Resident) Date signed 3/21/2022 12:21 PM Apartment Lease Contract, TAA Official Statewide Form 22 - A/B - 1/B - 2 Revised February 2022 Blue Moon eSignature Services Document ID: 306414080 Page 6 of 6
c onTinued on back side Inventory and Condition Form ) ) ) ) ) Resident’s Name : Henry Levinski Personal # : ( ) Work # : ( Resident’s Name : Dante Picazo Personal # : ( ) Work # : ( Resident’s Name : Personal # : ( ) Work # : ( Resident’s Name : Personal # : ( ) Work # : ( Resident’s Name : Personal # : ( ) Work # : ( Resident’s Name: Personal #: ( ) Work #: ( ) Apartment Community Name: SPUS9 HSTN North Tower LP orStreetAddress(ifhouse,duplex,etc.): Apt.# 202N Within 48 hours after move - in, you must note on this form all defects , damage, or safety or pest - related concerns and return it to our representative . Otherwise, everything will be considered to be in a clean, safe, and good working condition . Please mark through items listed below or put “none” if the items don’t exist . This form protects both you (the resident) and us (the owner) . We’ll use it in determining what should and should not be considered your responsibility upon move - out . You are entitled to a copy of this form after it is filled out and signed by you and us . Move - In or Move - Out Condition (Check one) Dining Room Walls Wallpaper Plugs, switches, A/C vents Woodwork/baseboards Ceiling Light fixtures, bulbs Floor/carpet Living Room Walls Wallpaper Plugs, switches, A/C vents Woodwork/baseboards Ceiling Light fixtures, bulbs Floor/carpet Doors, stops, locks Windows, latches, screens Window coverings Closets, rods, shelves Closet lights, fixtures Lamps, bulbs Water stains or mold on walls, ceilings or baseboards Other Kitchen Walls Wallpaper Plugs, switches, A/C vents Woodwork/baseboards Ceiling Light fixtures, bulbs Floor/carpet Doors, stops, locks Windows, latches, screens Window coverings Cabinets, drawers, handles Countertops Stove/oven, trays, pans, shelves Vent hood Refrigerator, trays, shelves Refrigerator light, crisper Dishwasher, dispensers, racks Sink/disposal Microwave Plumbing leaks, water stains or mold on walls, ceilings or baseboards Other General Items Thermostat Cable TV or master antenna A/C filter Washer/dryer Garage door Ceiling fans Exterior doors, screens/screen doors, doorbell Doors, stops, locks Windows, latches, screens Window coverings Closets, rods, shelves Closet lights, fixtures Water stains or mold on walls, ceilings or baseboards Other Halls Walls Wallpaper Plugs, switches, A/C vents Woodwork/baseboards Ceiling Light fixtures, bulbs Floor/carpet Doors, stops, locks Closets, rods, shelves Closet lights, fixtures Water stains or mold on walls, ceilings or baseboards Other Exterior (if applicable) Patio/yard Fences/gates Faucets Balconies Other Bedroom (describe which one) : Walls Wallpaper Plugs, switches, A/C vents Woodwork/baseboards Ceiling Light fixtures, bulbs Floor/carpet Doors, stops, locks Windows, latches, screens Window coverings Closets, rods, shelves Closet lights, fixtures Water stains or mold on walls, ceilings or baseboards Fireplace Other Other M E M B E R © T exas a parTmenT a ssociaTion , i nc ., 2021 Blue Moon eSignature Services Document ID: 306414080 3/21/2022 12:21 PM
3/21/2022 12:21 PM Bedroom (describe which one) : Walls Wallpaper Plugs, switches, A/C vents Woodwork/baseboards Ceiling Light fixtures, bulbs Floor/carpet Doors, stops, locks Windows, latches, screens Window coverings Closets, rods, shelves Closet lights, fixtures Water stains or mold on walls, ceilings or baseboards Other Bath (describe which one) : Walls Wallpaper Plugs, switches, A/C vents Woodwork/baseboards Ceiling Light fixtures, bulbs Exhaust fan/heater Floor/carpet Doors, stops, locks Windows, latches, screens Window coverings Sink, faucet, handles, stopper Countertops Mirror Cabinets, drawers, handles Toilet, paper holder Bathtub, enclosure, stopper Shower, doors, rods Tile Plumbing leaks, water stains or mold on walls, ceilings or baseboards Other Safety or Pest - Related Items (Put “none” if item does not exist) Door knob locks Keyed deadbolt locks Keyless deadbolts Keyless bolting devices Sliding door latches Sliding door security bars Sliding door pin locks Doorviewers Window latches Porch and patio lights Smoke alarms (push button to test) Other detectors Alarm system Fire extinguishers (look at charge level — BUT DON'T TEST!) Garage door opener Gate access card(s) Other Pest - related concerns Date of Move - In: or Date of Move - Out: Acknowledgment . You agree you will complete and submit this form in accordance with this Lease and our Community Policies . You acknowledge you will inspect and test all the safety - related items (if in the dwelling), as well as smoke alarms and any other detector(s), and confirm that they are working, except as noted on your completed Inventory and Condition Form . All items will be assumed to be in good condition unless otherwise noted . You acknowledge you will receive written operating instructions on the alarm system and gate access entry systems (if there are any) . You acknowledge that you will inspect the dwelling and confirm no signs of bed bugs or other pests are present, or that you will report any bed bug or pest issues through a work order or other repair request . In signing below, you acknowledge receipt of this form and accept the responsibility for completing it as part of the Lease Contract . You agree that, either after completion or 48 hours after move - in without returning this form (whichever comes first), it accurately reflects the condition of the premises for purposes of determining any refund due to you when you move out . Resident or Resident’s Agent: Owner or Owner’s Representative: Date of Signing: Date of Signing: TAA Official Statewide Form 21 - H, Revised June, 2021 Copyright 2021, Texas Apartment Association, Inc. Bedroom (describe which one) : Walls Wallpaper Plugs, switches, A/C vents Woodwork/baseboards Ceiling Light fixtures, bulbs Floor/carpet Doors, stops, locks Windows, latches, screens Window coverings Closets, rods, shelves Closet lights, fixtures Water stains or mold on walls, ceilings or baseboards Other Bath (describe which one) : Walls Wallpaper Plugs, switches, A/C vents Woodwork/baseboards Ceiling Light fixtures, bulbs Exhaust fan/heater Floor/carpet Doors, stops, locks Windows, latches, screens Window coverings Sink, faucet, handles, stopper Countertops Mirror Cabinets, drawers, handles Toilet, paper holder Bathtub, enclosure, stopper Shower, doors, rods Tile Plumbing leaks, water stains or mold on walls, ceilings or baseboards Other Half Bath Walls Wallpaper Plugs, switches, A/C vents Woodwork/baseboards Ceiling Light fixtures, bulbs Exhaust fan/heater Floor/carpet Doors, stops, locks Windows, latches, screens Window coverings Sink, faucet, handles, stopper Countertops Mirror Cabinets, drawers, handles Toilet, paper holder Tile Plumbing leaks, water stains or mold on walls, ceilings or baseboards Other FOR OFFICE USE ONLY. Date completed form was received: Received by: Blue Moon eSignature Services Document ID: 306414080
3/21/2022 12:21 PM Mold Information and Prevention Addendum 1. Addendum. This is an addendum to the Lease Contract executed by you, the resident or residents, on the dwelling you have agreed to rent. That dwelling is: Unit # 202N at SPUS9 HSTN North Tower LP , (name of apartments) or other dwelling located at (street address of house, duplex, etc.) City/State where dwelling is located . 2. About Mold . Mold is found everywhere in our environment, both indoors and outdoors and in both new and old structures . Molds are nothing new — they are natural microscopic organisms that reproduce by spores . They have always been with us . In the environment, molds break down organic matter and use the end product for food . Without molds we would be struggling with large amounts of dead organic matter . Mold spores (like plant pollen) spread through the air and are commonly transported by shoes, clothing, and other materials . There is conflicting scientific evidence about how much mold must accumulate before it creates adverse health effects on people and animals . Even so, we must take appropriate precautions to prevent its buildup . 3. Preventing Mold Begins with You . to minimze the potential for mold growth in your dwelling, you must : • Keep your dwelling clean — particularly the kitchen, bathroom, carpets, and floors . Regular vacuuming and mopping of the floors, plus cleaning hard surfaces using a household cleaner, are all important to remove the household dirt and debris that harbor mold or food for mold . Throw away moldy food immediately . • Remove visible moisture accumulations on windows, walls, ceilings, floors, and other surfaces as soon as reasonably possible . Look for leaks in washing - machine hoses and discharge lines — especially if the leak is large enough for water to seep into nearby walls . If your dwelling has them, turn on exhaust fans in the bathroom before showering and in the kitchen before cooking with open pots . Also when showering, keep the shower curtain inside the tub (or fully close the shower doors) . Experts also recommend that after a shower or bath you ( 1 ) wipe moisture off shower walls, shower doors, the bathtub, and the bathroom floor ; ( 2 ) leave the bathroom door open until all moisture on the mirrors and bathroom walls and tile surfaces has dissipated ; and ( 3 ) hang up your towels and bath mats so they will completely dry out . • Promptly notify us in writing about any air - conditioning or heating - system problems you discover . Follow any of our rules about replacing air filters . It’s also good practice to open windows and doors periodically on days when the outdoor weather is dry (i . e . , humidity is below 50 % ) to help humid areas of your dwelling dry out . • Promptly notify us in writing of any signs of water leaks, water infiltration, or mold . We will respond in accordance with state law and the Lease Contract to repair or remedy the situation as necessary . 4. Avoiding Moisture Buildup . To avoid mold growth, it’s important to prevent excess moisture buildup in your dwelling . Failing to promptly attend to leaks and moisture accumulations on dwelling surfaces can encourage mold growth, especially in places where they might get inside walls or ceilings . Prolonged moisture can come from a wide variety of sources, such as : • rainwater leaking from roofs, windows, doors, and outside walls, as well as flood waters rising above floor level ; • overflows from showers, bathtubs, toilets, sinks, washing machines, dehumidifiers, refrigerator or air - conditioner drip pans, or clogged air - conditioner condensation lines ; • leaks from plumbing lines or fixtures, and leaks into walls from bad or missing grouting or caulking around showers, bathtubs, or sinks ; • washing - machine hose leaks, plant - watering overflows, pet urine, cooking spills, beverage spills, and steam from excessive open - pot cooking ; • leaks from clothes - dryer discharge vents (which can put a lot of moisture into the air) ; and • insufficient drying of carpets, carpet pads, shower walls, and bathroom floors . 5. Cleaning Mold . If small areas of mold have already accumulated on nonporous surfaces (such as ceramic tile, formica, vinyl flooring, metal, wood, or plastic), the Environmental Protection Agency recommends that you first clean the areas with soap (or detergent) and water and let the surface dry thoroughly . (Applying biocides without first cleaning away the dirt and oils from the surface is like painting over old paint without first cleaning and preparing the surface . ) When the surface is dry — and within 24 hours of cleaning — apply a premixed spray - on household biocide such as Lysol Disinfectant®, Original Pine - Sol® Cleaner, Tilex Mold & Mildew Remover® or Clorox® Clean - up® Cleaner + Bleach . (Note two things : First, only a few of the common household cleaners can actually kill mold . Second, Tilex and Clorox contain bleach, which can discolor or stain surfaces, so follow the instructions on the container . ) Always clean and apply a biocide to an area five or six times larger than any mold you see — mold can be present but not yet visible to the naked eye . A vacuum cleaner with a high - efficiency particulate air (HEPA) filter can be used to help remove nonvisible mold products from porous items such as fibers in sofas, chairs, drapes, and carpets — providedthefibersarecompletelydry . Machinewashingordry - cleaning will remove mold from clothes . 6. Warning for Porous Surfaces and Large Surfaces . Do not clean or apply biocides to visible mold on porous surfaces such as sheetrock walls or ceilings or to large areas of visible mold on nonporous surfaces . Instead, notify us in writing and we will take appropriate action tocomply with Section 92 . 051 et seq . of the Texas Property Code, subject to the special exceptions for natural disasters . 7. Compliance . Complying with this addendum will help prevent mold growth in your dwelling, and both you and we will be able to respond correctly if problems develop that could lead to mold growth . If you have questions about this addendum, please contact us at the management office or at the phone number shown in your Lease Contract . If you fail to comply with this addendum, you can be held responsible for property damage to the dwelling and any health problems that may result . We can’t fix problems in your dwelling unless we know about them . Resident or Residents (all sign below) Owner or Owner’s Representative (sign below) Please note : We want to maintain a high - quality living environment for our residents . To help achieve this goal, it is important that we work together to minimize any mold growth in your dwelling . This addendum contains important information for you, and responsibilities for both you and us . (Name of Resident) (Name of Resident) (Name of Resident) (Name of Resident) (Name of Resident) (Name of Resident) Your are entitled to receive a copy of this Addendum after it is fully signed. Keep it in a safe place. TAA Official Statewide Form 15 - FF, Revised January 2015 Copyright 2015, Texas Apartment Association, Inc. Blue Moon eSignature Services Document ID: 306414080
©2019 T exas a parTmenT a ssociaTion , i nc . conTinued on back Bed Bug Addendum 1 . Addendum . This is an addendum to the Lease Contract that you, the resident or residents, signed on the dwelling you have agreed to rent . That dwelling is : ( name of apartments ) or other dwelling located at ( street address of house, duplex, etc. ) ( city ) ( state ) ( zip ). 2. Purpose . This addendum modifies the Lease Contract to address any infestation of bed bugs (Cimex lectularius) that might be found in the dwelling or on your personal property . We will rely on repre - sentations that you make to us in this addendum . 3. Inspection and Infestations . W e are not aware of any current evidence of bed bugs or bed - bug infestation in the dwelling . BY SIGNING THIS ADDENDUM, YOU REPRESENT THAT: • YOU HAVE INSPECTED THE DWELLING BEFORE MOVING IN OR SIGNING THIS ADDENDUM, AND YOU DID NOT FIND ANY EVIDENCE OF BED BUGS OR BED - BUG INFES - TATIONS, OR • YOU WILL INSPECT THE DWELLING WITHIN 48 HOURS AFTER MOVING IN OR SIGNING THIS ADDENDUM AND WILL NOTIFY US OF ANY BED BUGS OR BED - BUG INFES - TATION. You represent and agree that you have read the information about bed bugs provided by us and that you are not aware of any infesta - tion or presence of bed bugs in your current or previous dwellings, furniture, clothing, personal property and possessions and that you have fully disclosed to us any previous bed - bug infestation or issue that you have experienced . If you disclose a previous experience of bed - bug infestation, we can review documentation of the treatment and inspect your personal property and possessions to confirm the absence of bed bugs . 4 . Access for Inspection and Pest Treatment . You must allow us and our pest - control agents access to the dwelling at reasonable times to inspect for or treat bed bugs . You and your family mem - bers, occupants, guests, and invitees must cooperate and not in - terfere with inspections or treatments . We have the right to select any licensed pest - control professional to treat the dwelling and building . We can select the method of treating the dwelling, build - ing, and common areas for bed bugs . We can also inspect and treat adjacent or neighboring dwellings to the infestation, even if those dwellings are not the source or cause of the known infestation . Si - multaneously as we treat the dwelling, you must, at your expense, have your personal property, furniture, clothing, and possessions treated according to accepted treatment methods by a licensed pest - control firm that we approve . If you fail to do so, you will be in default and we will have the right to terminate your right of oc - cupancy and exercise all rights and remedies under the Lease Con - tract . You agree not to treat the dwelling for a bed - bug infestation on your own . 5. Notification. You must promptly notify us: • of any known or suspected bed - bug infestation or presence in the dwelling, or in any of your clothing, furniture, or personal property ; • of any recurring or unexplained bites, stings, irritations, or sores on the skin or body that you believe are caused by bed bugs, or by any condition or pest you believe is in the dwelling ; AND • if you discover any condition or evidence that might indicate the presence or infestation of bed bugs, or if you receive any confirmation of bed - bug presence by a licensed pest - control professional or other authoritative source . 6. Cooperation . If we confirm the presence or infestation of bed bugs, you must cooperate and coordinate with us and our pest - control agents to treat and eliminate them . You must follow all di - rections from us or our agents to clean and treat the dwelling and building that are infested . You must remove or destroy personal property that cannot be treated or cleaned before we treat the dwelling . Any items you remove from the dwelling must be dis - posed of off - site and not in the property’s trash receptacles . If we confirm the presence or infestation of bed bugs in your dwelling, we have the right to require you to temporarily vacate the dwelling and remove all furniture, clothing, and personal belongings so we can perform pest - control services . If you don’t cooperate with us, you will be in default and we will have the right to terminate your right of occupancy and exercise all rights and remedies under the Lease Contract . 7. Responsibilities . You may be required to pay all reasonable costs of cleaning and pest - control treatments incurred by us to treat your dwelling unit for bed bugs . If we confirm the presence or in - festation of bed bugs after you move out, you may be responsible for the cost of cleaning and pest control . If we have to move other residents in order to treat adjoining or neighboring dwellings to your dwelling unit, you may have to pay any lost rental income and other expenses we incur to relocate the neighboring residents and to clean and perform pest - control treatments to eradicate infesta - tions in other dwellings . If you don’t pay us for any costs you are liable for, you will be in default and we will have the right to termi - nate your right of occupancy and exercise all rights and remedies under the Lease Contract, and we may take immediate possession of the dwelling . If you don’t move out after your right of occupancy has been terminated, you will be liable for holdover rent under the Lease Contract . 8. Transfers . If we allow you to transfer to another dwelling in the community because of the presence of bed bugs, you must have your personal property and possessions treated according to ac - cepted treatment methods or procedures established by a licensed pest - control professional . You must provide proof of such cleaning and treatment to our satisfaction . Please note : We want to maintain a high - quality living environment for you . It’s important to work together to minimize the potential for bed bugs in your dwelling and others . This addendum outlines your responsibility and potential liability when it comes to bed bugs . It also gives you some important information about them . You are legally bound by this document. Please read it carefully. Resident or Residents (all sign below) (Name of Resident) (Name of Resident) Date signed (Name of Resident) Date signed (Name of Resident) Date signed (Name of Resident) Date signed (Name of Resident) Date signed You are entitled to receive a copy of this Addendum after it is fully signed. Keep it in a safe place. Date signed SPUS9 HSTN North Apt. # 202N at Tower LP 03/21/2022 Date signed 03/21/2022 Owner or Owner‘s Representative (sign below) 03/21/2022 Blue Moon eSignature Services Document ID: 306414080 3/21/2022 12:21 PM
Statewide Form 19 - JJ, Revised October 2019 TAA Official Co pyright 2019, Texas Apartment Association, Inc. Bed bugs are wingless, flat, broadly oval - shaped in - sects, with a typical lifespan of 6 to 12 months . Capa - ble of reaching the size of an apple seed at full growth, bed bugs are distinguishable by their reddish - brown color, although after feeding on the blood of hu - mans and warm - blooded animals — their sole food source — the bugs assume a distinctly blood - red hue until digestion is complete . Bed bugs don’t discriminate . Bed bugs’ increased presence across the United States in recent decades is due largely to a surge in interna - tional travel and trade . It’s no surprise then that bed bugs have been found in some of the fanciest hotels and apartment buildings in some of the nation’s most expensive neighborhoods . Nonetheless, false claims that associate bed bugs presence with poor hygiene and uncleanliness have caused rental - housing residents, out of shame, to avoid notifying owners of their presence . This only causes the bed bugs to spread . While bed bugs are more attracted to clutter, they’re certainly not discouraged by cleanliness . Bottom line : bed bugs know no social or economic bounds ; claims to the contrary are false . Bed bugs don’t transmit disease. There exists no scientific evidence that bed bugs carry disease . In fact, federal agencies tasked with addressing pests of public - health concern, namely the U . S . Environmental Protection Agency and the Centers for Disease Control and Prevention, have re - fused to elevate bed bugs to the threat level posed by disease - carrying pests . Again, claims associating bed bugs with disease are false . Learn to identify bed bugs. Bed bugs can often be found in, around, behind, un - der, or between: • Bedding • Bed frames • Mattress seams • Upholstered furniture, especially under cushions and along seams • Wood furniture, especially along areas where draw - ers slide • Curtains and draperies • Window and door frames • Ceiling and wall junctions • Crown moldings • Wall hangings and loose wallpaper • Carpeting and walls (carpet can be pulled away from the wall and tack strip) • Cracks and crevices in walls and floors • Electronic devices, such as smoke and carbon - mon - oxide detectors Because bed bugs leave some people with itchy welts similar to those made by fleas and mosquitoes, the Bed Bugs A Guide for Rental - Housing Residents ( Adapted with permission from the National Apartment Association ) cause of welts like that often go misdiagnosed . One distinguishing sign is that bed - bug marks often ap - pear in succession on exposed areas of the skin such as the face, neck, and arms . But sometimes a person has no visible reaction at all from direct contact with bed bugs . While bed bugs typically act at night, they often leave signs of their presence through fecal markings of a red to dark - brown color, visible on or near beds . Blood stains also tend to appear when the bugs have been squashed, usually by an unsuspecting sleeping host . And because they shed, it’s not uncommon to find the skin casts they leave behind . Prevent bed - bug encounters when traveling. Because humans serve as bed bugs’ main mode of transportation, it’s especially important to be mindful of bed bugs when away from home . Experts attribute the spread of bed bugs across all regions of the Unit - ed States largely to increases in travel and trade, both here and abroad . So travelers are encouraged to take a few minutes on arriving to thoroughly inspect their accommodations before unpacking . Because bed bugs can easily travel from one place to another, it’s also a good practice to thoroughly inspect luggage and belongings for bed bugs before heading home . Know the bed - bug dos and don’ts. • Don’t bring used furniture from unknown sourc - es into your dwelling . Countless bed - bug infesta - tions have stemmed directly from bringing home second - hand and abandoned furniture . Unless you are absolutely sure that a piece of second - hand furniture is bed - bug - free, you should as - sume that a seemingly nice looking leather couch, for example, is sitting curbside waiting to be hauled off to the landfill because it’s teeming with bed bugs . • Do inspect rental furniture, including mattresses and couches, for the presence of bed bugs before moving it into your dwelling . • Do address bed - bug sightings immediately . Rent - al - housing residents who suspect the presence of bed bugs in their unit must immediately notify the owner . • Don’t try to treat bed - bug infestations yourself . Health hazards associated with the misapplica - tion of traditional and nontraditional chemical - based insecticides and pesticides poses too great a risk to you, your family and pets, and your neighbors . • Do comply with eradication protocol . If the deter - mination is made that your unit is indeed playing host to bed bugs, you must comply with the bed - bug - eradication protocol set forth by both your owner and their designated pest - management company . Blue Moon eSignature Services Document ID: 306414080 3/21/2022 12:21 PM
1. Preface This Master Lease Addendum contains community rules, regulations, and/or policies that are incorporated into and part of your Lease Contract . They apply to you and your occupants, guests, and invitees . Use of “we”, “us”, and “our” in this Addendum refers collectively to the owner of the community and the owner’s authorized agents/representatives . Violation of any provision of this Addendum may result in termination of your right of possession and/or your Lease Contract . The community rules, regulations, and/or policies in this Addendum may be added to, amended or repealed at any time in accordance with your Lease Contract . This Addendum is intended to supplement your Lease Contract . To the extent there is any inconsistency between this Addendum and the Lease Contract, the provisions of the Lease Contract control . 2. No Reliance on Security Devices or Measures You acknowledge that cameras may be installed at some or all of the gates and in various common areas throughout the community . If cameras are installed, these areas may be recorded . Cameras, if installed, are for the sole purpose of protecting our real and personal property . Such cameras are not intended to protect, monitor, provide security for, or give a sense of security to you or any occupant or guest . You acknowledge that, given the limited purpose for which cameras may be installed or used, we have no obligation to cause such cameras to be monitored . We have no obligation to preserve or make available the contents of any recordings to you or others . 3. Entry Devices In the event your community requires an entry device, the following policies apply. a) Access Card, Remote or Key Fob: You and each occupant if you request, will receive one controlled access device of our choice. Additional devices may be available for an additional charge of $ . b) Damaged, Lost or Unreturned Cards, Remotes, or Fobs: If a controlled access device is lost, misplaced, stolen damaged, or not returned at termination of this Agreement, a fee of $ 75 will be charged for each device replacement. c) Duplicate, Lost or Unreturned Keys: A charge of $ 75 will be owed for each duplicate, lost or unreturned key. d) Re - keying Lock: If you wish to have your apartment home, storage, mailbox, and/or garage lock(s) re - keyed because you have lost your key or for any other reason you agree to pay a re - keying fee of $ 75 which is due prior to changing your locks. e) After Hours Lock Outs: After office hours, you must contact and pay for a locksmith if you have locked yourself out. f) Lock Outs During Office Hours: If you are locked out of your apartment home during business hours, contact us. A picture I.D. may be required to gain access to your apartment home. 4. Patios / Balconies / Private Yards In the event your community has patios, balconies, or private yards, the following policies apply. Items Prohibited Combustible Materials Flags Furniture designed for Indoor Use Firewood Charcoal & Gas Grills Bicycles hung from ceilings or walls Unsightly or Heavy Items Propane Tanks Laundry Motorcycles Automobile Tires, Parts, Equipment Signs a) Resident Responsible for Private Yard : In the event your apartment home has a private yard and you are responsible for maintenance of the yard, maintenance will include, but not be limited to, mowing, edging, shrub trimming, watering, debris removal, weeding, etc . You agree to maintain the landscaping in a healthy condition (free of weeds, holes, fungus/parasites, pet feces, trash, debris and consistent color in sod, etc . ) . If your private yard is not maintained to the community standards, we have the right to maintain it and charge our actual cost each time maintenance is required . Upon move - out, we can deduct any amounts owed for damage to the private yard which exceed ordinary wear and tear from the security deposit as allowable under the Lease Contract . b) Community Landscaper Utilized for Private Yard : In the event your apartment home has a private yard and your community landscaper maintains the private yard, there may be an additional monthly fee of $ required . You are still responsible for maintaining the landscaping in a healthy condition (free of weeds, holes, fungus/parasites, pet feces, trash, debris and consistent color in sod, regular watering, etc . ) . You agree to provide access so that routine yard management maintenance can occur . If your private yard is not maintained to the community standards, we have the right to maintain it and charge our actual cost each time maintenance is required . Upon move - out, we can deduct any amounts owed for damage to the private yard which exceed ordinary wear and tear from the security deposit paid as allowable under the Lease Contract . 5. Gardens In the event your community has a garden for the enjoyment of all residents, the following policies apply. a) Unless otherwise posted, the hours are from dawn to dusk. b) Use at your own risk. In case of emergency, call 911. c) You agree to plant the garden plot within two weeks of being assigned a designated area. d) You agree to maintain the designated plot and to keep plants within the assigned/designated area. e) We encourage an organic gardening program . Use of pesticides, herbicides, and insecticides made from synthetic materials as well as use of chemical fertilizers are not advisable . Slug bait is permitted only when used in enclosed containers, which must be removed from the site after use . Use of raw human and/or animal waste is not allowed due to environmental and health concerns . Fully composted manures, such as steer and chicken manure, are allowed . f) No illegal plants may be grown, including but not limited to any plant listed by the state agencies and weed control board as noxious weeds. g) Only water your assigned garden plot. h) Maintain healthy plants and remove dead plants in a timely manner (not to exceed one week duration). i) Materials other than plants are prohibited, except items that assist in growth. j) All tools provided by us must remain in designated areas. We are not responsible for injuries due to the use of tools. If you need any additional tools, they are your responsibility. k) Debris after planting, any remaining soil, fertilizer, etc. must be swept immediately. l) Garden plots will expire with your lease, and may be renewed at the time of lease renewal. If you decide not to renew usage, the plot must be cleaned out and left in the original condition. Renewal is not guaranteed. m) We are not responsible for lost, stolen, or damaged plants or other items. n) Please be respectful of the neighbors who live around the gardens. No smoking, noise disturbances, or horseplay is allowed. o) Animals are not allowed in the garden plot areas, except assistance animals. 6. Inside or Near the Apartment Home 1. Windows and Doors: Any window treatment installed by you shall present a uniform appearance with the exterior of the building. The use of foil and other similar materials, on windows is strictly prohibited. You will not obstruct any windows or doors. 2. Welcome Mats and Heavy Items : You may place a welcome mat in front of your entry door subject to our approval . Rugs or carpet remnants are not permitted . You shall not place any unusually heavy objects on the floor of the Premises, such as pool tables, waterbeds, etc . without our prior written permission . You will not obstruct any doorways, stairs, entry passages, breezeways, courtyards, or halls of the community . 3. Soliciting : Soliciting is not permitted in the community . Unless allowed by law or following our prior written permission, you shall not distribute, post, or hang any signs, flyers, advertisements, or notices in any portion of the community . Community Policies/Master Lease Addendum 3/21/2022 12:21 PM Community Policies/Master Addendum 8/1/2018 Page 1 of 7 Blue Moon eSignature Services Document ID: 306414080
4. Fireplace : In the event your apartment home has a fireplace, you agree to use the fireplace for the intended purpose and at your own risk . Never use flammable liquids to start fires and never burn anything other than seasoned firewood . Clean your hearth of any flammable materials . Do not attempt to clean the inside of the chimney . Report maintenance needs to us immediately . Use a mesh screen and leave glass doors open when burning fires . If applicable, open the flue/damper before lighting a fire . Close the flue/damper only when the fire is completely out, the smoke has ceased to rise, and the wood is cool . Never leave a fire unattended . Put all fires out completely before going to bed or leaving the apartment home . 5. Furniture, Televisions, Appliances : In the event your apartment home has furniture, televisions, and/or appliances included, you agree to maintain them in a clean condition, reasonable wear and tear excepted . Removal of these items is not allowed . Upon move - out, these items must be placed in the same location they were upon move - in . You will pay the cost to repair, replace, or clean the furniture, televisions, and/or appliances . 6. Wires and Personal Items Outside the Home : No radio, television other wires are permitted on any part of the apartment home . You shall not store personal items in the outside walkways, breezeways or under stairs . 7. Odors You, your occupants, guests, and invitees acknowledge that we cannot prevent odors in and around your apartment home and community. 1. Resident Responsibilities: If you create odors, you shall provide proper ventilation so you do not disturb or cause inconvenience to others. 2. Removal of Odors: If the carpet, walls, A/C ducts, or other items in the apartment home retain odors due to your use or surrounding residents complain about the odors, you will be responsible for the cost for removing unwanted smells and odors. 8. Parking and Vehicles In the event your community has parking for residents, the following policies apply. Guests must park in guest parking only. a) Speed Limi t : Unless otherwise posted, the speed limit is ten (10) miles per hour. b) Posted Signs: You are responsible for following all posted signs including height restrictions, mounted mirrors, and traffic control devices. c) Unassigned Parking: In the event parking at your community is unassigned, you can park on a first - come, first - serve basis, except in designated areas. Parking spaces are not guaranteed. d) Assigned Parking: In the event parking at your community is assigned, you must park only in your assigned space. e) Limitation of Vehicles: We will advise you if your community has a limitation on the number of vehicles allowed. f) Restricted Vehicles : Unless specifically allowed in designated areas, including carports and/or garages, the following are not allowed : campers, trailers, boats, buses, large trucks, commercial vehicles, mobile homes, trailers, recreational vehicles and equipment . Violators will be towed away without notice at the vehicle/equipment owner's expense . g) No Vehicle Repairs : Automobile repair work is not allowed on the community . Washing vehicles is not allowed unless there is a designated car care facility . h) Vehicle Insurance : All vehicles will be parked at your own or the vehicle’s owner’s risk, and you will maintain proper insurance on your vehicles . i) No Loitering or Recreational Activities : You, your occupants, guests, and invitees may not engage in the following activities in parking areas : loitering (standing or waiting around), recreational activities, or disrupting the flow of traffic . j) Improperly parked, non - operable, abandoned, or unauthorized vehicles or equipment are not permitted in the community and may be removed by us at your expense or the expense of any other person owning same, for storage or public or private sale, at our option with no right of recourse against us . The definition of improperly parked, non - operable, abandoned, or unauthorized vehicles or equipment shall be liberally construed in our favor . In addition, but not limited to their generally accepted definitions, “improperly parked”, “non - operable”, “abandoned”, and “unauthorized” shall also mean vehicles or equipment which : ( 1 ) Are noxious, offensive, unsightly, unpleasant or unkempt such as could reasonably affect the appearance or rental marketability of the community or such as could reasonably cause embarrassment, discomfort, annoyance, or nuisance to us or other residents ; ( 2 ) Are not displaying any required hangtag, decal, or other identifier provided by us ; ( 3 ) Are left unattended for a period of not less than thirty ( 30 ) days without anyone having claimed ownership of it . 9. Parking Tags/Stickers In the event your community requires parking tags/stickers, the parking tag/sticker must be visibly displayed either on the rear - view mirror or taped next to the vehicle registration . We are not responsible for damage to tint or glass due to the sticker . The vehicle can be towed without notice at the vehicle owner’s expense in accordance with state law . a) You agree to advise your guests and invitees to park in the designated guest parking spaces only . be assessed to your b) If your sticker/tag is lost, stolen, damaged, or not returned upon move - out, a replacement fee of $ 50 will account. 10. Animals 1. Assistance Animals : Assistance animals required pursuant to a disability - related need are welcome . Assistance animals must be disclosed to and approved by us . The appropriate reasonable accommodation process will apply . 2. Pet Policies : No animals of any kind are permitted in your apartment or the community without our prior written consent . In the event your community allows pets, the following policies apply . a) No More Than Two Pets : A maximum of two pets per apartment home is permitted . b) Weight Limits : Pets shall not exceed your community’s weight limit . c) Restricted Breeds and Prohibited Dogs : The following breeds are not permitted on the community : Rottweiler, Doberman Pinscher, Pit Bull Terrier/Staffordshire Terrier, Chow, Presa Canarios, Akita, Alaskan Malamutes, Wolf - Hybrid, or any mix thereof . Specific communities may have additional breed restrictions . In addition, we prohibit any dog with a history of biting, injuring any person or animal, or damaging property . d) Determination of Breed : Regardless of your representation as to the breed or classification of any animal, you agree that we shall make the final determination as to the breed or classification of your pet or animal in our sole and absolute discretion . Restricted Breeds shall have the broadest possible meaning, and includes, but is not limited to, any animal displaying physical traits or characteristics of any restricted breed animal, whether by observation or by standards established by the American Kennel Club, or other applicable association, or defined by any law, statute, or ordinance . If applicable, a canine DNA test may be requested at your expense . e) Cats: Cats must be spayed or neutered. f) Animals Not Allowed in Amenities: Animals, except Assistance Animals, are not permitted in the pool, pool area, or community amenity areas such as the business and fitness centers. No animals will be allowed in the pool or spa water. g) No Staking Animals: Animals may not be tied to any fixed object anywhere outside the dwelling units, except in fenced yards (if any) for your exclusive use. h) Aquariums: Aquariums up to 20 gallons are allowed without a pet deposit or fee. Aquariums over 20 gallons may require a pet deposit or fee in addition to proof of renter’s insurance. i) Secure Animals During Service Requests: Remove animals or place them in a room behind a closed door or kennel/crate with notification to us. 11. Trash Removal and Disposal a) Curbside Pick Up : In the event your community offers curbside trash pick - up, contact us for the scheduled days and times of pick - up . You agree not to leave any trash out on days that are not scheduled for pick - up . We reserve the right to remove curbside trash pick - up service upon written notice to you of the change . b) No Curbside Pick Up : In the event your community does not offer curbside trash pick - up, you shall dispose of your bagged and tied trash inside the compactor/dumpster facility as instructed by us or by the sign near the compactor/dumpster . c) Trash Chutes : In the event your community has trash chutes, contact us for the scheduled hours of operation . Securely tied, kitchen - sized bags are required . No loose items can be put in the trash chute . Do not use the chute for recycling . No boxes or large trash can be placed in the chutes . Contact us for details or questions regarding the use of the trash chutes . d) Recycling : In the event recycling is offered at your community, you are responsible for complying with all recycling regulations . e) Potential Charges : You may be charged $ 25 per bag for any trash left outside your apartment home or in breezeways . Please contact us if you require further instruction regarding proper disposal of garbage with the compactors, dumpsters, or chutes . 3/21/2022 12:21 PM Community Policies/Master Addendum 8/1/2018 Page 2 of 7 Blue Moon eSignature Services Document ID: 306414080
f) No Litter: Do not leave cigarette butts or other trash near or around patios/balconies, under windows, or near entry doors. We reserve the right to assess a fine of $25 per incident. g) No Furniture as Trash: No furniture may be left for trash removal. h) Dumpster Use for Residents Only: Only you and your occupants are permitted to use the dumpster/compactor. i) No Dumpster Diving: Do not retrieve items from the dumpster. Digging or scavenging is prohibited. j) General: Please break down empty boxes. Keep the area clean and litter free. If applicable, close the lid after use. k) No Parking in Front of Dumpster: Parking in front of the dumpster/compactor is not allowed. l) Prohibited Items: You understand that you cannot place the following items in or around the trash dumpster or compactor: propane tanks, flammable or toxic materials, furniture, bedding, appliances, auto batteries, tires, and oil/petroleum products. 12. Pest Control 1. Extermination: Unless prohibited by statute or otherwise stated in your Lease Contract, we may have extermination operations conducted in the apartment home several times a year and as needed to prevent insect infestation. If pest control services are provided, you shall pay the amount of $ 2.00 on or before the first day of each month to reimburse us for extermination services to the apartment home. You shall pay such fee in the same time and manner as you pay rent pursuant to your Lease Contract. You must request in writing extermination treatments in addition to those regularly provided by us. 2. Preparations for Extermination: If the apartment home is not prepared for a scheduled treatment date, we will reschedule treatment at your expense. You agree to perform the tasks necessary to prepare the apartment home for extermination, including: a) removing people sensitive to the extermination treatment from the apartment home; b) removing animals or placing them in bedrooms with notification to us; c) removing animal food bowls; d) removing all food, utensils, glasses, and dishes and food containers from countertops and floors; e) removing chain locks or other obstructions on the day of service; f) removing contents from shelves, cabinets, and floors where pests have been seen; g) cleaning all cabinets, drawers, and closets in kitchen and pantry; and h) refraining from wiping out cabinets after the treatment. 3. Notify Us of Health Issues: You are solely responsible for notifying us in writing prior to extermination of any anticipated health or other concerns related to extermination and the use of pesticides. 4. Your Responsibilities: To reduce the possibility of pests, you shall: (a) store all food in sealed containers; (b) not leave food or dirty dishes out; (c) empty all cans and bottles and rinse them with water; (d) immediately dispose of unused paper grocery sacks; (e) sweep and mop the kitchen regularly; (vi) vacuum carpets frequently to remove crumbs and other food particles; (f) remove trash immediately; (g) not put wet garbage in the trash; (h) use the garbage disposal if available; (i) not leave windows or doors open allowing pests to enter; and (j) comply with any instructions/protocol from the extermination company. 13. Packages / Deliveries In the event your community accepts packages for residents we do so in our sole discretion and the following policies apply: a) We will only accept packages from a commercial delivery service (UPS, Federal Express, etc.) and United States Postal Service. We will not accept any package shipped COD or having postage due. b) In the event your community offers a package locker system , couriers will make all deliveries exclusively through the locker system. Refer to your community for the locker location name to be placed on address delivery label(s), which will instruct couriers of proper delivery. c) We will not be responsible or liable for any lost or stolen deliveries which we sign for or accept. While your deliveries are in our possession, both during and after office hours, your deliveries are not secured. d) Pick up your deliveries within 48 hours. If you do not pick up your delivery within 48 hours, we reserve the right to return to sender. e) Occasionally the number of deliveries may become too great or too cumbersome; therefore, we reserve the right at all times to refuse deliveries. f) We have no obligation to contact you when accepting packages. This is your and the deliverer’s responsibility. g) Deliveries or service requiring entrance into your apartment home by anyone other than us will be allowed only with your prior written permission. h) We are not responsible for articles or parcels left at your door or in the office by delivery services. i) We will not be available after hours to allow you access to your deliveries. You must pick up your packages during regular office hours. j) You shall not have perishable goods delivered to the office unless your community has approved such delivery in advance or offers refrigerated lockers. k) We may not accept packages that are over 25 pounds or larger than 2’x2’x2’. l) You may be required to present a photo ID and/or signature when picking up a package. 14. Maintenance Emergencies Service requests will be handled after office hours if they are emergencies. We define emergencies as the following: a) Electrical or gas failure of any nature b) Broken or non - working exterior doors, locks, windows c) Malfunctioning access gates that are locked and will not open d) No heat (when outside temperature is below 60 degrees) e) No air conditioning (when outside temperature is above 85 degrees) f) No water g) Overflowing toilet h) Flooding i) Broken pipes j) Fire (call 911 immediately) k) After business hours, emergency service requests can be reported by calling the office. The on - duty service technician will be notified and will respond as quickly as possible. 15. Apartment Home Transfers When transferring to another apartment home within the community: a) You shall not replace or transfer your interest in the Lease Contract, or any part hereof, without our prior written consent. If you are in violation of the Lease Contract, you will not be approved for a transfer. b) You must sign a Transfer form. c) The criteria for qualifications of credit, income and employment, residence, and criminal must be met for residents that transfer within the lease term or at the end of the lease term. d) You must fulfill at least 3 months of your current lease term before you will be eligible to transfer to a new apartment home. e) If applicable, a transfer fee must be paid prior to transferring. A new security deposit may be required to secure the new apartment home. In addition, market rent, new pet deposit/fees (if applicable) and other applicable fees must be paid. f) You are required to provide a written move - out notice according to your Lease Contract from the current apartment home. The vacated apartment home must be left in the condition described in the move - out cleaning instructions. We will inspect the apartment home and forward statements and deposit refunds to your new address. g) If you cancel the transfer after the new apartment home has been assigned and taken off the market, you will be responsible for any economic loss sustained resulting from your failure to rent the new apartment home. h) You shall be responsible for all moving costs including those associated with switching utilities and services to the new apartment home if a transfer is approved. 3/21/2022 12:21 PM Community Policies/Master Addendum 8/1/2018 Page 3 of 7 Blue Moon eSignature Services Document ID: 306414080
16. Amenities / Facilities Swimming Pool Sports Court Tanning Facilities Video Library BBQ Grill/Fire Pit Car Cleaning Facility Sauna Nature/Hiking Trail Spa or Hot Tub Game Room/Theater Business Center Playground Club Room Laundry Room Fitness Facilities Roof Top Deck Dog Park/Spa In the event that your community hosts any of the above or other amenities, the following apply: In an emergency, call 911 Attendants are not provided Use amenities at your own risk Comply with posted signs Use equipment in the manner it is intended Do not destroy any equipment/amenity Report any equipment needing repair or vandalism Do not remove any equipment Wear appropriate attire Be mindful of others when using amenities and limit time as necessary Only two guests are allowed and must be accompanied by you We are not responsible for accidents, injuries, or lost, stolen, damaged, or misplaced items You agree to hold us harmless from any and all claims, damages, or expenses related to the use of amenities 17. Amenity / Facility Safety - Related Restrictions 1. Safety - Related Restrictions : Our community contains amenities/facilities that are intended to enhance the living experience for you and your occupants . You agree that, for safety - related reasons, certain amenities/facilities may require restrictions on use . You agree to abide by posted signs . You further agree that you, your occupants or guests will be supervised, as needed, by someone possessing the proper skills to supervise the particular activity at the amenities/facilities . 2. Residents Shall Exercise Their Own Prudent Judgment : You, occupants and guests are advised to exercise their own prudent judgment with respect to the unsupervised use of the facilities located throughout the community . By establishing safety - related use restrictions, we are not in any manner representing, guaranteeing or ensuring the safety of any persons when participating in the activities or using the facilities of the community with or without supervision . 18. Swimming Pool and Spa / Hot Tub In the event your community has a pool and/or hot tub for the enjoyment of all residents, the following policies apply. Please follow posted signage. a) We do not provide, at any time, safety or supervisory personnel at the pools, hot tubs, spas, or any other common area. LIFEGUARDS ARE NOT PROVIDED. SWIM AT YOUR OWN RISK. FOR YOUR SAFETY, DO NOT SWIM ALONE. b) No diving. Diving may result in injury or death. c) We cannot and do not assure, guarantee or warrant your safety. d) Assistance animals are allowed in the pool area if necessary due to a disability - related need; however, no animals will be allowed in the pool or spa water. e) We are not responsible for accidents, injuries, or lost, stolen, damaged or misplaced items. f) No jumping into the pool from balconies, patios, fountains, or other structures near the pool. g) Keep gates closed at all times. h) Respect others by covering pool furniture with a towel. Do not remove pool furniture from pool areas. Dispose of trash properly. i) Overexposure to hot water may cause dizziness, nausea, and fainting. Hot water exposure limitations vary from person to person. j) Check the hot tub temperature before entering the hot tub. Do not use the hot tub if the temperature is above 104 degrees. Do not operate the hot tub if the suction outlet cover is missing, broken, or loose. k) Do not place electrical appliances (telephone, radio, TV, etc.) within five feet of the pool or hot tub. l) Appropriate swimwear is required at all times as determined by us. Diapers are not allowed unless they are swim diapers. m) You are limited to 2 guests to any pool/hot tub area, and you must accompany your guests at all times. 19. Sports Courts (Tennis, Volleyball, Basketball, etc.) In the event your community has sports courts (tennis, volleyball, basketball, etc.) for the enjoyment of all residents, the following policies apply. a) Motorcycles, bicycles, tricycles, roller blades, skateboards and skates are not permitted on the court surface. b) Do not sit or lean on the net. Do not hang from or climb on the goal or nets. c) Proper athletic shoes with rubber soles are required. 20. Club Room / Game Room / Theater In the event that your community provides a club room, game room, and/or theater for the enjoyment of all residents, the following policies apply. a) No wet clothing permitted. b) Clubroom hours are determined by us. c) All items must be returned, in the condition in which they were received prior to leaving. d) Use the facility at your own risk. Use the equipment only in the manner intended by manufacturer. e) Do not remove or damage equipment and supplies. 21. Tanning Bed, Tanning Dome, or Spray Tan Booth In the event a tanning device(s) is provided for the enjoyment of all residents, the following policies apply: a) Failure to use the eye protection may result in permanent damage to your eyes. b) Overexposure to ultraviolet light (whether from natural or artificial sources) causes burns. c) Repeated exposure to ultraviolet light (whether from natural or artificial sources) may result in premature aging of the skin and skin cancer. d) Abnormal skin sensitivity or burning may be caused by reactions of ultraviolet light to certain food, cosmetics, and medications. 22. Video / DVD Library In the event your community provides a video/DVD library, the following policies apply. a) You acknowledge and agree to be fully responsible for any and all videos/DVDs borrowed by self or other occupants while using the video services provided. b) All videos/DVDs must be returned in good working condition (except reasonable wear and tear) within 48 hours. c) We are not responsible for persons borrowing videos/DVDs that may not be suitable for themselves or others. d) We may charge your account the total amount owed including late charges and/or market value of all items not returned in good working condition. 23. Business / Computer Center In the event your community has a business center for the enjoyment of all residents, the following policies apply: a) The center is for use by you and occupants only. b) We are not responsible for lost, stolen or damaged items, content viewed, viruses or loss of information. 3/21/2022 12:21 PM Community Policies/Master Addendum 8/1/2018 Page 4 of 7 Blue Moon eSignature Services Document ID: 306414080
c) Smoking, food and drinks are prohibited . d) Please be considerate of others . Limit computer use to 30 minutes when others are waiting . e) You must provide their own document/data storage . Do not install or download any program, file or software on the business center equipment . Data created, stored or saved on the business center equipment will not be private, may be used by us for any purpose and will likely be deleted . Incoming faxes are prohibited . f) We reserve the right to monitor, intercept, review, and erase, without further notice, all content created on, transmitted to, received or printed from, or stored or recorded on the courtesy devices . g) Users should not use the courtesy device to transmit or store personal information, including user names, passwords, addresses, driver’s license numbers, social security numbers, bank information, or credit card information . h) The courtesy device and associated access to the internet may not be used to (a) violate United States, state, or foreign laws ; (b) transmit or receive material that is threatening, obscene, harassing, discriminatory, defamatory, illicit, or pornographic ; or (c) interfere with or disrupt network users, services, or equipment . i) Attempts to remove equipment from the business center will engage the alarm system. j) Users may not alter or damage existing hardware or software. Do not modify screensavers or background images on business center equipment. k) Violation of any or all of the above stated rules may result in termination of business center use or other remedies under the lease. 24. Barbecue Grill / Outdoor Kitchen / Fire Pit / Fire Place In the event your community has barbeque grills, outdoor kitchens, fire pits, or fire places for the enjoyment of all residents, the following policies apply. a) Barbecue grill instructions may be posted at each location or are available from us. Please contact us before attempting to use these grills. b) Keep pets and persons requiring supervision away from open flames. c) Your community may require a deposit or fee to use the facility. Contact us for further details. d) Never leave a fire unattended. Do not leave until the fire is completely out. e) Keep flammable materials away from the fire. 24. Laundry Room In the event your community has laundry rooms, the following policies apply. a) Use appropriate settings on washers and dryers. Any loss or damage to clothing is not our responsibility. b) No dying of clothes is permitted. c) Do not wash or dry oversized items. d) Remove lint from dryer before and after each use. Wipe down after use. Please leave machines clean. e) Facilities are for use by you and occupants only. 24. Dog Park/Spa In the event your community has a Dog Park or Spa for the enjoyment of all residents, the following policies apply. a) Animal owners are responsible their animal’s behavior, for damage or injury inflicted to or by their animal(s). Animal owners must remain with dogs in fenced area at all times. b) You are limited to 2 animals per person in the Dog Park or Spa c) Dogs must be leashed when entering and exiting the park and must be leashed in the transition corridor, if applicable. You must have a visible leash for each dog at all times. d) Animals with a known history of dangerous or aggressive behavior are prohibited. Immediately leash your dog(s) and leave the Dog Park if your dog behaves aggressively. e) Puppies under 6 months of age and female dogs in heat are not allowed in the Dog Park. 24. Roof Top Deck In the event your community has a roof top deck for the enjoyment of all residents, the following policies apply. a) You, your occupants and guests shall not walk in any areas on the roof other than the designated walkway and roof top deck itself. b) Nothing shall be thrown or intentionally dropped over the edge of the roof. You, upon the first infraction of this policy by you, your occupants or guests, may have use privileges revoked and/or residency terminated. 24. Photographs, Digital Images, Video All residents, occupants, visitors and guests, while in common areas, give Owner, management company, their employees, agents, subsidiaries and authorized vendors the right to record their image and/or voice, and grant Owner and management company all rights to use these sound, still, or moving images in any and all media, now or hereafter known, and for any purpose whatsoever . A release to Owner, management company, their employees, agents, subsidiaries and authorized vendors is granted for all rights to exhibit this work in all media, including electronic form, publicly or privately . The rights, claims or interest controlling the use of identity or likeness in the sound, still or moving images is waived and any uses described herein may be made without compensation or consideration . 29. Wildlife 1. Definition of Wildlife: Wildlife can include the presence of alligators, bears, crocodiles, snakes, opossums, raccoons, or other non - domesticated animals. In the event wildlife is found on the community, you agree to the following. 2. Resident Acknowledgements: You assume the risk with respect to having wildlife near your apartment home and acknowledge that we are not liable for any injuries, damages or losses to persons or property caused by or related to the wildlife. 3. Resident Responsibilities: You will be responsible for informing occupants, guests and invitees about the wildlife and enforcing their compliance with the following: You, your occupants and guests will not: a) feed, get close to, or attempt to catch the wildlife; b) swim, wade or play near the wildlife; c) dispose of garbage of scraps near a water source, pond, lake, or other area that may contain wildlife. 29. Body of Water (Lake, Pond, Water Features) You will be responsible for informing occupants, guests and invitees about the bodies of water and enforcing their compliance with the following: No one will a) b) c) swim or wade in any body of water that is not designated as a swimming pool; boat on any body of water unless approved by us; ice skate or conduct any other type of water sport in or on the bodies of water. 31. Elevators In the event your community has an elevator (s) for the enjoyment of all residents, the following policies apply. a) Do not attempt to maneuver or stop closing doors. Wait for the next elevator car. b) In the event of a fire or other situation that could lead to a disruption in electrical services, take the stairs. c) When entering and exiting the elevator, watch your step as the elevator car may not be perfectly level with the floor. d) Do not climb out of a stalled elevator. Use the alarm, help, or telephone button to call for assistance. 32. Construction or Renovation 3/21/2022 12:21 PM Community Policies/Master Addendum 8/1/2018 Page 5 of 7 Blue Moon eSignature Services Document ID: 306414080
In the event your community is under construction or renovation, the following policies apply : a) Inform Occupants and Guests : You will be responsible for informing occupants, guests, and invitees about these policies . b) Stay Away from Construction Areas : You agree to observe all warning signs and blockades . You agree to stay away from the construction areas and shall not climb on or enter onto scaffolding or other construction equipment at any time . You acknowledge there may be construction debris, trip hazards, and uneven surfaces . Construction crews may work throughout the days to complete construction . c) Machinery and Equipment : You acknowledge the construction areas will have machinery and equipment to be used by authorized personnel only and entry into those areas by you, your occupants, guests or invitees is strictly prohibited . d) Minor Disturbances : You acknowledges that the construction/renovation may cause noise, dust, and minor disturbances to the egress/ingress on or about the community and minor disturbances to the quiet and enjoyment of the apartment home . e) Amenities May Be Unavailable : You further agree that the amenities, including the clubhouse, pool, or other common areas, may be unavailable for use by you, your occupants, guests and invitees during the period of construction . f) Resident Waives Right to Withhold Rent : Except as otherwise prohibited by law, you hereby waive any right to withhold rent due to inconvenience or disturbance of quiet enjoyment of your apartment home or the inability to use the amenities or common areas or put forward such noise or construction activity as a breach of our duty pursuant to applicable law . g) Move - In Date Not Guaranteed Due to Construction Delays : You acknowledge that the move - in date cannot be guaranteed in the case of unforeseen construction delays . You acknowledge that you will not be compensated for any unforeseen occupancy delays . If you terminate the Lease Contract early for any reason other than construction delays, you will be responsible for all applicable early termination charges and procedures . 33. Prevention of Mold You agree not to conduct any mold or other environmental testing of your apartment without giving us at least 72 hours advance written notice to enable us to have a representative present during testing . You agree that failure to provide such notice means the testing is not admissible in any legal proceedings . 34. Fire/Freezing Weather/Floods/Other Emergencies Emergency situations may occur during your residency . Please remember that you are responsible for your own safety and the safety of your occupants, guests and invitees . You should look to the proper authorities for any assistance when needs exceed your abilities . Please note the following regarding certain emergency situations . 1. Fire Hazards: a) Follow fire safety and fire safety regulations while in the apartment home and community. b) No flammable or combustible objects/substances are to be stored on patios, balconies, under stairwells, in your garage or storage space and should not be within 30 inches of an item which produces heat (water heater, furnace, stove, oven, candle, curling iron, etc.). c) Items which require an open flame to operate or which produce heat (e.g., Bunsen burners, sterno/canned heat, lighted candles, alcohol burners, heating elements, irons, curling irons, halogen bulbs, stove, oven) must be supervised at all times during use and should never be left unattended. d) Do not obstruct or use the driveways, sidewalks, entry passages, stairs, breezeways, courtyards, or halls for any purpose other than ingress or egress. e) Fireworks are prohibited inside the apartment home or anywhere within the community. 2. Fire Alarms : In the event residents are given procedures for fire alarms, you, your occupants, guests and invitees are required to adhere to all procedures . a) You and your occupants, guests, and invitees must not tamper with, interfere with, or damage any alarm equipment and/or installation . b) In the event the community has a fire sprinkler system, you acknowledge and hereby agree that it is important to be careful near fire sprinkler heads so as not to falsely trigger or activate them . If you trigger or activate the fire sprinkler system, you will be responsible for all damages caused by the activation . c) Anyone found to falsely pull a fire alarm will be subject to criminal charges, a fine, and/or a default of the Lease Contract . d) An extension cord must be UL approved, 16 gauges, and not exceed an un - spliced length of six feet with a polarized plug and a single outlet ; it may not be placed under floor coverings or furnishings and may not be secured by penetrating the insulation . 3. Freezing Weather: You shall follow these precautions when subfreezing weather occurs. a) Leave the heat on 24 hours a day at a temperature setting of no less than 55 degrees. Keep all windows closed. b) Leave open the cabinet doors under the kitchen sink and bathroom sink to allow heat to get to the plumbing. c) Drip all your water faucets 24 hours a day. If severe subfreezing weather occurs, it may be necessary to run your faucets at a steady, pencil - lead stream when you are in the apartment home and when you are gone. This includes hot and cold water in your kitchen, bathroom lavatories, bathtubs, shower, wet bar sinks, etc. d) Leave all drains open and clear of obstacles; including lavatories, sinks and bathtubs. e) If you notice a water leak, icy spot or other hazardous condition on the community, notify us IMMEDIATELY. 34.4 Floods: a) If heavy rain, storms or flooding is forecast, you should follow the guidelines below. Do not put tape on the windows unless directed by us. b) Unplug all appliances and televisions. Do not plug appliances back in until the water completely recedes and community personnel give you permission. 35. Power Outage In the event of a power outage that lasts more than 24 hours, we have the right, but not an obligation, to dispose of the contents of the refrigerator/freezer in your apartment home . You waive any claim and hold us harmless for the disposal of such contents . You agree not to seek recovery against us for interruption of power that results in disposal, loss, or spoilage of refrigerated or frozen food . 36. Payments Unless otherwise allowed at your community, we only accept electronic payments . Cash, paper checks, paper money orders or other forms of payment will not be accepted . Credit and Debit Card transactions may not be allowed . 1. ACH, Credit, and Debit Cards : Automated electronic payments include ACH and Credit and Debit Card transactions . ACH refers to the nationwide network of banking institutions that have agreed to process electronic payments automatically from your bank account to our bank accounts . Virtually all banks and credit unions participate . Credit and debit card transactions refers to credit and debit card transactions, including those cards bearing the Visa, MasterCard, Discover and American Express logos . Collectively, “automated electronic payments” are paperless transactions that occur instantly and automatically without a check being hand - processed through a local bank clearinghouse or the Federal Reserve System . 2. Advantages in Paying Rent via ACH: There are advantages for you in paying your rent via automated electronic payments, including: a) Greater convenience since you won’t have to worry each month with writing, mailing or delivering a rent check; b) No late charges since your rent will be paid timely, assuming there are sufficient funds in your checking account; c) Greater security since there is little chance that a check signed by you will fall into the wrong hands or get lost in the mail; and d) Proof that you’ve paid since your bank statement is evidence of payment according to ACH and card network rules. 3. Electronic Money Orders: We also accept electronic money orders. Details on this payment option are available at the office. 4. Check Scanner : If your community accepts paper checks and uses a check scanner, you are hereby advised that personal checks remitted for normal payments will be scanned and the funds will be electronically withdrawn from your bank account via “Automated Clearing House” (ACH) . If you wish to opt out of this process, you must choose another payment method . Standard ACH bank drafts occur after one business day . 5. Electronic Check Conversion : If your community accepts paper checks, please be aware that we may use electronic check conversion . This is a process in which your check is used as a source of information (for the check number, your account number, and the number that identifies your financial institution) . The information is then used to make a one - time electronic payment from your account (an electronic fund transfer) . The check itself is not the method of payment . Your electronic transaction may be processed faster than a check . Be sure you have enough money in your account at 3/21/2022 12:21 PM Community Policies/Master Addendum 8/1/2018 Page 6 of 7 Blue Moon eSignature Services Document ID: 306414080
the time you make a purchase or payment . Your financial institution will not return any checks that are converted, even if you normally receive your original checks or images of those checks with your statement . Always review your regular account statement from your financial institution . You should immediately contact your financial institution if you see a problem . You have only 60 days (from the date your statement was sent) to tell the financial institution about a problem . Depending on the circumstances, the financial institution may take up to 45 days from the time you notify it to complete its investigation . Your checking account statement will contain information about your payment, including the date, the check number, the name of the person or company you have paid, and the amount of the payment . 37. Data and Communication You understand and accept that we may collect, retain, use, transfer, and disclose personal information, such as the first name, last name, email address, and phone number of you or your occupants in the unit . We may collect, retain, and use that information, or disclose that information to third parties to, among other things, (a) operate the Property ; (b) provide services consistent with the Lease ; (c) refer you to third parties that provide products or services that may be of interest to you or your occupants in the unit ; (d) collect debts ; and (e) conduct and analyze resident surveys . Please review the privacy policy of the owner’s authorized agent at the time of residence for a discussion of the treatment of information during your lease . The current policy may be viewed at https : // www . greystar . com/privacy . Providing an email address or cell phone number to us enables us to send important announcements, including notices regarding an emergency water shut off, work to be done at the Property, or changes in office hours . By providing this contact information, you and your occupants consent to receive communications regarding marketing materials, promotional offers, community messages, and service reminders via e - mail, voicemail, calls and/or text . By providing your and your occupants’ phone numbers, you acknowledge and agree that we may contact you and your occupants at the phone number(s) that you and your occupants have provided, including through an automatic telephone dialing system and/or an artificial prerecorded voice, with information and notifications about the community and for other non - marketing, informational purposes, including in connection with expiration of your lease. You further warrant to us that you or your occupants are the subscriber for any wireless number that you or your occupants have provided. You agree to immediately notify us if you or your occupants are no longer the subscriber for a wireless number, or if a wireless number changes. Text messaging and data rates may apply. You authorize us to deliver messages regarding renewal of your lease and other offers to you at the telephone number(s) that you have provided, including through the use of an automatic telephone dialing system and/or artificial or prerecorded voice . You acknowledge and agree that this authorization is made voluntarily . The permissions and consents granted herein apply to the owner of the community and the owner’s authorized agents/representatives, including its property manager, and will continue even after your lease expires, the owner of the community sells the community, or the property manager no longer manages the community . 38. Subletting and Replacements 1. When Allowed : Replacing a resident, subletting, assigning, or licensing a resident’s rights are allowed only when we consent in writing . Residency at your community is subject to an application and/or approval by us . Occupancy is restricted to only the named residents and occupants that are identified in your Lease Contract . 2. Advertising Your Apartment : You are not allowed to advertise your apartment homes(s) without our written consent . This prohibition on advertising includes online postings, print advertising or other formats such as craigslist, Airbnb, etc . 39. Conduct You agree to communicate and conduct yourself at all times in a lawful, courteous, and reasonable manner when interacting with us ; our employees, agents, independent contractors, and vendors ; other residents, occupants, guests or invitees ; or any other person in the community . Any acts of unlawful, discourteous, or unreasonable communication or conduct by you or your occupants, guests or invitees, shall be a material breach of this Agreement and will entitle us to exercise all of our rights and remedies for default . You agree not to engage in any abusive behavior, either verbal or physical, or any form of intimidation or aggression directed at us ; our employees, agents, independent contractors, and vendors ; other residents, occupants, guests or invitees ; or any other person in the community . Any acts of abusive or offensive behavior whether verbal or physical by you or your occupants, guests or invitees, shall be a material breach of this Lease and will entitle us to exercise all of our rights and remedies for default . If requested by us, you agree to conduct all further business with us in writing. Summary Section and Description Charge Additional Controlled Access Device $ Damaged/Lost/Unreturned Cards/Remotes/Fobs (per device) $ 75 Duplicate/Lost/Unreturned Key $ 75 Re - keying Lock $ 75 Private Yard Maintenance Fine $ Lost/Stolen/Unreturned Parking Tag/Sticker (per item) $ 50 Trash Clean - up (per bag) $ 25 Litter Fine (per incident) $ 25 Pest Control Monthly Fee $ 2.00 This is a binding document. Read carefully before signing. Resident(s) Signature(s) (18 years of age and over) Date : 03 / 21 / 2022 Date : 03 / 21 / 2022 Date : Date : Date : Date : Owner’s Representative Signature: 3/21/2022 12:21 PM Community Policies/Master Addendum 8/1/2018 Page 7 of 7 Blue Moon eSignature Services Document ID: 306414080
VIRUS WARNING AND WAIVER ADDENDUM This Virus Warning and Waiver Addendum relates to the TAA Lease Contract, signed , for Apt . No . 202 N in the SPUS 9 HSTN North Tower LP Apartments in Houston , Texas, OR the house, duplex, etc . located at (street address) in , Texas . Due to the inherent risk of exposure to COVID - 19 and/or other virus strains (collectively “Viruses”) on the premises as defined in Section 92 . 001 of the Texas Property Code (the “Premises”), it is important that you diligently follow all posted instructions, written rules, and generally accepted health precautions concerning the spread of Viruses while on the Premises . Viruses may be extremely contagious and can lead to severe illness and death . You should always assume that anyone could have a Virus . There is no representation or warranty that : ( 1 ) the Premises are or will remain free of Viruses, ( 2 ) persons on the Premises are not carrying Viruses ; or ( 3 ) exposure to Viruses cannot occur on the Premises . While on the Premises : 1. You must exercise due care for your safety at all times . 2. You agree to take full responsibility for and voluntarily assume all risks related to exposure to Viruses . 3. You agree to release, indemnify, discharge, and hold us and our representatives harmless to the fullest extent allowed by law for all present and future claims and liabilities relating to Viruses, including but not limited to any negligent act or omission by us, which might occur as a result of your being on the Premises . Date 03 / 21 / 2022 Date 03 / 21 / 2022 Date Date Date Date Date 03 / 21 / 2022 Resident Resident Resident Resident Resident Resident Owner’s Representative Apartment name and unit number or street address of leased premises Texas Apartment Association SPUS9 HSTN North Tower LP, 1625 Main St #202N 3/21/2022 12:21 PM Blue Moon eSignature Services Document ID: 306414080
3/21/2022 12:21 PM LEASE ADDENDUM FOR CONCESSION, CREDIT OR OTHER DISCOUNT 1. Addendum. This is an addendum to the TAA Lease Contract for Apt. No. 202N in the SPUS9 HSTN North Tower LP Apartments in Houston , Texas OR the house, duplex, etc. located at (street address) in , Texas. 2. Concession or discount . As an incentive and bonus to you for signing the TAA Lease Contract, choosing our property, and agreeing to fulfill your obligations for the entire term of the TAA Lease Contract, you will receive a concession, credit or discount described below . [Check all that apply] D One - time concession. You will receive a one - time concession in the total amount of $ . This concession will be credited to your charges for the month(s) of . D Monthly discount. You will receive a monthly discount of $ for months. Special Provisions: 3 . Payment or repayment for breach . If you move out or terminate your TAA Lease Contract early, in violation of the TAA Lease Contract, you forfeit the concession or credit received under this addendum . If you fail to pay all of your obligations under the TAA Lease Contract, then you will be required to immediately repay us the amounts of all concessions and/or discounts that you actually received from us for the months you resided in your dwelling, in addition to all other sums due under the TAA Lease Contract for unauthorized surrender or abandonment by the resident (see TAA Lease Contract Par . 27 ) . Signatures of All Residents Signature of Owner or Owner’s Representative Texas Apartment Association Blue Moon eSignature Services Document ID: 306414080
3/21/2022 12:21 PM LEASE ADDENDUM FOR TRASH REMOVAL AND RECYCLING COSTS — FLAT FEE 1. Addendum. This is an addendum to the TAA Lease Contract for Apt. No. 202N in the SPUS9 HSTN North Tower LP Apartments in Houston , Texas OR the house, duplex, etc. located at (street address) in , Texas. 2. Flat fee for trash/recycling costs. Your monthly base rent under the TAA Lease Contract does not include a charge for trash removal. Instead, you will be receiving a separate bill from us for such service. You agree to pay a monthly fee of $ 15.00 for the removal of trash and/or recycling for the apartment community, plus a nominal administrative fee of $ 3.00 per month (not to exceed $3) for processing and billing. Your trash/recycling bill may include state and local sales taxes as required by state law. 3. Payment due date . Payment of your trash removal and recycling bill is due 16 days after the date it is postmarked or hand delivered to your apartment . We may include this item as a separate and distinct charge as part of a multi - item bill . You agree to mail or deliver payment to the place indicated on your bill so that payment is received no later than the due date . There will be a late charge of $ 0 . 00 (not to exceed $ 3 ) if we do not receive timely payment of your trash/recycling bill, but we are not obligated to accept late payment . If you are late in paying the trash removal/recycling bill, we may immediately exercise all lawful remedies under your lease contract, including eviction . Signatures of All Residents Signature of Owner or Owner’s Representative Texas Apartment Association Blue Moon eSignature Services Document ID: 306414080
Texas Apartment Association 3/21/2022 12:21 PM WATER AND WASTEWATER SUBMETERING ADDENDUM 1. Addendum. This is an addendum to the TAA Lease Contract for Apt. No. 202N in the SPUS9 HSTN North Tower LP Apartments in Houston , Texas OR the house, duplex, etc. located at (street address) in , Texas. 2. PUC . Water conservation by submeter billing is encouraged by the Public Utility Commission of Texas (PUC) . Submeter billing is regulated by PUC rules, and a copy of the rules is attached to this addendum . This addendum complies with those rules . 3. Mutual Conservation Efforts . We agree to use our best efforts to repair any water leaks inside or outside your apartment no later than 7 days after we learn about them . You agree to use your best efforts to follow the water - conservation suggestions listed in the checklist below . 4. Submeter Billing Procedures . Your monthly rent under the TAA Lease does not include a charge for water and wastewater . Instead, you will receive a separate monthly bill from us for submetered water and wastewater use, as follows : (A) Your monthly water and wastewater bill will conform to all applicable rules of the PUC (see attached) . (B) As permitted by state law, a service fee of 9 % (not to exceed 9 % ) will be added to your monthly water - service charges . (C) No other administrative or other fees will be added to your bill unless expressly allowed by law or PUC rules . No other amounts will be included in the bill except your unpaid balances and any late fees (if incurred by you) . If we fail to pay our mastermeter bill to the utility company on time and incur penalties or interest, no portion of these amounts will be included in your bill . (D) We will calculate your submetered share of the mastermetered water bill according to PUC rules, Section 24 . 124 . (E) We will bill you monthly for your submetered water consumption from approximately the 1 day of the month to the 31 day of the month, the latter being our scheduled submeter - reading date . Your bill will be calculated in accordance with PUC rules and this Addendum and will be prorated for the first and last months you live in the unit . (F) PUC rules require us to publish figures from the previous calendar year if that information is available . The average monthly bill for all dwelling units in the apartment community last year was $ 16 . 13 per unit, varying from $ 1 . 07 for the lowest month’s bill to $ 83 . 08 for the highest month’s bill for any unit . This information may or may not be relevant since the past amounts may not reflect future changes in utility - company water rates, weather variations, future total water consumption, changes in water - consumption habits of residents, and other unpredictable factors . (G) During regular weekday office hours, you may examine : ( 1 ) our water and wastewater bills from the utility company ; ( 2 ) our calculation of your monthly submeter bill ; and ( 3 ) any other information available to you under PUC rules . Please give us reasonable advance notice to gather the data . Any disputes relating to the computation of your bill will be between you and us . 5. Your Payment - Due Date . Payment of your submeter water and wastewater bill is due 16 days after the date it is postmarked or hand delivered to your apartment . You agree to mail or deliver payment to the place indicated on your bill so that payment is received no later than the due date . You will pay a late charge of 5 % of your water and wastewater bill if we do not receive your payment on time . A Checklist of Water - Conservation Ideas for Your Dwelling In the bathroom . . . • Never put cleansing tissues, dental floss, cigarette butts, or other trash in the toilet. • When brushing your teeth, turn off the water until you need to rinse your mouth. • When shaving, fill the sink with hot water instead of letting the faucet run. • Take a shower instead of filling the tub and taking a bath. • Take a shorter shower. Showers may use up to half of your interior water consumption. • If you take a tub bath, reduce the water level by one or two inches. • Shampoo your hair in the shower. • T es t toilets for leaks . Add a few drop s o f food coloring to the tank, bu t d o no t flush . W atc h to see i f the coloring appear s i n the bow l within a few minutes . If i t does , the fixture need s adjustmen t o r repai r . A slow dri p can wast e a s much a s 17 0 gallon s a da y o r 5 , 00 0 gall o n s per month . Repor t al l leak s to management . • Don’t leave water running while cleaning bathroom fixtures . In the kitchen . . . • Run your dishwasher only when you have a full load. • If you wash dishes by hand, don’t leave the water running for washing or rinsing. Fill the sink instead. • Use your sink disposal sparingly, and never for just a few scraps. • Keep a container of drinking water in the refrigerator. • When cleaning vegetables, use a pan of cold water rather than letting the faucet run. • For cooking most food, use only a little water and place a lid on the pot. • Report all leaks to management. When doing the laundry . . . • Wash only full loads of laundry or else adjust the water level to match the size of the load (if you have this option) . • Use cold water as often as possible to save energy and to conserve the hot water for uses that cold water cannot serve. Attached: PUC Rules for Submetered Water or Wastewater Service Also note that the service fee referenced in item 4(B) does not apply to properties receiving Low - Income Housing Tax Credits or to properties receiving tenant - based vouchers. Resident or Residents [All residents must sign here] Owner or Owner’s Representative [sign here] Blue Moon eSignature Services Document ID: 306414080
Water allocation and submetering is regulated by the Texas Public Utility Commission (PUC). In accordance with PUC rules, a copy of the applicable rules are provided to you below: SUBCHAPTER H: WATER UTILITY SUBMETERING AND ALLOCATION † 24.275. General Rules and Definitions. (a) Purpose and scope . The provisions of this subchapter are intended to establish a comprehensive regulatory system to assure that the practices involving submeteredandallocatedbilling ofdwellingunitsandmultipleusefacilitiesfor water and sewer utility service are just and reasonable and include appropriate safeguards for tenants . (b) Application . The provisions of this subchapter apply to apartment houses, condominiums, multiple use facilities, and manufactured home rental communitiesbillingfor waterandwastewater utilityservice onasubmetered or allocated basis . The provisions of this subchapter do not limit the authority of an owner, operator, or manage of an apartment house, manufactured home rental community, or multiple - use facility to charge, bill for, or collect rent, an assessment, an administrative fee, a fee relating to upkeep or management of chilled water, boiler, heating, ventilation, air conditioning, or other building system, or any other amount that is unrelated to water and sewer utility service costs . (c) Definitions . The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise . (1) Allocated utility service – Water or wastewater utility service that is master metered to an owner by a retail public utility and allocated to tenants by the owner . (2) Apartment house – A building or buildings containing five or more dwelling units that are occupied primarily for nontransient use, including a residential condominium whether rented or owner occupied, and if a dwelling unit is rented, having rental paid at intervals of one month or longer . (3) Condominium manager – A condominium unit owners’ association organized under Texas Property Code Α 82 . 101 , or an incorporated or unincorporated entity comprising the council of owners under Chapter 81 , Property Code . Condominium Manager and Manager of a Condominium have the same meaning . (4) Customer service charge – A customer servicecharge is a rate that is not dependent on the amount of water used through the master meter . (5) Dwelling unit – One or more rooms in an apartment house or condominium, suitable for occupancy as a residence, and containing kitchen and bathroom facilities ; a unit in a multiple use facility ; or a manufactured home in a manufactured home rental community . (6) Dwelling unit base charge – A flat rate or fee charged by a retail public utility for each dwelling unit recorded by the retail public utility . (7) Manufactured home rental community – A property on which spaces are rented for the occupancy of manufactured homes for nontransient residential use and for which rental is paid at intervals of one month or longer . (8) Master meter – A meter used to measure, for billing purposes, all water usage of an apartment house, condominium, multiple use facility, or manufactured home rental community, including common areas, common facilities, and dwelling units . (9) Multiple use facility – A commercial or industrial park, office complex, or marina with five or more units that are occupied primarily for nontransient use and are rented at intervals of one month or longer . (10) Occupant – A tenant or other person authorized under a written agreement to occupy a dwelling . (11) Overcharge – The amount, if any, a tenant is charged for submetered or nonsubmetered master metered utility service to the tenant’s dwelling unit after a violated occurred relating to the assessment of a portion of utility costs in excess of the amount the tenant would have been charged under this subchapter . Overcharge and Overbilling have the same meaning . (12) Owner – The legal titleholder of an apartment house, a manufactured home rental community, or a multiple use facility ; a condominium association ; or any individual, firm, or corporation that purports to be the landlord of tenants in an apartment house, manufactured home rental community, or multiple use facility . (13) Point - of - use submeter – A device located in a plumbing system to measure the amount of water used at a specific point of use, fixture, or appliance, including a sink, toilet, bathtub, or clothes washer . (14) Submetered utility service – Water utility service that is master metered for the owner by the retail public utility and individually metered by the owner at each dwelling unit ; wastewater utility service based on submetered water utility service ; water utility service measured by point - of - use submeters when all of the water used in a dwelling unit is measured and totaled ; or wastewater utility service based on total water use as measured by point - of - use submeters . (15) Tenant – A person who owns or is entitled to occupy a dwelling unit or multiple 1 use facility unit to the exclusion of others and, if rent is paid, who is obligated to pay for the occupancy under a written or oral rental agreement . (16) Undercharge – The amount, if any, a tenant is charged for submetered or nonsubmetered master metered utility service to the tenant’s dwelling unit less than the amount the tenant would have been charged under this subchapter . Overcharge and Overbilling have the same meaning . (17) Utility costs – Any amount charged to the owner by a retail public utility for water or wastewater service . Utility Costs and Utility Service Costs have the same meaning . (18) Utility service – For purposes of this subchapter, utility service includes only drinking water and wastewater . † 24.277. Owner Registration and Records. (a) Registration . An owner who intends to bill tenants for submetered or allocated utility service or who changes the method used to bill tenants for utility service shall register with the commission in a form prescribed by the commission . (b) Water quantity measurement . Except as provided by subsections (c) and (d) of this section, a manager of a condominium or the owner of an apartment house, manufactured home rental community, or multiple use facility, on which construction began after January 1 , 2003 , shall provide for the measurement of the quantity of water, if any, consumed by the occupants of each unit through the installation of : (1) submeters, owned by the property owner or manager, for each dwelling unit or rental unit; or (2) individual meters, owned by the retail public utility, for each dwelling unit or rental unit. (c) Plumbing system requirement . An owner of an apartment house on which construction began after January 1 , 2003 , and that provides government assisted or subsidized rental housing to low or very low income residents shall install a plumbing system in the apartment house that is compatible with the installation of submeters for the measurement of the quantity of water, if any, consumed by the occupants of each unit . (d) Installation of individual meters . On the request by the property owner or manager, a retail public utility shall install individual meters owned by the utility in an apartment house, manufactured home rental community, multiple use facility, or condominium on which construction began after January 1 , 2003 , unless the retail public utility determines that installation of meters is not feasible . If the retail public utility determines that installation of meters is not feasible, the property owner or manager shall install a plumbing system that is compatible with the installation of submeters or individual meters . A retail public utility may charge reasonable costs to install individual meters . (e) Records . The ownershallmakethe followingrecordsavailableforinspection by the tenant or thecommission or commissionstaff attheon - sitemanager’s office during normalbusinesshours in accordance withsubsection(g) of this section . The owner may require that the request by the tenant be in writing and include : (1) a current and complete copy of TWC, Chapter 13, Subchapter M; (2) a current and complete copy of this subchapter; (3) a current copy of the retail public utility’s rate structure applicable to the owner’s bill; (4) information or tips on how tenants can reduce water usage; (5) the bills from the retail public utility to the owner; (6) for allocated billing: (A) the formula, occupancy factors, if any, and percentages used to calculate tenant bills ; (B) the total number of occupants or equivalent occupants if an equivalency factor is used under Α 24 . 124 (e)( 2 ) of this title (relating to Charges and Calculations) ; and (C) the square footage of the tenant’s dwelling unit or rental space and the total square footage of the apartment house, manufactured home rental 3/21/2022 12:21 PM Blue Moon eSignature Services Document ID: 306414080
community, or multiple use facility used for billing if dwelling unit size or rental space is used; (7) for submetered billing: (A) the calculation of the average cost per gallon, liter, or cubic foot ; (B) if the unit of measure of the submeters or point - of - use submeters differs from the unit of measure of the master meter, a chart for converting the tenant’s submeter measurement to that used by the retail public utility ; (C) all submeter readings ; and (D) all submeter test results ; (8) the total amount billed to all tenants each month; (9) total revenues collected from the tenants each month to pay for water and wastewater service; and ( 10 ) any other information necessary for a tenant to calculate and verify a water and wastewater bill . (f) Records retention . Each of the records required under subsection (e) of this section shall be maintained for the current year and the previous calendar year, except that all submeter test results shall be maintained until the submeter is permanently removed from service . (g) Availability of records (1) If the records required under subsection (e) of this section are maintained at the on - site manager’s office, the owner shall make the records available for inspection at the on - site manager’s office within three days after receiving a written request . (2) If the records required under subsection (e) of this section are not routinely maintained at the on - site manager’s office, the owner shall provide copies of the records to the on - site manager within 15 days of receiving a written request from a tenant or the commission or commission staff . (3) If thereisnoon - sitemanager,theownershallmakecopies oftherecords available at thetenant’sdwelling unit at a timeagreedupon bythetenant within 30 days of theowner receiving awrittenrequestfromthetenant . (4) Copies of the recordsmay be provided bymailifpostmarked by midnight of the last day specified in paragraph ( 1 ), ( 2 ), or ( 3 ) of this subsection . † 24.279. Rental Agreement. (a) Rental agreement content. The rental agreement between the owner and tenant shall clearly state in writing: (1) the tenant will be billed by the owner for submetered or allocated utility services, whichever is applicable ; (2) which utility services will be included in the bill issued by the owner ; (3) any disputes relating to the computation of the tenant’s bill or the accuracy of any submetering device will be between the tenant and the owner ; (4) the average monthly bill for all dwelling units in the previous calendar year and the highest and lowest month’s bills for that period ; (5) if not submetered, a clear description of the formula used to allocate utility services ; (6) information regarding billing such as meter reading dates, billing dates, and due dates ; (7) the period of time by which owner will repair leaks in the tenant’s unit and in common areas, if common areas are not submetered ; (8) the tenant has the right to receive information from the owner to verify the utility bill ; and (9) for manufactured home rental communities and apartment houses, the service charge percentage permitted under Α 24 , 1 24 (d)( 3 ) (related to Charges and Calculations) of this title that will be billed to tenants . (b) Requirement to provide rules . At the time a rental agreement is discussed, the owner shall provide a copy of this subchapter or a copy of the rules to the tenant to inform the tenant of his rights and the owner’s responsibilities under this subchapter . (c) Tenant agreement to billing method changes . An owner shall not change the method by which a tenant is billed unless the tenant has agreed to the change bysigning alease or otherwrittenagreement . Theownershallprovide notice of the proposedchange at least 35 days prior to implementing the new method . (d) Change from submetered toallocatedbilling . An ownershall notchange from submetered billing to allocated billing, except after receiving written approval from the commission after a demonstration of good cause and if the rental agreement requirements under subsections (a), (b), and (c) of this section have been met . Good cause mayinclude : (1) equipment failures ; or (2) meter reading or billing problems that could not feasibly be corrected . Waiver of tenant rights prohibited . A rental agreement provision that purports to waive a tenant’s rights or an owner’s responsibilities under this subchapter is void . (e) † 24.281. Charges and Calculations. (a) Prohibited charges . Charges billed to tenants for submetered or allocated utility service may only include bills for water or wastewater from the retail public utility and must not include any fees billed to the owner by the retail public utility for any deposit, disconnect, reconnect, late payment, or other similar fees . Dwelling unit base charge . If the retail public utility’s rate structure includes a dwelling unit base charge, the owner shall bill each dwelling unit for the base charge applicable to that unit . The ownermay not bill tenants for any dwelling unit base charges applicable to unoccupied dwelling units . Customer service charge . If the retail public utility’s rate structure includes a customer service charge, the owner shall bill each dwelling unit the amount of the customer service charge divided by the total number of dwelling units, including vacant units, that can receive service through the master meter serving the tenants . Calculations forsubmeteredutilityservice . Thetenant’ssubmeteredcharges must include the dwelling unit base charge and customer service charge, if applicable, and the gallonage charge and must be calculated each month as follows : (b) (c) (d) (1) water utility service : the retail public utility’s total monthly charges for water service (less dwelling unit base charges or customer service charges, if applicable), divided by the total monthly water consumption measured by the retail public utility to obtain an average water cost per gallon, liter, or cubic foot, multiplied by the tenant’s monthly consumption or the volumetric rate charged by the retail public utility to the owner multiplied by the tenant’s monthly water consumption ; (2) wastewater utility service : the retail public utility’s total monthly charges for wastewater service (less dwelling unit base charges or customer service charges, if applicable), divided by the total monthly water consumption measured by the retail public utility, multiplied by the tenant’s monthly consumption or the volumetric wastewater rate charged by the retail public utility to the owner multiplied by the tenant’s monthly water consumption ; (3) service charge for manufactured home rental community or the owner or manager of apartment house : a manufactured home rental community or apartment house may charge a service charge in an amount not to exceed 9 % of the tenant’s charge for submetered water and wastewater service, except when ; (A) the resident resides in a unit of an apartment house that has received an allocation of low income housing tax credits under Texas Government Code, Chapter 2306, Subchapter DD; or (B) the apartment resident receives tenant - based voucher assistance under United States Housing Act of 1937 Section 8, (42 United States Code, Α 1437f ); and (4) final bill on move - out for submetered service : if a tenant moves out during a billing period, the owner may calculate a final bill for the tenant before the owner receives the bill for that period from the retail public utility . If the owner is billing using the average water or wastewater cost per gallon, liter, or cubic foot as described in paragraph ( 1 ) of this subsection, the owner may calculate the tenant’s bill by calculating the tenant’s average volumetric rate for the last three months and multiplying that average volumetric rate by the tenant’s consumption for the billing period . (e) Calculations for allocated utility service. (1) Before an owner may allocate the retail public utility’s master meter bill for water and sewer service to the tenants, the owner shall first deduct: (A) dwelling unit base charges or customer service charge, if applicable; and (B) common area usage such as installed landscape irrigation systems, pools and laundry rooms, if any, as follows: (i) if all common areas are separately metered or submetered, deduct the actual common area usage; (ii) if common areas that are served through the master meter that provides water to the dwelling units are not separately metered or 3/21/2022 12:21 PM Blue Moon eSignature Services Document ID: 306414080
submetered and there is an installed landscape irrigation system, deduct at least 25 % of the retail public utility’s master meter bill ; (iii) if all water used for an installed landscape irrigation system is metered or submetered and there are other common areas such as pools or laundry rooms that are not metered or submetered, deduct at least 5 % of the retail public utility’s master meter bill ; or if common areas that are served through the master meter that provides water to the dwelling units are not separately metered or submetered and there is no installed landscape irrigation system, deduct at least 5 % of the retail public utility’s master meter bill . (iv) (2) To calculate a tenant’s bill: (A) for an apartment house, the owner shall multiply the amount established in paragraph (1) of this subsection by: (i) thenumber ofoccupants in thetenant’sdwelling unitdivided by the total number of occupants in all dwelling units at the beginning of the month for which bills are being rendered ; or the number of occupants in the tenant’s dwelling unit using a ratio occupancy formula divided by the total number of occupants in all dwelling units at the beginning of the retail public utility’s billing period using the same ratio occupancy formula to determine the total . The ratio occupancy formula will reflect what the owner believes more accurately represents the water use in units that are occupied by multiple tenants . The ratio occupancy formula that is used must assign a fractional portion per tenant of no less than that on the following scale : (ii) dwelling unit with one occupant = 1; dwelling unit with two occupants = 1.6; (I) (II) (III) dwelling unit with three occupants = 2.2; or (IV) dwelling unit with more than three occupants = 2 . 2 + 0 . 4 per each additional occupant over three ; or (iii) the average number of occupants per bedroom, which shall be determined by the following occupancy formula . The formula must calculate the average number of occupants in all dwelling units based on the number of bedrooms in the dwelling unit according to the scale below, notwithstanding the actualnumber of occupants in each of thedwellingunit’s bedrooms or all dwellingunits : dwelling unit with an efficiency = 1; (I) (II) (III) dwelling unit with one bedroom = 1.6; dwelling unit with two bedrooms = 2.8; (IV) dwelling unit with three bedrooms = 4 + 1 . 2 for each additional bedroom ; or (iv) afactorusing acombinationofsquarefootageandoccupancy in which no more than 50 % is based on square footage . The square footage portion must be based on the total square footage living area of the dwelling unit as a percentage of the total square footage living area of all dwelling units of the apartment house ; or (v) the individually submetered hot or cold water usage of the tenant’s dwelling unit divided by all submetered hot or cold water usage in all dwelling units ; (B) a condominium manager shall multiply the amount established in paragraph ( 1 ) of this subsection by any of the factors under subparagraph (A) of this paragraph or may follow the methods outlined in the \ condominiumcontract ; (C) for a manufactured home rental community, the owner shall multiply the amount established in paragraph ( 1 ) of this subsection by : (i) any of the factors developed under subparagraph (A) of this paragraph ; or (ii) the area of the individual rental space divided by the total area of all rental spaces ; and (D) for a multiple use facility, the owner shall multiply the amount established in paragraph (1) of this subsection by: (I) any of the factors developed under subparagraph (A) of this paragraph; or (II) the square footage of the rental space divided by the total square footage of all rental spaces . ( 3 ) If atenantmovesin or outduring abillingperiod,theownermaycalculate a bill for the tenant . If the tenant moves in during a billing period, the ownershallproratethebill by calculating abill as if thetenantwerethere for the whole month and then charging the tenant for only the number of days the tenant lived in the unit divided by the number of days in the month multiplied by the calculated bill . If a tenant moves out during a billing period before the owner receives the bill for that period from the retail public utility, the owner may calculate a final bill . owner may calculate the tenant’s bill by calculating the tenant’s average bill for the last three months and multiplying that average bill by the number of days the tenant was in the unit divided by the number of days in that month . (f) Conversion to approved allocation method . An owner using an allocation formula other than those approved in subsection (e) of this section shall immediatelyprovidenoticeasrequiredunder Α 24 . 123 (c) of this title (relating to Rental Agreement) and either : (1) adopt one of the methods in subsection (e) of this section; or (2) install submeters and begin billing on a submetered basis; or (3) discontinue billing for utilityservices. † 24.283. Billing. (a) Monthly billing of total charges . The owner shall bill the tenant each month for the totalcharges calculated under Α 24 . 124 of this title (relating to Charges and Calculations) . If itis permitted in the rental agreement, an occupant or occupants who are not residing in ther ental unit for a period longer than 30 days may be excluded from the occupancy calculation and from paying a water and sewer bill for thatperiod . (b) Rendering bill . (1) Allocated bills shall be rendered as promptly as possible after the owner receives the retail public utility bill . (2) Submeterbillsshall berendered as promptly aspossibleaftertheowner receives the retail public utility bill or according to the time schedule in therentalagreement if the ownerisbilling using the retailpublicutility’s rate . (c) Submeter reading schedule . Submeters or point - of - use submeters shall be read within three days of the scheduled reading date of the retail public utility’s master meter or according to the schedule in the rental agreement if the owner is billing using the retail public utility’s rate . (d) Billing period . (1) Allocated bills shall be rendered for the same billing period as that of the retail publicutility, generallymonthly, unless service is provided for less than that period . (2) Submeter bills shall be rendered for the same billing period as that of the retail public utility, generally monthly, unless service is provided for less than that period . If the owner uses the retail public utility’s actual rate, the billing period may be an alternate billing period specified in the rental agreement . (e) Multi - item bill. If issued on a multi - item bill, charges for submetered or allocated utility service must be separate and distinct from any other charges on the bill. (f) Information on bill. The bill must clearly state that the utility service is submetered or allocated, as applicable, and must include all of the following: (1) total amount due for submetered or allocated water; (2) total amount due for submetered or allocated wastewater; (3) total amount due for dwelling unit base charge(s) or customer service charge(s) or both, if applicable; (4) total amount due for water or wastewater usage, ifapplicable; (5) the name of the retail public utility and a statement that the bill is not from the retail public utility; (6) name and address of the tenant to whom the bill is applicable; (7) name of the firm rendering the bill and the name or title, address, and telephone number of the firm or person to be contacted in case of a billing dispute; and 3/21/2022 12:21 PM Blue Moon eSignature Services Document ID: 306414080
( 8 ) name, address, and telephone number of the party to whom payment is to be made . (g) Information on submetered service . In addition to the information required in subsection (f ) of this section, a bill for submetered service must include all of the following : (1) the total number of gallons, liters, or cubic feet submetered or measured by point - of - use submeters; (2) the cost per gallon, liter, or cubic foot for each service provided; and (3) total amount due for a service charge charged by an owner of a manufactured home rental community, if applicable. (h) Duedate . The duedate on thebillmay not be less than 16 daysafter it ismailed or hand delivered to the tenant, unless the due date falls on a federal holiday or weekend, in which case the following work day will be the due date . The owner shall record the date the bill is mailed or hand delivered . A payment is delinquent if not received by the due date . (i) Estimated bill . An estimated bill may be rendered if a master meter, submeter, or point - of - use submeter has been tampered with, cannot be read, or is out of order ; and in such case, the bill must be distinctly marked as an estimate and the subsequent bill must reflect an adjustment for actual charges . (j) Payment by tenant . Unless utility bills are paid to a third - party billing company on behalf of the owner, or unless clearly designated by the tenant, payment must be applied first to rent and then toutilities . (k) Overbilling and underbilling . If a bill is issued and subsequently found to be in error, the owner shall calculate a billing adjustment . If the tenant is due a refund, an adjustment must be calculated for all of that tenant’s bills that included overcharges . If the overbilling or underbilling affects all tenants, an adjustment must be calculated for all of the tenants’ bills . If the tenant was undercharged, and the cause was not due to submeter or point - of - use submeter error, the owner may calculate an adjustment for bills issued in the previous six months . If the total undercharge is $ 25 or more, the owner shall offer the tenant a deferred payment plan option, for the same length of time as that of the underbilling . Adjustments for usage by a previous tenant may not be back billed to a current tenant . (l) Disputed bills . In the event of a dispute between a tenant and an owner regarding any bill, the owner shall investigate the matter and report the results of the investigation to the tenant in writing . The investigation and report must be completed within 30 days from the date the tenant gives written notification of the dispute to the owner . (m) Late fee . A one - time penalty not to exceed 5 % may be applied to delinquent accounts . If such a penalty is applied, the bill must indicate the amount due if the late penalty is incurred . No late penalty may be applied unless agreed to by the tenant in a written lease that states the percentage amount of such late penalty . † 24.287. Submeters or Point - of - Use Submeters and Plumbing Fixtures. (a) Submeters or point - of - use submeters (1) Same type submeters or point - of - use submeters required . All submeters or point - of - use submeters throughout a property must use the same unit of measurement, such as gallon, liter, or cubic foot . (2) Installation by owner . The owner shall be responsible for providing, installing, and maintaining all submeters or point - of - use submeters necessary for the measurement of water to tenants and to common areas, if applicable . (3) Submeter or point - of - use submeter tests prior to installation . No submeter or point - of - use submeter may be placed in service unless its accuracy has been established . If any submeter or point - of - use submeter is removed from service, it must be properly tested and calibrated before being placed in service again . (4) Accuracy requirements for submeters and point - of - use submeters . Submeters must be calibrated as close as possible to the condition of zero error and within the accuracy standards established by the American Water Works Association (AWWA) for water meters . Point - of - use submeters must be calibrated as closely as possible to the condition of zero error and within the accuracy standards established by the AmericanSociety of Mechanical Engineers (ASME) for point - of - use and branch - water submetering systems . (5) Location of submeters and point - of - use submeters . Submeters and point - of - usesubmetersmust be installed inaccordancewithapplicable plumbingcodesandAWWAstandardsforwatermeters or ASMEstandards forpoint - of - usesubmeters, andmust be readilyaccessible to thetenant and to the owner for testing and inspection where such activities will cause minimum interference and inconvenience to the tenant . ( 6 ) Submeter and point - of - use submeter records . The owner shall maintain a record on each submeter or point - of - use submeter which includes : (A) an identifying number; (B) the installation date (and removal date, if applicable); (C) date(s) the submeter or point - of - use submeter was calibrated or tested; (D) copies of all tests; and (E) the current location of the submeter or point - of - use submeter. (7) Submeter or point - of - use submeter test on request of tenant. Upon receiving a written request from the tenant, the owner shall either: (A) provide evidence, at no charge to the tenant, that the submeter or point - of - use submeter was calibrated or tested within the preceding 24 months and determined to be within the accuracy standards established by the AWWA for water meters or ASME standards for point - of - use submeters ; or (B) have the submeter or point - of - use submeter removed and tested and promptly advise the tenant of the test results . (8) Billing for submeter or point - of - use submeter test. (A) The owner may not bill the tenant for testing costs if the submeter fails to meet AWWA accuracy standards for water meters or ASME standards for point - of - use submeters . PROJECT NO . 42190 PROPOSAL FOR ADOPTION PAGE 345 OF 379 . (B) The owner may not bill the tenant for testing costs if there is no evidence that the submeter or point - of - use submeter was calibrated or tested within the preceding 24 months. (C) Theownermaybillthetenantforactualtesting costs(not to exceed $ 25 ) if the submeter meets AWWA accuracy standards or the point - of - use submeter meets ASME accuracy standards and evidence as described in paragraph ( 7 )(A) of this subsection was provided to the tenant . ( 9 ) Bill adjustment due to submeter or point - of - use submeter error . If a submeter does not meet AWWA accuracy standards or a point - of - use submeter does not meet ASME accuracy standards and the tenant was overbilled, an adjusted bill must be rendered in accordance with Α 24 . 125 (k) of this title (relating to Billing) . The owner may not charge the tenant for any underbilling that occurred because the submeter or point - of - use submeter was in error . ( 10 ) Submeter or point - of - use submeter testing facilities and equipment . For submeters, an owner shall comply with the AWWA’s meter testing requirements . For point - of - use meters, an owner shall comply with ASME’s meter testing requirements . (b) Plumbing fixtures . After January 1 , 2003 , before an owner of an apartment house, manufactured home rental community, or multiple use facility or a manager of a condominium may implement a program to bill tenants for submetered or allocated water service, the owner or manager shall adhere to the following standards : (1) Texas Health and Safety Code, Α 372.002, for sink or lavatory faucets, faucet aerators, and showerheads; (2) perform a water leak audit of each dwelling unit or rental unit and each common area and repair any leaks found; and (3) not later than the first anniversary of the date an owner of an apartment house, manufactured home rental community, or multiple use facility or a manager of a condominium begins to bill for submetered or allocated water service, the owner or managershall: (A) remove any toilets that exceed a maximum flow of 3.5 gallons per flush; and (B) install toilets that meet the standards prescribed by Texas Health and Safety Code, Α 372.002. (c) Plumbing fixture not applicable . Subsection (b) of this section does not apply to a manufactured home rental community owner who does not own the manufactured homes located on the property of the manufactured home rental community . 3/21/2022 12:21 PM Blue Moon eSignature Services Document ID: 306414080
Texas Apartment Association 3/21/2022 12:21 PM LEASE ADDENDUM FOR ALLOCATING STORMWATER/DRAINAGE COSTS 1. Addendum. This is an addendum to the TAA Lease Contract for Apt. No. 202N in the SPUS 9 HSTN North Tower LP Apartments in Houston , Texas . The terms of this addendum will control if the terms of the Lease and this addendum conflict . 2. Reason for allocation . Governmental entities impose stormwater/drainage fees to help pay for the cost of maintaining the infrastructure needed to prevent flooding and lessen the impact of pollution on our water system . These fees can be significant . Our property has chosen to allocate this fee so residents are more aware of the true costs associated with these fees and so it is not necessary to raise rents to keep pace with these fee increases . 3. Your payment due date . Payment of your allocated stormwater/drainage bill is due 16 days after the date it is postmarked or hand delivered to your apartment . You agree to mail or deliver payment to the place indicated on your bill so that payment is received no later than the due date . You will pay a late charge of 5 percent of your stormwater/drainage bill if we do not receive timely payment . If you are late in paying the stormwater/drainage bill, we may immediately exercise all lawful remedies under your lease contract, including eviction — just like late payment of rent . 4. Allocation procedures . Your monthly base rent under the TAA Lease Contract does not include a charge for stormwater/ drainage costs . You will pay separately for these monthly recurring fixed charges which are defined under the Lease as “Additional Rent” . You may receive a separate bill from us each month or we may include these items as separate and distinct charges as part of a multi - item bill . You agree to and we will allocate the monthly stormwater/drainage bill for the apartment community based on the allocation method checked below . (check only one) D A percentag e reflecting your apartmen t unit ’ s share o f the total square footage i n the apartmen t communit y , i . e . your unit ’ s square footage divide d b y the total square footage i n al l apartmen t units . D A percentage reflecting your apartment unit’s share of the total number of people living in the apartment community, i . e . the number of people living in your apartment divided by the total number of people living in the entire apartment commu - nity for the month . (“People” for this purpose are all residents and occupants listed in leases at the apartment community as having a right to occupy the respective units) . D Half of your allocation will be based on your apartment’s share of total square footage and half will be based on your share of total people living in the apartment community, as described above . D X Per dwelling unit D Other formula (see attached page) 5. Penalties and fees . Only the total stormwater/drainage bill will be allocated . Penalties or interest for any late payment of the master stormwater/ drainage bill by us will be paid for by us and will not be allocated . A nominal administrative fee of $ 1 . 15 per month (not to exceed $ 3 ) will be added to your bill for processing, billing and/or collecting . 6. Change of allocation formula . The above allocation formula for determining your share of the stormwater/drainage bill cannot be changed except as follows : ( 1 ) you receive notice of the new formula at least 35 days before it takes effect ; and (2) you agree to the change in a signed lease renewal or signed mutual agreement. 7. Right to examine records . You may examine our stormwater/drainage bills from the utility company, and our calculations relating to the monthly allocation of the stormwater/drainage bills during regular weekday office hours . Please give us reasonable advance notice to gather the data . Signatures of All Residents Signature of Owner or Owner’s Representative Blue Moon eSignature Services Document ID: 306414080
FLOOD DISCLOSURE NOTICE In accordance with Texas law, we are providing the following flood disclosure: We are or are not aware that the unit you are renting is located in a 100 - year floodplain. If neither box is checked, you should assume the unit is in a 100 - year floodplain. Even if the unit is not in a 100 - year floodplain, the unit may still be susceptible to flooding. The Federal Emergency Management Agency (FEMA) maintains a flood map on its Internet website that is searchable by address, at no cost, to determine if a unit is located in a flood hazard area. Most renter’s insurance policies do not cover damages or loss incurred in a flood. You should seek insurance coverage that would cover losses caused by a flood. We are or X are not aware that the unit you are renting has flooded (per the statutory definition below) at least once within the last five years. As defined in Texas Property Code 92.0135(a)(2), “flooding” means “a general or temporary condition of a partial or complete inundation of a dwelling caused by: (A) the overflow of inland or tidal waters; (B) the unusual and rapid accumulation of runoff or surface waters from any established water source such as a river, stream, or drainage ditch; or (C) excessive rainfall.” Signatures of All Residents Signature of Owner or Owner’s Representative Texas Apartment Association 03/21/2022 Date 3/21/2022 12:21 PM Blue Moon eSignature Services Document ID: 306414080
3/21/2022 12:21 PM COMMUNITY POLICIES ADDENDUM 1. Addendum. This is an addendum to the Lease between you and us for Apt. No. 202N in the SPUS9 HSTN North Tower LP Apartments in Houston , Texas OR the house, duplex, etc. located at (street address) in , Texas. 2. Payments. All payments for any amounts due under the Lease must be made: O at the onsite manager’s office O X through our online portal O by mail to , or O X other: on - site manager's office which accepts Cashier's Checks only . The following payment methods are accepted : O X electronic payment O personal check O X cashier’s check O money order, or O other : . We have the right to reject any payment not made in compliance with this paragraph . 3. Security Deposit Deductions and Other Charges . You’ll be liable for the following charges, if applicable : unpaid rent ; unpaid utilities ; unreimbursed service charges ; repairs or damages caused by negligence, carelessness, accident, or abuse, including stickers, scratches, tears, burns, stains, or unapproved holes ; replacement cost of our property that was in or attached to the apartment and is missing ; replacing dead or missing alarm or detection - device batteries at any time ; utilities for repairs or cleaning ; trips to let in company representatives to remove your telephone, Internet, television services, or rental items (if you so request or have moved out) ; trips to open the apartment when you or any guest or occupant is missing a key ; unreturned keys ; missing or burned - out light bulbs ; removing or rekeying unauthorized security devices or alarm systems ; packing, removing, or storing property removed or stored under the Lease ; removing illegally parked vehicles ; special trips for trash removal caused by parked vehicles blocking dumpsters ; false security - alarm charges unless due to our negligence ; animal - related charges outlined in the Lease ; government fees or fines against us for violation (by you, your occupants, or your guests) of local ordinances relating to alarms and detection devices, false alarms, recycling, or other matters ; late - payment and returned - check charges ; and other sums due under this Lease . You’ll be liable to us for charges for replacing any keys and access devices referenced in the Lease if you don’t return them all on or before your actual move - out date ; and accelerated rent if you’ve violated the Lease . We may also deduct from your security deposit our reasonable costs incurred in rekeying security devices required by law if you vacate the apartment in breach of this Lease . Upon receipt of your move - out date and forwarding address in writing, the security deposit will be returned (less lawful deductions) with an itemized accounting of any deductions, no later than 30 days after surrender or abandonment, unless laws provide otherwise . Any refund may be by one payment jointly payable to all residents and distributed to any one resident we choose or distributed equally among all residents . 4. Written Requests. All written requests to us must be submitted by: O X online portal O X email to O X hand delivery to our management office, or O other: . 5. Parking. We may have any unauthorized or illegally parked vehicles towed or booted according to state law at the owner or operator’s expense at any time if the vehicle: (a) has a flat tire or is otherwise inoperable; (b) is on jacks, on blocks, or has a wheel missing; (c) takes up more than one parking space ; (d) belongs to a resident or occupant who has surrendered or abandoned the apartment ; (e) is in a handicapped space without the legally required handicapped insignia ; (f) is in a space marked for office visitors, managers, or staff ; (g) blocks another vehicle from exiting ; (h) is in a fire lane or designated “no parking” area ; (i) is in a space that requires a permit or is reserved for another resident or apartment ; (j) is on the grass, sidewalk, or patio ; (k) blocks a garbage truck from access to a dumpster ; (l) has no current license or registration, and we have given you at least 10 days’ notice that the vehicle will be towed if not removed ; or (m) is not moved to allow parking lot maintenance . 6. HVAC Operation . If the exterior temperature drops below 32 ƒ F you must keep the heat on and set to a minimum of 50 ƒ F . You must also open all closets, cabinets, and doors under sinks to assist in keeping plumbing fixtures and plumbing pipes from freezing, and you must drip all the faucets in your apartment using both the hot and cold water . Leave the faucets dripping until the exterior temperature rises above 32 ƒ F . You must leave your HVAC system on, even if you leave for multiple days, and have it set to auto at all times . 7. Amenities . Your permission for use of all common areas, amenities, and recreational facilities (collectively “Amenities”) located at the property is a license granted by us . This permission is expressly conditioned upon your compliance with the terms of the Lease, the Community Policies, and any signage posted in or around any of the Amenities . We have the right to set the days and hours of use for all Amenities and to change those or close any of the Amenities based upon our needs . We may make changes to the rules for the use of the Amenities at any time . Neither we nor any of our agents, employees, management company, its agents, or its employees shall be liable for any damage or injury that results from the use of any Amenities by you, your invitees, your licensees, your occupants, or your guests . This release applies to any and all current, past or future claims or liability of any kind related to your decision to use the Amenities . Blue Moon eSignature Services Document ID: 306414080
3/21/2022 12:21 PM 8. Package Services . We O X do or O do not accept packages on behalf of residents . If we DO accept packages, you give us permission to sign and accept any parcels or letters you receive through UPS, Federal Express, Airborne, United States Postal Service or other package delivery services . You agree that we are not liable or responsible for any lost, damaged or unordered deliveries and will hold us harmless . 9. Miscellaneous . Your Lease is subordinate to existing and future recorded mortgages, unless the owner’s lender chooses otherwise . 10. Special Provisions . The following special provisions control over conflicting provisions of this form : Signature of All Residents Signature of Owner or Owner’s Representative Texas Apartment Association Blue Moon eSignature Services Document ID: 306414080
E - SIGNATURE CERTIFICATE This certificate details the actions recorded during the signing of this Document. DOCUMENT INFORMATION Status Signed Document ID 306414080 Submitted 03/21/22 Total Pages 30 Forms Included Apartment Lease Form, Inventory and Condition Form, Mold Information and Prevention Addendum, Bed Bug Addendum, Master Addendum and Community Policies, Virus Warning and Waiver Addendum, Addendum for Rent Concession, Lease Addendum for Trash Removal and Recycling Costs - Flat Fee, Water/Wastewater Submetering Addendum, Lease Addendum for Allocating Stormwater/ Drainage Costs, Flood Disclosure Notice, Community Policies Addendum PARTIES Henry Levinski signer key: d1a25e5c1f479a54e95a7c00f05e60f7 IP address: 70.119.158.200 signing method: Blue Moon eSignature Services authentication method: eSignature by SMS text browser: Mozilla/5.0 (Windows NT 10.0; Win64; x64) AppleWebKit/537.36 (KHTML, like Gecko) Chrome/99.0.4844.51 Safari/537.36 Dante Picazo signer key: d4fbaf717f60c3b907f6992d8c37976b IP address: 70.119.158.200 signing method: Blue Moon eSignature Services authentication method: eSignature by SMS text browser: Mozilla/5.0 (Windows NT 10.0; Win64; x64) AppleWebKit/537.36 (KHTML, like Gecko) Chrome/99.0.4844.74 Safari/537.36 Alisha Stefek signer key: 0da07a3c947662121245377677fb7ba2 IP address: 104.156.174.1 signing method: Blue Moon eSignature Services authentication method: eSignature by email skyhousedowntown@greystar.com DOCUMENT AUDIT 1 03/15/22 01:33:00 PM CDT Henry Levinski accepted Consumer Disclosure 2 03/15/22 01:38:08 PM CDT Henry Levinski signed Apartment Lease Form 3 03/15/22 01:38:55 PM CDT Henry Levinski dated Apartment Lease Form 4 03/15/22 01:39:32 PM CDT Henry Levinski signed Inventory and Condition Form 5 03/21/22 11:55:20 AM CDT Henry Levinski signed Mold Information and Prevention Addendum 6 03/21/22 11:55:32 AM CDT Henry Levinski signed Bed Bug Addendum 7 03/21/22 11:55:50 AM CDT Henry Levinski dated Bed Bug Addendum 3/21/2022 12:21 PM
DOCUMENT AUDIT CONTINUED 8 03/21/22 11:57:03 AM CDT Henry Levinski signed Master Addendum and Community Policies 9 03/21/22 11:57:05 AM CDT Henry Levinski dated Master Addendum and Community Policies 10 03/21/22 11:57:16 AM CDT Henry Levinski dated Virus Warning and Waiver Addendum 11 03/21/22 11:57:18 AM CDT Henry Levinski signed Virus Warning and Waiver Addendum 12 03/21/22 11:57:27 AM CDT Henry Levinski signed Addendum for Rent Concession 13 03/21/22 11:57:38 AM CDT Henry Levinski signed Lease Addendum for Trash Removal and Recycling Costs - Flat Fee 14 03/21/22 11:57:53 AM CDT Henry Levinski signed Water/Wastewater Submetering Addendum 15 03/21/22 11:58:10 AM CDT Henry Levinski signed Lease Addendum for Allocating Stormwater/Drainage Costs 16 03/21/22 11:58:20 AM CDT Henry Levinski signed Flood Disclosure Notice 17 03/21/22 11:58:33 AM CDT Henry Levinski signed Community Policies Addendum 18 03/21/22 11:58:42 AM CDT Henry Levinski submitted signed documents 19 03/21/22 12:00:26 PM CDT Dante Picazo accepted Consumer Disclosure 20 03/21/22 12:01:08 PM CDT Dante Picazo signed Apartment Lease Form 21 03/21/22 12:01:11 PM CDT Dante Picazo dated Apartment Lease Form 22 03/21/22 12:01:28 PM CDT Dante Picazo signed Inventory and Condition Form 23 03/21/22 12:01:41 PM CDT Dante Picazo signed Mold Information and Prevention Addendum 24 03/21/22 12:01:52 PM CDT Dante Picazo signed Bed Bug Addendum 25 03/21/22 12:01:55 PM CDT Dante Picazo dated Bed Bug Addendum 26 03/21/22 12:02:24 PM CDT Dante Picazo signed Master Addendum and Community Policies 27 03/21/22 12:02:27 PM CDT Dante Picazo dated Master Addendum and Community Policies 28 03/21/22 12:02:39 PM CDT Dante Picazo dated Virus Warning and Waiver Addendum 29 03/21/22 12:02:42 PM CDT Dante Picazo signed Virus Warning and Waiver Addendum 30 03/21/22 12:02:50 PM CDT Dante Picazo signed Addendum for Rent Concession 31 03/21/22 12:03:00 PM CDT Dante Picazo signed Lease Addendum for Trash Removal and Recycling Costs - Flat Fee 32 03/21/22 12:03:13 PM CDT Dante Picazo signed Water/Wastewater Submetering Addendum 33 03/21/22 12:03:28 PM CDT Dante Picazo signed Lease Addendum for Allocating Stormwater/Drainage Costs 34 03/21/22 12:03:40 PM CDT Dante Picazo signed Flood Disclosure Notice 35 03/21/22 12:03:51 PM CDT Dante Picazo signed Community Policies Addendum 36 03/21/22 12:03:58 PM CDT Dante Picazo submitted signed documents 37 03/21/22 12:14:09 PM CDT Alisha Stefek signed Apartment Lease Form 38 03/21/22 12:14:09 PM CDT Alisha Stefek signed Inventory and Condition Form 39 03/21/22 12:14:09 PM CDT Alisha Stefek signed Mold Information and Prevention Addendum 40 03/21/22 12:14:09 PM CDT Alisha Stefek signed Bed Bug Addendum 41 03/21/22 12:14:09 PM CDT Alisha Stefek dated Bed Bug Addendum 42 03/21/22 12:14:09 PM CDT Alisha Stefek signed Master Addendum and Community Policies 43 03/21/22 12:14:09 PM CDT Alisha Stefek signed Virus Warning and Waiver Addendum 44 03/21/22 12:14:09 PM CDT Alisha Stefek dated Virus Warning and Waiver Addendum 45 03/21/22 12:14:09 PM CDT Alisha Stefek signed Addendum for Rent Concession 46 03/21/22 12:14:09 PM CDT Alisha Stefek signed Lease Addendum for Trash Removal and Recycling Costs - Flat Fee 47 03/21/22 12:14:09 PM CDT Alisha Stefek signed Water/Wastewater Submetering Addendum 48 03/21/22 12:14:09 PM CDT Alisha Stefek signed Lease Addendum for Allocating Stormwater/Drainage Costs 49 03/21/22 12:14:09 PM CDT Alisha Stefek signed Flood Disclosure Notice 50 03/21/22 12:14:09 PM CDT Alisha Stefek dated Flood Disclosure Notice 51 03/21/22 12:14:09 PM CDT Alisha Stefek signed Community Policies Addendum 52 03/21/22 12:14:09 PM CDT Alisha Stefek submitted signed documents 3/21/2022 12:21 PM
Exhibit 10.6
Elizabeth Hernandez
 |
U.S. Small Business Administration
NOTE
|
| SBA Loan # |
5506238610
|
| SBA Loan Name |
Elizabeth Hernandez
|
| Date |
03-20-2021
|
| Loan Amount |
$20,833.00
|
| Interest Rate |
Fixed
|
| Borrower |
Elizabeth Hernandez
|
| Operating Company |
NA
|
Lender
|
Fountainhead SBF LLC |
In return for
the Loan, Borrower promises to pay to the order of Lender the amount of twenty thousand eight hundred thirty-three dollars and
cents ( $20,833.00 ). interest on the unpaid principal balance, and all other amounts required by this Note.
“Collateral”
means any property taken as security for payment of this Note or any guarantee of this Note.
“Guarantor”
means each person or entity that signs a guarantee of payment of this Note.
“Loan”
means the loan evidenced by this Note.
“Loan
Documents” means the documents related to this loan signed by Borrower, any Guarantor, or anyone who pledges collateral.
“SBA”
means the Small Business Administration, an Agency of the United States of America.
Borrower must
make all payments at the place Lender designates. The payment terms for this Note are:
|
This is a loan made under
the SBA’s Paycheck Protection Program (PPP). The terms and conditions specific to the PPP loan, as outlined below, supersede any
conflicting terms in this U.S. Small Business Administration Note.
The interest rate on this Note
will be 1.00% per year. The interest rate is fixed and will not be changed during the life of the loan.
Payments: If you submit a loan
forgiveness application within 10 months after the end of your loan forgiveness covered period (defined below), you will not have to make
any payments of principal or interest on your loan before the date on which SBA remits the loan forgiveness amount on your loan to Fountainhead
(or notifies Fountainhead that no loan forgiveness is allowed). Interest will continue to accrue during the deferment period. If you do
not submit a loan application within 10 months after the end of your loan forgiveness covered period, you must begin paying principal
and interest after that period. After either the loan forgiveness has been determined by the SBA or the 10-month period has ended, Borrower
must pay principal and interest payments based on the unforgiven portion of the loan balance plus all accrued interest, amortized over
the remaining term of the Note. Payments must be made on the first (1st) calendar day in the months they are due. Total term of the Note
is 60 months. Lender will apply each installment payment first to pay interest accrued to the day Lender receives the payment, then to
bring principal current, then to pay any late fees, and will apply any remaining balance to reduce principal.
If SBA purchases the
guaranteed portion of the unpaid principal balance, the interest rate becomes fixed at the rate in effect at the time of the earliest
uncured payment default. If there is no uncured payment default, the rate becomes fixed at the rate in effect at the time of purchase.
Loan Prepayment: Notwithstanding
any provision in this Note to the contrary:
Borrower may prepay this Note.
Borrower may prepay 20 percent or less of the unpaid principal balance at any time without notice. If Borrower prepays more than 20 percent
and the Loan has been sold on the secondary market, Borrower must:
a. Give Lender written notice;
b. Pay all accrued interest; and
c. If the prepayment is received less than 21 days from the date Lender receives the notice, pay an amount equal to 21 days' interest
from the date lender receives the notice, less any interest accrued during the 21 days and paid under subparagraph b., above.
If Borrower does not prepay within
30 days from the date Lender receives the notice, Borrower must give Lender a new notice.
All remaining principal and accrued
interest is due and payable 5 years from date of first disbursement of this loan.
Loan Forgiveness: Borrower
may apply to Lender for forgiveness of the amount due on this loan in an amount equal to the sum of the following costs incurred. Borrower
has the option to select a covered period during which PPP loan proceeds are used anytime between 8 and 24 weeks beginning on the date
of first disbursement of this loan:
a. Payroll costs
including benefits
b. Any payment of interest on a covered mortgage obligation (which shall not include any prepayment of or payment of principal on
a covered mortgage obligation)
c. Payments on a covered rent obligation and utilities
d. Covered cost for worker protection costs related to COVID-19
e. Uninsured property damage costs caused by looting or vandalism during 2020
f. Certain supplier costs and expenses for operations
The amount of loan forgiveness
shall be calculated (and may be reduced) in accordance with the requirements of the Paycheck Protection Program, including the provisions
of Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (P.L. 116-136). Not more than 40% of the amount
forgiven can be attributable to non-payroll costs.
|
Borrower is
in default under this Note if Borrower does not make a payment when due under this Note, or if Borrower or Operating Company:
| A. | Fails to do anything required by this Note and other Loan Documents; |
| B. | Defaults on any other loan with Lender; |
| C. | Does not preserve, or account to Lender’s satisfaction for, any of the Collateral
or its proceeds; |
| D. | Does not disclose, or anyone acting on their behalf does not disclose, any material
fact to Lender or SBA; |
| E. | Makes, or anyone acting on their behalf makes, a materially false or misleading representation
to Lender or SBA; |
| F. | Defaults on any loan or agreement with another creditor, if Lender believes the default
may materially affect Borrower ’s ability to pay this Note; |
| G. | Fails to pay any taxes when due; |
| H. | Becomes the subject of a proceeding under any bankruptcy or insolvency law; |
| I. | Has a receiver or liquidator appointed for any part of their business or property; |
| J. | Makes an assignment for the benefit of creditors; |
| K. | Has any adverse change in financial condition or business operation that Lender believes
may materially affect Borrower ’s ability to pay this Note; |
| L. | Reorganizes, merges, consolidates, or otherwise changes ownership or business structure
without Lender ’s prior written consent; or |
| M. | Becomes the subject of a civil or criminal action that Lender believes may materially
affect Borrower ’s ability to pay this Note. |
| 5. | LENDER ’S RIGHTS IF THERE IS A DEFAULT: |
Without notice
or demand and without giving up any of its rights, Lender may:
| A. | Require immediate payment of all amounts owing under this Note; |
| B. | Collect all amounts owing from any Borrower or Guarantor; |
| C. | File suit and obtain judgment; |
| D. | Take possession of any Collateral; or |
| E. | Sell, lease, or otherwise dispose of, any Collateral at public or private sale, with
or without advertisement. |
| 6. | LENDER ’S GENERAL POWERS: |
Without notice
and without Borrower ’s consent, Lender may:
| A. | Bid on or buy the Collateral at its sale or the sale of another lienholder, at any
price it chooses; |
| B. | Incur expenses to collect amounts due under this Note, enforce the terms of this
Note or any other Loan Document, and preserve or dispose of the Collateral. Among other things, the expenses may include payments for
property taxes, prior liens, insurance, appraisals, environmental remediation costs, and reasonable attorney ’s fees and costs.
If Lender incurs such expenses, it may demand immediate repayment from Borrower or add the expenses to the principal balance; |
| C. | Release anyone obligated to pay this Note; |
| D. | Compromise, release, renew, extend or substitute any of the Collateral; and |
| E. | Take any action necessary to protect the Collateral or collect amounts owing on this
Note. |
| 7. | WHEN FEDERAL LAW APPLIES: |
When SBA is
the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. Lender or SBA may use state or local
procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA
does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower may not claim or
assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.
| 8. | SUCCESSORS AND ASSIGNS: |
Under this
Note, Borrower and Operating Company include the successors of each, and Lender includes its successors and assigns.
| A. | All individuals and entities signing this Note are jointly and severally liable. |
| B. | Borrower waives all suretyship defenses. |
| C. | Borrower must sign all documents necessary at any time to comply with the Loan Documents
and to enable Lender to acquire, perfect, or maintain Lender ’s liens on Collateral. |
| D. | Lender may exercise any of its rights separately or together, as many times and in
any order it chooses. Lender may delay or forgo enforcing any of its rights without giving up any of them. |
| E. | Borrower may not use an oral statement of Lender or SBA to contradict or alter the
written terms of this Note. |
| F. | If any part of this Note is unenforceable, all other parts remain in effect. |
| G. | To the extent allowed by law, Borrower waives all demands and notices in connection
with this Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any defenses based upon any claim
that Lender did not obtain any guarantee; did not obtain, perfect, or maintain a lien upon Collateral; impaired Collateral; or did not
obtain the fair market value of Collateral at a sale. |
| 10. | STATE-SPECIFIC PROVISIONS: |
| 11. | BORROWER’S NAME(S) AND SIGNATURE(S): |
By signing
below, each individual or entity becomes obligated under this Note as Borrower.
LOAN AGREEMENT,
BORROWER CERTIFICATION, AND AGREEMENT TO COOPERATE
LOAN AGREEMENT
THIS LOAN AGREEMENT
(“Agreement”) is made as of 3/20/2021 between Elizabeth Hernandez (“Borrower”) in
favor of Fountainhead SBF LLC (“Lender”).
WHEREAS, Lender has agreed
to make a loan to Borrower in the original principal amount of twenty thousand eight hundred thirty-three dollars and cents ( $20,833.00
) (“Loan”) and Borrower has agreed to accept the Loan proceeds on the terms and conditions set forth in the “Loan
Documents” (as hereinafter defined); and
WHEREAS, the
Loan is evidenced by that certain Promissory Note of even date herewith (“Note”) in the amount of the Loan executed
by Borrower in favor of Lender.
NOW, THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby,
the parties hereto hereby agree as follows:
1. Loan Documents. The term “Loan Documents” as used in this Agreement means the Note, and any and all other documents executed by Borrower in connection with the Loan.
2. Purpose. Proceeds of the Loan shall be working capital per the SBA Paycheck Protection Program.
3. Repayment. The Loan shall be repaid as set forth in the Note.
4. Miscellaneous.
4.1 USA Patriot Act. Neither Borrower, nor any of its members or managers, nor Guarantor are identified in any list of known or suspected terrorists published by the any United States government agency (individually, as each such list may be amended or supplemented from time to time, referred to as “Blocked Persons List”), including, without limitation, (a) the annex to Executive Order 13224 issued on September 23, 2001 by the President of the United States, and (b) Specially Designated Nationals List published by the United States Office of Foreign Assets Control.
4.2 Americans
with Disabilities Act. Borrower covenants and agrees that, during the term of the Loan, the Property will be in material
compliance with the Americans with Disabilities Act (“ADA”) of July 26, 1990, 42 U.S.C. Section 12191 et seq., as
amended from time to time, and the regulations promulgated pursuant thereto. Borrower will be solely responsible for all ADA
compliance costs, including without limitation, attorneys’ fees and litigation costs, which responsibility shall survive the
repayment of the Loan and any foreclosure of the Property.
4.3 Compliance with Applicable Laws. Borrower shall fully, promptly and faithfully comply with conform and obey all present and future federal, state, and local laws, ordinances, rules, regulations, and all other legal requirements of any type whatsoever.
4.4 Subordination. From the date hereof and throughout the term of the Loan, Borrower each hereby fully and unconditionally subordinate to and in favor of Lender any and all current and future debt from Borrower in favor of any owner of Borrower (i.e., shareholder debt). Borrower each will promptly execute all documents required by Lender regarding such subordination.
4.5 Changes in Ownership and/or Sale of Assets. Borrower will not, without Lender’s written consent, change its ownership structure. In addition, the transfer, sale, assignment or other conveyance of any legal or equitable title to the Property or any interest therein, making of any distribution of company assets that would adversely affect its financial condition, or transfer (including pledging) or dispose of any assets except in the ordinary course of business, is expressly prohibited unless approved by Lender in advance and in writing. The transfer, assignment, sale or conveyance of legal or equitable title to any equity or other ownership interest in Borrower is expressly prohibited unless approved by Lender in advance and in writing.
4.6 Governing Law. It is agreed and understood that this Agreement shall be governed by the laws of the State of __TEXAS__ (excluding the principles thereof governing conflicts of law).
4.7 Severability. If any provision of this Agreement shall be contrary to the laws of the jurisdiction in which the same shall be sought to be enforced, the illegality or unenforceability of any such provision shall not affect the other terms, covenants and conditions hereof, and the same shall be binding upon Borrower with the same force and effect as though such illegal or unenforceable provisions were not contained herein.
4.8 Binding. All of the terms of this Agreement will apply to and be binding upon, and inure to the benefit of, the heirs, devisees, personal representatives, successors and assigns of Borrower and Lender, respectively, and all persons claiming under or through them.
4.9 Attorneys’ Fees. In the event that Lender engages the services of legal counsel to enforce or interpret the terms and conditions of this Agreement against the other parties hereto, the prevailing party in each such action and/or proceeding shall be entitled to fully and promptly recoup its reasonable attorneys’ fees, costs of legal assistants, and other costs from such other parties, jointly and severally, and including, without limitation, any and all fees and costs incurred at trial or in any appellate or bankruptcy proceeding, and expenses and other costs, including any accounting expenses incurred.
4.10 SBA Reporting Requirement. If the Borrower defaults on the Loan and the SBA suffers a loss, the names of the Borrower of the Loan will be referred for listing in the CAIVRS database, which may affect their respective eligibility for further financial assistance.
BORROWER CERTIFICATION
| 1. | Records. Borrower will keep books and records in a manner satisfactory to Lender, furnish financial
statements as required by Lender, and allow Lender and SBA to inspect and audit books, records and paper relating to Borrower’s
financial or business condition. |
| 2. | Default. Borrower acknowledges that if the Borrower defaults on the loan, SBA may be required to
pay Lender under the SBA guaranty, and SBA may the seek recovery on the loan (to the extent any balance remains after loan forgiveness). |
AGREEMENT TO COOPERATE
| 1. | In consideration thereof of the Loan being given, upon request of the Lender and/or its agents, successors
and/or assigns, the undersigned Borrower, shall execute such documents as are reasonable to provide assurance to the Lender: (1) that
the obligations undertaken by the undersigned in connection with the Loan shall be faithfully performed; (2) that any and all documents
and instruments executed by the undersigned in connection with the Loan are accurate statements as to the truth of the matters set forth
therein and constitute binding obligations upon the undersigned in accordance with their terms; (3) as to the amount of the Loan outstanding
from time to time, and the date and amount of payments made with respect to the Loan. |
| 2. | The Borrower hereby agrees to promptly correct any defect, error or omission, upon request of Lender,
which may be discovered in the contents and/or document regarding the Loan, or in the execution or acknowledgment thereof, and will execute,
or re-execute, acknowledge and deliver such further instruments and so such further acts as may be necessary or reasonably requested by
Lender to satisfy the terms and conditions of this Loan, and all documents in connection therewith. |
| 3. | Upon request of the Lender, the undersigned shall re-execute any document or instrument signed in connection
with the Loan which has been inadvertently destroyed, lost in shipping or misplaced or which was originally incorrectly drafted and signed. |
| 4. | All such requests shall receive the full cooperation and compliance by the undersigned within seven (7)
days of the making of any request set forth in paragraphs 1, 2, or 3 of this section hereof. |
WAIVER OF JURY
TRIAL: BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION (INCLUDING, BUT NOT LIMITED TO, ANY CLAIMS, CROSS CLAIMS OR THIRD PARTY CLAIMS) ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN. BORROWER AND GUARANTOR HEREBY CERTIFY THAT NO
REPRESENTATIVE OR AGENT OF LENDER OR LENDER'S COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT
OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. BORROWER AND GUARANTOR ACKNOWLEDGE THAT LENDER HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS PARAGRAPH.
Borrower have
executed this Loan Agreement as of the day and year first above written.
Borrower:
Exhibit
10.7
U.S. Small Business Administration
NOTE
| SBA Loan # |
4329518800 |
| SBA Loan Name |
Elizabeth Hernandez |
| Date |
04-16-2021 |
| Loan Amount |
$20,833.00 |
| Interest Rate |
Fixed |
| Borrower |
Elizabeth Hernandez |
| Operating Company |
NA |
| Lender |
Fountainhead SBF LLC |
1.
PROMISE TO PAY:
In
return for the Loan, Borrower promises to pay to the order of Lender the amount of twenty thousand eight hundred thirty-three dollars
and cents ( $20,833.00 ). interest on the unpaid principal balance, and all other amounts required by this Note.
2.
DEFINITIONS:
“
Collateral” means any property taken as security for payment of this Note or any guarantee of this Note. “Guarantor”
means each person or entity that signs a guarantee of payment of this Note.
“
Loan” means the loan evidenced by this Note.
“
Loan Documents” means the documents related to this loan signed by Borrower, any Guarantor, or anyone who pledges collateral.
“
SBA” means the Small Business Administration, an Agency of the United States of America.
3.
PAYMENT TERMS:
Borrower
must make all payments at the place Lender designates. The payment terms for this Note are:
This is
a loan made under the SBA’s Paycheck Protection Program (PPP). The terms and conditions specific to the PPP loan, as outlined below,
supersede any conflicting terms in this U.S. Small Business Administration Note.
The interest
rate on this Note will be 1.00% per year. The interest rate is fixed and will not be changed during the life of the loan.
Payments:
If you submit a loan forgiveness application within 10 months after the end of your loan forgiveness covered period (defined below),
you will not have to make any payments of principal or interest on your loan before the date on which SBA remits the loan forgiveness
amount on your loan to Fountainhead (or notifies Fountainhead that no loan forgiveness is allowed). Interest will continue to accrue
during the deferment period. If you do not submit a loan application within 10 months after the end of your loan forgiveness covered
period, you must begin paying principal and interest after that period. After either the loan forgiveness has been determined by the
SBA or the 10-month period has ended, Borrower must pay principal and interest payments based on the unforgiven portion of the loan balance
plus all accrued interest, amortized over the remaining term of the Note. Payments must be made on the first (1st) calendar day in the
months they are due. Total term of the Note is 60 months. Lender will apply each installment payment first to pay interest accrued to
the day Lender receives the payment, then to bring principal current, then to pay any late fees, and will apply any remaining balance
to reduce principal.
If SBA purchases
the guaranteed portion of the unpaid principal balance, the interest rate becomes fixed at the rate in effect at the time of the earliest
uncured payment default. If there is no uncured payment default, the rate becomes fixed at the rate in effect at the time of purchase.
Loan Prepayment:
Notwithstanding any provision in this Note to the contrary:
Borrower
may prepay this Note. Borrower may prepay 20 percent or less of the unpaid principal balance at any time without notice. If Borrower
prepays more than 20 percent and the Loan has been sold on the secondary market, Borrower must:
a. Give
Lender written notice;
b. Pay all
accrued interest; and
c. If the
prepayment is received less than 21 days from the date Lender receives the notice, pay an amount equal to 21 days' interest from the
date lender receives the notice, less any interest accrued during the 21 days and paid under subparagraph b., above.
If Borrower
does not prepay within 30 days from the date Lender receives the notice, Borrower must give Lender a new notice.
All remaining
principal and accrued interest is due and payable 5 years from date of first disbursement of this loan.
Loan Forgiveness:
Borrower may apply to Lender for forgiveness of the amount due on this loan in an amount equal to the sum of the following costs incurred.
Borrower has the option to select a covered period during which PPP loan proceeds are used anytime between 8 and 24 weeks beginning on
the date of first disbursement of this loan:
a. Payroll
costs including benefits
b. Any payment
of interest on a covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage
obligation)
c. Payments
on a covered rent obligation and utilities
d. Covered
cost for worker protection costs related to COVID-19
e. Uninsured
property damage costs caused by looting or vandalism during 2020
f. Certain
supplier costs and expenses for operations
The amount
of loan forgiveness shall be calculated (and may be reduced) in accordance with the requirements of the Paycheck Protection Program,
including the provisions of Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (P.L. 116-136). Not more
than 40% of the amount forgiven can be attributable to non-payroll costs.
4.
DEFAULT:
Borrower
is in default under this Note if Borrower does not make a payment when due under this Note, or if Borrower or Operating Company:
A. Fails
to do anything required by this Note and other Loan Documents;
B. Defaults
on any other loan with Lender;
C. Does
not preserve, or account to Lender’s satisfaction for, any of the Collateral or its proceeds;
D. Does
not disclose, or anyone acting on their behalf does not disclose, any material fact to Lender or SBA;
E. Makes,
or anyone acting on their behalf makes, a materially false or misleading representation to Lender or SBA;
F. Defaults
on any loan or agreement with another creditor, if Lender believes the default may materially affect Borrower ’s ability to pay
this Note;
G. Fails
to pay any taxes when due;
H. Becomes
the subject of a proceeding under any bankruptcy or insolvency law;
I. Has a
receiver or liquidator appointed for any part of their business or property;
J. Makes
an assignment for the benefit of creditors;
K. Has any
adverse change in financial condition or business operation that Lender believes may materially affect Borrower ’s ability to pay
this Note;
L. Reorganizes,
merges, consolidates, or otherwise changes ownership or business structure without Lender ’s prior written consent; or
M. Becomes
the subject of a civil or criminal action that Lender believes may materially affect Borrower ’s ability to pay this Note.
5.
LENDER’S RIGHTS IF THERE IS A DEFAULT:
Without
notice or demand and without giving up any of its rights, Lender may:
A. Require
immediate payment of all amounts owing under this Note;
B. Collect
all amounts owing from any Borrower or Guarantor;
C. File
suit and obtain judgment;
D. Take
possession of any Collateral; or
E. Sell,
lease, or otherwise dispose of, any Collateral at public or private sale, with or without advertisement.
6.
LENDER ’S GENERAL POWERS:
Without
notice and without Borrower ’s consent, Lender may:
A. Bid on
or buy the Collateral at its sale or the sale of another lienholder, at any price it chooses;
B. Incur
expenses to collect amounts due under this Note, enforce the terms of this Note or any other Loan Document, and preserve or dispose of
the Collateral. Among other things, the expenses may include payments for property taxes, prior liens, insurance, appraisals, environmental
remediation costs, and reasonable attorney ’s fees and costs. If Lender incurs such expenses, it may demand immediate repayment
from Borrower or add the expenses to the principal balance;
C. Release
anyone obligated to pay this Note;
D. Compromise,
release, renew, extend or substitute any of the Collateral; and
E. Take
any action necessary to protect the Collateral or collect amounts owing on this Note.
7.
WHEN FEDERAL LAW APPLIES:
When SBA
is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. Lender or SBA may use state or
local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures,
SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower may not claim
or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.
8.
SUCCESSORS AND ASSIGNS:
Under this
Note, Borrower and Operating Company include the successors of each, and Lender includes its successors and assigns.
9.
GENERAL PROVISIONS:
A. All individuals
and entities signing this Note are jointly and severally liable.
B. Borrower
waives all suretyship defenses.
C. Borrower
must sign all documents necessary at any time to comply with the Loan Documents and to enable Lender to acquire, perfect, or maintain
Lender ’s liens on Collateral.
D. Lender
may exercise any of its rights separately or together, as many times and in any order it chooses. Lender may delay or forgo enforcing
any of its rights without giving up any of them.
E. Borrower
may not use an oral statement of Lender or SBA to contradict or alter the written terms of this Note.
F. If any
part of this Note is unenforceable, all other parts remain in effect.
G. To the
extent allowed by law, Borrower waives all demands and notices in connection with this Note, including presentment, demand, protest,
and notice of dishonor. Borrower also waives any defenses based upon any claim that Lender did not obtain any guarantee; did not obtain,
perfect, or maintain a lien upon Collateral; impaired Collateral; or did not obtain the fair market value of Collateral at a sale.
10.
STATE-SPECIFIC PROVISIONS:
NONE.
11. BORROWER
’S NAME(S) AND SIGNATURE(S):
By
signing below, each individual or entity becomes obligated under this Note as Borrower. Elizabeth Hernandez
By: /s/
Elizabeth Hernandez
Elizabeth
Hernandez, Owner
LOAN
AGREEMENT, BORROWER CERTIFICATION, AND AGREEMENT TO COOPERATE
LOAN
AGREEMENT
THIS
LOAN AGREEMENT (“Agreement”) is made as of 4/17/2021 between Elizabeth Hernandez (“Borrower”) in
favor of Fountainhead SBF LLC (“Lender”).
WHEREAS,
Lender has agreed to make a loan to Borrower in the original principal amount of twenty thousand eight hundred thirty-three dollars
and cents ( $20,833.00 ) (“Loan”) and Borrower has agreed to accept the Loan proceeds on the terms and conditions set
forth in the “Loan Documents” (as hereinafter defined); and
WHEREAS,
the Loan is evidenced by that certain Promissory Note of even date herewith (“Note”) in the amount of the Loan executed
by Borrower in favor of Lender.
NOW, THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby,
the parties hereto hereby agree as follows:
1. Loan
Documents. The term “Loan Documents” as used in this Agreement means the Note, and any and all other documents executed
by Borrower in connection with the Loan.
2. Purpose. Proceeds
of the Loan shall be working capital per the SBA Paycheck Protection Program.
3. Repayment.
The Loan shall be repaid as set forth in the Note.
4. Miscellaneous.
4.1 USA
Patriot Act. Neither Borrower, nor any of its members or managers, nor Guarantor are identified in any list of known or suspected
terrorists published by the any United States government agency (individually, as each such list may be amended or supplemented from
time to time, referred to as “Blocked Persons List”), including, without limitation, (a) the annex to Executive Order 13224
issued on September 23, 2001 by the President of the United States, and (b) Specially Designated Nationals List published by the United
States Office of Foreign Assets Control.
4.2 Americans
with Disabilities Act. Borrower covenants and agrees that, during the term of the Loan, the Property will be in material compliance
with the Americans with Disabilities Act (“ADA”) of July 26, 1990, 42 U.S.C. Section 12191 et seq., as amended from time
to time, and the regulations promulgated pursuant thereto. Borrower will be solely responsible for all ADA compliance costs, including
without limitation, attorneys’ fees and litigation costs, which responsibility shall survive the repayment of the Loan and any
foreclosure of the Property.
4.3 Compliance
with Applicable Laws. Borrower shall fully, promptly and faithfully comply with conform and obey all present and future federal,
state, and local laws, ordinances, rules, regulations, and all other legal requirements of any type whatsoever.
4.4 Subordination.
From the date hereof and throughout the term of the Loan, Borrower each hereby fully and unconditionally subordinate to and in favor
of Lender any and all current and future debt from Borrower in favor of any owner of Borrower (i.e., shareholder debt). Borrower each
will promptly execute all documents required by Lender regarding such subordination.
4.5 Changes
in Ownership and/or Sale of Assets. Borrower will not, without Lender’s written consent, change its ownership structure. In
addition, the transfer, sale, assignment or other conveyance of any legal or equitable title to the Property or any interest therein,
making of any distribution of company assets that would adversely affect its financial condition, or transfer (including pledging) or
dispose of any assets except in the ordinary course of business, is expressly prohibited unless approved by Lender in advance and in
writing. The transfer, assignment, sale or conveyance of legal or equitable title to any equity or other ownership interest in Borrower
is expressly prohibited unless approved by Lender in advance and in writing.
4.6 Governing
Law. It is agreed and understood that this Agreement shall be governed by the laws of the State of TEXAS (excluding
the principles thereof governing conflicts of law).
4.7 Severability.
If any provision of this Agreement shall be contrary to the laws of the jurisdiction in which the same shall be sought to be enforced,
the illegality or unenforceability of any such provision shall not affect the other terms, covenants and conditions hereof, and the same
shall be binding upon Borrower with the same force and effect as though such illegal or unenforceable provisions were not contained herein.
4.8 Binding.
All of the terms of this Agreement will apply to and be binding upon, and inure to the benefit of, the heirs, devisees, personal representatives,
successors and assigns of Borrower and Lender, respectively, and all persons claiming under or through them.
4.9 Attorneys’
Fees. In the event that Lender engages the services of legal counsel to enforce or interpret the terms and conditions of this Agreement
against the other parties hereto, the prevailing party in each such action and/or proceeding shall be entitled to fully and promptly
recoup its reasonable attorneys’ fees, costs of legal assistants, and other costs from such other parties, jointly and severally,
and including, without limitation, any and all fees and costs incurred at trial or in any appellate or bankruptcy proceeding, and expenses
and other costs, including any accounting expenses incurred.
4.10 SBA
Reporting Requirement. If the Borrower defaults on the Loan and the SBA suffers a loss, the names of the Borrower of the Loan will
be referred for listing in the CAIVRS database, which may affect their respective eligibility for further financial assistance.
BORROWER
CERTIFICATION
| 1. | | Records. Borrower will keep books and records in a manner satisfactory to Lender,
furnish financial statements as required by Lender, and allow Lender and SBA to inspect and audit books, records and paper relating to
Borrower’s financial or business condition. |
| 2. | | Default. Borrower acknowledges that if the Borrower defaults on the loan, SBA may
be required to pay Lender under the SBA guaranty, and SBA may the seek recovery on the loan (to the extent any balance remains after
loan forgiveness). |
AGREEMENT
TO COOPERATE
| 1. | | In consideration thereof of the Loan being given, upon request of the Lender and/or its agents,
successors and/or assigns, the undersigned Borrower, shall execute such documents as are reasonable to provide assurance to the Lender:
(1) that the obligations undertaken by the undersigned in connection with the Loan shall be faithfully performed; (2) that any and all
documents and instruments executed by the undersigned in connection with the Loan are accurate statements as to the truth of the matters
set forth therein and constitute binding obligations upon the undersigned in accordance with their terms; (3) as to the amount of the
Loan outstanding from time to time, and the date and amount of payments made with respect to the Loan. |
| 2. | | The Borrower hereby agrees to promptly correct any defect, error or omission, upon request
of Lender, which may be discovered in the contents and/or document regarding the Loan, or in the execution or acknowledgment thereof,
and will execute, or re-execute, acknowledge and deliver such further instruments and so such further acts as may be necessary or reasonably
requested by Lender to satisfy the terms and conditions of this Loan, and all documents in connection therewith. |
| 3. | | Upon request of the Lender, the undersigned shall re-execute any document or instrument signed
in connection with the Loan which has been inadvertently destroyed, lost in shipping or misplaced or which was originally incorrectly
drafted and signed. |
| 4. | | All such requests shall receive the full cooperation and compliance by the undersigned within
seven (7) days of the making of any request set forth in paragraphs 1, 2, or 3 of this section hereof. |
WAIVER
OF JURY TRIAL: BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION (INCLUDING, BUT NOT LIMITED TO, ANY CLAIMS, CROSS CLAIMS OR THIRD-PARTY CLAIMS) ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN. BORROWER AND GUARANTOR HEREBY CERTIFY THAT NO
REPRESENTATIVE OR AGENT OF LENDER OR LENDER'S COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF
SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. BORROWER AND GUARANTOR ACKNOWLEDGE THAT LENDER HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS PARAGRAPH.
Borrower
have executed this Loan Agreement as of the day and year first above written.
Borrower:
By: /s/
Elizabeth Hernandez
Elizabeth
Hernandez, Owner
Exhibit 10.8
FORWARD PURCHASE AGREEMENT (FIXED ACH DELIVERY) This Forward Purchase Agreement (“the Purchase Agreement”) dated May 13 2022 is entered into between Kapitus LLC (“Purchaser”) and each of the merchant(s) listed below (the “Seller” or “Merchant”) . Seller agrees to sell, assign, and transfer and Purchaser agrees to purchase and receive Seller’s accounts, receipts, contract rights, and other rights to payment arising from or relating to the payment to Seller through cash, checks, electronic transfers, ACH transfers, credit cards, charge cards, debit cards, prepaid cards, mobile payments (including Apple Pay Œ and other ACH payments) and other similar payment methods that may accrue to Seller in the ordinary course of Seller’s Business (“Receipts”) . SELLER: S ELLER ’ S L EGAL N AME : PHARMACOLOGY UNIVERSITY FW, LLC/ H ENRY L EVINSKI / D ANTE P ICAZO T Y P E OF E NTI T Y : C O RP O R AT I ON T R ADE N A M E : P H A RM A C OLOGY U N I VE RS ITY P H Y S I C AL A D D R E S S : 5665 A R A P AHO R D A P T 1923 C I TY : D A LLAS S TATE : TX Z IP : 75248 - 3496 M AI L ING A DD R E S S : 6201 B ON H O MM E R D S TE 46 6 S C I TY : H O U S TON S TATE : TX Z IP : 77036 - 4476 T ELEPHONE : (817) 528 - 2475 E M AIL A DD R E S S : H LEV I N S K I @ P HA RM A C OLOG Y UNI V E RS IT Y . C OM SALE CONFIRMATION (CID 7010281) 1. Purchaser: Kapitus LLC, 2500 Wilson Boulevard Suite 350, Arlington, VA 22201 2. Servicer: 3. Purchased Amount: Kapitus Servicing, Inc., 2500 Wilson Boulevard, Suite 350, Arlington, VA 22201 $63,250.00 Total dollar amount of Receipts to be delivered to Purchaser $50,000.00 Gross total paid for Receipts purchased. $1,250.00 ((2.5%) of Purchase Price) Up - front fee charged for closing the purchase. $48,750.00 Net total delivered to Seller as consideration for purchase, equal to the Purchase Price less the Closing Fee and any payment made to Purchaser or any third party as agreed by Seller . 5 . 8 % . 4. Purchase Price: 5. Closing Fee: 6. Net Purchase Price: 7. Specified Percentage: Percentage of receipts to be delivered until Purchased Amount is delivered to Purchaser. Seller irrevocably designates only one deposit account acceptable to Purchaser to facilitate the collection of the Specified Percentage until such time as Purchaser receives the full Purchased Amount. In the event of a breach of any of the Transaction Documents the Specified Percentage shall equal 100%. DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71 Page 1 Kapitus - FPA - ACH 2021 - 09 - 07
Page 2 Kapitus - FPA - ACH 2021 - 09 - 07 8. Fixed ACH Terms: Specified Amount and Frequency: $1,218.00 Weekly. Seller authorizes Purchaser to ACH Debit the Specified Amount from the designated deposit account as the base payment credited against the Specified Percentage due . The Specified Amount is an estimate of the Specified Percentage . Seller understands that it is responsible for ensuring that funds adequate to cover the amount to be debited by Purchaser remain in the account . Reconciliation : The Specified Amount shall be reconciled to reflect the Seller’s actual Receipts at Seller’s request . Seller may initiate a reconciliation by calling 1 - 800 - 780 - 7133 and requesting to speak with a Kapitus Servicing, Inc . (“Servicer”) customer service representative . The Seller agrees to provide any information needed to complete such reconciliation, including providing online access to Seller’s banking transaction data through a secure, read - only link . It is the Seller’s responsibility to provide bank transaction data and/or statements for any and all bank accounts held by the Seller to reconcile the ACH debits to the Specified Percentage permitting Servicer to debit or credit the difference to the Seller . Upon verification of the Receipts generated by Seller, Servicer shall adjust the Specified Amount on a going - forward basis to more closely reflect the Seller’s actual Receipts . Once the Seller elects to conduct a reconciliation, either Party may thereafter request a reconciliation once every 30 days . After each adjustment, the new dollar amount shall be deemed the Specified Amount until any subsequent adjustment . SELLER SHALL NOT BE ENTITLED TO ANY RECONCILIATION IF SELLER HAS DEFAULTED UNDER ANY OF THE TRANSACTION DOCUMENTS . To secure Seller’s payment and performance obligations to Purchaser under the Transaction Documents, Seller hereby grants to Purchaser a security interest in the property, rights, accounts, and other interests as set forth in the Security Agreement . The Purchaser and Seller shall be bound by this Purchase Agreement, the Sale Terms and Conditions governing the purchase of Receipts from Seller, the Security Agreement, the Guaranty, which are incorporated by reference herein, dated May 13 , 2022 and the Agreement to Arbitrate, dated May 13 , 2022 (collectively, the “Transaction Documents”) . 9. Security Interest: 10. General Terms and Conditions: Each signatory represents and warrants that : ( 1 ) he or she is authorized to enter into this sale, legally binding the Seller to deliver the Receipts as agreed, and ( 2 ) all information provided herein, in the application, in any documents submitted, and in any interviews conducted during the underwriting of the sale, including without limitation any financial information, are true, accurate and complete in all respects . Seller and Guarantor(s) expressly acknowledge and agree that Purchaser and Servicer are relying on such representations and warranties when determining to purchase the Receipts and that the accuracy thereof is a material condition of the Transaction Documents . If any information provided is false or misleading, Seller shall be held liable for fraud in the inducement and fraud and Guarantor(s) shall be personally liable for the Seller’s obligations . DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71
IT IS UNDERSTOOD THAT ANY REPRESENTATIONS OR ALLEGED PROMISES BY INDEPENDENT BROKERS OR AGENTS ARE NULL AND VOID IF NOT INCLUDED IN THE TRANSACTION DOCUMENTS . ANY MODIFICATION OR OTHER ALTERATION TO THE TRANSACTION DOCUMENTS MUST BE IN WRITING AND DULY EXECUTED BY THE PARTIES . CONSENT TO RECEIVE AUTODIALED AND PRERECORDED CALLS AND MESSAGES Purchaser, Kapitus Servicing, Inc . and their subsidiaries and affiliates (collectively, “KAPITUS”) may from time to time notify applicant(s) of various promotional offers and other marketing information, or contact Seller and Guarantor(s) in connection with the servicing of the Transaction Documents, or in connection with any default under the Transaction Documents . By signing this Purchase Agreement, Seller and Guarantor(s) expressly consent and authorize KAPITUS to call, send text messages, and/or send other electronic messages (including prerecorded or artificial voice messages) using an automatic telephone dialing system to any telephone number provided by Seller or Guarantor(s) in the Transaction Documents, any and all applications or any administrative form or other means, including cellular phone numbers and landlines, regardless of their inclusion on any do not call list, for purposes of servicing, collections, marketing or promoting any product offered by KAPITUS . Seller and Guarantor(s) further expressly consent and authorize KAPITUS to record all calls with KAPITUS . Please note that you are not required to consent to be called for marketing or promotional purposes in order to obtain any products or services from KAPITUS . If you do not agree to be called for marketing or promotional purposes, please call ( 844 ) 547 - 9396 or email DNC@kapitus . com SELLER By H ENRY L EVINSKI , O WNER (Print Name and Title) (Signature) PURCHASER By (Company Officer or Designee) (Signature) GUARANTOR By Henry Levinski (Print Name) (Signature) GUARANTOR By (Print Name) GUARANTOR By (Print Name) (Signature) (Signature) DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71 Page 3 Kapitus - FPA - ACH 2021 - 09 - 07
AUTHORIZED SUB - SERVICING AGENT Purchaser, as Agent, may perform any and all of its duties and exercise its rights and powers by or through any one or more sub - agents . Kapitus Servicing, Inc . is the Authorized Sub - Servicing Agent and the General Agent of the Purchaser . Servicer will initiate all debits and credits to Seller’s account, provide customer service and administrative support to Purchaser and Seller, initiate any necessary collection actions in the event of any default under the Transaction Documents, initiate and defend legal actions related to the Transaction Documents, and provide legal support services to Purchaser .. SERVICER FEES Page 4 Kapitus - FPA - ACH 2021 - 09 - 07 11. Banking Fees $50.00 for outgoing wire transfers or payments by check. 12. Changing Bank Accounts $75.00 13. UCC Terminations $250.00 14. Default Fee $2500.00 15. Returned Payment Fee $99.00 O TH ER TH AN TH E C LO SING F EE , I F A NY , A N D TH E S E RVI C ER F E ES SET F O R T H A B O VE , N EITH ER P U R CH ASER NO R K A PITU S S E R VICING IS CH A R G ING A N Y F E ES T O S E LL ER . I F S E LL ER IS CH A R G ED A N Y A DDITION AL F EE IN CONN E CTIO N WI T H THE SAL E , IT IS NO T A UTHORIZ ED O R CH A R G ED BY K A PITU S A N D S E LL ER S HOUL D I N F O RM K API TU S IF A N Y UN A UTHORIZ ED F E E H AS B E EN CH AR G ED IN CONN E CTIO N WI T H TH E T R A NS A CTIO N D OCU ME NT S . Y OU R A PP L ICA TIO N T O S E L L R E C EIP T S IS AN A PP L ICA TIO N F O R B U SINESS C RE DI T , A N D I F IT IS D E N I E D , YO U H A VE TH E RIGH T T O A W RITT EN S T A T EME N T O F TH E S PE CI FIC R EAS ON S F O R TH E D E NI A L . T O O B T AIN TH E S T A T EME N T , P L E ASE CONT A C T K API TU S LLC AT TH E AB O V E A DD RESS O R P HON E NU M B ER WI TH IN 60 D A Y S F R O M TH E D A T E YO U A RE NOTIFIED O F TH E D E CISIO N . Y O U H A VE TH E R IGH T T O O B T AIN A WRI TT EN S T A T EME N T O F R EAS ON S F O R TH E D E NI AL WI TH IN 30 D A YS O F RE C EIVING YOU R RE QU EST F O R TH E S T A T EME N T . N OT IC E : T H E F E D E R AL E QU AL C RE DIT O P P O R TUNIT Y A C T P R OHIBIT S C RE DITO RS F R O M D ISCRIMINA T ING A G AINST C RE DIT A P P L ICA NT S O N TH E B ASIS O F RA C E , COLO R , RE LIGIO N , N A TION AL ORIGI N , S EX , MARI T AL S T A TU S , A G E ( P R OVID ED THE A P P L ICA N T H AS TH E C A P A CIT Y T O E NT ER IN T O A BIN D ING CONT RA C T ); BE C A U SE A L L O R P ART O F TH E A PP L ICA NT ' S INC O ME D ERI V ES FR O M A N Y P U B L IC A SSIST A NC E PR OG RAM ; O R B E C A U SE TH E A P P L ICA N T H AS IN GOO D FAI T H E X ER CIS ED ANY RIGH T UND ER TH E C ONSU MER C R E DIT P R OT E CTIO N A CT . T H E FE D E RAL A G E NC Y TH AT A D MINIS T ERS CO MP LIANC E WI TH THIS L AW CONC ER NIN G THIS C RE DITO R IS TH E F E D E R AL T R A D E C O MMISSI O N , 600 P E NNSYL VA NI A A VE NU E , N W, W AS H IN GTO N , DC 20580, F T C . GO V DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71
Page 1 Kapitus - FPA - T&C 2021 - 09 - 07 SALE TERMS AND CONDITIONS I. GENERAL TERMS 1.1 Sale of Receipts. Seller and Purchaser intend that the transfer of the interest in the Receipts from Seller to Purchaser constitutes a forward sale, and not a loan, for all legal, practical and business purposes . Seller agrees that the Purchase Price equals the fair market value of the Receipts being purchased as of the date sold that are expected to come into existence in the future in the ordinary course of the operation of Seller’s business . Title to, responsibility for and risk of loss of the interest in the Receipts shall pass from the Seller to the Purchaser upon execution of this Agreement with respect to the Purchased Amount . In addition : (a) as further set forth in the Security Agreement, Seller hereby grants to Purchaser a security interest in all right, title and interest of Seller in and to the Receipts, which security interest shall secure the payment of the Purchase Price and all other obligations of Seller under this Agreement. Seller hereby authorizes Purchaser to file any financing statements deemed necessary by Purchaser to perfect or maintain Purchaser’s interest in the Receipts ; (b) the parties acknowledge that the delivery of the Purchase Price is not a payment in whole or in part for the use or forbearance of money, but rather delivery of the bargained for payment of the purchase price to Purchaser under the Purchase Agreement, notwithstanding anything to the contrary contained herein; (c) the Parties agree and acknowledge that there is no stated or unstated interest factor in this Agreement, and no interest will be paid ; (d) in the event that a court ignores the intent of the parties that the Transaction Documents be treated as a forward purchase of Receipts, and further determines that the arrangement creates a loan or other indebtedness rather than a completed forward sale of Receipts, and further determines that under that court - determined arrangement that the PURCHASER has charged or received “interest,” and further determines that the amount of interest is in excess of the highest applicable rate, the imputed rate so determined shall automatically be reduced to the maximum rate permitted by applicable law and Purchaser shall promptly refund to Seller as liquidated damages any amount received by Purchaser in excess of such maximum lawful rate, it being intended that Seller not pay or contract to pay, and that Seller not receive or contract to receive, directly or indirectly in any manner whatsoever, interest on indebtedness in excess of that which may be paid by Seller under applicable law . 1 . 2 Term of Agreement . The Purchase Agreement shall have an indefinite term . The Purchase Agreement shall commence with Purchaser’s delivery of the funds constituting the Purchase Price and shall run until such time as Purchaser receives sufficient receipts to equal the value of the Purchased Amount and thus fulfill the delivery of the future receivable purchased and all of Seller’s other obligations to Purchaser are fully satisfied . The Purchase Agreement and the provisions of this Section 1 . 2 are applicable to any renewals and additional agreements executed by the parties that constitute Forward Purchase Agreements and/or purchase of future receivables . 1 . 3 Authorization to Debit . Seller shall establish an account with a financial institution acceptable to Purchaser that will be designated to collect the Receipts generated by Seller. Seller hereby authorizes Purchaser and/or its agents to obtain any amounts due pursuant to the Transaction Documents by ACH debit of the account designated, or of any other Seller account, as provided pursuant to the Transaction Documents. This authorization shall be irrevocable without the written consent of Purchaser. Seller shall provide Purchaser and/or its agents with all of the information and authorizations necessary for verifying Sellers’s receivables, Receipts and deposits. investigate their financial responsibility and history, and will provide to Purchaser any bank or financial statements, tax returns, or any other documentation, as Purchaser deems necessary prior to or at any time after execution of the Transaction Documents. A photocopy of this authorization will be deemed as acceptable for release of any necessary information . Seller and Guarantor(s) authorize and consent to Purchaser updating their credit and financial profile from time to time in the future, as Purchase deems appropriate, including by obtaining investigative, consumer, and personal or business credit reports . This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 1 . 4 . Financial Information and Credit Reporting . Seller and Guarantor authorize Purchaser to obtain business and personal credit bureau and consumer reports at any time and from time to time for purposes of deciding whether to purchase Receipts from Seller, for any requested loan or for any update, renewal, extension of credit or other lawful purpose . Upon Seller’s or Guarantor’s request, Purchaser will advise Seller or Guarantor if Purchaser obtained a credit report and Purchaser will give Seller or Guarantor the credit bureau’s name and address . Seller and Guarantor agree to submit current financial information, update any credit application, or both, at any time promptly upon Purchaser’s request . Purchaser may report Purchaser’s experiences with Seller and Guarantor to third parties as permitted by law . Seller and Guarantor also agree that Purchaser may release information to comply with governmental reporting or legal process that Purchaser believes may be required, whether or not such is in fact required, or when necessary or helpful in completing a transaction, or when investigating a loss or potential loss, and/or seeking recovery for such loss . This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 1.5 Transactional History. Seller and Guarantor authorize Purchaser to act as 1.3 Financial Condition . Seller and Guarantor(s) authorize Purchaser to Seller’s and Guarantor’s agent, DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71
Page 2 Kapitus - FPA - T&C 2021 - 09 - 07 respectively, for purposes of accessing and retrieving transaction history information regarding Seller and/or Guarantor from Seller’s and Guarantor’s institutions, banks, banking and/or credit card processing financial accounts, accounts . Seller and Guarantor authorize their respective financial institutions to provide Purchaser with Seller’s and Guarantor’s transaction history, and information Guarantor’s regarding accounts, any and all Seller’s and balances, or transfers, for any purpose, including for purposes of collection . This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 1 . 6 Indemnification . Seller and Guarantor jointly and severally will indemnify and hold Purchaser, and its officers, directors, shareholders, members, managers, employees, owners, partners, affiliates, subsidiaries, parent company, successors, transferees, assigns, purchasers, investors, financiers, agents, representatives, attorneys and professionals, (collectively, the “Purchaser Parties”) harmless from all losses, costs, damage, liabilities or expenses (including, without limitation, court costs and attorneys’ fees) that the Purchaser Parties may sustain or incur by reason of defending claims asserted by Seller and/or Guarantor, and all persons and entities claiming by, through or under them, to the fullest extent permitted by law, in protecting the security interest conveyed pursuant to the Security Agreement or the priority thereof, in enforcing any other term of the Transaction Documents, and/or in the prosecution or defense of any action or proceeding concerning any matter arising out of or in connection with the Transaction Documents and/or any other documents now or hereafter executed in connection with the Transaction Documents, the Collateral and/or the Additional Collateral, including without limitation any legal or dispute resolution proceeding, bankruptcy proceeding, receivership, and/or any other insolvency proceeding or other proceeding for relief for debtors or creditors . In no event will Purchaser, its officers, directors, shareholders, members, managers, employees, affiliates, agents or representatives be liable for any claims asserted by Seller under any legal theory for lost profits, lost revenues, lost business opportunities, exemplary, punitive, special, incidental, indirect or consequential damages, each of which is waived by Seller and Guarantor(s). This section shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 1 . 7 Power of Attorney . Seller irrevocably appoints Purchaser as its agent and attorney - in - fact with full authority to take any action or execute any instrument or document to settle all obligations due to Purchaser, or in the case of the occurrence of any Event of Default, from Seller, under this Agreement, including without limitation (i) to obtain and adjust insurance ; (ii) to collect monies due or to become due under or in respect of any of the Collateral ; (iii) to receive, endorse and collect any checks, notes, drafts, instruments, documents or chattel paper in connection with clause (i) or clause (ii) above ; (iv) to sign Seller’s name on any invoice, bill of lading, or assignment directing customers or account debtors to make payment directly to Purchaser ; and (v) to file any claims or take any action or institute any proceeding which Purchaser may deem necessary for the collection of any of the unpaid Purchased Amount from the Collateral, or otherwise to enforce its rights with respect to payment of the Purchased Amount . This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 1 . 8 Disclosure of Information . Seller and Guarantor and each person signing this Agreement on behalf of Seller and/or as a Guarantor, in respect of himself or herself personally, authorizes Purchaser to disclose information concerning Seller’s and each Guarantor’s credit standing (including credit bureau reports that Purchaser obtains) and business conduct . Seller and each Guarantor hereby waives to the maximum extent permitted by law any claim for damages against Purchaser Parties relating to any (i) investigation undertaken by or on behalf of Purchaser as permitted by the Transaction information Documents or (ii) disclosure of as permitted by the Transaction Documents . This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 1 . 9 Publicity . Seller and Guarantor(s) authorize Purchaser to use its, his or her name in a listing of clients and in advertising and marketing materials . This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 1 . 10 UCC Agent & D/B/A’s . Seller and Guarantor(s) hereby acknowledge and agree that Purchaser may be using affiliates, representatives, agents, “doing business as” or “d/b/a” and/or fictitious names in connection with various matters relating to the transaction between Purchaser and Seller and Guarantor(s), and may file UCC - 1 financing statements and other notices or filings using such names on its own behalf or though Purchaser’s UCC agent . Purchaser shall have no obligation to terminate any UCC financing statement filed in connection with the Purchase Agreement absent a written request by Purchaser and after delivery of the Receipts purchased and the fulfillment of all of Seller’s obligations to Purchaser under the Transaction Documents, and payment of the UCC Termination fee stated in the Purchase Agreement . Notwithstanding any terms to the contrary contained herein, and except as may be required under applicable law, Purchaser shall have no obligation to terminate any UCC financing statement while there is a pending : (i) petition for bankruptcy protection under Title 11 of the United States Code or any state - law analogue filed by or against Purchaser, Seller, or Guarantor(s) ; (ii) insolvency proceeding or other proceeding instituted against Purchaser, Seller or Guarantor(s), and/or any other guarantor for relief for debtors or creditors ; (iii) receivership proceeding brought by or against Purchaser, Seller, Guarantor, and/or any other guarantor; and/or (iv) any other legal proceeding or alternative dispute resolution proceeding between any of the Seller and/or Guarantor, on the one hand, and the Purchaser Parties, on the other hand . This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 1 . 11 . Alternative Delivery of Receipts . If Seller or Guarantor knows that for any reason Purchaser will be unable to receive delivery of the Receipts from Seller’s account, then Seller must promptly set up DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71
Page 3 Kapitus - FPA - T&C 2021 - 09 - 07 another arrangement for delivery of receipts that is authorized by Purchaser . Seller and Guarantor understand and agree that delivery of Receipts made at any other address or method than as specified by Purchaser may result in a delay in processing and/or crediting the delivery of Receipts by Seller . 1 . 12 Early Delivery Option . Seller shall have the option to deliver the Purchased Amount at any time, along with any fees incurred under the Transaction Documents, less Receipts previously delivered. Purchaser may, from time to time, and in the Purchaser’s sole discretion, offer discounts for early delivery of Receipts communicated to Seller through one or more customer web interfaces, emails or addenda to the Purchase Agreement . Such discounts will be based on the time elapsed since disbursement of the Purchase Price, the history of the delivery of Receipts, and the remaining amount of Receipts due to be delivered . II. REPRESENTATIONS, WARRANTIES AND COVENANTS Seller and Guarantor represents, warrants and covenants that as of this date and during the term of this Agreement: 2.1 Financial Condition and Financial Information. The information and financial statements which have been furnished to Purchaser by Seller and Guarantor, and such future statements which will be furnished hereafter at the request of Purchaser, fairly represent the ownership and operations of the Seller’s business and the financial condition of Seller and Guarantor at such dates, and since those dates, there has been no material adverse change, financial or otherwise, in such condition, operation or ownership of Seller or Guarantor (as applicable) . Seller and Guarantor are current on any and all lease, rent or mortgage payments due. Seller and Guarantor are currently in compliance with all loans, financing agreements, promissory notes, and/or other obligations of indebtedness, except as disclosed to Purchaser . No material changes, financial or otherwise, in the condition, operation or ownership of Seller and Guarantor (as applicable) are in any way expected or anticipated and Seller and Guarantor do not anticipate closing or selling Seller’s business . Neither the Seller nor the Guarantor are party to any pending litigation that is expected to have a material impact on the Seller or Guarantor. Seller has a continuing, affirmative obligation to advise Purchaser of any material change in its financial condition, operation or ownership. Purchaser may request statements at any time during the performance of this Agreement and the Seller shall provide them to Purchaser within five ( 5 ) business days. Seller’s failure to do so is a material breach of this Agreement. 2.2 Compliance with Law. Seller is in compliance and shall comply with all laws, including possession of all necessary permits, authorizations and licenses to own, operate and lease its properties and to conduct the business in which it is presently engaged . 2 . 3 Authorization . Seller, and the person(s) signing the Transaction Documents on behalf of Seller, have full power and authority to incur and perform the obligations under the Transaction Documents, all of which have been duly authorized . 2.4 Insurance. Seller will maintain property, liability, and business interruption insurance and name Purchaser as certificate holder, loss payee and additional insured in amounts and against risks as are satisfactory to Purchaser and shall provide Purchaser proof of such insurance upon request . 2 . 5 Tax Obligations . Seller is currently in compliance with all federal state and local tax laws, has filed all returns, and has paid all taxes due, except as disclosed to Purchaser. No federal, state, or local taxing authority has filed any lien against the assets of the Seller and/or Guarantor . Seller or Guarantor shall pay all taxes owed to federal, state, or local governments when due. 2 . 6 Deposit Arrangements and Delivery of Receipts . Without Purchaser’s prior written consent, Seller will not (i) change the account designated for the delivery of Receipts ; (ii) set up multiple accounts into which any of the Seller’s receipts are deposited or otherwise transferred ; (iii) block or stop payment on Purchaser debit ; (iv) permit any event to occur that could cause diversion of any of Seller’s receipts; (v) or take any other action that could have any adverse effect upon Seller’s obligations under the Transaction Documents. Seller will batch out receipts with all payment processors on a daily basis. 2 . 7 Change of Name or Location . Seller will not conduct Seller’s business(es) under any name other than as disclosed to the Purchaser or change any of its places of business, or change its jurisdiction or incorporation or organization without ten ( 10 ) days prior written notice to Purchaser . 2 . 8 Estoppel Certificate . Seller will at any time, and from time to time, upon at least one ( 1 ) day’s prior notice from Purchaser to Seller, execute, acknowledge and deliver to Purchaser and/or to any other person, firm or corporation specified by Purchaser, a statement certifying that the Purchase Agreement is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified and stating the modifications) and stating the dates which the Purchased Amount or any portion thereof has been repaid . 2 . 9 No Bankruptcy or Insolvency . Seller is solvent, no transfer of property is being made by Seller, and no obligation is being incurred by Seller in connection with the sale of Receipts with the intent to hinder, delay, or defraud either present or future creditors of Seller . Seller represents that it is not insolvent and does not contemplate and has not filed any petition for bankruptcy protection under Title 11 of the United States Code or any state - law analogue, and there has been no involuntary petition under such laws brought or pending against Seller . Seller further warrants that it does not anticipate filing any such receivership or bankruptcy petition and it does not anticipate that an involuntary petition will be filed against it . 2 . 10 Other Financing . Seller shall not enter into any arrangement, agreement or commitment for any additional financing, whether in the form of a purchase and sale of receivables, the sale of accounts receivable, or a loan (whether secured or unsecured) with any party other than Purchaser without Purchaser’s written consent . DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71
Page 4 Kapitus - FPA - T&C 2021 - 09 - 07 2 . 11 Unencumbered Receipts . Seller has good, complete and marketable title to all Receipts, free and clear of any and all liens, claims, changes, conditions, options, rights, liabilities, restrictions, mortgages, security interests, equities, pledges and encumbrances of any kind or nature whatsoever or any other rights or interests that may be inconsistent with the transactions contemplated with, or adverse to the interests of Purchaser . 2.12 Authorization to Obtain Lease Information. Seller and Guarantor authorize Purchaser to receive pertinent information regarding the commercial lease or mortgage for the physical location of Seller’s business (the “Premises”) from any applicable lender, leasing company or agent . Upon any Event of Default under this Agreement, as security for the Seller’s obligations set forth herein, Seller and/or Guarantor shall, at the request of Purchaser deliver to Purchaser an executed Assignment of Lease covering the Premises in favor of Purchaser. 2 . 13 . Business Purpose . Seller is a valid business in good standing under the laws of the jurisdictions in which it is organized and/or operates, and Seller is entering into this Agreement for business purposes and not as a consumer for personal, family or household purposes . 2 . 14 Default Under Other Contracts . Seller’s execution of and/or performance under this Agreement will not cause or create an event of default by Seller under any contract with another person or entity . 2 . 15 . Sale or Dissolution of Seller . Seller shall not : (a) sell, dispose, transfer or otherwise convey its business, assets and/or any equity interest in Seller ; or (b) effectuate the suspension, dissolution, or termination or Seller’s business without the express prior written consent of Purchaser, or the written agreement of any purchaser, assignee, or transferee assuming all of Seller’s and Guarantor’s obligations under the Transaction Documents pursuant to documentation satisfactory to Purchaser (as applicable) . 2 . 16 Accuracy of Information . All information provided by Seller and Guarantor to Purchaser in the Transaction Documents, in any application, in all other Seller forms and in response to any request by Purchaser for information whether oral or in writing, is true, accurate and complete in all respects . III. EVENTS OF DEFAULT AND REMEDIES 3 . 1 Events of Default . The occurrence of any of the following events shall constitute an “Event of Default” hereunder : (a) Seller changes its deposit or banking relationships with any financial institution in any way that interferes with the delivery of the Receipts, including, by way of example and not limitation, using multiple depository accounts to collect Receipts without the prior written consent of Purchaser ; (b) Seller closes or changes the account(s) designated to collect the Receipts without notice to Purchaser, or otherwise permits any event to occur that could cause diversion of any Receipts to an account other than that designated to collect the Receipts ; (c) Seller interrupts the operation of its business in the ordinary course (other than as a result of adverse weather, natural disasters or acts of God) without notice to Purchaser of any planned shutdown or interruption of operations, (d) Seller transfers, moves, sells, disposes, transfers or otherwise conveys its business, or all or substantially all of its assets, without : (i) the express prior written consent of Purchaser, and (ii) the written agreement of any purchaser or transferee to the assumption of all of Seller’s obligations under the Transaction Documents pursuant to documentation satisfactory to Purchaser ; (e) any debit is rejected or returned due to insufficient funds and Seller fails to respond to Purchase inquiries or to contact Purchaser within five ( 5 ) business days ; (f) Seller shall violate any term, covenant, or condition in the Transaction Documents ; (g) any representation or warranty by Seller in the Transaction Documents shall prove to have been incorrect, false or misleading in any material respect when made ; (h) Seller or Guarantor sends a notice of termination of any Purchase Agreement ; (i) Seller suspends, dissolves or terminates its corporate existence without notice to Purchaser ; (j) Seller or Guarantor makes or sends notice of any intended assignment, bulk sale or transfer of Seller’s assets ; (k) Seller or Guarantor performs any act that reduces the value of any Collateral or Additional Collateral or reduces the value of the Collateral or Additional Collateral granted under the Security Agreement ; (l) Seller or Guarantor fails to pay taxes to any federal, state, or local government when due ; or (m) Seller shall default under any of the terms, covenants and conditions of any other agreement with Purchaser, including those between Purchaser and any business that is affiliated or associated with Seller . 3.2 Remedies for Default. In case any Event of Default occurs and is not waived by Purchaser : Purchaser may proceed to protect and enforce its rights or remedies by suit in equity or by action at law, or both, whether for the specific performance of any covenant, agreement or other provision contained herein, or to enforce the discharge of Seller’s obligations under the Transaction Document or any other legal or equitable right or remedy. In addition, and without limitation, upon any Event of Default : (a) the full uncollected Purchased Amount and any unpaid fees due shall become due and payable in full immediately ; (b) Purchaser may enforce the provisions of the Transaction Documents against the Seller and Guarantor(s) ; (c) Purchaser may enforce its security interest in the Collateral, Additional Collateral and the Cross Collateral ; (d) Purchaser may debit Seller’s depository accounts wherever situated by means of ACH debit or facsimile signature on a computer - DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71
Page 5 Kapitus - FPA - T&C 2021 - 09 - 07 generated check drawn on Seller’s bank account or otherwise ; (e) Purchaser may direct any payment or credit card processor to deposit any amounts due to Seller directly to Purchaser ; (f) Purchaser may exercise its rights under the Assignment of Lease set forth in Section 2 . 12 ; (g) Purchaser may exercise the Power of Attorney set forth in Section 1 . 7 . All rights, powers and remedies of Purchaser in connection with this Agreement may be exercised at any time by Purchaser after the occurrence of an Event of Default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity . Seller and Guarantor acknowledge and agree that there may be no adequate remedy at law with respect to a breach of the Transaction Documents . Accordingly, Seller and Guarantor agree that Purchaser shall have the right, in addition to any other rights and remedies existing in Purchaser’s favor at law or in equity, to enforce Purchaser’s rights and obligations under the Transaction Documents not only by an action or actions for damages, but also for an action or actions for specific performance, injunctive and/or other equitable relief without posting of a bond or other security . To the extent authorized by applicable law, Seller and Guarantor hereby agree to toll or waive any relevant statute of limitations in respect of any claims arising under, and/or relating to the Transaction Documents. This section shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement. 3 . 3 Costs . Seller shall pay to Purchaser all reasonable costs associated with (a) a breach by Seller of the Transaction Documents and the enforcement thereof, and (b) the enforcement of Purchaser’s remedies set forth herein, including but not limited to (i) expenses, court costs and attorneys’ fees of twenty - five percent ( 25 % ) of the total amount due to Purchaser or the actual attorney fees incurred, whichever is greater, and (ii) default interest on the total amount due to Purchaser accruing from the date of default at the rate of ten percent ( 10 % ) per annum or such other amount as allowed by law . 3.4 Required Notifications. Seller is required to give Purchaser fourteen (14) days’ prior written notice of: (a) any change in control of the Seller or the sale, transfer or assignment of all or substantially all of the Seller’s assets or equity interests; and (b) the suspension, dissolution or termination of its business. 3 . 5 . Servicer and Default Fees . Seller shall pay certain fees for services related to origination and servicing of the Transaction Documents as detailed in the Purchase Agreement. Upon the occurrence of any Event of Default, Seller and Guarantor shall be liable for a default fee in the amount stated in the Purchase Agreement, payable on demand in addition to any other fees or charges due under the Transaction Documents . IV. MISCELLANEOUS 4.1 Modifications; Amendment. modification, amendment, waiver consent of any provision of Transaction Documents shall be effective unless the same shall be in writing and signed by Purchaser . This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 4.2 Purchaser acting as Agent. Purchaser has entered into the Transaction Documents as agent (in such capacity, “Agent”) for itself and one or more third parties as “co - investors” or “co - purchasers” (each a “Principal”). Agent and each Principal have elected to treat the transaction consummated under the Transaction Documents (the “Transaction”) as a single transaction on behalf of separate Principals, and Agent hereby certifies that the portion of the Transaction allocable to the account of each of the Principals (the “Portion”) for which it is acting (to the extent that any such Transaction is allocable to the account of more than one Principal) is set forth in one or more addenda to the Transaction Documents, which may be provided to Seller upon request . All references to “Purchaser” “Seller” or “Guarantor,” as the case may be, in the Transaction Documents shall be subject to the provisions of this section and shall be construed to reflect that (i) each Principal shall have, in connection with the Transaction entered into by the Agent on its behalf, all of the rights, responsibilities, privileges and obligations of a “Purchaser” directly entering into such Transaction with the other parties under each of the Transaction Documents and (ii) Agent’s Principals have designated Agent (acting directly or through the Authorized Subservicing Agent) as their sole agents for performance of Purchaser’s obligations to Seller and for receipt of performance by Seller of its obligations to Purchaser in connection with the Transaction (including, among other things, as Agent for each Principal in connection with transfers of cash or other property and as agent for giving and receiving all notices under the Transaction Documents) . Both Agent and its Principals shall be deemed “parties” to the Transaction Documents and all references to a “party” or “either party” in any Transaction Document shall be deemed No revised accordingly. or the The parties hereto acknowledge and agree that any assignment, pledge and/or grant to Purchaser by the Seller or a Performance Guarantor of a security interest in and to any property and assets (including the Collateral and the Additional Collateral) pursuant to any of the applicable Transaction Documents to secure the payment and/or performance of any of their respective and/or joint obligations, shall be deemed to have been made to the Purchaser for and on behalf of itself and any other Principal . Purchaser hereby agrees to hold all Collateral and Additional Collateral hereafter delivered to it pursuant to the Transaction Documents, for itself and for the benefit of the Principals, on and subject to the terms and conditions set forth in the Transaction Documents . In its capacity, the Agent and Sub - Servicing Agent are each a “representative” of each of the Principals within the meaning of the term “secured party” as defined in the UCC . In addition to the representations and warranties set forth in the Transaction Documents, Agent hereby makes the following representations and warranties, which shall continue during the term of any Transaction : Principal has duly authorized Agent to execute and deliver the Transaction Documents on its behalf, has the power to so authorize Agent and to enter into the Transaction contemplated by the Transaction Documents and to perform the obligations of Purchaser, and has taken all necessary action to authorize such execution and DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71
Page 6 Kapitus - FPA - T&C 2021 - 09 - 07 delivery by Agent and such performance by it. This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 4 . 3 Sub - Servicing Agent . Purchaser may contract with one or more general agents to service the Transaction Documents (the “Sub - Servicing Agent”) that will provide customer service, treasury, administrative, bookkeeping, reporting, collections, and support services, but not limited to, background checks, credit checks, general underwriting review, filing UCC - 1 security interests and any other UCC documentation, for the Purchaser. Seller and Guarantor(s) acknowledge and agree that Purchaser has granted Sub - Servicing Agent all rights and authority as its general agent to take any and all actions to enforce the Purchase Agreement, through legal actions in the name of the Purchaser or otherwise, and to assert and/or defend against any and all claims arising from or relating to the Purchase Agreement . Any and all authorizations and rights granted to Purchaser under the Transaction Documents are hereby granted to Sub - Servicing Agent, as servicer and general agent of Purchaser . In no event will the Sub - Servicing Agent be liable for any claims made against the Purchaser or under theory for lost profits, lost lost business opportunity, punitive, actual, special, any legal revenues, exemplary, incidental, indirect or consequential damages, each of which is waived by the Seller and Guarantor(s) . This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 4 . 4 Notices . All notices, requests, consent, demands and other communications under the Transaction Documents and any addendum shall be delivered by ordinary mail to the respective parties at the addresses set forth in the Purchase Agreement and shall become effective upon delivery . The Parties hereto may also send such notices, requests, consent, demands and other communications via facsimile or electronic mail numbers and email communicated by the parties at such addresses hereto in writing or as reflected in the records of the Sub - Servicing Agent. This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement. 4 . 5 Binding Effect ; Governing Law, Venue and Jurisdiction . Seller and Guarantor agree that any suit, action or proceeding to enforce or arising out of or brought in any court in Commonwealth of Virginia or in United States District Court for Eastern District of Virginia relating to this Agreement shall be the the the (the “Acceptable Forums”), and Seller and Guarantor waive personal service of process . Seller and Guarantor agree that the Acceptable Forums are convenient to them, submit to the jurisdiction of the Acceptable Forums and waive any and all objections to jurisdiction or venue . In the event a legal proceeding concerning this Agreement is initiated in any other forum, Seller and Guarantor waive any right to oppose any motion or application made by Purchaser to transfer such proceeding to an Acceptable Forum, or to dismiss the action on the grounds of forum non conveniens . This Agreement and any claim, dispute or controversy (whether in contract, tort, or otherwise) at any time arising from or relating to this Agreement is governed by, and this Agreement will be construed in accordance with Virginia law (to the extent not preempted by federal law) without regard to internal principles of conflict of laws. The legality, enforceability and interpretation of this Agreement and the amounts contracted for under this Agreement will be governed by the laws of the Commonwealth of Virginia . Seller and Guarantor understand and agree that (i) Purchaser and/or Kapitus Servicing are located in Virginia, (ii) all final credit decisions are made from Virginia, (iii) the Agreement is made in Virginia (that is, no binding contract will be formed until Seller’s signed Agreement is received and accepted in Virginia) and (iv) Seller’s delivery of Receipts are not accepted until received in Virginia . This section shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 4.6. Counterparts; Facsimile and PDF Acceptance. Each of the Transaction Documents may be executed in one or more counterparts, each of which counterparts shall be deemed to be an original of each such Transaction Document, and all such counterparts for the respective Transaction constitute one and Transaction Document. Document shall the same such For purposes of the execution of each of the Transaction Documents, electronically transmitted PDFs, facsimile copies of signatures, or electronically transmitted copies of signatures complying with the US Federal ESIGN Act of 2000 (e.g. www.docusign.com) shall be treated as original signatures for all purposes. This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 4 . 7 Waiver of Remedies . No failure on the part of Purchaser to exercise, and no delay in exercising, any right under the Transaction Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right under the Transaction Documents preclude any other or further exercise thereof or the exercise of any other right . The remedies provided hereunder are cumulative and not exclusive of any remedies provided by law or equity . This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 4.8 Solicitations. Seller and Guarantor authorize the Purchaser Parties to communicate with, solicit and/or market to Seller and Guarantor via regular mail, telephone, electronic mail and facsimile in connection with the provision of goods or services by the Purchaser Parties, their affiliates or any third party that the Purchaser Parties share, transfer, exchange, disclose or provide information with and will hold the Purchaser Parties harmless against any and all claims pursuant to the federal CAN - SPAM ACT of 2003 (Controlling the Assault of Non - Solicited Pornography and Marketing Act of 2003 ), the Telephone Consumer Protection Act (TCPA), and any and all other state or federal laws relating to transmissions or solicitations by and any of the methods described above. This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement. DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71
Page 7 Kapitus - FPA - T&C 2021 - 09 - 07 4.9 Survival of Representation, etc. Except as otherwise provided herein, all representations, warranties and covenants herein, including those in the Security Agreement and the Guaranty shall survive the execution and delivery of the Purchase Agreement and shall continue in full force until all obligations under the Purchase Agreement shall have been satisfied in full and the Purchase Agreement shall have terminated . Notwithstanding any terms to the contrary contained herein : (i) the Security Agreement and the Guaranty shall survive, in their entirety, the delivery of the Purchased Amount and the termination of the Purchase Agreement ; and (ii) in the event that Purchaser must return any amount paid by Seller, Guarantor, any other guarantor, entity or person with respect to the obligations arising under the Transaction Documents, including without limitation, arising from or relating to, Seller, Guarantor, any other guarantor, entity or person becoming subject to a proceeding under the United States Bankruptcy Code or any similar law (whether arising under Federal or State law), and/or any other legal proceeding or alternative dispute resolution proceeding, all representations, warranties and covenants and other obligations under the Transaction Documents and any addendum thereof (if any) shall remain in full force and effect and Seller and Guarantor shall be obligated for any such amounts repaid, as well attorneys’ fees, costs and interest in connection with such proceeding. This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 4.10 Severability, Savings. In case any of the provisions in the Transaction Documents are found to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of any other provision contained therein shall not in any way be affected or impaired and the Transaction Documents shall be construed as if such provision had not been included . If any provisions of these Sale Terms and Conditions are in conflict with any other agreement to which any parties are subject, the provisions of the Purchase Agreement shall control . Should any provision of the Transaction Documents require judicial interpretation, the court interpreting or construing the provision shall not apply the rule of construction that a document is to be construed more strictly against one Party . This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 4.11 Entire Agreement. The Transaction Documents embody the entire agreement between Seller, Guarantor(s), and Purchaser and supersede all prior agreements and understandings relating to the subject matter hereof . This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 4.12 JURY TRIAL WAIVER. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO THE TRANSACTION DOCUMENTS OR THE ENFORCEMENT THE PARTIES HEREOF. HERETO ACKNOWLEDGE THAT MAKES THIS EACH WAIVER KNOWINGLY, WILLINGLY AND VOLUNTARILY AND WITHOUT DURESS, AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ATTORNEYS. THIS SHALL SURVIVE, THEIR PROVISION IN ITS ENTIRETY, THE DELIVERY OF THE RECEIPTS PURCHASED AND THE TERMINATION OF THE PURCHASE AGREEMENT. 4 . 13 CLASS ACTION WAIVER . THE PARTIES HERETO WAIVE ANY RIGHT TO ASSERT ANY CLAIMS AGAINST ANY OTHER PARTY AS A REPRESENTATIVE OR MEMBER IN ANY CLASS OR REPRESENTATIVE ACTION. TO THE EXTENT A PARTY IS PERMITTED TO PROCEED WITH A CLASS OR REPRESENTATIVE ACTION, THE PARTIES AGREE THAT : ( 1 ) THE PREVAILING PARTY SHALL NOT BE ENTITLED TO RECOVER ATTORNEYS’ FEES OR COSTS ASSOCIATED WITH PURSUING THE CLASS OR REPRESENTATIVE ACTION AND ( 2 ) THE PARTY WHO INITIATES OR PARTICIPATES AS A MEMBER OF THE CLASS WILL NOT SUBMIT A CLAIM OR OTHERWISE PARTICIPATE IN ANY RECOVERY SECURED THROUGH THE CLASS OR REPRESENTATIVE ACTION. THIS PROVISION IS A MATERIAL INDUCEMENT FOR PURCHASER TO ENTER INTO THIS AGREEMENT . THIS PROVISION SHALL SURVIVE, IN ITS ENTIRETY, THE DELIVERY OF THE RECEIPTS PURCHASED AND THE TERMINATION OF THE PURCHASE AGREEMENT . 4 . 14 Successors ; Assigns ; Amendment . Purchaser and any Principal may assign, transfer or sell its right to receive the Purchased Amount or delegate its duties hereunder, either in whole or in part . Purchaser reserves the rights to sell or assign this Agreement with or without prior written notice to Seller . Seller shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of Purchaser which consent may be withheld in Purchaser’s sole discretion . The Transaction Documents shall be binding upon and inure to the benefit of the heirs, executors, trustees, administrators, legal representatives, successors, transferees and assigns of the Parties. This provision shall survive, in its entirety, the delivery of the Receipts purchased and the termination of the Purchase Agreement . 4.15 ARBITRATION. PLEASE READ THIS PROVISION OF THE AGREEMENT CAREFULLY. A SEPARATE AGREEMENT BETWEEN THE PARTIES PROVIDES THAT DISPUTES MAY BE RESOLVED BY BINDING ARBITRATION. ARBITRATION REPLACES THE RIGHT TO GO TO COURT, HAVE A JURY TRIAL OR INITIATE OR PARTICIPATE IN A CLASS ACTION . IN ARBITRATION, DISPUTES ARE RESOLVED BY AN ARBITRATOR, NOT A JUDGE OR JURY. ARBITRATION PROCEDURES ARE SIMPLER AND MORE LIMITED THAN IN COURT . Signatures on Next Page DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71
SELLER AND GUARANTOR ACKNOWLEDGE AND AGREE TO BE BOUND BY THE SALE TERMS AND CONDITIONS. THE TERMS, DEFINITIONS, CONDITIONS, AND INFORMATION SET FORTH IN THE “PURCHASE AGREEMENT”, “SECURITY AGREEMENT”, AND THE “GUARANTY” (AS APPLICABLE) ARE HEREBY SUBJECT TO AND MADE A PART OF THE SALE TERMS AND CONDITIONS. CAPITALIZED TERMS NOT DEFINED IN THE SALE TERMS AND CONDITIONS, SHALL HAVE THE MEANING SET FORTH IN THE “PURCHASE AGREEMENT,” “SECURITY AGREEMENT” OR “GUARANTY,” AS APPLICABLE. SELLER By Henry Levinski, Owner (Print Name and Title) GUARANTOR By Henry Levinski (Print Name) GUARANTOR By N/A (Print Name) GUARANTOR By N/A (Print Name) (Signature) (Signature) (Signature) (Signature) USE OF PROCEEDS CERTIFICATION This Use of Proceeds Certification is part of (and incorporated by reference into) the Purchase Agreement. Each signatory below, on behalf of each Seller or Guarantor, hereby certifies the following to the Purchaser: 1. The entirety of the Purchase Price will be used in the ordinary course of business . 2. The entirety of the Purchase Price will be used exclusively for a Business Purpose and no other . A Business Purpose as applied to use of proceeds obtained under this Purchase Agreement refers solely to the purchase and acquisition of specific products or services used for the following purposes only : (i) working capital, (ii) business insurance (but not self - insurance programs), (iii) franchise fees, (iv) employee training, (v) the purchase of equipment, (vi) inventory, (vii) business supplies and raw materials, and (viii) the construction, renovation or improvement of facilities (but not the purchase of real estate) . Business Purpose does not include : (a) payment for, or purchase of, any items, goods, materials real property, personal property or services for personal, individual or household use ; or (b) use of funds for any proceeding under the United States Bankruptcy Code or any similar law (whether arising under Federal or State law) and/or any other legal proceeding or alternative dispute resolution proceeding . SELLER By Henry Levinski, Owner (Print Name and Title) GUARANTOR By Henry Levinski (Print Name) GUARANTOR By N/A (Print Name) GUARANTOR By N/A (Print Name) (Signature) (Signature) (Signature) (Signature) DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71 Page 8 Kapitus - FPA - T&C 2021 - 09 - 07
Page 1 Kapitus - FPA - Security Agreement 2021 - 09 - 07 SECURITY AGREEMENT S ECURIT Y I NTERES T . T o s ec ure S elle r’s d eli v e ry of t he Recei p t s pur c h a s e d a nd o t h e r ob li g ati ons t o P ur c h a s e r und e r t he T r a ns acti on Do c u me n t s, S elle r h e r e by gr a n t s t o Pur c h a s e r a s ec ur it y i n te r e st i n: ( i ) al l acc oun t s, acc oun t s r ecei v a b l e , c on t r act s, r ea l prop e r t y lea s e s, no te s, b ill s, acce p ta n c e s, c hoos e s i n acti on, c h atte l p a p e r, i ns t ru me n t s, do c u me n t s a nd o t h e r for m s of ob li g ati ons a t a ny tim e ow i ng t o t he S elle r a r i s i ng out of goods s o l d or lea s e d or for s e rv ice s r e nd e r e d by S elle r, t he pro cee ds t h e r e of a nd al l of S elle r's r i gh t s w it h r e sp ec t t o a ny goo d s r e pr e s e n te d t h e r e by, wh et h e r or not d eli v e r e d, goods r et urn e d by c us t o me rs a nd al l r i gh t s a s a n unp ai d v e ndor or lie nor, i n cl ud i ng r i gh t s of s t opp a ge i n t r a ns i t a nd of r ec ov e r i ng p o ss e ss i on by pro cee d i ngs i n cl ud i ng r e p le v i n a nd r ecla m ati on, t og et h e r w it h al l c u s t o me r li s t s, boo k s a nd r ec ords, le dg e r a nd acc ount ca rds, c o m pu te r ta p e s, s of t w a r e , d i sks, pr i n t ou t s a nd r ec ords, wh et h e r now i n e x i s te n c e or h e r ea f te r c r eate d, r elati ng t h e r et o ( c o llecti v e l y r e f e rr e d t o h e r ei n a f t e r a s "Recei v a b l e s ") ; ( ii ) al l i nv e n t ory, i n cl ud i ng w it hout limita t i on, al l goods ma nuf act ur e d or ac qu i r e d for s al e or lea s e , a nd a ny p iec e goods, r a w mate r i al s, work i n pro ce ss a nd f i n i sh e d me r c h a nd i s e , f i nd i ngs or c o m pon e nt mate r ial s, a nd al l supp lie s, goods, i n ci d e n t a l s, off ic e s upp lie s, p ac k a g i ng mate r i a l s a nd a ny a nd al l item s us e d or c onsu me d i n t he op e r ati on of t he bus i n e ss of S elle r or w h ic h ma y c on t r i bu t e t o t he f i n i sh e d produ c t or t o t he s ale , pro m o ti on a nd sh i p me nt t h e r e of, i n wh ic h S elle r n o w or a t a ny tim e h e r ea f te r ma y h a ve a n i n te r e s t , wh et h e r or not t he s am e i s i n t r a ns i t or i n t he c ons t ru cti v e , act u a l or e x cl us i ve o cc up a n c y or po s s e ss i on of S elle r or i s h el d by S elle r or by o t h e rs for S elle r's acc ount ( c o llecti v e l y r e f e rr e d t o h e r ei n a f te r a s "Inve n t ory"); ( iii ) goo d s, i n cl ud i ng w it hout lim i tati on, al l mac h i n e ry, e qu i p me n t , p a r t s, supp lie s, a pp a r at us, a pp lia n c e s, t oo l s, f itti ngs, furn it ur e , furn i sh i ngs, f i x t ur e s a nd a r ticle s of ta ng i b l e p e rson a l prop e r t y of e v e ry d e s c r i p ti on n o w or h e r ea f te r o wn e d by t he S elle r or i n wh ic h S elle r ma y h a ve or ma y h e r ea f te r ac qu i re a ny i n te r e s t , a t a ny l o cati on ( c o llec t i v el y r e f e rr e d t o h e r ei n a f te r a s "E qu i p me n t" ) ; ( i v) g e n e r a l i n ta ng i b l e s i n wh ic h t he S elle r now h a s or h e r ea f te r ac qu i r e s a ny r i gh t s, i n cl ud i ng but not limite d t o, ca us e s of acti on, c orpor at e or bus i n e ss r ec ords, i nv e n ti ons, d e s i gns, p ate n t s, p ate nt a pp lica t i ons, t r a d ema rks, t r a d ema rk r e g i s t r ati ons a nd a pp licati ons t h e r e for, goodw ill , t r a de n ame s, t r a de s ec r et s, t r a de pro ce ss e s, c opyr i gh t s, c opyr i ght r e g i s t r ati ons a nd a pp lic a ti ons t h e r e for, lice ns e s, p e r mit s, fr a n c h i s e s, c us t o me r li s t s, c o m pu te r progr am s, al l claim s und e r gu a r a n tie s, ta x r e fund claim s, r i gh t s a nd claim s a g ai nst ca rr ie rs a nd sh i pp e rs, lea s e s, claim s und e r i nsur a n c e po licie s, al l r i gh t s t o i nd em n i f i ca t i on a nd al l o t h e r i n ta ng i b l e p e rson a l prop e r t y a nd i n tell e ct u a l prop e r t y of e v e ry k i nd a nd n at ure ( c o lle c ti v el y r e f e rr e d t o h e r ei n a f te r a s "Inta ng i b le s ") ; (v) al l t he ca p ita l s t o c k, bon d s, no te s, p a r t n e rsh i p i n te r e s t s, mem b e r i n te r e s t s i n limite d lia b ilit y c o m p a n ie s, a nd o t h e r s ec ur itie s, i f a ny, h el d of r ec ord or b e n e f ic i all y by t he S elle r, i n cl ud i ng w it hout limi t ati on t he ca p it a l s t o c k of al l subs i d ia r ie s of t he S elle r, a nd t he S elle r's i n te r e s t s i n al l s ec ur itie s brok e r a ge acc oun t s ( c o llecti v el y r e f e rr e d t o h e r ei n a f te r a s "Inve s tme n t s ") ; (v i ) al l ca sh on h a nd a nd on d e pos i t i n b a nks, t rust c o m p a n ie s a nd s imila r i ns tit u ti ons, a nd al l prop e r t y acc oun te d for i n t he S elle r's f i n a n cia l s tateme n t s a s "ca sh e qu i v ale n t s" ( c o llec t i v el y r e f e rr e d t o h e r ei n a f te r a s "C a sh"); (v ii ) al l o t h e r a ss et s, pro cee ds a nd item s not d i r ectl y r e f e rr e d t o h e r ei n a s t hose te r m s a re d e f i n e d i n Ar ticl e 9 of t he Un i form C o mme r c i a l C ode und e r a pp lica b l e f e d e r a l a nd s tat e la w ( c o llecti v el y r e f e rr e d t o h e r ei n a f t e r a s “ U C C Ar ticl e 9 I tem s ” ); (v iii ) al l acce ss i ons t o, subs tit u ti ons for, a nd al l r e p lace m e n t s, produ ct s a nd pro cee ds of t he Recei v a b le s, Inv e n t ory, E qu i p me n t , In ta ng i b le s, Inv e s tme n t s, Ca sh a nd U C C Ar ticl e 9 I tem s ( c o llecti v el y r e f e rr e d t o h e r ei n a f t e r a s "Collate r a l") , i n cl ud i ng w it hout limi t ati on pro cee ds of i nsur a n c e po licie s i nsur i ng t he C o llate r a l ; a nd ( i x) books a nd r ec ords r elati ng t o a ny of t he C o llate r a l ( i n cl ud i ng w it hout limi t ati on, c us t o me r d ata , c r e d i t f ile s, c o m pu te r progr am s, pr i n t ou t s, a nd o t h e r c o m pu te r mate r i al s a nd r ec ords of t he S elle r p e r tai n i ng t o a ny of t he C o llate r al ), w h et h e r now or h e r ea f te r own e d or ac qu i r e d by S elle r a nd wh e r e v e r l o cate d; a nd al l pro cee ds of t he for e go i ng. If t he T r a ns acti on Do c u me n t s or a ny a dd e nda i d e n ti fy m ore t h a n one S elle r, t h i s S ec ur it y Agr eeme nt a pp lie s t o eac h S elle r, j o i n tl y a nd s e v e r all y. Seller and Guarantor acknowledge and agree that any security interest granted to Purchaser under any other agreement between Seller and Purchaser will secure the obligations hereunder, and that the Seller’s obligations secured by this Security Agreement, and the Collateral granted hereunder, shall be perfected under any previously filed UCC - 1 or UCC - 3 statement, perfecting Purchaser’s interest in the Collateral. DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71
Page 2 Kapitus - FPA - Security Agreement 2021 - 09 - 07 Seller and Guarantor further acknowledge and agree that if, in the future, Seller enters into any agreement with Purchaser, any security interest granted to Purchaser under such future agreements will relate back to this Security Agreement, and that the Seller and/or Guarantor’s obligations, and the Collateral granted, under such future agreements, shall relate back to, be perfected under, and made a part of, any previously filed UCC - 1 or UCC - 3 statement, perfecting Purchaser’s interest in the Collateral. C ROSS - C OLLATERAL . To secure Seller’s delivery of the Receipts purchased and other obligations to Purchaser under the Purchase Agreement, Seller and each Guarantor hereby grants Purchaser a security interest in all assets and equity interests in the following collateral: China Infrastructure Construction Corp, PRECISION RESEARCH INSTITUTE, LLC (the “ Additional Collateral ”). Seller and each Guarantor understands that Purchaser will have a security interest in the aforesaid Additional Collateral upon execution of this Security Agreement. Each of Seller and each Guarantor acknowledges and agrees that any security interest granted to Purchaser under any other agreement between Seller and/or Guarantor and Purchaser will secure the obligations hereunder, and that the Seller and/or Guarantor’s payment and performance obligations under the Purchase Agreement, and secured by this Security Agreement, and the Collateral and Additional Collateral granted hereunder, shall be perfected under any previously filed UCC - 1 or UCC - 3 statement, perfecting Purchaser’s interest in the Collateral and Additional Collateral. Each of Seller and each Guarantor further acknowledges and agrees that, if Seller and/or Guarantor enter into future agreements with Purchaser, any security interest granted to Purchaser under such future agreements will relate back to this Security Agreement, and that the Seller and/or Guarantor’s obligations, and the Collateral and Additional Collateral granted, under any such future agreements, shall relate back to, be perfected under, and made a part of, any previously filed UCC - 1 or UCC - 3 statement, perfecting Purchaser’s interest in the Collateral and Additional Collateral. Each of Seller and each Guarantor agree to execute any documents or take any action in connection with this Security Agreement as Purchaser deems necessary to carry out the purpose of such agreements including, without limitation, to perfect or maintain Purchaser’s security interest in the Collateral and the Additional Collateral, including the execution of any account control agreements. Each of Seller and each Guarantor hereby authorizes Purchaser to file any financing statements deemed necessary by Purchaser to perfect or maintain Purchaser’s security interest, which financing statement may contain notification that Seller and Guarantor have granted a negative pledge to Purchaser with respect to the Collateral and the Additional Collateral, and that any subsequent Purchaser or lienor may be tortiously interfering with Purchaser’s rights. Each Seller and each Guarantor shall be jointly and severally liable for and shall pay to Purchaser upon demand all costs and expenses, including but not limited to attorney’s fees and costs, which may be incurred by Purchaser in protecting, preserving and enforcing Purchaser’s security interest and rights. N E G ATIV E P LED GE . S elle r a nd eac h G u a r a n t or a gr ee s not t o c r eate , i n c ur, a ssu me , or p e r mi t t o e x i s t , d i r ectl y or i nd i r ec t l y, a ny a dd iti on a l f i n a n ci ngs, l o a ns, lie n or o t h e r e n c u m br a n c e of a ny k i nd w it h r e sp ec t t o a ny of t he C o llate r a l or t he Add iti on a l C o llate r a l , a s a pp lica b l e , w it hout t he pr i or w r itte n p e r mi ss i on of Pur c h a s e r. C ERTI F ICATE D C O LLATERA L . If a ny of t he C o llate r a l a nd / or A dd iti on a l C o llate r a l i s n o w or i n t he fu t ure e v i d e n ce d or r e pr e s e n te d by a ce r ti f ica t e or ce r ti f i c ate s, eac h S elle r a nd eac h Gu a r a n t or s h al l imme d i a tel y, a nd w it hout t he n ee d t o be no ti f ie d, d eli v e r su c h ce r ti f ic a te (s) t o Pur c h a s e r, du l y e ndors e d i n a ma nn e r s ati sf act ory t o Pur c h a s e r, t o be h el d a s C o llate r a l a nd / or Add iti on a l C o llate r a l pursu a nt t o t h i s S ec ur it y Agr eeme n t . C O NSEN T T O E NTE R P RE M ISE S AN D A SSI GN L EAS E . Pur c h a s e r sh al l h a ve t he r i ght t o c ure S elle r’s d e f a u l t i n t he p a y me nt of r e nt for t he P r emi s e s on t he fo ll ow i ng te r m s: In t he e v e nt S elle r or Gu a r a n t or a re s e rv e d w it h p a p e rs i n a n acti on a g ai nst S elle r for nonp a y me nt of r e nt or for su mma ry e v icti on, S elle r or Gu a r a n t or sh al l pro m p tl y prov i de DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71
Purchaser with such papers and Purchaser may execute its rights and remedies under the Assignment of Lease pursuant to Section 2.12 of the Sale Terms and Conditions. Seller also agrees that Purchaser may enter into an agreement with Seller’s landlord giving Purchaser the right to: (a) enter Seller’s Premises and to take possession of the fixtures, equipment and other Collateral therein for the purpose of protecting and preserving same; and (b) to assign Seller’s lease to another qualified Seller capable of operating a business comparable to Seller’s at such Premises. R E M EDIE S . Upon a ny E v e nt of D e f a u lt , Pur c h a s e r ma y pu r sue a ny r eme dy a v aila b l e a t la w ( i n cl ud i ng t hose a v aila b l e und e r t he prov i s i ons of t he U CC ), or i n e qu it y t o c o llect , e nfor ce , or s ati sfy a ny ob li g ati ons t h e n o w i ng, w h et h e r by accele r ati on or o t h e rw i s e . THE TERMS, DEFINITIONS, CONDITIONS AND INFORMATION SET FORTH IN THE “PURCHASE AGREEMENT”, “SALE TERMS AND CONDITIONS”, AND THE “GUARANTY” (AS APPLICABLE) ARE HEREBY INCORPORATED IN AND MADE A PART OF THIS SECURITY AGREEMENT. CAPITALIZED TERMS NOT DEFINED IN THIS SECURITY AGREEMENT, SHALL HAVE THE MEANING SET FORTH IN THE “PURCHASE AGREEMENT,” “SALE TERMS AND CONDITIONS” OR “GUARANTY,” AS APPLICABLE. SELLER By Henry Levinski, Owner (Print Name and Title) GUARANTOR By Henry Levinski (Print Name) GUARANTOR By N/A (Print Name) GUARANTOR By N/A (Print Name) (Signature) (Signature) (Signature) (Signature) DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71 Page 3 Kapitus - FPA - Security Agreement 2021 - 09 - 07
Page 1 Kapitus - FPA - Guaranty 2021 - 09 - 07 Contract# 7010281 GUARANTY P ERS O NA L G UARAN T Y OF P ER FO R M ANC E . Eac h und e rs i gn e d Gu a r a n t or h e r e by un c ond iti on a l l y gu a r a n tee s t o Pur c h a s e r t he M e r c h a n t ’s p e rfor ma n c e of al l of t he r e pr e s e n tati ons, w a rr a n tie s, c ov e n a n t s ma de by S elle r i n t he Pur c h a se Agr eeme n t , t he S al e Te r m s a nd C ond iti ons, t he S ec ur it y A gr eeme n t , G u a r a n t y, a nd A gr eeme nt t o Arb it r at e ( c o lle c ti v el y, t he “T r a ns acti on Do c u me n t s ” ), a s eac h ma y be r e n e w e d, ame nd e d, e x te nd e d or o t h e rw i se m od i f ie d from tim e t o tim e ( t he “ Gu a r a n tee d Ob li g ati ons ” ). Gu a r a n t or sh al l be lia b l e for a nd P ur c h a s e r ma y c h a rge a nd c o lle c t al l c os t s a nd e xp e ns e s, i n cl ud i ng but not lim i te d t o att orn e ys’ f ee s a nd c ourt c os t s, wh ic h ma y be i n c urr e d by Pur c h a s e r i n c onn ecti on w it h t he c o llec t i on of a ny or al l of t he Gu a r a n tee d Ob li g ati ons from Gu a r a n t or or t he e nfor ceme nt of t he T r a ns acti on Do c u me n t s. (It i s und e rs t ood by al l p a r tie s t h a t G u a r a n t ors a re on l y gu a r a n teei ng t h a t t h e y w il l not ta ke a ny acti on or p e r mi t t he S elle r t o ta ke a ny acti on t h a t i s a br eac h of t he T r a ns acti on Do c u me n t s a nd i s not ma k i ng a n a bso l u t e gu a r a n t y of r e p a y me n t .) G UARANT OR W AIVE R S . In t he e v e nt t h a t S elle r f ail s t o d eli v e r Recei p t s g e n e r ate d due t o G u a r a n t or’s acti ons or mal f ea s a n c e , or Gu a r a n t or o t h e rw i se f ail s t o p e rform a ny ob li g ati on or c ov e n a nt und e r t he T r a ns acti on D o c u me n t s, Pur c h a s e r ma y e nfor c e it s r i gh t s und e r t h i s Gu a r a n t y or a ny of t he o t h e r T r a ns acti on Do c u me n t s w it hout f i rst s ee k i ng t o ob tai n p a y me nt from t he S elle r, a ny o t h e r gu a r a n t or, or t hrough t he S ec ur it y Agr eeme n t . Purchaser does not have to notify Guarantor of any of the following events, and Guarantor will not be released from its obligations under this Guaranty, if it is not notified of: (i) Merchant’s failure to deliver timely the Receipts due or to pay any amount owed under the Purchase Agreement; (ii) any material or adverse change in Merchant’s financial condition or business operations; (iii) any sale or other disposition of any collateral securing the Guaranteed Obligations, including all collateral listed in the Security Agreement, or any other guarantee of the Guaranteed Obligations; (iv) Purchaser’s acceptance of this Guaranty; (v) any renewal, extension or other modification of any of the Transaction Documents and/or Merchant’s other obligations to Purchaser; and (vi) the Purchaser’s pursuit and/or enforcement of any rights and remedies, available at law and in equity, relating to, and/or arising from, the Transaction Documents. In addition, Purchaser may take any of the following actions without releasing Guarantor from any of its obligations under this Guaranty: (i) renew, extend or otherwise modify any of the Transaction Documents or Merchant’s other obligations to Purchaser; (ii) release Seller from its obligations to Purchaser; (iii) sell, release, impair, waive or otherwise fail to realize upon, any collateral securing the Guaranteed Obligations or any other guarantee of the Guaranteed Obligations; (iv) foreclose on any collateral securing the Guaranteed Obligations or any other guarantee of the Guaranteed Obligations in a manner that impairs or precludes the right of Guarantor to obtain reimbursement for payment under this Guaranty; and (v) pursuit and/or enforcement of any rights and remedies, available at law and in equity, relating to, and/or arising from, the Transaction Documents. Until all of Merchant’s obligations to Purchaser under any of the Transaction Documents are satisfied in full, Guarantor shall not seek reimbursement from Seller or any other guarantor for any amounts paid by Guarantor under any of the Transaction Documents. Guarantor permanently waives and shall not seek to exercise the following rights that Guarantor may have against Merchant, any other guarantor or third party, any collateral, or any other real or personal property for any amounts paid by Guarantor, any other guarantor, or third party, or acts performed by Guarantor, any other guarantor, or third party, under the Transaction Documents including, without limitation: (i) subrogation; (ii) reimbursement; (iii) performance; (iv) indemnification; or (v) contribution. In the event that Purchaser must return any amount paid by Merchant, any guarantor, entity, or person with respect to the Guaranteed Obligations, including, without limitation, any Merchant, guarantor, entity or person becoming subject to a proceeding under the United States Bankruptcy Code DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71
Contract# 7010281 or any similar law, (whether arising under Federal or State law), and/or any other Insolvency Proceeding, legal proceeding or alternative dispute resolution proceeding, the Guaranteed Obligations under this Guaranty shall remain in full force and effect and Guarantor shall be obligated for any such amounts repaid as well as attorneys’ fees, costs, and interest in connection with such proceeding. G UARANT OR A C K N OWLE D G E M EN T . G u a r a n t or ac know le dg e s t h at : ( i ) h e/ she und e rs ta nds t he s e r i ousn e s s of t he prov i s i ons of t h i s G u a r a n t y ; ( ii ) h e/ she h a s h a d a fu l l oppor t un it y t o c onsu l t w it h c ouns e l of h i s / h e r c ho ice ; a nd ( iii ) h e/ she h a s c onsu lte d w it h c ouns e l of h i s / h e r c ho ic e or h a s d eci d e d not t o a v ai l h im s el f / h e rs el f of t h a t oppor t un it y. J O IN T AN D S EVERA L L IABILIT Y . T he ob li g ati ons h e r e und e r of t he p e rsons or e n titie s c o n s tit u t i ng Gu a r a n t or und e r t h i s G u a r a n t y a re j o i nt a nd s e v e r al . CONSENT TO RECEIVE AUTODIALED AND PRERECORDED CALLS AND MESSAGES PURCHASER, Kapitus Servicing and their subsidiaries and affiliates (collectively, “KAPITUS”) may from time to time notify applicant(s) of various promotional offers and other marketing information, or contact Merchant(s) and Guarantor(s) in connection with the servicing of the Transaction Documents, or in connection with any default under the Transaction Documents . By signing this Guaranty, Guarantor(s) expressly consent and authorize KAPITUS to call, send text messages, and/or send other electronic messages (including prerecorded or artificial voice messages) using an automatic telephone dialing system to any telephone number provided by Merchant(s) or Guarantor(s) in the Transaction Documents, any and all applications or any administrative form or other means, including cellular phone numbers and landlines, regardless of their inclusion on any do not call list, for purposes of servicing, collections, marketing or promoting any product offered by KAPITUS . Guarantor(s) further expressly consent and authorize KAPITUS to record all calls with KAPITUS . Please note that you are not required to consent to be called for marketing or promotional purposes in order to qualify for financing or obtain any other products or services from KAPITUS . If you do not agree to be called for marketing or promotional purposes, please call ( 844 ) 547 - 9396 or email DNC@kapitus . com . THE TERMS, DEFINITIONS, CONDITIONS AND INFORMATION SET FORTH IN THE “PURCHASE AGREEMENT”, “SALE TERMS AND CONDITIONS”, AND THE “SECURITY AGREEMENT” (AS APPLICABLE) ARE HEREBY INCORPORATED IN AND MADE A PART OF THIS GUARANTY. CAPITALIZED TERMS NOT DEFINED IN THIS GUARANTY SHALL HAVE THE MEANING SET FORTH “PURCHASE AGREEMENT”, “SALE TERMS AND CONDITIONS”, AND THE “SECURITY AGREEMENT,” AS APPLICABLE. GUARANTOR By Henry Levinski (Print Name) GUARANTOR By N/A (Print Name) GUARANTOR By N/A (Print Name) (Signature) (Signature) (Signature) DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71 Page 2 Kapitus - FPA - Guaranty 2021 - 09 - 07
1 AGREEMENT TO ARBITRATE PLEASE READ THIS AGREEMENT CAREFULLY . THIS AGREEMENT TO ARBITRATE (“AGREEMENT”) PROVIDES THAT DISPUTES BETWEEN STRATEGIC FUNDING SOURCE, INC . D/B/A KAPITUS AND ITS SUBSIDIARIES AND AFFILIATES, INCLUDING BUT NOT LIMITED TO KAPITUS LLC AND KAPITUS SERVICING, INC . (COLLECTIVELY, “KAPITUS”), ON ONE HAND, AND PHARMACOLOGY UNIVERSITY FW, LLC/ HENRY LEVINSKI/ DANTE PICAZO, D/B/A PHARMACOLOGY UNIVERSITY AND HENRY LEVINSKI, (COLLECTIVELY, “YOU” OR “MERCHANT”) (EACH A “PARTY” AND TOGETHER WITH KAPITUS, “THE PARTIES”) MAY BE RESOLVED BY BINDING ARBITRATION . ARBITRATION REPLACES THE RIGHT TO GO TO COURT, HAVE A JURY TRIAL OR INITIATE OR PARTICIPATE IN A CLASS ACTION . IN ARBITRATION, DISPUTES ARE RESOLVED BY AN ARBITRATOR, NOT A JUDGE OR JURY . ARBITRATION PROCEDURES ARE SIMPLER AND MORE LIMITED THAN IN COURT . THIS AGREEMENT IS GOVERNED BY THE FEDERAL ARBITRATION ACT (“FAA”), AND SHALL BE INTERPRETED IN THE BROADEST WAY THAT LAW WILL ALLOW . I. Covered Claims. a. You or Kapitus may arbitrate any claim, dispute or controversy between the Parties arising out of and/or related to : (i) this Agreement ; (ii) any other agreement between the Parties ; and/or (iii) the relationship between the Parties, whether or not related to a contract between them (“Claims”) . b. If arbitration is chosen by any Party in accordance with Section III below, no Party will have the right to litigate the Claims in court or to have a jury trial on the Claims. c. Except as stated below, all Claims are subject to arbitration, no matter what legal theory they are based on or what remedy (damages, or injunctive or declaratory relief) they seek, including Claims based on contract, tort (including intentional tort), fraud, agency, Merchant’s or Kapitus’s negligence, statutory or regulatory provisions, or any other sources of law ; Claims made as counterclaims, cross - claims, third - party claims, interpleaders or otherwise ; Claims made regarding past, present, or future conduct ; and Claims made independently or with other claims . This also includes Claims made by or against anyone connected with Kapitus or Merchant or claiming through Kapitus or Merchant, or by someone making a claim through Kapitus or Merchant, such as a co - applicant, authorized user, employee, agent, representative or an affiliated/parent/subsidiary company . Threshold issues of whether any claim is arbitrable also are subject to arbitration in accordance with this Agreement . II. Arbitration Limits. a. Claims brought as part of a class action, private attorney general or other representative action can be arbitrated only on an individual basis . The arbitrator has no authority to arbitrate any claim on a class or representative basis and may award relief only on an individual basis . If arbitration is chosen by any Party, neither Merchant nor Kapitus may pursue a Claim as part of a class action or other representative action . b. Claims of two or more persons may not be combined in the same arbitration . However, applicants, co - applicants, authorized users on a single account and/or related accounts, or corporate affiliates or entities under common ownership or control of a Party are deemed one person for purposes of this Agreement . DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71
2 III. How Arbitration Works. a. Arbitration shall be conducted by the American Arbitration Association (“AAA”) according to this arbitration provision and the applicable AAA Commercial Arbitration Rules in effect when the claim is filed (“AAA Rules”), except where those rules conflict with this arbitration provision . Merchant can obtain copies of the AAA Rules at the AAA’s website ( www . adr . org ) . Merchant or Kapitus may choose to have a hearing, appear at any hearing by phone or other electronic means, and/or be represented by counsel . Notwithstanding any terms to the contrary, any in - person hearing will be held in Arlington, Virginia . The arbitration shall be conducted and the award shall be rendered in English . b. Arbitration may be requested any time, even where there is a pending lawsuit, unless discovery has fully and finally concluded, and/or a final judgment entered . Neither Merchant nor Kapitus waives the right to arbitrate by filing or serving a complaint, answer, counterclaim, or motion in a lawsuit . To choose arbitration, a Party must file a motion to compel arbitration in a pending matter or commence arbitration by submitting the required AAA forms and requisite filing fees to the AAA . c. The arbitration shall be conducted by a single arbitrator agreed to by the Parties within twenty ( 20 ) days of receipt by respondent of the request for arbitration (unless an extended time period is agreed to by the Parties) . In the event the Parties are unable to agree upon the selection of the arbitrator, the arbitrator shall be selected in accordance with this arbitration provision and the AAA Rules for appointing an arbitrator from the AAA National Roster . The selected arbitrator may limit discovery . The arbitrator shall not apply any federal or state rules of civil procedure for discovery, but the arbitrator shall honor claims of privilege recognized at law and shall take reasonable steps to protect account information and other confidential information of any Party if requested to do so . Except as may be required by law, neither a Party nor the arbitrator may disclose the existence, content or results of any arbitration without the prior written consent of both parties, unless to protect or pursue a legal right . The arbitrator shall apply the substantive laws of the jurisdiction specified in any contract between the parties . If no jurisdiction is specified or if multiple jurisdictions are specified in various contracts among the Parties, the substantive laws of the Commonwealth of Virginia shall apply, without regard to any applicable principals of conflicts of law . d. The arbitrator shall make any award in writing and, if requested by Merchant or Kapitus, shall include a reasoned opinion for the award . An arbitration award shall decide the rights and obligations only of the parties named in the arbitration, and shall not have any bearing on any other person or dispute . e. The arbitrator shall have no authority to award punitive damages, consequential damages, or other damages not measured by the prevailing Party’s actual damages, except as required by statute or allowed under any agreement between the Parties . IV. Paying for Arbitration Fees. a. Arbitration fees will be allocated according to the applicable AAA Rules . All parties are responsible for their own attorney’s fees, expert fees and any other expenses unless the arbitrator awards such fees or expenses to Kapitus based on a contract between the parties or applicable law . b. The Parties agree that failure or refusal of a Party to pay its required share of the deposits for arbitrator compensation or administrative charges shall constitute a waiver by that Party to present evidence or cross - examine witnesses . In such event, the other Party shall be required to present evidence and legal argument as the arbitrator(s) may require for the making of an award . Such waiver shall not allow for a default judgment against the non - paying Party in the absence of evidence presented as provided for above . DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71
3 V. The Final Award. a. Any award rendered by the arbitrator shall be final, and binding on the Parties, and may be entered and enforced in any court having jurisdiction, and any court where a Party or its assets is located (to which jurisdiction the Parties consent for the purposes of enforcing such award) unless a Party appeals such award in writing to the AAA within 30 days of notice of the award pursuant to the AAA’s Optional Appellate Arbitration Rules . The arbitration appeal shall be determined by a panel of 3 arbitrators . The panel will consider all facts and legal issues anew based on the same evidence presented in the prior arbitration and will make decisions based on a majority vote . Arbitration fees for the arbitration appeal shall be allocated according to the applicable AAA Rules . An award by a panel on appeal is final . A final award is subject to judicial review as provided by applicable law . VI. Miscellaneous. a. Survival . This Agreement shall survive : (i) termination of the account or the relationship between Merchant and Kapitus ; (ii) repayment of any amounts owed by Merchant to Kapitus ; (iii) the termination of any other agreement between Merchant and Kapitus ; (iv), the filing of any petition or institution of any proceeding by or against any Party under any provisions of the Bankruptcy Reform Act, Title 11 of the United States Code, or any other similar law relating to bankruptcy, insolvency or other relief for debtors, or general affecting creditor’s rights or seeking the appointment of a receiver, trustee, custodian, administrator or liquidator of or for any Party’s assets ; (v) any sale, transfer and/or assignment of Merchant’s account with Kapitus, or amounts owed on Merchant’s account, to another person or entity ; (vi) the closure, suspension, dissolution or termination of Merchant’s business ; and (vi) the sale, transfer, and/or assignment of Merchant’s business, any interest therein that constitutes a change of control in such business, and/or substantially all of Merchant’s assets . b. Severability. If any part of this Agreement is deemed invalid or unenforceable, the other terms shall remain in force, except that there can be no arbitration and/or litigation of a class or representative Claim. c. Entire Agreement, Amendment, Successors, and Assigns. This Agreement contains the entire understanding among the Parties concerning the subject matter hereof . No representation, promise, statement of intention has been made by any Party concerning the subject matter hereof that is not embodied in this Agreement, and no Party shall be bound by, or liable for, any such alleged representation, promise or statement of intention not set forth herein . This Agreement may not be amended, modified, severed or waived, except through a written agreement between Merchant and Kapitus . All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, trustees, administrators, representatives, receivers, liquidators, successors, transferees, and assigns of the Parties . This Agreement shall not be assignable or otherwise transferrable by Merchant without Kapitus’s prior written consent to be exercised solely in Kapitus’s discretion . Kapitus may assign or otherwise transfer this Agreement . d. Counterparts ; Electronic Signatures . This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which together shall constitute one instrument . Electronically transmitted PDFs, facsimile copies of signatures, or electronically transmitted copies of signatures complying with the US Federal ESIGN Act of 2000 (e . g . www . docusign . com) shall be treated as original signatures for all purposes . e. Authorization . Merchant, and the person(s) signing this Agreement on behalf of Merchant, have full power and authority to incur and perform the obligations under this Agreement, all of which have been duly authorized . DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71
f. Waiver . No failure on the part of Kapitus to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right under this Agreement preclude any other or further exercise thereof or the exercise of any other right . The remedies provided hereunder are cumulative and not exclusive of any remedies provided by law or equity . g. Further Assurances . Each Party agrees to take all reasonable steps necessary to effectuate the terms of this Agreement . The Parties agree that they will take all actions, execute, and deliver any and all documents reasonably necessary to carry out the intent and purpose of this Agreement, including, without limitation any documents and fees necessary for the commencement and conduct of arbitration as set forth herein . h. No Interpretation of Captions or Headings . The captions and headings within this Agreement are for ease of reference only and are not intended to create any substantive meaning or to modify the terms and clauses either following them or contained in any other provision of this Agreement i. Notices . All notices, requests, consent, demands and other communications hereunder shall be delivered by certified mail, return receipt requested, to Kapitus at 2500 Wilson Boulevard, Suite, 350 , Arlington, VA 22201 , and to Merchant and/or Guarantor at the address(es) provided by Merchant or Guarantor to Kapitus and as reflected in Kapitus’s system of record, and shall become effective only upon receipt . In addition, all notices, requests, consent, demands and other communications must be emailed to generalcounsel@kapitus.com and hlevinski@pharmacologyuniversity.com, dpicazo@msn.com. MERCHANT By Henry Levinski, Owner (Print Name and Title) KAPITUS By (Company Officer or Designee) GUARANTOR By Henry Levinski (Print Name) GUARANTOR By N/A (Print Name) GUARANTOR By N/A (Print Name) (Signature) (Signature) (Signature) (Signature) (Signature) DocuSign Envelope ID: 49EACEF4 - 5F55 - 45DF - B3B3 - EFD2DF278F71 4
Exhibit 10.9
First Electronic Bank Revolving Credit Agreement
MASTER REVOLVING CREDIT AGREEMENT
THIS MASTER REVOLVING CREDIT AGREEMENT
is effective as of the date of acceptance (the "Effective Date") by the approved borrower (the "Borrower") that has
requested First Electronic Bank and its successors and assigns (the "Lender") to provide a revolving credit facility to the
Borrower on the terms and conditions set forth herein.
PLEASE READ THIS AGREEMENT CAREFULLY. BY
ACCESSING OR USING ANY PART OF THE SITE WITH RESPECT TO LOANS TO BE PROVIDED UNDER THIS AGREEMENT, THE BORROWER ACKNOWLEDGES AND
AGREES THAT THE BORROWER HAS READ THIS AGREEMENT, THAT THE BORROWER UNDERSTANDS THIS AGREEMENT AND ITS TERMS AND CONDITIONS,
INCLUDING THE ARBITRATION AGREEMENT SET FORTH IN SECTION 9, AND THAT THE BORROWER AGREES TO BE BOUND LEGALLY BY THIS AGREEMENT AND
ITS TERMS AND CONDITIONS, INCLUDING THE AGREEMENT TO ARBITRATE CERTAIN DISPUTES. IF THE BORROWER DOES NOT AGREE WITH THE TERMS AND
CONDITIONS OF THIS AGREEMENT AND THE ARBITRATION AGREEMENT CONTAINED HEREIN, THE BORROWER IS NOT GRANTED PERMISSION BY THE LENDER TO
ACCESS OR OTHERWISE USE THE SITE OR RECEIVE LOANS UNDER THIS AGREEMENT.
RECITALS
A. The
Borrower has requested through the Borrower Dashboard that the Lender make a revolving credit facility available to the Borrower, and
the A. Lender has agreed to do so under certain terms and conditions.
B. The Borrower and the Lender desire
to set forth the mutually agreed upon terms and conditions of such revolving credit facility in this Agreement.
NOW, THEREFORE, in consideration of the
Recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties intending
to be legally bound agree as follows:
AGREEMENT
| 1. | 1. Definitions; Incorporation. |
| 1. | a. Definitions. As used in this Agreement, capitalized words and phrases will have the meanings
set forth in Section 10 or as otherwise provided in this Agreement. |
| 2. | b. Incorporation. Information regarding the Credit Limit and the Loans, including, without
limitation, the number of payments and the amount of any interest, fees and other charges, is set forth in the Borrower Dashboard (as
updated from time to time by the Lender, the "Loan Information"), and such Loan Information is incorporated into this
Agreement by reference and shall be a part of this Agreement for all purposes. Any and all references to this Agreement will include the
Loan Information. If there is a conflict or inconsistency between the terms of this Agreement and the Loan Information, the Loan Information
will control. |
| 2. | 2. The Revolving Credit Facility. |
| 1. | a. Lending Limit. On the terms and subject to the conditions set forth in this Agreement,
the Lender agrees that it shall establish a revolving credit facility in favor of the Borrower in an amount set forth in the Loan Information
(the "Revolving Credit Facility"). From time to time before the Maturity Date, Lender shall make one or
more advances under the Revolving Credit Facility (each, a "Loan" and collectively, the "Loans") in
aggregate outstanding amounts not to exceed, at any one time, the Credit Limit. Amounts borrowed under this Agreement and repaid may be
re-borrowed as provided in this Agreement. |
| 2. | b. Security. The Borrower hereby assigns, transfers, conveys, pledges, mortgages and grants
to the Lender a security interest and lien in any and all accounts, accounts receivable, chattel paper, contract rights, documents, equipment,
fixtures, general intangibles, goods, instruments, inventory, securities, deposit accounts, investment property and all other property
of whatever nature and kind, wherever located, in which the Borrower now or hereafter has any right or interest and in any and all cash
and non-cash proceeds (including rental proceeds, insurance proceeds, accounts and chattel paper arising out of or related to the sale,
use, rental or other disposition thereof) of and to all of the foregoing (collectively, "Collateral") to secure the prompt payment,
performance and fulfillment of this Agreement and all present and future indebtedness and obligations of the Borrower to the Lender. Without
limiting the foregoing, the Borrower grants the Lender a security interest in the Collateral to secure the Obligations. The Borrower hereby
authorizes the Lender to file one or more financing statements, and any other lien-related forms or documents relating to the Collateral,
from time to time as the Lender deems in its sole discretion appropriate, in any jurisdiction (and the Borrower shall execute any financing
statement or amendment thereto). The Borrower hereby irrevocably appoints the Lender as the true and lawful attorney-in-fact of the Borrower,
coupled with an interest, with full power in the Borrower’s name, place and stead to execute financing statements on the Borrower’s
behalf and to do any and all other acts on the Borrower’s behalf necessary or helpful to perfect and continue perfection of the
Lender’s security interest granted in the Collateral pursuant to the Uniform Commercial Code or other applicable law, including,
but not limited to, completing, as needed, and correcting, any errors and omissions concerning descriptions, serial numbers or other descriptive
information relating to the Collateral. |
| 3. | c. Calculation of Interest. Commencing on the date hereof and continuing until repayment in full
of all Loans, the unpaid principal balance of the Loans shall bear interest at a rate per annum equal to the Interest Rate as in effect
from time to time during the applicable calculation period for each Loan. Without limiting the generality of Section 8(b), upon
the occurrence of an Event of Default, the unpaid principal balance of the Loans shall also incur additional default charges as described
in Section 3(f) for so long as the Event of Default remains outstanding and uncured. |
| 4. | d. Payment of Principal and Interest. Any amount advanced under a Loan, and any
credit in respect thereof, shall be entered into the |
Borrower Dashboard. The Borrower shall
make timely payments of principal, interest and applicable fees and charges due under this Agreement on a weekly basis in fixed, equal
payment amounts, representing principal, interest and applicable fees and charges specified by the Lender for each Loan in the Loan Information
prior to the Borrower’s acceptance of each such Loan. The duration of the payments shall be agreed by the Borrower and Lender as
disclosed in the Loan Information. The Borrower shall make all such payments of principal, interest and applicable fees and charges in
accordance with procedures established by the Lender, as may be amended from time to time upon notice to the Borrower. Without limiting
the foregoing, the Borrower shall pay the outstanding principal amount and all accrued but unpaid interest (as calculated in accordance
with Section 2(c)) of each Loan on or before the applicable Maturity Date for each Loan. The Borrower may optionally repay any
portion of the Loans in accordance with Section 3(h) of this Agreement.
| 5. | e. Waiver of Presentment and Demand. The Borrower, for itself, its successors and assigns, hereby
waives diligence, presentment, protest, and demand and notice of protest, demand, dishonor, and nonpayment of any of the Loans. |
| 6. | f. Termination of Revolving Credit Facility. The Borrower may, at any time and
for any or no reason, advise the Lender in writing that the Borrower will no longer request Loans under this Agreement, and satisfy all
Obligations owing to the Lender by payment in full of all amounts outstanding under all Loans (which payment is Indefeasible). The Lender
may, at any time and for any or no reason, advise the Borrower in writing (including through the Borrower Dashboard) that the Lender will
not make any future Loans under this Agreement and Borrower shall satisfy all Obligations owing to the Lender by payment in full of all
amounts outstanding under all Loans (which payment is Indefeasible). If, for any reason, any portion of any payment to the Lender is set
aside or restored, whether voluntarily or involuntarily, then the Loan intended to be satisfied by that payment shall be revived and continued
in full force and effect as if the payment had not been made, and the Borrower shall be liable for the full amount the Lender is required
to repay plus any and all costs and expenses (including reasonable attorneys’ fees paid by the Lender in connection with any related
litigation or resolution of such claims). Any termination of this Agreement by the Borrower shall not affect the rights and obligations
of the parties which may exist before the effective date of such termination nor any rights and obligations that, by their nature, continue
after termination of this Agreement. |
| 3. | 3. Loan Advances, Use of Proceeds, and Payments. |
| 1. | a. Use of Proceeds. The proceeds of all Loans shall be utilized only for business or commercial
purposes in connection with Borrower’s business, including, without limitation, to fund documented Invoices issued by Borrower in
the course of providing goods and services to its customers, which Invoices have been approved by Lender through the Site ("Authorized
Advance"). Without limiting the foregoing, Borrower represents, warrants and covenants that the proceeds of the Loans will be
used exclusively for business or commercial purposes, and not for any personal, family or household purposes. |
| 2. | b. Loans. The Borrower may request Loans (a "Loan Request") in connection
with Authorized Advances by submitting an online request through the Borrower Dashboard for the principal amount of the Loan (each day
upon which the Borrower requests a Loan is hereinafter referred to as a "Loan Request Date"). |
| 3. | c. Disbursements. So long as (i) an Event of Default does not exist, (ii) the aggregate outstanding
balance of the Loans does not exceed the Credit Limit, (iii) the Lender has approved the Loan based on evidence provided by the Borrower
that the proceeds of the Loan will be used in compliance with this Agreement, (iv) all conditions to making Loans set forth in Section
4 of this Agreement have been met, and (v) the Lender has not terminated its commitment to fund Loans, the Lender shall disburse a
Loan pursuant to a Loan Request made by the Borrower in accordance with Section 3(b). Any request made after 1pm Pacific Time on
a Business Day may not be disbursed until the next Business Day. Any disbursement by the Lender of a Loan shall not be deemed to mean
that the Borrower has complied with its Obligations hereunder in respect of such Loan or otherwise. The Lender shall transfer the proceeds
of any Loan provided by the Lender into the designated bank account established by the Borrower and approved by the Lender through the
Site. |
| 4. | d. Nature and Place of Payments. All payments made on account of the Loans shall be automatically
debited from the Borrower’s designated bank account via Automated Clearing House (ACH) pursuant to a valid authorization by the
Borrower, without setoff or counterclaim in lawful money of the United States in the form of electronic deposits in immediately available
funds into the Lender’s designated Payment Account or as the Lender may otherwise direct, free and clear of and without deduction
for any taxes (except as required by law), fees, or other charges of any nature whatsoever imposed by any taxing authority. On the applicable
Maturity Date, the Lender shall automatically debit all outstanding amounts via ACH pursuant to such valid authorization by the Borrower.
Any payment received after 1pm Pacific Time on a Business Day by the Lender will be considered to have been made by the Borrower on the
next succeeding Business Day and, at the election of the Lender, interest thereon shall be payable by the Borrower at the Interest Rate
during such extension. If any payment required to be made by the Borrower under this Agreement becomes due and payable on a day other
than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, at the election of the Lender, interest
thereon shall be payable at the then applicable rate during such extension. The Borrower acknowledges and agrees that it shall not have
access to the Payment Account and that all proceeds made or transferred to the Payment Account shall be applied to the Obligations of
Borrower. |
| 5. | e. Payment Application. The Lender may apply all sums received to the payment of
principal, interest and other fees and charges on the Loans in such order and with such priority as the Lender may determine within its
sole discretion, unless otherwise required by law. The Borrower agrees that each Loan and the Lender’s related records shall be
conclusive evidence of the Loans with respect to the Borrower that may be owed to the Lender at any time, absent manifest error. |
| 6. | f. Postmaturity Interest. During the continuation of any Event of Default, any Loans not
paid when due (whether at stated maturity, upon acceleration or otherwise) shall incur additional transaction and advance fees as set
forth in the Loan Information. |
| 7. | g. Computations. All computations of interest payable under this Agreement shall be based
upon a year of 360 days for the actual number of days elapsed. |
| 8. | h. Prepayments. The Borrower may prepay Loans under this Agreement in whole or
in part at any time upon written notice to the Lender. The Borrower shall pay in connection with any prepayment under this Agreement all
interest accrued but unpaid on Loans and other fees and charges to which such prepayment is applied, concurrently with payment to the
Lender of any principal amounts, as set forth in the Loan Information. |
| 9. | i. Guaranty. If requested by the Lender as support for the Loans, the Borrower will cause
to be executed and delivered to the Lender a guaranty in form and substance satisfactory to the Lender (a "Guaranty")
by each Guarantor. |
| 4. | 4. Conditions to Making Loans. |
1. a. First Loan. The
first Loan shall be limited to the amount set forth in the Loan Information in the Borrower Dashboard. As conditions precedent to the
Lender’s obligation to make the first Loan under this Agreement, at and as of the date of the funding thereof:
| 1. | i. Delivery of Documents by Borrower. The Borrower shall have delivered electronically
to the Lender, in form and substance satisfactory to the Lender and its counsel a duly executed copy of this Agreement in accordance with
Section 9(i) of this Agreement; |
| 2. | ii. Delivery of Documents by Guarantors. If requested by the Lender pursuant to
Section 3(i), each Guarantor shall have delivered or shall have had delivered to the Lender, in form and substance satisfactory
to the Lender and its counsel, a duly executed Guaranty; |
| 3. | iii. Additional Information. The Borrower shall have delivered or shall have had delivered to
the Lender, in such form and substance as is satisfactory to the Lender and its counsel, such authorizations and information concerning
the Borrower and its business, operations, and condition (financial and otherwise), as the Lender may request; |
| 4. | iv. Documents Enforceable. All acts and conditions (including, the obtaining of any necessary
regulatory approvals and the making of any required filings, recordings, or registrations) required to be done and performed and to have
happened precedent to the execution, delivery, and performance of the Loan Documents and to constitute the same legal, valid, and binding
obligations, enforceable in accordance with their respective terms, shall have been done and performed and shall have happened in due
and strict compliance with all applicable laws; and |
| 5. | v. Documents Satisfactory to Lender. All documentation, including documentation for organizational
and legal proceedings in connection with the transactions contemplated by the Loan Documents shall be satisfactory in form and substance
to Lender and its counsel. |
2. b. All Loans. As conditions
precedent to the Lender’s obligation to make any Loan under this Agreement (including, the first Loan), at and as of the date of
the funding thereof:
| 1. | i. The representations and warranties of the Borrower contained in the Loan Documents shall be accurate
and complete; |
| 2. | ii. There shall not have occurred an Event of Default or Potential Default; |
| 3. | iii. Following the making of such Loan, the aggregate principal amount of Loans outstanding will not
exceed the Credit Limit; and |
| 4. | iv. The Lender shall not have terminated its commitment to make Loans. |
3. c. Loan Stacking Prohibited.
The Lender prohibits "loan stacking", which means any series of transactions occurring within a ninety(90-) day period, during
which Obligations under the Agreement are outstanding, in which the Borrower maintains loans from three or more lenders in addition to
the Lender, unless the Lender has given prior written consent to the Borrower to exceed such number of loans. The Borrower acknowledges
and agrees that any occurrence of loan stacking as defined in this Section 4(c) shall be an Event of Default under the Agreement,
and Lender, at its option, shall have the right thereafter to cease making Loans under the Agreement, and to declare
an Event of Default as to all outstanding
Loans, which shall then become immediately due and payable, without demand or presentment to the Borrower, which are expressly waived
by the Borrower. Without limiting the foregoing, the Lender may immediately exercise all rights, powers and remedies available to it under
the Agreement, at law, in equity or otherwise. The Lender reserves the right to change the loan stacking policy set forth in this Section
4(c) with respect to any Loan Request by including the updated policy in the Loan Information in the Borrower Dashboard.
| 5. | 5. Representations and Warranties of the Borrower. |
As an inducement to the Lender to enter
into this Agreement and to make Loans as provided in this Agreement, the Borrower represents and warrants to the Lender that:
| 1. | a. Financial Condition. The Borrower (i) is solvent, (ii) is adequately capitalized, (iii) has
not incurred Indebtedness that would be beyond its ability to pay as such debts mature, and (iv) will not be rendered insolvent nor left
with unreasonably small capital as a result of the Obligations or performance of the terms under this Agreement. |
| 2. | b. Valid Existence; Compliance with Law. The Borrower (i) is duly organized, validly
existing, and in good standing under the laws of its jurisdiction of organization and is qualified to do business in each jurisdiction
where its ownership of property or conduct of business requires such qualification and where failure to qualify would have a material
adverse effect on the Borrower or its property and/or business or on the ability of the Borrower to pay or perform the Obligations, (ii)
has the power and authority and the legal right to own and operate its property and to conduct business in the manner in which it does
and proposes so to do, and (iii) is in compliance with all Requirements of Law (including, securities laws) and Contractual Obligations. |
| 3. | c. Authorization; Enforceable Obligations. The Borrower has the power and authority
and the legal right to execute, deliver, and perform the Loan Documents to which it is a party and has taken all necessary organizational
action to authorize the execution, delivery, and performance of the Loan Documents. The Loan Documents have been duly executed and delivered
on behalf of the Borrower and constitute the legal, valid, and binding obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms, subject to the effect of applicable bankruptcy and other similar laws affecting the rights of
creditors generally and the effect of equitable principles whether applied in an action at law or a suit in equity. |
| 4. | d. No Legal Bar. The execution, delivery, and performance of the Loan Documents, the borrowings
under this Agreement and the use of the proceeds thereof, will not violate any Requirement of Law or any material Contractual Obligation
of the Borrower. |
| 5. | e. No Material Litigation. No litigation, investigation, or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, threatened by or against the Borrower or against
its properties or revenues that is likely to be adversely determined and that, if adversely determined, is likely to have a material adverse
effect on the business, operations, property, or financial or other condition of the Borrower. |
| 6. | f. Taxes. The Borrower has filed or caused to be filed all tax returns that are required to be
filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property
other than taxes that are being contested in good faith by appropriate proceedings and as to which the Borrower has established adequate
reserves in conformity with GAAP. |
| 7. | g. Consents, etc. No consent, approval, authorization of, or registration, declaration
or filing with any governmental authority is required on the part of the Borrower in connection with the execution and delivery of the
Loan Documents or the performance of or compliance with the terms, provisions, and conditions hereof or thereof except those consents,
approvals, authorizations, registrations, declarations and/or filings, which have been obtained, granted or completed, as applicable. |
| 8. | h. Insurance. The business and properties of the Borrower are insured with financially sound
and reputable insurance companies (which are not Affiliates) reasonably acceptable to Lender, in such amounts, with such deductibles,
and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities
where the Borrower operates. As of the date hereof, all of Borrower’s insurance coverages are in full force and effect and all premiums
therefor have been duly paid. |
| 9. | i. Full Disclosure. None of the representations or warranties made by the Borrower in the Loan
Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in the exhibits,
reports, statements, certificates and other information furnished by or on behalf of the Borrower in connection with the Loan Documents,
taken as a whole, contains as of the delivery thereof any untrue statement of a material fact or omits or will omit any material fact
necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time
when made or delivered. |
1. 6. Affirmative Covenants.
The Borrower covenants and agrees with
the Lender that, as long as any Obligations (other than contingent, unmatured Obligations arising under provisions of this Agreement that
expressly survive termination) remain unpaid or the Lender has any obligation to make Loans under this Agreement, the Borrower shall:
| 1. | a. Payment of Indebtedness. Pay, discharge, or otherwise satisfy at or before maturity
or before it becomes delinquent, defaulted, or accelerated, as the case may be, all its Indebtedness (including taxes), except Indebtedness
being contested in good faith and for which provision is made to the satisfaction of the Lender for the payment thereof in the event the
Borrower is found to be obligated to pay such Indebtedness and which Indebtedness is thereupon promptly paid by the Borrower. |
| 2. | b. Maintenance of Existence and Properties; Compliance. Maintain its organizational
existence and maintain all rights, privileges, licenses, approvals, franchises, properties, and assets necessary or desirable in the normal
conduct of its business, and comply with all Contractual Obligations and Requirements of Law. |
| 3. | c. Books and Records. Keep proper books of record and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business
and activities. |
| 4. | d. Notices. Promptly give written notice to the Lender of: |
| 1. | i. The occurrence of any Potential Default or Event of Default; |
| 2. | ii. Any litigation or proceeding affecting the Borrower that could have a material adverse effect on
the business, operations, property, or financial or other condition of the Borrower; and |
| 3. | iii. A material adverse change in the business, operations, property or financial or other condition
of the Borrower. |
| 5. | e. Expenses. Pay all reasonable out-of-pocket expenses (including fees and disbursements
of counsel) of the Lender incident to the enforcement of payment of the Loans, whether by judicial proceedings or otherwise, and before
as well as after judgment including, in connection with bankruptcy, insolvency, liquidation, reorganization, moratorium, or other similar
proceedings involving the Borrower or a "workout" of the Loans. The obligations of the Borrower under this Section 6(e)
shall be effective and enforceable whether or not any Loan is made under this Agreement and shall survive payment of all other Obligations. |
| 6. | f. Insurance. Maintain with financially sound and reputable insurance companies insurance on
all such property and against all such risks as is consistent and in accordance with industry practice for companies similarly situated
owning similar properties and engaged in similar businesses as the Borrower. |
| 7. | g. Indemnification. Indemnify, defend, and hold harmless the Lender and each of its officers
and other employees, representatives, and agents (each, an "Indemnified Party") from and against any and all claims,
obligations, penalties, actions, suits, judgments, reasonable costs and disbursements, losses and liabilities (including, reasonable attorneys’
fees) of any kind whatsoever (collectively and severally, "Claims") that may at any time be imposed on, assessed against,
or incurred by such Indemnified Party in any way relating to or arising out of the Loan Documents or the transactions contemplated thereby
or any action taken or omitted to be taken by such Indemnified Party in connection with the foregoing; provided, however, that the Borrower
shall not be liable for any portion of any Claims arising out of or resulting from the gross negligence or willful misconduct of such
Indemnified Party. The indemnification obligations of the Borrower under this Agreement shall survive termination of this Agreement and
payment in full of the Obligations. |
| 8. | h. Further Assurances. Promptly on request by the Lender, do, execute, acknowledge, deliver,
record, re-record, file, re-file, register, and re-register any and all such further acts as the Lender may require from time to time
in order to (i) carry out more effectively the purposes of this Agreement or any other Loan Document, and (ii) assure, preserve, protect,
and confirm to the Lender the rights granted or now or hereafter intended to be granted to the Lender under any of the Loan Documents. |
1. 7. Negative Covenants
The Borrower hereby agrees that, as long
as any Obligations (other than contingent, unmatured Obligations arising under provisions of this
Agreement that expressly survive termination)
remain unpaid or the Lender has any obligation to make Loans under this Agreement, the Borrower shall not, directly or indirectly:
| 1. | a. Consolidation and Merger. Except with the consent of the Lender, liquidate or dissolve
or enter into any consolidation, merger or other combination unless the Borrower is the sole survivor thereof; have or experience any
change-in-control. |
| 2. | b. Consolidated Shareholders' Equity. The Borrower shall not permit or suffer Consolidated
Shareholders’ Equity to be less than U.S. $1.00 as of any time of determination. |
1. 8. Events of Default
1. a. Events of Default.
Any of the following events is an Event of Default:
| 1. | i. The Borrower shall fail to pay within three (3) Business Days of the date when due, as set forth
in the Loan Information for each Loan Request as indicated in the Borrower Dashboard, any installment payment on the Loans, fail to make
any payment necessary to ensure the Credit Limit is not exceeded, or fail to pay within three (3) Business Days of the date when due any
other Obligations under the Loan Documents; |
| 2. | ii. Any representation or warranty made by the Borrower in any Loan Document or in connection with any
Loan Document shall be inaccurate on or as of the date made and, if capable of being cured, shall remain uncured for five (5) Business
Days; |
| 3. | iii. The Borrower shall fail to maintain its organizational existence or shall default in the observance
or performance of any covenant or agreement contained in Section 7; |
| 4. | iv. The Borrower shall fail to observe or perform any other term or provision contained in the Loan
Documents and such failure shall continue for ten (10) Business Days; |
| 5. | v. The Borrower or any Guarantor shall default in any payment of principal of or interest on any Indebtedness
(other than the Loans) or any other event shall occur, the effect of which is to permit (A) any Indebtedness to be declared or otherwise
become due prior to its stated maturity, or (B) permit the holder or any Person on its behalf to cause any Indebtedness to be declared
or otherwise become due, or to require prepayment, repurchase, redemption or defeasance thereof, prior to its stated maturity; |
| 6. | vi. (A) The Borrower or the Guarantor, shall commence any case, proceeding or other action (I) under
any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, or relief of
debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition, or other relief with respect to it or its
debts, or (II) seeking appointment of a receiver, trustee, custodian, or other similar official for it or for all or any substantial part
of its assets, or the Borrower or the Guarantor shall make a general assignment for the benefit of its creditors; (B) there shall be commenced
against the Borrower or the Guarantor, any case, proceeding or other action of a nature referred to previously in clause (A) that (I)
results in the entry of an order for relief or any such adjudication or appointment or (II) remains undismissed, undischarged, or unbonded
for a period of sixty (60) days; (C) there shall be commenced against the Borrower or any Guarantor, any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint, or similar process against all or substantially all of its assets that
results in the entry of an order for any such relief that shall not have been vacated, discharged, stayed, satisfied, or bonded pending
appeal within sixty (60) days from the entry thereof; (D) the Borrower or the Guarantor, shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in (other than in connection with a final settlement), any of the acts set forth in clause
(A) or (B) above; or (E) the Borrower or the Guarantor shall generally not, or shall be unable to, or shall admit in writing, its inability
to pay its debts as they become due; or |
| 7. | vii. The Guarantor shall fail to observe or comply with any term or condition of the Guaranty, including
any failure to make any payment under the Guaranty, or shall attempt to rescind or revoke the Guaranty, with respect to future transactions
or otherwise. |
2. b. Upon Default.
Automatically upon the occurrence of an Event of Default under Section 8(a)(vi), and at the option of the Lender upon the
occurrence of any other Event of Default, the Lender’s obligation to make Loans shall terminate and the Loans shall become immediately
due and payable, without demand upon or presentment to the Borrower, which are expressly waived by the Borrower, and the Lender may immediately
exercise all rights, powers, and remedies available to it at law, in equity or otherwise. The Borrower agrees to pay all collection expenses,
court costs, and reasonable attorneys’ fees and disbursements (whether or not a lawsuit or arbitration is commenced) of Lender that
may be incurred in connection with the collection or enforcement of all or any part of the Obligations.
2. 9. Additional Miscellaneous Provisions
| 1. | a. No Assignment. The Borrower may not assign, delegate or otherwise transfer its rights
or obligations under this Agreement without the prior written consent of the Lender. Any purported assignment, delegation or transfer
by the Borrower in violation of the previous sentence shall be automatically deemed null and void. Subject to the foregoing, all provisions
contained in this Agreement or any document or agreement referred to in this Agreement or relating to this Agreement shall inure to the
benefit of the Lender, its successors and assigns, and shall be binding upon the Borrower, its successors and assigns. |
| 2. | b. Amendment; No Waiver. This Agreement may only be amended by a writing signed by the
parties hereto, or by an electronic record that has been electronically signed by the parties hereto and has been rendered tamper-evident
as part of the signing process, including through the Borrower Dashboard. The exchange of email or other electronic communications discussing
an amendment to this Agreement, even if such communications
are signed, does not constitute a signed electronic record agreeing to such an amendment. It is expressly agreed and understood that the
failure by the Lender to elect to accelerate amounts outstanding under this Agreement and/or to terminate the obligation of the Lender
to make Loans under this Agreement shall not constitute an amendment or waiver of any term or provision of this Agreement or any other
Loan Document. No delay or failure by the Lender to exercise any right, power, or remedy shall constitute a waiver thereof by the Lender,
and no single or partial exercise by the Lender of any right, power, or remedy shall preclude other or further exercise thereof or any
exercise of any other rights, powers, or remedies. |
| 3. | c. Cumulative Rights. The rights, powers, and remedies of the Lender under this Agreement
are cumulative and in addition to all rights, powers, and remedies provided under any and all agreements between the Borrower and the
Lender relating to this Agreement, at law, in equity or otherwise. |
| 4. | d. Entire Agreement. This Agreement and the documents and agreements referred to in this
Agreement embody the entire agreement and understanding between the parties to this Agreement with respect to the subject matter hereof
and supersede all prior agreements and understandings relating to the same or similar subject matter. |
| 5. | e. Survival. This Agreement shall terminate as of the termination of the Lender’s commitment
to fund Loans. Section 5 and Section 6(g) of this Agreement, together with any other provisions of this Agreement necessary
to interpret or to enforce the provisions therein, shall survive the termination of this Agreement. |
| 6. | f. Notices. All notices required under this Agreement and other information concerning this Agreement
("Communications") shall be personally delivered or sent by first class mail, postage prepaid, or by overnight courier. In addition,
the Lender may, in its sole discretion, send such Communications to the Borrower electronically in the manner described in this Section. |
Such Communications sent by personal delivery,
mail or overnight courier will be sent to the addresses on the signature page of this Agreement, or to such other addresses as the Lender
and the Borrower may specify from time to time in writing. Communications shall be effective (i) if mailed, upon the earlier of receipt
or five (5) days after deposit in the U.S. mail, first class, postage prepaid, or (ii) if hand-delivered, by courier or otherwise (including
telegram, lettergram or mailgram), when delivered.
Such Communications may be sent
electronically by the Lender to the Borrower (i) by transmitting the Communication to the electronic address provided by the
Borrower or to such other electronic address as the Borrower may specify from time to time in writing, (ii) by posting the
Communication on a website and sending the Borrower a notice to the Borrower’s postal address or electronic address telling
the Borrower that the Communication has been posted, its location, and providing instructions on how to view it, or (iii) by posting
the Communication on the Borrower Dashboard. Communications sent electronically to the Borrower will be effective when the
Communication, or a notice advising of its posting to a website, is sent to the Borrower’s electronic address.
1. g. Arbitration Agreement.
| 1. | i. Consent to Arbitrate Disputes. Except as expressly excluded by this Section 9(g)
(this "Arbitration Agreement"), by clicking "Draw Funds" on the Borrower’s Dashboard or by accessing
or using any part of the Site with respect to Loans to be provided under this Agreement, the Borrower acknowledges and agrees that, at
the election of either the Borrower or the Lender, any Dispute will be resolved in accordance with the arbitration agreement set forth
in this Section 9(g). As used in this Agreement, the term "Dispute" is to be given the broadest possible meaning,
and includes without limitation disputes arising from or relating to (A) this Agreement, including without limitation, the terms, construction,
interpretation, performance, termination, breach, or enforceability of this Agreement, (B) any transactions effected pursuant to this
Agreement, (C) the terms of or change or addition of terms to this Agreement, (D) the collection or enforcement of any obligation arising
from this Agreement, (E) advertisements, promotions, or oral or written statements relating to this Agreement or any transactions between
us pursuant to this Agreement, (F) disputes between Borrower and Guarantor (if any) and Lender or Lender’s parent corporations,
and (G) disputes regarding the "making" (9 U.S.C. § 4), validity, enforceability, or scope of this agreement to arbitrate
or this Agreement, including but not limited to whether a given claim or dispute is subject to arbitration. The term "Dispute"
extends to and includes claims the Borrower asserts against the Lender that arose before the existence of this Agreement and the Borrower’s
claims arising out of or relating to this Agreement that arise after termination of this Agreement. The Borrower acknowledges and agrees
that if the Lender or the Borrower elects to arbitrate a Dispute (I) the Dispute will be resolved by an arbitrator on an individual basis
and not by a judge and jury, (II) the Borrower and the Lender will be limiting or foregoing rights that might otherwise exist in court
under applicable rules of evidence or civil procedure, (III) the Borrower and the Lender will be giving up their respective right to appeal
from the arbitrator’s decision regarding the Dispute, (IV) the Dispute will be resolved only on an individual basis and that the
Borrower will not be able to bring or participate as a representative plaintiff or class member in a class action with respect to any
Dispute, (V) the Borrower will not be able to arbitrate any Dispute in a private attorney general or other representative capacity, and
(VI) the arbitrator will have no authority to hear a class or representative action, or to join or consolidate a Dispute with that of
any other borrower. |
| 2. | ii. For purposes of this arbitration agreement, references to the Borrower and the Lender also include
their respective Affiliates, agents, employees, predecessors, successors and assigns, as well as authorized users or beneficiaries of
the Lender’s services. |
| 3. | iii. Exclusions. Either the Lender or the Borrower may file a motion, petition, complaint, counterclaim,
or cross-complaint or crosspetition in a court of competent jurisdiction in the state of Borrowers’ residence and each Party consents
to the jurisdiction of these courts: |
| 1. | (A) To enforce the arbitration provisions of this Section 9(g); |
| 2. | (B) To obtain monetary relief, or to foreclose on a lien or other security interest, solely on an individual
(not class action or representative) basis in an amount less than $25,000; |
| 3. | (C) To seek equitable remedies on a provisional basis pending arbitration; such equitable remedies shall
remain in place until the later of such time as the arbitrator’s award entering preliminary or permanent injunctive relief (or dissolving
or modifying a court-entered injunction) is (I) confirmed, or (II) the time for bringing a motion to confirm the arbitral award has expired
without a motion or petition for confirmation having been timely filed; or |
| 4. | (D) If the Borrower is a California resident and a Dispute involves a claim for public injunctive relief
under California law, the Borrower may bring that claim in court. If the Borrower brings that claim in court, the Borrower agrees that
the Lender may treat such a claim as a Dispute within the meaning of this Section 9(g) and that the Lender would then have the
right to elect arbitration, and if the Borrower refuses its demand, to move to enforce arbitration in accordance with the terms of this
Section 9(g) pursuant to the Federal Arbitration Act, 9 U.S.C. §§1 et seq. (the "FAA"). If the Lender
brings and loses that motion, the Borrower’s claim for public injunctive relief will be heard in court, but the Borrower agrees
to stay its claim in court for public injunctive relief pending (I) exhaustion of the Lender’s right to appeal in court from the
ruling against it, and (II) completion of arbitration of all other Disputes. If the Lender wins its motion, the Borrower’s claim
for injunctive relief will be decided in arbitration in accordance with the terms of this Section 9(g), meaning that the arbitrator
can award only such injunctive relief as is necessary to remedy the Borrower’s own alleged injury or to prevent future injury to
the Borrower alone. |
| 4. | iv. For the avoidance of doubt, if either party asserts in any way a claim or Dispute other than those
set out in Section 9 (g)(iii), the other party still may elect arbitration of these other claims or Disputes. In addition,
if Borrower, Guarantor or Lender files a Dispute in court, such action is not deemed to be a waiver of the right to compel arbitration
of any counterclaims, cross-claims, or separate claims that may be asserted. |
| 5. | v. Law Governing Agreement to Arbitrate. The Borrower acknowledges and agrees that
this Agreement evidences a transaction in interstate commerce. Accordingly, the agreement to arbitrate set forth in this Section 9(g)
is governed by the FAA, and not by any state law governing consolidation or joinder of parties or claims, the arbitrability of claims,
or the enforcement of class action or jury trial waivers |
| 6. | vi. Arbitration Procedure. |
| 1. | (A) How to elect arbitration of a dispute. The Borrower or the Lender may elect arbitration
by providing written notice to the other in accordance with Section 9(f). |
| 2. | (B) Number of arbitrators. All Disputes shall be resolved by a single arbitrator who shall be
a retired judge selected by the parties. |
| 3. | (C) Administration of arbitration. The arbitration shall be administered by JAMS and the arbitration
shall be conducted in accordance with the JAMS Streamlined Arbitration Rules & Procedures except as otherwise agreed in this Agreement.
If JAMS is unavailable to administer the arbitration, then the arbitration shall be administered by (I) the American Arbitration Association
("AAA") under its Commercial Arbitration Rules or (II) such other administrator as the parties agree to or, in the absence
of agreement, (III) as selected by a court. If the parties cannot agree upon an arbitrator, the arbitration administrator will select
a retired judge to serve as an arbitrator. JAMS or AAA may be contacted as follows: JAMS (18881 Von Karman Ave., Suite 350, Irvine, CA
92612, 1-800-352-5267, www.jamsadr.com); American Arbitration Association (120 Broadway, Floor 21, New York, NY 10271, 1-800-778-7879,
www.adr.org). The administrator’s rules are posted online. You should read these rules carefully. |
| 4. | (D) Location of arbitration. Any arbitration hearing will occur in the Borrower’s state
of residence at a place determined in accordance with the administrator’s rules. However, the Borrower and the Lender agree that
the arbitrator is authorized, in his or her discretion, to conduct special hearings at any other place for the purpose of receiving evidence that would otherwise be unavailable at the situs of the arbitration
and that the place for the special hearing selected by the arbitrator shall also be deemed a place where the arbitrator or "[is]
sitting" for purposes of Section 7 of the FAA. The Borrower and the Lender further agree that the arbitrator or any party may attend
any hearing electronically, and that the electronic, adjudicative (as opposed to physical) presence of the arbitrator at the hearing satisfies
the "[is] sitting" requirement of Section 7 of the FAA. To the extent permitted by applicable local law, the arbitrator is authorized
to conduct special hearings outside the United States to receive evidence not otherwise available within the United States. The Borrower
and the Lender agree that the arbitrator may appear and preside telephonically or electronically at such hearings and that any party may
also appear and participate telephonically or electronically. If the value of the relief sought is $10,000 or less, the Borrower or the
Lender may elect to have the arbitration conducted by telephone or based solely on written submissions, which election shall be binding
on the Borrower and the Lender subject to the arbitrator’s discretion to require an in-person hearing, if the circumstances warrant. |
| 5. | (E) Law to be applied by the arbitrator to resolve disputes in arbitration.
As provided in sub-section (v) of this Arbitration Agreement, the arbitrator shall apply the FAA to all questions arising under the FAA.
Subject to and to the extent not preempted by the FAA, the terms of this Arbitration Agreement, the rules of the administrator, and the
law of the State of Utah (without reference to its choice of law rules) shall be applied (in the foregoing order of priority) by the arbitrator
as the rule of decision in arbitration to issues that would be governed by state law if the Dispute were heard in court instead of in
arbitration; likewise, the arbitrator shall apply federal law to all questions of federal law that arise in arbitration. However, the
arbitrator shall not be bound by rulings in prior arbitrations or court proceedings involving different borrowers or users of the Lender’s
services. |
| 6. | (F) Authority of arbitrator. Subject to all applicable limitations of liability including
those set forth in Section 9(o), which shall be enforced by the arbitrator, the arbitrator is authorized to award remedies that would
be available on an individual basis if the action were heard in a court. The arbitrators shall honor claims of privilege in accordance
with federal law, if a federal claim is at issue, or applicable state law, if a claim governed by state law or foreign law is at issue.
The arbitrator shall apply applicable statutes of limitations. The arbitrators shall hear Motions to Dismiss or their equivalent and Motions
for Summary Judgment. The arbitrators shall determine such motions under Rules 12 and 56 of the Federal Rules of Civil Procedure (or their
equivalents if superseded) and case law construing these rules governing at the time of decision. Unless otherwise agreed by the parties,
a motion to dismiss shall be filed no later than the 60th day following the appointment of the arbitrator and heard by the arbitrator
within 30 days thereafter. The arbitrator shall rule on any motion to dismiss within 15 days of the hearing date on such motion. If the
arbitrator allows an amended pleading, then the opposing party shall have an opportunity to move to dismiss any amended pleading. A party
shall be entitled to bring a motion or motions for summary judgment at any point after the 60th day following notice of an election to
arbitrate and any such motion or motions shall be heard and determined no later than 4 weeks prior to the date of any evidentiary hearing
in the matter. The arbitrator has no authority to (i) certify a class, (ii) conduct a classwide arbitration, (iii) hear claims brought
in a representative or private attorney general capacity, or (iv) join or consolidate a Dispute (or the hearing respecting a Dispute)
with claims of persons other than the Borrower, the Lender, or their respective Affiliates, agents, employees, predecessors, successors
and assigns as well as authorized users or beneficiaries under this Agreement of Lender’s services. The arbitrator may award relief
(including monetary, injunctive, and declaratory relief) only in favor of the individual party seeking relief and only to the extent necessary
to remedy the party’s individual injury or to prevent future injury to that party alone; any relief awarded cannot affect other
borrowers or other users of the Lender’s services. |
| 7. | (G) Arbitral award and enforcement thereof. The arbitrator’s award shall be in writing
and shall provide a brief explanation of the arbitrator’s findings of fact and conclusions of law. The arbitrator’s award
shall be final and binding, and judgment on the award rendered by the arbitrator may be entered and/or confirmed in any court having jurisdiction. |
| 8. | (H) Additional Conditions. If any portion of this Arbitration Agreement cannot be enforced, the
unenforceable portion will be severed and the rest of this Section 9(g) will continue to apply. However, if (i) it is finally determined
that the class action waiver contained in this Section 9(g) cannot be enforced, or (ii) the arbitrator (contrary to this Section
9(g)) purports to decide a Dispute on a class or other representative basis, or to award injunctive relief that extends beyond that
necessary to remedy the Borrower’s own individual alleged injuries or to prevent future harm to the Borrower alone, then only this
sentence will apply and the remainder of this Arbitration Agreement will be void. In no event will a claim for class relief (or for injunctive
relief extending beyond the Borrower’s own individual alleged injuries or to prevent future harm to the Borrower alone) be arbitrated. |
| 9. | (I) Survival. The Borrower acknowledges and agrees that the arbitration agreement set forth in
this Section 9(g) survives termination of this Agreement to the extent provided herein. |
| 2. | h. Transfers. The Borrower acknowledges that the Lender may elect to sell, assign, and otherwise
transfer to other Persons (each, a "Transferee") all or portions of, and participations in, the Lender’s interest
in Loans outstanding (and its commitment to make Loans) under this Agreement from time to time and expressly agrees that the holder of
any Loans or interest in this Agreement (or commitment to make Loans under this Agreement) shall be a "Lender" under this Agreement.
The Borrower agrees to execute and deliver to the Lender such documents, instruments, and agreements, including amendments to the Loan
Documents, deemed necessary or desirable by the Lender to effectuate transfers pursuant to this Section 9(h). |
| 3. | i. Electronic Documents; Counterparts. Electronic records and signatures may be
used in connection with the execution of this Agreement and the Loans Documents, in the Lender’s discretion. This Agreement and
the Loan Documents may be executed in as many counterparts as necessary or convenient, including both counterparts that are executed on
paper and counterparts that are electronic records and executed electronically, and by the different parties on separate counterparts
each of which, when so executed, (and any copy of an executed counterpart that is an electronic record) shall be deemed an original but
all such counterparts shall constitute but one and the same document. Delivery of a manually executed paper counterpart of this Agreement
(or of any Loan Document or other agreement or document required by this Agreement and any amendment to this Agreement) by telecopy or
other electronic imaging means shall be as effective as delivery of such manually executed paper counterpart; provided, however, that
the telecopy or other electronic image shall be promptly followed by a manually executed paper original if required by the Lender. |
| 4. | j. Accounting Terms. All accounting terms not otherwise defined in this Agreement are
used with the meanings given such terms under |
GAAP.
| 5. | k. Payments Set Aside. To the extent that the Borrower makes a payment or payments to
the Lender or the Lender exercises its rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to
any settlement entered into by the Lender in its discretion) to be repaid to a trustee, receiver, or any other party in connection with
any insolvency proceeding, or otherwise, then to the extent of such recovery 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. |
| 6. | l. Setoff. In addition to any rights and remedies of the Lender provided by law and to the extent
fully permitted by law, if an Event of Default exists, the Lender is authorized at any time and from time to time, without prior notice
to the Borrower, any such notice being waived by the Borrower (if permitted by law), to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing to, the Lender to or for
the credit or the account of the Borrower against any and all Obligations owing to the Lender, now or hereafter existing, irrespective
of whether or not the Lender shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent
or unmatured. The Lender agrees promptly to notify the Borrower after any such setoff and application made by the Lender; provided, however,
that the failure to give such notice shall not affect the validity of such setoff and application. |
| 7. | m. Severability. Subject to Section 9(g), the illegality or unenforceability of any provision
of this Agreement or any other Loan Document or any instrument or agreement required under this Agreement shall not in any way affect
or impair the legality or enforceability of the remaining provisions hereof or thereof. |
| 8. | n. No Third Parties Benefited. This Agreement and the other Loan Documents are made and entered
into for the sole protection and legal benefit of the Borrower and the Lender, and their permitted successors and assigns, and no other
Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with,
this Agreement or any of the other Loan Documents. The Lender has no obligation to any Person not a party to this Agreement or other Loan
Documents. |
| 9. | o. Limitation of Liability. THE LENDER SHALL NOT BE LIABLE FOR INDIRECT, SPECIAL,
CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES DAMAGES OF THE BORROWER, INCLUDING BUT NOT LIMITED TO LOST PROFITS, LOSS OF DATA, LACK
OR LOSS OF PRODUCTIVITY, COST OF SUBSTITUTE EQUIPMENT, SERVICES, OR DOWNTIME COSTS EXCEPT THOSE WHICH ARISE PURSUANT TO THE
LENDER’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH CLAIM IN ADVANCE.
|
| 10. | p. Warranty Disclaimer. THE SITE AND ALL SERVICES ON THE SITE
ARE PROVIDED ON AN "AS IS" AND "AS AVAILABLE" BASIS, AND WITHOUT WARRANTIES OF ANY KIND EITHER EXPRESS OR IMPLIED.
LENDER HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, AND THOSE ARISING BY STATUTE OR FROM A COURSE OF DEALING OR USAGE OF TRADE. LENDER
DOES NOT GUARANTEE THAT THE SITE OR ANY SERVICE ON THE SITE WILL BE FREE OF BUGS, SECURITY BREACHES, OR VIRUS ATTACKS. THE SITE AND SERVICES
MAY OCCASIONALLY BE UNAVAILABLE FOR ROUTINE MAINTENANCE, UPGRADING, OR OTHER REASONS. THE BORROWER AGREES THAT THE LENDER WILL NOT BE
HELD RESPONSIBLE FOR ANY CONSEQUENCES TO THE BORROWER OR ANY THIRD PARTY THAT MAY RESULT FROM TECHNICAL PROBLEMS OF THE INTERNET, SLOW
CONNECTIONS, TRAFFIC CONGESTION OR OVERLOAD OF THE LENDER’S OR OTHER SERVERS. EXCEPT AS EXPRESSLY STATED IN THE LENDER’S
PRIVACY POLICY, THE LENDER DOES NOT MAKE ANY REPRESENTATIONS, WARRANTIES OR CONDITIONS OF ANY KIND, EXPRESS OR IMPLIED, AS TO THE SECURITY
OF ANY INFORMATION THE BORROWER MAY PROVIDE OR ACTIVITIES THE BORROWER ENGAGES IN DURING THE COURSE OF THE BORROWER’S USE OF THE
SITE AND ANY SERVICES ON THE SITE. THE LENDER IS NOT ACTING AS A BUSINESS ASSOCIATE OR SUBCONTRACTOR (AS SUCH TERMS ARE DEFINED AND USED
IN HIPAA) AND THE SERVICES PROVIDED BY THE LENDER ARE NOT HIPAA COMPLIANT. THE LENDER HAS NO LIABILITY UNDER THIS AGREEMENT FOR SENSITIVE
DATA.
|
1. 10. Definitions
For purposes of this Agreement, the terms
set forth below shall have the following meanings:
"Affiliate" shall mean,
as to any Person, any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with,
such Person.
"Agreement" shall mean
this Master Revolving Credit Agreement, as the same may be amended, modified, supplemented, extended or replaced from time to time.
"Borrower Dashboard"
shall mean the Web Dashboard established on the Site for the Borrower’s account.
"Business Day" shall
mean any day other than a Saturday, a Sunday, or a day on which Lender is authorized or obligated to close its regular banking business.
"Consolidated Shareholders’
Equity" shall mean, as of any date of determination, the remainder of (a) the total assets of the Borrower and its consolidated
subsidiaries minus (b) the sum of all liabilities of the Borrower and its consolidated subsidiaries, in each case that would be
reflected on a consolidated balance sheet of the Borrower and its consolidated subsidiaries as of that date in accordance with GAAP.
"Contractual Obligations"
as to any Person shall mean any provision of any security issued by such Person or of any agreement, instrument, or undertaking to
which such Person is a party or by which it or any of its property is bound.
"Credit Limit" shall
mean the dollar amount set forth in the Loan Information in the Borrower Dashboard, as such amount may be increased or decreased by the
Lender in its sole discretion and reflected in the Loan Information from time to time.
"GAAP" shall mean generally
accepted accounting principles in the United States in effect from time to time.
"Governmental Authority"
shall mean any nation or government, any state or other political subdivision thereof, or any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to government.
"Guarantor" shall mean
a guarantor of the Loans.
"HIPAA" means the Health
Insurance Portability and Accountability Act of 1996, as amended.
"Indebtedness" means,
for any Person, at any time, and only to the extent outstanding at such time (a) obligations created, issued or incurred by such Person
for borrowed money, (b) obligations of such Person to pay the deferred purchase or acquisition price of property or services, other than
trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business, so
long as such trade accounts payable are payable within ninety (90) days of the date the respective goods are delivered or the respective
services are rendered, and (c) any other indebtedness of such Person evidenced by a note, bond, debenture or similar instrument. Indebtedness
will exclude non-recourse Indebtedness and exclude all Indebtedness that is not reflected on the Borrower’s financial statements
such as Indebtedness at the Guarantor.
"Indefeasible" means,
with respect to a payment that the Obligations are satisfied only when the Lender is no longer subject to any right on the part of any
Person, including (a) the Borrower, (b) the Borrower as a debtor in possession, or (c) any bankruptcy or other trustee of the Borrower’s
assets, to invalidate or set aside such payments or to seek to recoup the amount of such payments or any portion thereof, or to declare
same to be fraudulent or preferential.
"Interest Rate" means
the per annum rate of interest established by the Lender for each Loan, which shall be subject to the maximum permitted rate under Utah
law and calculated in accordance with the following formula and example:
Formula:
Example:
Amount advanced (A) = $1,000
Weekly Payment (P) = $89.20
Number of payments (n) = 12
Finance Charge = $70.40
Unit period = 1 week
Unit periods per year = 52
Advance, 11/18/19
First payment, 11/30/19
Payments made each
Wednesday, starting 11/30/19
Time to 1st debit = 12 days
t = 1 (i.e., 11/23/19 thru 11/30/19)
f = 5/7 (i.e., 11/18/19
thru 11/23/19)
Periodic interest rate (i) = 0.9548%
Annual Percentage Rate (Interest Rate)
= 52 x i = 49.654%
Borrower acknowledges that the foregoing
is an example only and the actual Interest Rate for each Loan may differ. The Interest Rate is a means of pricing credit extensions to
customers and is neither directly tied to an external rate of interest or index nor necessarily the lowest rate of interest charged by
the Lender at any given time for any particular class of customers or credit extensions. For each Loan, the Interest Rate shall be fixed
and included in the total fixed payment amount to be made weekly by the Borrower for each Loan.
"Invoice" means the outstanding
invoices the Borrower generates as part of its business operations that are submitted to the Lender on the Site and itemized in the Borrower
Dashboard. Such invoices will not contain any protected health information regulated by the Health Insurance Portability and Accountability
Act ("HIPAA") or similar federal or state laws, rules or regulations or other medical or health information identifiable
with a particular individual ("Sensitive Data").
"Liabilities" means at
any date, the amount that, in accordance with GAAP consistently applied, would be set forth opposite the caption "total current liabilities"
(or any like caption) on a consolidated balance sheet of each Borrower.
"Loan Documents" shall
mean this Agreement and each other document, instrument and agreement executed by the Borrower in connection herewith or therewith, as
any of the same may be amended, restated, extended, or replaced from time to time.
"Maturity Date"
shall mean, for each Loan, the earlier of: (a) the maturity date indicated in the Loan Information for each Loan indicated in the Borrower
Dashboard, as such date may be extended from time to time in writing by the Lender and the Borrower, in each case, in their sole discretion,
or (b) the date the Lender accelerates the maturity date of the Loans under this Agreement pursuant to Section 8.
"Obligations"
shall mean any and all debts, obligations, and liabilities of the Borrower to the Lender arising under this Agreement (whether principal,
interest, fees, or otherwise, whether now existing or hereafter arising, whether voluntary or involuntary, whether or not jointly owed
with others, whether direct or indirect, absolute or contingent, contractual or tortious, liquidated or unliquidated, arising by operation
of law or otherwise, whether or not from time to time decreased or extinguished and later increased, created or incurred and whether or
not extended, modified, rearranged, restructured, refinanced or replaced, including modifications to interest rates or other payment terms
of such debts, obligations, or liabilities).
"Payment Account"
shall mean the account of the Lender designated in writing by the Lender from time to time to the Borrower as the "Payment Account"
for purposes of this Agreement.
"Person" shall mean any
corporation, partnership, limited liability company, natural person, firm, joint venture, partnership, trust, unincorporated organization,
government, or any department or agency of any government.
"Potential Default" shall
mean an event that but for the lapse of time or the giving of notice, or both, would constitute an Event of Default.
"Requirements of Law"
shall mean as to any Person the Certificate of Incorporation and Bylaws or other organizational or governing documents of such Person,
and any law, treaty, rule or regulation, or a final and binding determination of an arbitrator or a determination of a court or other
Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of
its property is subject.
"Site" refers to fundbox.com,
together with its subdomains, text, documents, articles, blogs, descriptions, graphics, photos, sounds videos and interactive features
on the Site, Site products, services and software, trademarks, and service marks and logos contained therein.
Exhibit 10.10
Account: #18007170
PHARMACOLOGY UNIVERSITY INC
BUSINESS-USE
LINE OF CREDIT AGREEMENT ("Agreement")
| Line of Credit Number: 2019TX320295421 |
Date:
10/08/2019 |
| Lender:
Headway Capital, LLC |
Borrower: PHARMACOLOGY UNIVERSITY
INC |
| |
Guarantor: Henry Levinski |
| 1. | General; Certain Definitions. This Agreement governs the terms of the line of credit
provided by Headway Capital, LLC ("Headway Capital") under this Agreement (the "Line of Credit"). As used in
this Agreement, the words "we", "us" and "our" mean Headway Capital and Headway Capital’s
successors and assigns and for purposes of the Arbitration Provision (Section 14), the other persons identified in the Arbitration Provision. The
words "you", "your", and "yours" mean the entity, proprietorship and any other person identified above
as the Borrower (collectively, jointly and severally, "Borrower"). The word "Guarantor" means the individual
(or, if more than one, each individual) identified above as the Guarantor. "Website" means headwaycapital.com, where you
can obtain information about your Line of Credit, request advances under the Line of Credit ("Advances"), arrange for
payments on your Line of Credit and manage your Line of Credit. "Notice Address" means our address above or such updated
address as we shall provide by notice to you at any time. |
| a. | Advance
Limits. Subject to the Credit Limit, the minimum Advance amount and the Advance
increments we establish, we will make Advances that you request from time to time, so long
as you have made all payments required under this Agreement at the time you request an Advance.
The maximum Advance amount is the amount of available credit under the Line of Credit. Any
employee of yours, any person you authorize to obtain Advances and any person who receives
password and authentication information sufficient to access the secured portion of the Website
devoted to your Line of Credit (each, a "Permitted User") may initiate an Advance.
You agree that you will only use the Line of Credit for the business purposes described
in your application for the Line of Credit (the "Application")—not for personal,
family and household purposes—and you will not use the Line of Credit to engage in
or facilitate internet gambling, to buy "margin stock" or to pay any amount owed
to us. You further agree not to use the Line of Credit for any unlawful purpose or in violation
of any applicable law. |
| b. | Requesting
Advances. To obtain an Advance, you must go to the Website, establish your identity
through the procedures we have adopted and follow the series of prompts you will receive.
During this process, we will provide you with information about the interest rate that will
apply and the repayment term options you will have if you choose to obtain the Advance. After
you review this information, you will have the opportunity to obtain the Advance and choose
your preferred repayment term option. You will also have the opportunity, if you choose,
to decline the Advance and leave the Line of Credit unchanged, including the interest rate
and required payments on existing Advances. |
| c. | Deposit
of Advance Funds into Designated Bank Account. Advances will be made by an electronic
transfer of funds of the amount of the Advance to the bank account you have designated in
applying for the Line of Credit or the bank account you subsequently designate (the "Bank
Account"). Any Advance Fee will be added to your account balance. Depending upon whether
you request an Advance on a business day or non-business day, and depending upon the time
of day you request an Advance, the funds typically will be available in the Bank Account
on the first or second business day after you make an Advance request. |
| a. | Limits
on Advances. You may obtain multiple Advances under the Line of Credit, and the
amount of credit available to you will generally be replenished to the extent that you repay
any outstanding balance. The "Credit Limit" equals the total principal amount you
are permitted to have outstanding under the Line of Credit at any time. You agree not to
seek or obtain any Advance if the outstanding balance of your Line of Credit is in excess
of the Credit Limit or would exceed the Credit Limit after the Advance. You agree that we
are not required to honor a request for any such Advance. However, if we do, you agree to
pay all amounts exceeding the Credit Limit immediately upon our demand. When you make any
payment, we may delay increasing your available credit until the payment has cleared. |
| b. | Initial
Credit Limit; Adjustments in Credit Limit. We have established your initial Credit Limit at $15,000.00. We may decrease your
Credit Limit, suspend or terminate your credit privileges, limit the number or dollar amount of Advances that can be charged to your
Line of Credit or close your Line of Credit at any time, with or without prior notice, subject to any limitations under applicable law.
We will typically obtain a credit report on you and evaluate your Credit Limit on a quarterly basis. We may reduce your Credit Limit
for any reason, including but not limited to if we become aware of any deterioration in your credit standing or we believe that economic
conditions or the functioning of the Line of Credit program so warrant. We will promptly notify you in writing (by sending an email to
the email address we have in our records for you) if we reduce your Credit Limit. We may increase your Credit Limit at any time or from
time to time, whether or not you request an increase, provided that any increase will be subject to underwriting approval in our absolute
discretion. You agree to provide us from time to time with any financial or other information we reasonably request to determine your
appropriate Credit Limit. |
| a. | General.
Each day, we will charge you interest in an amount equal to the Balance Subject to
Interest Rate times the applicable Daily Periodic Rate disclosed to you on the Website when
you obtain an Advance. To calculate the interest for a billing cycle, we will total the interest
for each day in the cycle. |
| b. | Balance
Subject to Interest Rate. Each day, the "Balance Subject to Interest Rate"
will equal the closing principal balance under your Line of Credit. Each day, we will compute
this amount by taking the beginning principal balance of your Line of Credit, adding any
Advances and subtracting any payments or credits applied to principal. We will not include
any interest or fees in these balances and will not charge interest on interest or fees.
We will disregard any balance less than $0. |
| c. | Interest
Rates. If you were to obtain an Advance as of the date of this Agreement, the
"Daily Periodic Rate" of interest would be 0.14%, which corresponds to a “Monthly
Periodic Rate” of 4.17% and an Annual Percentage Rate ("APR") of 53.74%.
Each time you obtain a new Advance, the Daily Periodic Rate (and APR) may stay the same or
decrease. Any decrease in rates will apply both to the new Advance and to unpaid prior Advances.
Before you obtain the Advance, we will advise you of the new Daily Periodic Rate and APR
that will apply. You will have the opportunity to decline the Advance if you choose, in which
case your rates will remain at their then current levels. |
| d. | No
Grace Period. Interest begins on the date each Advance posts to your Line of Credit.
There is no grace period. |
| 5. | Fees. Each time you obtain an Advance, we will charge an "Advance Fee" equal to 2%
of the Advance. We do not charge a returned item fee, however, your bank may charge its own fee for any dishonored items. If your minimum
monthly payment is in default for a period of not less than 10 days, we may charge a Late Fee equal to 5% of the amount of the minimum
monthly payment. If a minimum monthly payment remains delinquent, we will not charge a Late Fee on that payment more than once. |
| a. | Frequency
of Payments. Your payments will be due on a monthly basis. Every payment otherwise
due on a day that is not a business day will instead be due the next business day (but interest
will continue to accrue on unpaid principal until the payment is actually received). |
| b. | Number
and Dollar Amount of Payments. Before each Advance, we will provide you with one
or more potential payment schedules you can select. We may allow you to determine the number
of monthly payments and the dollar amount of monthly payments you prefer. Each potential
payment schedule will be designed to pay off the entire amount you will owe under the Line
of Credit after the Advance in substantially equal periodic payments (subject to an adjusted
final payment to account for early or late payments, rounding issues, programming limitations
and similar causes). The required payment period will be from 12 to 24 months (but may be
in a narrower range based on the dollar amount of Advances that will be outstanding and/or
your credit standing). |
| c. | Allocation
of Payments. Payments will be applied first towards past due amounts, next to
fees, then to interest and finally to principal. |
| d. | Prepayments.
You may prepay amounts outstanding under the Line of Credit in whole or in part at any
time, without penalty. |
| a. | Periodic
Payments; Authorizing Higher Frequency Payments. You authorize and direct us to
initiate an electronic payment from the Bank Account for each monthly payment due under the
Line of Credit on or after the scheduled payment date. We may adjust the amount of the nal
payment on any outstanding balance so it does not exceed the total amount you owe under the
Line of Credit. Each time you obtain an Advance, you will be asked to tell us whether you
wish to instead authorize electronic payments on a more frequent basis throughout the month
that total at least the minimum monthly payment due. You may authorize such electronic payments
every business day, every week or every other week. If you choose higher frequency electronic
payments, you authorize and direct us to initiate such payments from the Bank Account at
the frequency you specify. In the event that you choose to authorize higher frequency payments
and a payment is not successful (because, e.g., you do not have sufficient funds in your
Bank Account), we will not deem your Line of Credit in default unless payments made during
the billing cycle fall short of the minimum payment due by the associated due date. If one
or more of the higher frequency payments is not successful, we may, in our sole discretion,
continue seeking the higher frequency payments or discontinue seeking such payments and instead
seek larger payments on a less frequent basis. In the event that we decide to seek larger
payments on a less frequent basis, you authorize and direct us to initiate an electronic
payment from the Bank Account for such payments. Your bank may charge you fees for unsuccessful
electronic payments, and you agree that we will have no liability to you for such fees. |
| b. | Advances.
You authorize and direct us to credit the Bank Account with the amount of any Advance we
issue. |
| c. | Bank
Account Verification. You authorize us to verify any information you have provided
about the Bank Account and to correct any missing, erroneous or out-of-date information.
You promise us that the Bank Account is just that—your bank account—and that
you have the power and authority to initiate payments from the Bank Account and to authorize
us to initiate payments from the Bank Account. You promise that the Bank Account is a legitimate,
open, and active Bank Account. |
| d. | Additional
Amounts. You authorize us to initiate an electronic payment from the Bank Account
for any fee or charge you owe. |
| e. | Error
Correction. In the event we make an error in processing any payment or credit,
you authorize us to initiate a payment to or from the Bank Account to correct the error. |
| f. | Resubmissions.
You agree that we may resubmit up to two times any payment that is dishonored. |
| g. | No
Termination. You agree to keep this authorization in force so long as this Agreement
remains in place and/or any amount remains outstanding under the Line of Credit. |
| h. | Compliance
with Law and Network Rules. You acknowledge that the origination of electronic
payments from or to the Bank Account must comply with U.S. law and applicable network rules. |
| i. | Voluntary
Payments by Other Methods. In addition to or instead of any payment under this
payment authorization, you may arrange for different ACH payments on the Website or mail
payments to us by check or money order. |
| 8. | Monthly Statements. We
will send you a monthly statement (via email to the email address we have on record for you) if you have a Line of Credit balance or
incur any interest or fee during a monthly billing period. Your monthly statements will show, among other matters: (a) Advances; (b)
payments, (c) credits and adjustments; (d) interest charges and fees; and (e) scheduled payments for the next billing cycle. |
| 9. | Default. Subject to applicable law, we may declare you to be in default under this Agreement
if any one or more of the following events occurs: (a) you fail to make any required monthly payment when due; (b) you exceed your Credit
Limit; (c) you make a payment which is dishonored or fail to keep the Bank Account in place or the payment authorization in Section 7
in place; (d) you breach any obligation in this Agreement; (e) you die or are declared legally incompetent; (f) any other creditor tries
by legal process to take money of yours in our possession; (g) a petition is led or other proceeding is commenced by or against you under
the federal bankruptcy code or any other applicable federal or state insolvency laws; (h) you become generally unable to pay your debts;
(i) you provide us with any false or misleading information; (j) you are in default of any other agreement you have with us or any of
our affiliates; or (k) any of the foregoing events occurs with respect to any Guarantor. |
| 10. | Our Rights Upon Default. Upon any default, we may take one or more of the following actions,
subject to applicable law (including any applicable notice requirement and/or right to cure): (a) either declare all or any portion of
your outstanding Line of Credit balance to be immediately due and payable or, without waiving any rights, allow you to repay your Line
of Credit balance by making scheduled payments; (b) terminate or suspend your Line of Credit privileges and/or cancel your Line of Credit;
(c) reduce your Credit Limit or otherwise limit your ability to obtain Advances; (d) commence an action against the Borrower, the Guarantor,
or both, to collect all amounts owed in connection with this Agreement; or (e) continue charging interest on the outstanding principal
balance at the rate specified above. We also may charge you court costs and reasonable attorneys' fees that we actually incur (including
court costs and attorneys' fees in connection with appeals and/or bankruptcy proceedings), as permitted by applicable law, if your Line
of Credit is sent for collection to an attorney who is not our salaried employee. |
| 11. | Representations and Warranties. You hereby represent and warrant to us, as of the date hereof,
as follows: |
| a. | Your form of organization is correctly set forth on the Application. Unless you are an individual or
sole proprietorship, you were duly incorporated or formed and are validly existing and in good standing under the laws of the state set
forth on the Application. (i) You are duly qualified, licensed and in good standing in every state in which you are doing business; (ii)
your principal office and the location where you keep your records concerning your accounts, contract rights and other property, are
accurately shown in the Application; (iii) your exact legal
name is accurately set forth in the Application; (iv) you have the requisite power and authority, and the legal right, to own, lease and
operate your properties and assets and to conduct your business as it is now being conducted; (v) you are complying and will comply with
all laws, statutes, regulations and ordinances pertaining to the conduct of your business and will indemnify and hold us harmless from
any damages, liabilities, costs, expenses (including attorneys' fees) or other harm arising out of any violation thereof; (vi) all of
your organization papers and all amendments thereto have been duly led and are in proper order, and any capital stock, member interest
or other equity issued by you and outstanding was and is properly issued; and (vii) all your books and records are accurate and up to
date and will be so maintained. |
| b. | No consent or authorization of, ling with, notice to or other act by, or in respect of, any
governmental authority or any other individual or entity is required in order for you to execute, deliver, or perform ay of your
obligations under this Agreement. The execution, delivery and performance of the Agreement and any other document executed in
connection therewith (including the Application) are within your powers, have been duly authorized, are not in contravention of law
or the terms of your charter, by-laws or other organization papers, if any, or of any indenture, contract, agreement or undertaking
to which you are a party. You are subject to no charter, corporate or other legal restriction, or any judgment, award, decree,
order, governmental rule or regulation or contractual restriction that could have a material adverse effect on your financial
condition, business or prospects. You are in compliance with your organization documents and by-laws, if any, all contractual
requirements by which you may be bound and all applicable laws, rules and regulations where the failure to comply might materially
adversely affect your financial condition, business or prospects or your ability to perform your obligations under this
Agreement. |
| c. | There is no action, suit, proceeding or investigation pending or, to your knowledge, threatened against
or affecting you or any of your assets which, if determined adversely, could have a material adverse effect on your financial condition, business
or prospects or your ability to perform your obligations under this Agreement. |
| d. | This Agreement is your valid, legal and binding obligation, enforceable against you in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings
in equity or at law). |
| 12. | Covenants. Until all amounts outstanding under this Agreement have been paid in full: |
| a. | You will: (i) preserve, renew and maintain in full force and effect your corporate or organizational
existence, if any; (ii) take all reasonable action to maintain all rights, privileges and franchises necessary or desirable for the normal
conduct of your business; and (iii) remain duly qualified, licensed and in good standing in your state of organization (if any) and every
other state in which you are doing business. |
| b. | You will comply with: (i) all of the terms and provisions of your organizational documents and by-laws,
if any; (ii) your obligations under your material contracts and agreements; and (iii) all laws and orders applicable to you and your business,
except where the failure to do so could not reasonably be expected to have a material adverse effect on your financial condition, business
or prospects or your ability to perform your obligations under this Agreement. |
| c. | You will pay, discharge or otherwise satisfy at or before maturity or before they become delinquent,
as the case may be, all of your material obligations of whatever nature, including without limitation all amounts as are or may be due
under this Agreement. |
| d. | Without our prior written consent, you will not merge or consolidate with or into any other business
entity, sell your assets or enter into any joint venture or partnership with any person, firm or corporation. |
| e. | Without our prior written consent, you will not: (i) change your name, place of business, chief executive
office, mailing address or organizational identification number, if any; or (ii) change your type of organization, jurisdiction of organization
or other legal structure. |
| f. | Promptly upon our request, you will provide us with such information about your financial condition and
operations as we may from time to time reasonably request. |
| g. | Promptly upon becoming aware of any event of default or the occurrence or existence of an event which,
with the passage of time or the giving of notice or both, would constitute an event of default, you will provide notice thereof to us
in writing. |
| 13. | Personal Guaranty. As consideration for us to enter into this Agreement and lend funds to the
Borrower, each Guarantor, acting in their personal and individual capacity, unconditionally guarantees, and becomes directly liable to
us for, all of the Borrower's payment and performance obligations under this Agreement (the "Guaranteed Obligations"). Without
in any way limiting this Section or anything else in this Agreement, each Guarantor specifically agrees as follows: |
| a. | Guarantor is an owner or principal of
the Borrower, or otherwise holds a direct or indirect interest in the Borrower, and will
benefit significantly from our extension of credit to the Borrower on the terms provided
in this Agreement. Guarantor is signing this Agreement, and is agreeing to become liable
to us for the Guaranteed Obligations, at the request of Borrower. Guarantor agrees that
the line of credit is for the business purposes of Borrower only, and that Guarantor is not
using this Line of Credit for any personal, family or household purposes, to engage in or
facilitate internet gambling, to buy "margin stock," or to pay any amount owed
to us. |
| b. | Guarantor's liability under this Agreement is unconditional and unlimited. If more than one Guarantor
signs this Agreement, the liability of all Guarantors is joint and several. Each Guarantor understands that, at any time after an event
of default, we may proceed against any Guarantor directly to collect the Guaranteed Obligations or enforce our rights under this Agreement,
without first attempting to obtain payment from Borrower, any other Guarantor, any collateral or other security for the Guaranteed Obligations,
or any other party who may also be liable to us for any of the Guaranteed Obligations. |
| c. | By signing this Agreement, Guarantor specifically agrees to, and makes, each of the representations,
warranties and covenants made by the Borrower in Sections 11 and
12 of this Agreement, as if those representations, warranties and covenants were set forth in their entirety in this Section 13. Guarantor
agrees that all references in Sections 11 and 12 to "you," "your" or "yours" apply to the Guarantor, individually. |
| d. | Guarantor understands that we do not need to notify Guarantor of any of the following events: (i) Borrower's
failure to timely pay any amount due under this Agreement, or failure to comply with any of its performance obligations under this Agreement;
(ii) the occurrence of any other event of default under this Agreement; (iii) any adverse change in the Borrower's business or financial
condition; (iv) any collection, sale or other disposition of any collateral or other security for the Guaranteed Obligations; or (v) any
modification, renewal, extension or amendment to this Agreement, or the terms for payment or performance of the Guaranteed Obligations.
Guarantor further understands that its liability under this Agreement will not be released or affected in any way if any of the events
in this paragraph occur. |
| e. | Guarantor further understands that we may take any of the following actions, without notifying Guarantor,
and without releasing or affecting the Guarantor's liability under this Agreement: (i) modify, renew, extend or amend this Agreement, or
the terms for payment and performance of the Guaranteed Obligations; (ii) release the Borrower from its obligations under this Agreement;
(iii) collect, sell or otherwise dispose of any collateral or other security for the Guaranteed Obligations; (iv) foreclose on any collateral
or other security in a way that may prevent Guarantor from obtaining reimbursement from the Borrower or any other party for any payments
that Guarantor makes under this Agreement; or (v) delay or agree to forbear from enforcing our rights under this Agreement. |
| f. | Until all of the Guaranteed Obligations have been paid and satisfied in full, Guarantor agrees not to
seek reimbursement from the Borrower or any other Guarantor for any payments that Guarantor makes under this Agreement. If Guarantor receives
any reimbursement, Guarantor will hold that amount in trust for us, and immediately pay that amount to us, to be applied to the Guaranteed
Obligations. Guarantor waives, and agrees not to exercise, any right of subrogation, reimbursement, performance, indemnification, or contribution
that it may have against the Borrower or any other Guarantor for any amounts paid or actions taken by Guarantor under this Agreement.
Guarantor understands that its liability under this Agreement includes any amounts which we receive from the Borrower or any other Guarantor,
but which we are required to return as a result of insufficient funds, bankruptcy proceedings, or for any other reason. |
| g. | Guarantor understands that any disputes or claims relating to this Agreement are subject to arbitration,
on the terms set forth in Section 14 of this Agreement. Each Guarantor specifically acknowledges that (i) he or she has read this Agreement
and understands all of its terms, including the Guarantor's obligations and liability under this Section, (ii) before signing this Agreement,
he or she had an opportunity to review this Agreement with an attorney of Guarantor's own choice, and (iii) he or she has signed this
Agreement after consulting with his or her chosen attorney, or has decided not to consult an attorney. |
| h. | Guarantor understands and agrees that each of the provisions in Section 15 of this Agreement apply to
the Guarantor and the collection of the Guaranteed Obligations, as if each of those provisions were set forth in their entirety in this
Section 13. Guarantor agrees that all references in Section 15 to "you," "your" or "yours" apply to the
Guarantor, individually. |
| 14. | Arbitration Provision. |
| a. | General:
Either you or we may elect to arbitrate or require the other party to arbitrate any
Claim (as defined below) under the following terms and conditions. If you or we elect to
arbitrate a Claim, neither you nor we will have the right to: (i) have a court or a jury
decide the Claim; (ii) participate in a class action in court or in arbitration, either as
a class representative or a class member; (iii) act as a private attorney general in court
or in arbitration; or (iv) join or consolidate your Claim(s) with claims of any other person.
The right to appeal and the right to pre-arbitration discovery are more limited in arbitration
than in court. Other rights that you would have if you went to court may also not be available
in arbitration. |
| b. | Definitions:
The following definitions apply to this Arbitration Provision, even if terms defined
in this Arbitration Provision are defined differently or more narrowly elsewhere in this
Agreement: |
| I. | "We", "us" and "our" mean Headway Capital, LLC ("Headway Capital"),
together with any subsequent holder of this Agreement. Also, these terms include the parents, subsidiaries, representatives, affiliates
and successors of such companies, as well as the officers, directors, agents and employees of any of the foregoing. These terms also
include any party named as a co-defendant with us in a Claim asserted by you, such as marketing companies, credit bureaus, credit insurance
companies, Line of Credit servicers and debt collectors. "You," "your" and "yours" mean, individually and
collectively, each Borrower and each Guarantor signing this Agreement. |
| II. | "Administrator" means the American Arbitration Association ("AAA"), 1633 Broadway,
10th Floor, New York, NY 10019, www.adr.org, 800-778-7879; JAMS, 620 Eighth Avenue, 34th Floor, New York, NY 10018, www.jamsadr.com, 800.352.5267;
or any other company selected by mutual agreement of the parties. If both AAA and JAMS cannot or will not serve and the parties are unable to select an Administrator by mutual consent, the Administrator will be selected by a court. The party initiating
an arbitration selects the Administrator.
Notwithstanding any language in this Arbitration Provision to the contrary, no arbitration may be administered, without the consent of
all parties to the arbitration, by any Administrator that has in place a formal or informal policy that would purport to override subsection
(d) below, captioned "No Class Actions" (the "Class Action Waiver"). |
| III. | "Claim" means any claim, dispute or controversy between you and us that in any way arises
from or relates to this Agreement, or the Line of Credit, including disputes arising from actions or omissions prior to the date of this
Agreement. "Claim" has the broadest reasonable meaning, and includes initial claims, counterclaims, cross-claims and third-party
claims. It includes disputes based upon contract, tort, consumer rights, fraud and other intentional torts, constitution, statute, regulation,
ordinance, common law and equity (including any claim for injunctive or declaratory relief). However, it does not include disputes about
the validity, enforceability, coverage or scope of this Arbitration Provision or any part thereof (including, without limitation, the
Class Action Waiver, the final sentence in subsection (j) under the caption "Survival, Severability, Primacy" and/or this sentence).
However, any dispute or argument that concerns the validity or enforceability of the Agreement as a whole is for the arbitrator, not a
court, to decide. |
| c. | Starting
or Demanding Arbitration: To start an arbitration, the party asserting the Claim
(the "Claimant") must commence the arbitration in accordance with the Administrator's
rules. To require arbitration of a Claim, the party defending the Claim (the "Defending
Party") must give the Claimant a written demand for arbitration. This demand may be
given after a lawsuit has been led and may be given in papers or motions in the lawsuit.
If an arbitration is commenced or an arbitration demand is given, the Claim shall be resolved
by arbitration under this Arbitration Provision and the applicable rules of the Administrator
then in effect. We will not elect to arbitrate any collection action we initiate or any individual
action brought by you in small claims court or your state's equivalent court, except if such
action is transferred, removed, or appealed to a different court. |
| d. | No
Class Actions: Notwithstanding any language herein to the contrary, if you
or we elect to arbitrate a Claim, neither you nor we will have the right to: (i) participate
in a class action in court or in arbitration, either as a class representative, class member
or otherwise; (ii) act as a private attorney general in court or in arbitration; or (iii)
join or consolidate Claims by or against you with claims by or against any other person,
and the arbitrator shall have no authority to conduct any such class, private attorney general
or multiple-party proceeding. |
| e. | Location
and Costs: Any arbitration hearing that you attend will take place in a location
that is reasonably convenient for you. If you cannot obtain a waiver of the Administrator's
or arbitrator's ling, administrative, hearing and/or other fees, we will consider in good
faith any request by you for us to bear such fees. We will pay for our own attorneys, experts
and witnesses and will pay the reasonable fees and charges of your attorneys, experts and
witnesses if you win the arbitration. Even if you do not win the arbitration, we will pay
any of the Administrator's or arbitrator's ling, administrative, hearing and/or other fees,
and the fees and charges of your attorneys, experts and witnesses, if and to the extent we
are required to pay such fees and charges by law or in order to make this Arbitration Provision
enforceable. |
| f. | Arbitrator
Selection: The arbitrator will be appointed by the Administrator in accordance
with the rules of the Administrator. However, unless the parties agree otherwise, the arbitrator
must be a retired or former judge or a lawyer with at least 10 years of experience. |
| g. | Discovery;
Getting Information: In addition to the parties' rights under the Administrator's
rules to obtain information prior to the hearing, either party may ask the arbitrator for
more information from the other party. The arbitrator will decide the issue in his or her
sole discretion, after allowing the other party the opportunity to object. |
| h. | Effect
of Arbitration Award: Any court with jurisdiction may enter judgment upon the
arbitrator's award. The arbitrator's award will be nal and binding, except for: (1) any appeal
right under the Federal Arbitration Act, 9 U.S.C. §1 et seq. (the "FAA");
and (2) Claims involving more than $50,000. For Claims involving more than $50,000, any party
may appeal the award to a three-arbitrator panel appointed by the Administrator, which will
reconsider anew any aspect of the initial award that is appealed. The panel's decision will
be final and binding, except for any appeal right under the FAA. The costs of any appeal
will be borne in accordance with subsection (e) above, captioned "Location
and Costs." |
| i. | Governing
Law: This Agreement governs transactions involving interstate commerce and accordingly
this Arbitration Provision shall be governed by the FAA and not by any state law concerning
arbitration. The arbitrator shall follow applicable substantive law to the extent consistent
with the FAA, applicable statutes of limitation and privilege rules that would apply in a
court proceeding, and shall be authorized to award all remedies available in an individual
lawsuit under applicable substantive law, including, without limitation, compensatory, statutory
and punitive damages (which shall be governed by the constitutional standards applicable
in judicial proceedings), declaratory, injunctive and other equitable relief, and attorneys'
fees and costs. Upon the timely request of either party, the arbitrator shall write a brief
explanation of the basis of his or her award. The arbitrator will follow rules of procedure
and evidence consistent with the FAA, this Arbitration Provision and the Administrator's
rules. |
| j. | Survival,
Severability, Primacy:This Arbitration Provision shall survive the termination
of this Agreement, your fulfillment or default of your obligations under this Agreement and/or
your or our bankruptcy or insolvency (to the extent permitted by applicable law). In the
event of any conflict or inconsistency between this Arbitration Provision and the Administrator's
rules or this Agreement, this Arbitration Provision will govern. If any portion of this Arbitration
Provision, other than the Class Action Waiver, is deemed invalid or unenforceable, the remaining
portions shall nevertheless remain in force. If a determination is made with respect to any
Claim that the Class Action Waiver is unenforceable, only this sentence of the Arbitration
Provision will remain in force and the remaining provisions shall be null and void, provided
that the determination concerning the Class Action Waiver shall be subject to appeal. |
| k. | Amendment/Termination:
Notwithstanding any provision of this Agreement to the contrary, we will not amend
this Arbitration Provision in a manner that adversely affects your rights or responsibilities
in a material manner unless we give you a right to reject the amendment and/or the Arbitration
Provision in its entirety. |
| l. | Notice
and Cure. Prior to initiating a lawsuit or arbitration regarding a legal dispute
or Claim relating in any way to this Agreement, the Claimant shall give the Defending Party
written notice of the Claim (a "Claim Notice") and a reasonable opportunity, not
less than 30 days, to resolve the Claim on an individual basis. Any Claim Notice to you shall
be sent in writing by mail to the address for you maintained in our records. Any collection
letter we send to this address shall be deemed to be a Claim Notice. Any Claim Notice to
us shall be sent to us by certified mail, return receipt requested, to the Notice Address,
Attn: Legal Claim. Any Claim Notice you send must provide your Line of Credit Number and
telephone number. Any Claim Notice must explain the nature of the Claim and the relief that
is demanded. The Claimant must reasonably cooperate in providing any information about the
Claim that the Defending Party reasonably requests. Upon receipt of a Claim Notice, we will
credit your Line of Credit for the standard cost of a certified letter. |
| m. | Special
Payment: If (i) you submit a Claim Notice on your own behalf (and not on behalf
of any other party) in accordance with subsection (l), captioned "Notice and Cure"
(including the timing requirements thereof); (ii) we refuse to provide you with the relief
you request; and (iii) an arbitrator subsequently determines that you were entitled to such
relief (or greater relief), the arbitrator shall award you at least $7,500 in addition to
the attorney, witness and expert fees and costs to which you are entitled. |
15. Miscellaneous
| a. | Changes
to this Agreement. Subject to the Arbitration Provision and applicable law: (i)
You agree that we may, in our sole discretion, from time to time change any of the terms
and conditions of, or add new terms and conditions to, this Agreement, including changing
the method of computing interest charges or increasing or adding fees. (ii) Any such changes
will generally be effective immediately unless we are required by applicable law or elect,
in our discretion, to provide you with advance written notice of the changes (and/or the
reasons for the changes), afford you the right to reject the change and/or obtain your consent
to the change (whether by written agreement, through the initiation of an Advance after a
specified date or through some other means). In such instances, those changes will be effective
if, when and as stated in such notice. (iii) Any changes may apply to your outstanding Line
of Credit balance on the effective date of the change and to any future balances created
after that date. (iv) No change to any term of this Agreement will excuse your obligation
to pay all amounts owing under this Agreement. |
| b. | Governing
Law/Jurisdiction. Except as set forth to the contrary in the Arbitration Provision,
any claim, dispute or controversy arising from or relating to your Line of Credit or this
Agreement, whether based in contract, tort, fraud or otherwise, is governed by, and construed
in accordance with, federal law and, to the extent state law applies, the law of the State
of Illinois. You acknowledge that this Line of Credit is payable to us in Cook County, Illinois,
and that you consent to the non-exclusive jurisdiction of the federal and state courts located
in the State of Illinois for any litigation relating to this Agreement or the Line of Credit,
subject to the requirements of the Arbitration Provision. You further acknowledge that (i)
we are domiciled and have our principal place of business in Illinois, (ii) we received and
evaluated your Line of Credit application in Illinois, (iii) this Agreement is not consummated
until countersigned by us at our offices in Illinois and (iv) any Advances you request under
the Line of Credit will be disbursed from a bank account of ours located in Illinois. |
| c. | Correspondence.
All notices to us must be sent to the Notice Address, with such attention as may be
specified in this Agreement. To the extent permitted under applicable law, any notice you
send us will not be effective until we receive and have had a reasonable opportunity to act
on such notice. Any written or electronic correspondence we send to you will be effective
and deemed delivered when sent in accordance with any authorization for electronic communications
you execute or mailed to you at your mail address, as it appears on our records. |
| d. | Reporting
Information to Credit Bureaus; Identity Theft. We may report information
about the Line of Credit and this Agreement to other creditors, other financial institutions
and credit bureaus. Late payments, missed payments or other defaults on the Line of Credit
may be reflected in your credit report. You have the right to dispute the accuracy of
information we have reported. If you believe that any information that we have reported to
a credit bureau is inaccurate, or if you believe that you have been the victim of identity
theft in connection with the Line of Credit or this Agreement, write us at the Notice Address,
Attn: Fraud/Dispute. Please include your name, address, Line of Credit Number, telephone
number and a brief description of the problem. If available, please include a copy of the
credit report in question. If you believe that you have been the victim of identity theft,
you should send us a police report or written statement in a form we provide you alleging
that you are the victim of identity theft for a specific debt. |
| e. | Bankruptcy.
All bankruptcy notices and related correspondence to us must be sent to us at the
Notice Address, Attn: Bankruptcy Notice. You promise that you have no current intent to file
any bankruptcy petition and have not consulted a bankruptcy attorney in the past six months. |
| f. | Notices
of Change in Circumstances. You must notify us of any changes to your name, mailing
or email address, home, cell or business phone number within fifteen
(15) days by writing us at the Notice Address or going on the Website. We will rely on your mail and email addresses as they appear on
our records for any and all Line of Credit communications we send you by mail or email unless and until either you or, in the case of
your mailing address, the U.S. Postal Service, notifies us of a change of address and we have had a reasonable opportunity to act on such
notice. |
| g. | Partial
Payments Marked Payment in Full. Any check or other payment you send us for
less than the total outstanding balance on your Line of Credit that is marked "payment
in full" or with any similar language or that you otherwise tender as full satisfaction
of a disputed amount must be sent to the Notice Address, Attn: Payment of Disputed Amount.
We may deposit any such payment without such deposit effecting a satisfaction of the disputed
amount. |
| h. | Inadvertent
Overcharges. It is not our intention to charge any interest, fees or other amounts
in excess of those permitted by applicable law or this Agreement. If any interest, fee or
other amount is finally determined to be in excess of that permitted by applicable law or
this Agreement, the excess amount will be applied to reduce the outstanding balance in your
Line of Credit or, if there is no outstanding balance, will be refunded to you. |
| i. | Delay
in Enforcement. We may at any time and in our sole discretion delay or waive enforcing
any of our rights or remedies under this Agreement or under applicable law without losing
any of those or any other rights or remedies. Even if we do not enforce our rights or remedies
at any one time, we may enforce them at a later date. |
| j. | Verifications,
Examinations and Audits. We will verify your age, social security number,
employee identification number or other tax identification number, residence and other identifying
information as required by applicable law. You authorize us to conduct examinations and audits
of Borrower's business and the use of Advances, and you promise to fully cooperate with all
such examinations and audits. |
| k. | Credit
Reports; Evaluation of Financial Condition and Credit History. You understand and
agree that we may obtain credit and other reports about Borrower or Guarantor in connection
with any request for credit and in connection with any updates, renewals or extensions of
any credit as a result of your request. We expect to obtain a credit report on a quarterly
basis and reserve the right to obtain a credit report more frequently (including in connection
with any Advance you request). |
| l. | Line
of Credit Settlements. Any settlement of your Line of Credit balance for less
than what is owed requires our written agreement. |
| m. | Telephone
Monitoring and Recording. You agree that we may monitor, record, retain and reproduce
your telephone calls and any other communications you provide to us, regardless of how transmitted
to us, for training, quality control, evidentiary and other purposes. However, we are not
under any obligation to monitor, record, retain or reproduce such items, unless required
to do so by applicable law. |
| n. | Third-Party
Claims or Defenses. Except as otherwise provided in this Agreement or as required
by applicable law, we will not be responsible for any claim or defense you may have against
any third party that arises out of or in connection with any Advance. |
| o. | Assignment.
You may not sell, assign or transfer your Line of Credit or any of your rights and
obligations under this Agreement. However, we may sell, assign or transfer your Line of Credit,
or any balance due thereunder, and/or any of our rights and obligations under this Agreement,
to any third party without prior notice to or consent by you. Should we do so, then to the
extent of any such sale, assignment or transfer, that third party will take our place in
this Agreement. |
| p. | Severability.
Except as provided otherwise in the Arbitration Provision, if any provision of this
Agreement is deemed to be void or unenforceable by a court of competent jurisdiction or any
governmental agency, that provision will continue to be enforceable to the extent permitted
by that court or agency, and the remainder of that provision will no longer be considered
as part of this Agreement. All other provisions of this Agreement will, however, remain in
full force and effect. |
| q. | Section
Headings. The section headings used in this Agreement are for convenience of reference
only and do not in any way limit or de ne your or our rights or obligations hereunder. |
| r. | Entire
Agreement. You acknowledge that this Agreement constitutes the entire agreement
between you and us with respect to the Line of Credit, and supersedes and may not be contradicted
by evidence of any prior or contemporaneous written or oral communications and understandings
between you and us concerning the Line of Credit. |
| s. | Formal
Requirements to Collect Debt. You agree that we are not obligated to: (i) make
a formal demand for payment under this Agreement; (ii) provide formal notice that any amount
due under this Agreement has not been paid; and/or (iii) provide a certification that any
amount due under this Agreement was not paid by the due date. To the extent permitted by
applicable law, you agree that, in any collection proceeding by us, unless you provide affirmative
evidence, sufficient to the finder of fact, that our business records are incorrect, the
records we maintain in the ordinary course of business, including monthly statements and/or
summaries of information in our computer records, certified by any custodian of our records
as accurate reflections of statements or information in our business records, provide adequate
proof of the amounts due hereunder. |
| t. | Contacting
You; Phone and Text Messages. You authorize us and our affiliates, agents,
representatives, assigns and service providers (collectively, the "Messaging Parties")
to contact you using automatic telephone dialing systems, artificial or prerecorded voice
message systems, text messaging systems and automated email systems in order to provide you
with information about this Agreement, the Line of Credit, including information about upcoming
payment due dates, missed payments and returned payments. You authorize the Messaging Parties
to make such contacts using any telephone numbers (including wireless, landline and VOIP
numbers) or email addresses you supply to the Messaging Parties in connection with the Application,
the Messaging Parties' servicing and/or collection of amounts you owe the Messaging Parties
or any other matter. You understand that anyone with access to your telephone or email account
may listen to or read the messages the Messaging Parties leave or send you, and you agree
that the Messaging Parties will have no liability for anyone accessing such messages. You
further understand that, when you receive a telephone call, text message or email, you may
incur a charge from the company that provides you with telecommunications, wireless and/or
Internet services, and you agree that the Messaging Parties will have no liability for such
charges. You expressly authorize the Messaging Parties to monitor and record your calls with
the Messaging Parties. You understand that, at any time, you may withdraw your consent to
receive text messages and calls to your cell phone or to receive artificial or prerecorded
voice message system calls by calling the Messaging Parties at 877-392-2014. To stop text
messages, you can also simply reply "STOP" to any text message the Messaging Parties
send you. To stop emails, you can follow the opt-out instructions included at the bottom
of the Messaging Parties' emails. |
BY TICKING THE BOX AND BY CLICKING OR ALLOWING ANY OTHER SIGNER TO CLICK THE "Agree and Continue" BUTTON, OR BY EXPRESSING YOUR AGREEMENT IN REPLYING TO AN EMAIL WE SEND YOU WITH A COPY OF THIS AGREEMENT ATTACHED, YOU AGREE TO ALL OF THE TERMS OF THIS AGREEMENT ON BEHALF OF THE ENTITIES AND PERSONS LISTED AS BORROWER, AND YOU ACKNOWLEDGE THAT YOU HAVE READ AND UNDERSTAND THIS ENTIRE AGREEMENT, INCLUDING BUT NOT LIMITED TO: (1) THE PROMISE THAT ALL ADVANCES WILL BE FOR THE BUSINESS PURPOSES DESCRIBED IN THE APPLICATION (SECTION 2(A)); (2) THE PAYMENT AUTHORIZATION (SECTION 7); AND (3) THE ARBITRATION PROVISION (SECTION 14). YOU AGREE THAT TICKING A BOX ON BEHALF OF ANY OTHER PERSON, OR REPLYING TO AN EMAIL SENT TO ANY OTHER PERSON, WITHOUT SUCH PERSON'S EXPRESS CONSENT, CONSTITUTES FRAUD.
BY TICKING THE BOX AND BY CLICKING OR ALLOWING ANY OTHER SIGNER TO CLICK THE "Agree and Continue" BUTTON, OR BY EXPRESSING YOUR AGREEMENT IN REPLYING TO AN
EMAIL WE SEND YOU WITH A COPY OF THIS AGREEMENT ATTACHED, YOU AGREE TO ALL OF THE TERMS OF THE PERSONAL GUARANTY SET FORTH IN
SECTION 13 OF THIS AGREEMENT, WHEREBY YOU, ACTING IN YOUR PERSONAL CAPACITY AND NOT ON BEHALF OF THE BORROWER, GUARANTEE AND BECOME
LIABLE TO HEADWAY CAPITAL FOR ALL OF THE BORROWER'S PAYMENT AND PERFORMANCE OBLIGATIONS UNDER THIS AGREEMENT, AND YOU ACKNOWLEDGE
THAT YOU HAVE READ AND UNDERSTAND THIS ENTIRE AGREEMENT, INCLUDING BUT NOT LIMITED TO: (1) THE PROMISE THAT ALL ADVANCES WILL BE FOR
THE BUSINESS PURPOSES DESCRIBED IN THE APPLICATION (SECTION 13(A)); AND (2) THE ARBITRATION PROVISION (SECTION 14). YOU AGREE THAT
TICKING A BOX ON BEHALF OF ANY OTHER PERSON, OR REPLYING TO AN EMAIL SENT TO ANY OTHER PERSON, WITHOUT SUCH PERSON'S EXPRESS
CONSENT, CONSTITUTES FRAUD. |
Account: #18007170
PHARMACOLOGY
UNIVERSITY INC
Headway Capital, LLC | 175 W. Jackson Blvd., Suite
1000 | Chicago, IL 60604
California Residents: Headway Capital California
License Lender No. 60DBO 44216.
Exhibit 10.11
PARK
AVE FUNDING
FUTURE
RECEIVABLES SALE AND PURCHASE AGREEMENT
This agreement
(this “Agreement”), dated August 8, 2022
, between PARK AVE FUNDING ( “Buyer”) and the seller(s) listed herein (collectively, the "Seller”)
(all capitalized terms shall have the meanings ascribed to them below):
Business
Legal Name: CHINA INFRASTRUCTURE CONSTRUCTION CORP
Form
of Business Entity: Corporation
D/B/A:
PHARMACOLOGY UNIVERSITY
EIN #: 82-5497827
Physical
Address: 6201 BONHOMME RD STE 466-S HOUSTON TEXAS 77036
Mailing
Address: 6201 BONHOMME RD STE 466-S HOUSTON TEXAS 77036
PURCHASE
PRICE: $45,000.00
PURCHASED
AMOUNT: $61,155.00
SPECIFIED
PERCENTAGE: 49%
INITIAL
INSTALLMENT: $3,057.00 Weekly
| FOR SELLER #1 |
FOR SELLER # 2 (if any) |
| By: /s/ Henry Levinski |
By: /s/ Dante Picazo |
| Name: HENRY DONALD LEVINSKI |
Name: DANTE PICAZO |
| Title: Owner/Agent/Manager |
Title: Owner/Agent/Manager |
| Email: HLEVINSKI@PHARMACOLOGY.COM |
Email: DPICAZO@MSN.COM |
| Business Phone: |
Business Phone: |
Concurrently
with the execution of this Agreement by Seller, and as condition to the effectiveness hereof, Seller has caused the Personal Guarantee
of Performance in the form attached hereto as Exhibit A (the “Guaranty”) to be signed and delivered to Buyer.
Furthermore,
in the event the Seller and/or Guarantor are comprised of more than one entity and/or individuals, then ALL such entities and/or individuals,
respectively, shall sign a standard form addendum of Buyer to this Agreement reflecting said interest of Buyer.
WHEREAS,
Seller is desirous to sell to Buyer, and Buyer is desirous to purchase from Seller a Specified Percentage of the Seller’s Future
Receipts, but only on the terms and conditions set forth in this Agreement.
NOW,
THEREFORE, for good and valuable consideration, the mutual receipts and sufficiency of which is hereby acknowledged by both parties,
Buyer and Seller hereby agree to the foregoing and as follows:
1. Basic
Terms and Definitions.
a. “Effective
Date” shall mean the later of: (i) the date set forth in the preamble to this Agreement, and (ii) the date when BUYER paid
the Purchase Price to Seller.
b. “Specified
Percentage” shall mean the percentage set forth in the preamble to this Agreement of each and every sum from sale made by Seller
of Future Receipts.
c. “Future
Receipts” shall mean, collectively, all of Seller’s receipts of monies for the sale of its goods and services that monies
shall be paid and delivered to Seller by Seller’s customers and/or other vendees after the Effective Date of this Agreement; which
payments or deliveries of monies can be made in the form of cash, check, credit, charge, or debit card, ACH or other electronic transfer
or any other form of monetary payment and/or pecuniary benefit received by Seller. “Daily Receipts” shall mean the
amount of Future Receipts received by Seller on a daily basis.
d. “Purchased
Amount” shall mean the total amount of the Specified Percentage of the Future Receipts that Seller shall be under obligation
to deliver and pay over to Buyer pursuant to this Agreement. The Purchased Amount shall be the amount set forth under “Purchased
Amount” in the preamble to this Agreement.
e. Purchase
Price” shall mean the total amount that Buyer agrees to pay for the Purchased Amount. The Purchase Price shall be the amount
set forth under “Purchase Price” in the preamble to this Agreement. However, the amount that Seller will actually receive
from Buyer pursuant to this Agreement will be less than the Purchase Price by the total sum of the Applicable Fees, Prior Balance and
the Origination Fee, if any, as set forth in subparagraphs h., i., and j. below.
f. “Initial
Installment” shall mean the fixed amount (whether daily or weekly, as set forth in the preamble) that Seller and Buyer agree
to be a good faith approximation of the Specified Percentage of Seller's (daily or weekly) Future Receipts. Seller and Buyer further
agree that the Initial Installment set forth in the Preamble to this Agreement is based upon the information provided by Seller to Buyer
concerning Seller's most recent accounts receivables and/or revenue, including representations by the Seller to Buyer regarding the Seller's
estimated Future Receipts, and subject to Seller's right of adjustment/reconciliation set forth in this Agreement.
g. “Workday”
shall mean Monday through Friday except on days when banking institutions are closed for the holidays and do not process ACH payments.
h. “Applicable
Fees” shall mean, collectively, all initial costs and fees that Seller agrees to pay to Buyer as consideration for agreeing
to enter into this Agreement and that are described in Section 17 of this Agreement. The total sum of the Applicable Fees will be deducted
from the Purchase Price prior to delivering it to Seller pursuant to Seller’s authorization set forth in Rider 1 to this Agreement,
provided nevertheless that such deduction shall not be deemed to reduce the agreed upon Purchase Price or Purchased Amount.
i. “Prior
Balance” shall mean the sum of all amounts that Seller may owe to Buyer and/or third party(s) as of the Effective Date of this
Agreement. The Prior Balance, if any, is described in Section 18 of this Agreement and will be deducted from the Purchase Price prior
to delivering it to Seller pursuant to Seller’s authorization set forth in Rider 2 to this Agreement, provided nevertheless that
such deduction shall not be deemed to reduce the agreed upon Purchase Price or Purchased Amount.
j. “Origination
Fee” shall mean the fee set forth in Rider 1 that Buyer charges Seller for the costs of underwriting and processing Seller’s
application for funding. The Origination Fee, if any, is described in Section 19 of this Agreement and will be deducted from the Purchase
Price prior to delivering it to Seller, provided nevertheless that such deduction shall not be deemed to reduce the agreed upon Purchased
Price or Purchased Amount.
k. In the
event “Seller” is comprised of more than one entity, then:
i. The term
“Seller” shall mean, individually and collectively, all such entities; and
ii. Each
Seller is an “Affiliate” of all other Seller(s). The term “Affiliate” shall mean an entity or an individual that
(1) controls, (2) is under the “Control”, or (3) is under common Control with the entity or individual in question. The term
“Control” shall mean direct or indirect ownership of more than 50% of the outstanding voting stock of a corporation or other
majority equity interest if not a corporation and the possession of power to direct or cause the direction of the management and policy
of such corporation or other entity, whether through ownership of voting securities, by stature, or by contract; and
iii. The
representations, warranties, covenants, obligations and liabilities of each Seller shall be joint and several under this Agreement;
iv. The
liability of each Seller under this Agreement shall be direct and immediate and shall not be conditional or contingent upon the pursuance
of any remedies against any other person or entity;
v. The terms
“Specified Percentage”, “Future Receipts”, and “Initial Installment” shall mean the Specified Percentage
and the Future Receipts of each Seller individually; and
vi. Buyer
may pursue its rights and remedies under this Agreement against any one or any number of entities that constitute Seller without obligation
to assert, prosecute or exhaust any remedy or claim against any other Seller or any Guarantor.
l. In the
event “Guarantor” is comprised of more than one individual, then:
i. The term
“Guarantor” shall mean, individually and collectively, all such individuals;
ii. Each
Guarantor is an Affiliate of all other Guarantor(s);
iii. The
representations, warranties, covenants, obligations and liabilities of each Guarantor shall be joint and several under this Agreement
and the Guaranty;
iv. The
liability of each Guarantor under this Agreement and the Guaranty shall be direct and immediate and shall not be conditional or contingent
upon the pursuance of any remedies against any other person or entity; and
v. Buyer
may pursue its rights and remedies under this Agreement and/or Guaranty against any one or any number of individuals that constitute
Guarantor without obligation to assert, prosecute or exhaust any remedy or claim against any other Guarantor or any Seller.
2. The
Term. This Agreement for the purchase and sale of Future Receipts does not have a fixed duration or term, and therefore it is
potentially infinite. Subject to the provisions of Sections 10-13 hereof, the term of this Agreement shall commence on the Effective
Date and expire on the date (the “Expiration Date”) when the Purchased Amount and all other sums due to Buyer pursuant
to this Agreement are received by Buyer in full.
3. Sale
of Purchased Future Receipts. Seller hereby sells, assigns, transfers and conveys (hereinafter, the “Sale”)
unto Buyer all of Seller’s right, title and interest in to the Specified Percentage of the Future Receipts until the Purchased
Amount shall have been delivered by Seller to Buyer (hereinafter, the portion of the Future Receipts sold by Seller to Buyer pursuant
to this Agreement, the “Purchased Future Receipts”); to have and hold the same unto Buyer, its successors and assigns,
forever. This Sale of the Purchased Future Receipts is made without express or implied warranty to Buyer of collectability of the Purchased
Future Receipts by Buyer and without recourse against Seller and/or Guarantor(s), except as specifically set forth in this Agreement.
By virtue of this Agreement, Seller transfers to Buyer full and complete ownership of the Purchased Future Receipts and Seller retains
no legal or equitable interest therein.
4. Payment
of Purchase Price. In consideration of the sale by Seller to Buyer of the Purchased Future Receipts pursuant to this Agreement,
Buyer agrees to pay to Seller the Purchase Price. The amount of the Purchase Price (reduced by the Applicable Fees, Prior Balance, and
Origination Fee, if any) shall be delivered to Seller after execution of this Agreement.
5. Use
of Purchase Price. Seller hereby acknowledges that it fully understands that: (i) Buyer’s ability to collect the Purchased
Amount (or any portion thereof) is contingent upon Seller’s continued operation of its business and successful generation of the
Future Receipts until the Purchased Amount is delivered to Buyer in full; and (ii) that in the event of decreased efficiency or total
failure of Seller’s business Buyer’s receipt of the full or any portion of the Purchased Amount may be delayed indefinitely.
Based upon the foregoing, Seller agrees to use the Purchase Price exclusively for the benefit and advancement of Seller’s business
operations and for no other purpose.
6. Initial
Installments of Purchased Amount. The Purchased Amount shall be delivered by Seller to Buyer in the amount of the Initial Installment
on each and every Workday or Workweek (depending on whether the Initial Installment are daily or weekly) commencing on the Effective
Date and ending on the Expiration Date.
7. Approved
Bank Account and Credit Card Processor. During the term of this Agreement, Seller shall: (i) deposit all Future Receipts
into one (and only one) bank account which bank account shall be acceptable and preapproved by Buyer (the “Approved Bank Account”),
(ii) use one (and only one) credit card processor which processor shall be acceptable and preapproved by Buyer (the “Approved Processor”)
and (iii) deposit all credit card receipts into the Approved Bank Account. In the event the Approved Bank Account or Approved Processor
shall become unavailable or shall cease providing services to Seller during the term of this Agreement, prior to the first date of such
unavailability or cessation of services, Seller shall arrange for another Approved Bank Account or Approved Processor, as the case may
be.
8. Authorization
to Debit Approved Bank Account. Seller hereby authorizes Buyer to initiate electronic checks or ACH debits from the Approved
Bank Account (which as of the Effective Date of this Agreement shall be the account listed below) in the amount of the Initial Installment
commencing on the Effective Date until Buyer receives the full Purchased Amount;
*Seller
shall provide Buyer with all access code(s) for the Approved Bank Account during the Term of this Agreement. The Initial Installment
is to be drawn via ACH payment, from the following bank account:
| i. | | Account Number: 488056617849 |
| ii. | | Routing Number:111000025 |
| iii. | | Account Name:PHARMACOLOGY UNIVERSITY INC |
| iv. | | Bank Name: BANK OF AMERICA |
*Note that
this authorization is to remain in full force and effect until Buyer receives written notification from Seller of its termination in
such time and in such manner to afford Buyer a reasonable opportunity to act on it; provided, however, that revocation of this authorization
prior to remittance of the balance under the Agreement shall constitute a breach thereunder, subject to Sections 10-13 herein.
9. Fees
Associated with Debiting Approved Bank Account. It shall be Seller’s exclusive responsibility to pay to its banking institution
and/or Buyer’s banking institution directly (or to compensate Buyer, in case it is charged) all fees, charges and expenses incurred
by either Seller or Buyer due to rejected electronic checks or ACH debit attempts, overdrafts or rejections by Seller’s banking
institution of the transactions contemplated by this Agreement, including without limitation a $35.00 charge per bounced or rejected
ACH debit.
10. Seller’s
Right for Reconciliation. Seller and Buyer each acknowledges and agrees that:
a. If at
any time during the term of this Agreement Seller will experience unforeseen decrease or increase in its Receipts, Seller shall have
the right, at its sole and absolute discretion, but subject to the provisions of Section 11 below, to request retroactive reconciliation
of the Initial Installments for one (1) full calendar month immediately preceding the day when such request for reconciliation is received
by Buyer (each such calendar month, a “Reconciliation Month”).
b. Such
reconciliation (the “Reconciliation”) of the Seller’s Initial Installment for a Reconciliation Month shall be
performed by Buyer within five (5) Workdays following its receipt of the Seller’s request for Reconciliation by either crediting
or debiting the difference back to, or from, the Approved Bank Account so that the total amount debited by Buyer from the Approved Bank
Account during the Reconciliation Month at issue is equal to the Specific Percentage of the Future Receipts that Seller collected during
the Reconciliation Month at issue.
c. One or
more Reconciliation procedures performed by Buyer may reduce or increase the effective Initial Installment amount during the Reconciliation
Month in comparison to the one set forth in Section 1 of this Agreement, and, as the result of such reduction, the term of this Agreement
during which Buyer will be debiting the Approved Bank Account may get shortened or extended indefinitely.
11. Request
for Reconciliation Procedure.
a. It shall
be Seller’s sole responsibility and the right hereunder to initiate Reconciliation of Seller’s actual Initial Installments
during any Reconciliation Month by sending a request for Reconciliation to Buyer.
b. Any such
request for Reconciliation of the Seller’s Initial Installments for a specific Reconciliation Month shall be in writing, shall
include a copy of Seller’s bank statement, credit card processing statements, and pertinent aging report(s) for the Reconciliation
Month at issue, and shall be received by PARK AVE FUNDING via email to info@parkavefunding.com, with the subject line “REQUEST
FOR RECONCILIATION,” within five (5) Workdays after the last day of the Reconciliation Month at issue (time being of the essence
as to the last day of the period during which such demand for Reconciliation shall be received by Buyer).
c. Buyer’s
receipt of Seller’s request for Reconciliation after the expiration of the five (5) Workday period following the last day of the
Reconciliation Month for which such Reconciliation is requested nullifies and makes obsolete Seller’s request for Reconciliation
for that specific Reconciliation Month.
d. Seller
shall have the right to request Reconciliation as many times during the term of this Agreement as it deems proper, and Buyer shall comply
with each such request, provided that:
i. Each
such request is made in accordance with the terms of this Section 11; and
ii. If a
request for Reconciliation is made after the expiration of the term of this Agreement and, as the result of such Reconciliation, the
total amount actually debited by Buyer from the Approved Bank Account will become less than the Purchased Amount, then and in such event
the term of this Agreement shall automatically be extended until the time when the total amount actually debited from Approved Bank Account
pursuant to this Agreement shall become equal to the Purchased Amount.
e. Nothing
set forth in Sections 10 or 11 of this Agreement shall be deemed to: (i) provide Seller with the right to interfere with Buyer’s
right and ability to debit the Approved Bank Account while the request for Reconciliation of Seller’s receipts is pending or until
the Purchased Amount is collected by Buyer in full, or (ii) modify the amount of the Initial Installment for any calendar month during
the term of this Agreement other than during the Reconciliation Month(s) as the result of the Reconciliation.
12. Adjustment
of the Initial Installment. Seller and Buyer each acknowledge and agree that:
a. If at
any time during the term of this Agreement Seller experiences a steady decrease in its Receipts, Seller shall have the right, at its
sole and absolute discretion, but subject to the provisions of Section 13 below, to request modification (“Adjustment”)
of the amount of the Initial Installment that Seller is obligated to deliver to Buyer in accordance with the provisions of Section 6
above. Such Adjustment shall become effective as of the date it is granted and the new adjusted amount of the Initial Installment (the
“Adjusted Installment”) shall replace and supersede the amount of the Initial Installment set forth in Section 1 above.
b. The
Adjustment of the Initial Installment shall be performed by Buyer within five (5) Workdays following its receipt of the Seller’s
request for Adjustment by modifying the amount of the Initial Installment that shall be debited from the Approved Bank Account until
the Purchased Amount is paid in full. Notwithstanding anything to the contrary set forth in Sections 12 and 13 hereof, no Adjustment
shall take place until and unless Reconciliation for at least one (1) Reconciliation Month takes place resulting in the reduction of
the total amount debited from Seller’s Approved Bank Account during the Reconciliation Month by at least fifteen percent (15%)
in comparison to the amount that would have been debited during that month without Reconciliation.
c. One or
more Adjustments performed by Buyer may substantially extend the term of this Agreement.
13. Request
for Adjustment Procedure.
a. It
shall be Seller’s sole responsibility and the right to initiate the Adjustment by sending a request for Adjustment to Buyer.
b. A request
for Adjustment (an “Adjustment Request”) shall be in writing, and shall include copies of: (i) Seller’s last three
(3) consecutive bank statements of the Approved Bank Account, the last three (3) credit card processing statements and the last three
(3) aging reports immediately preceding the date of Buyer’s receipt of the Adjustment Request, and (ii) Seller’s bank statements
and credit card processing statements previously provided by Seller to Buyer based upon which statements the amount of the Initial Installment
set forth in Section 1 above (or the then current Adjusted Installment as the case may be) was determined, and shall be received by Buyer
by email at info@parkavefunding.com, with the subject line “REQUEST FOR ADJUSTMENT,” within five (5) Workdays after the date
that is the later of (i) the last day of the latest bank statement enclosed with the Adjustment Request and (ii) the last date of the
latest credit card processing statement enclosed with the Adjustment Request (time being of the essence as to the last day of the period
during which an Adjustment Request shall be received by Buyer).
c. Buyer’s
receipt of a Seller’s Adjustment Request after the expiration of the above referenced five (5) Workday period nullifies and makes
obsolete such Adjustment Request.
d. Seller
shall have the right to request Adjustment of the Initial Installment, or the Adjusted Installment (as the case may be), as many times
during the term of this Agreement as it deems proper, and Buyer shall comply in good faith with such request, provided that:
i. Each
such request for Adjustment is made in accordance with the terms of this Section 13; and
ii. A request
for Adjustment shall not be made after the Expiration Date.
e. Nothing
set forth in Sections 12 or 13 of this Agreement shall be deemed to provide Seller with the right to (i) interfere with Buyer’s
right and ability to debit the Approved Bank Account while the request for Adjustment is pending or until the Purchased Amount is collected
by Buyer in full or (ii) request Adjustment retroactively for the portion of the term of this Agreement preceding the date of an Adjustment
Request.
14. Seller’s
Right to Accelerate Remittance of the Outstanding Portion of the Purchased Amount of Future Receipts (“Outstanding PAFR”).
a. Notwithstanding
anything to the contrary set forth in this Agreement, Seller shall have the right, at any time after receipt from Buyer of the Purchase
Price, and upon obtaining Buyer’s prior written consent, to accelerate delivery to Buyer of the then undelivered portion of the
Purchased Amount of Future Receipts (such amount, the “Outstanding PAFR”). The delivery of the Outstanding PAFR shall
be governed by the following subparagraphs.
b. The Outstanding
PAFR can only be delivered in full and not partially.
c. Seller
shall request the right to accelerate the delivery of the Outstanding PAFR by notifying Buyer to that effect; provided that such notice
shall be in writing (an email delivery shall be deemed acceptable) and shall contain the information on the source(s) of the funds to
be used for delivery of the Outstanding PAFR and on the approximate date of such delivery.
d. Buyer
shall respond to Seller’s request within three (3) Workdays from the date of its receipt by Buyer.
e. In its
response to Seller’s request, Buyer shall indicate the exact amount of the Outstanding PAFR as of the date of its delivery by Seller.
f. As of
the date agreed upon as between Buyer and Seller, Seller shall deliver to Buyer the full amount of the Outstanding PAFR (such date, the
“Accelerated Delivery Date”).
g. Under
no circumstances shall Seller suspend or modify, or cause to be suspended or modified, the delivery to Buyer of the Initial Installments
prior to the delivery of the Outstanding PAFR to Buyer.
h. Upon
delivery of the Outstanding PAFR to Buyer in compliance with the provisions of this Section 14, Seller’s obligations to Buyer pursuant
to this Agreement shall be deemed completed and fulfilled.
15. Rights
and Obligations of Buyer Upon Receipt of the Outstanding PAFR. Upon receipt of the full amount of the Outstanding PAFR:
a. Buyer
shall notify the Approved Bank Account and request from it to stop transferring Initial Installments to Buyer’s bank account.
b. If Buyer
shall have received one or more Initial Installment (or Adjusted Installment, as the case may be) after the Accelerated Delivery Date
(due to the Approved Bank’s delay in processing Buyer’s request described in subparagraph (a) above or for any other reason),
Buyer shall immediately do one of the two following things (but not both):
i. Return
to Seller the total sum of the Initial Installments (or the Adjusted Installments, as the case may be) received by Buyer after the date
of delivery of the Outstanding PAFR to Buyer; or
ii. Apply
the total sum of the Initial Installments (or the Adjusted Installments, as the case may be) received by Buyer after the Accelerated
Delivery Date toward Seller’s outstanding financial obligations to Buyer existing as of the Accelerated Delivery Date for reasons
unrelated to this Agreement (if any).
A. By way
of example, if as of the Accelerated Delivery Date, Seller and Buyer would be parties to a another future receivables sale and purchase
agreement in connection with a portion of Seller’s Future Receipts that is not subject to this Agreement (such agreement, an “Unrelated
Future Agreement”), then and in such event Buyer may, in its sole and absolute discretion, apply the sum of the Initial Installments
(or the Adjusted Installments, as the case may be) received by Buyer after the Accelerated Delivery Date pursuant to this Agreement toward
fulfilling Seller’s obligations to Buyer pursuant to the Unrelated Future Agreement.
c. Seller
acknowledges and agrees that Buyer shall have the right to apply the total sum of the Initial Installments (or Adjusted Installments,
as the case may be) received by Buyer after the Accelerated Delivery Date toward Seller’s outstanding financial obligations to
Buyer existing as of the Accelerated Delivery Date for reasons unrelated to this Agreement (if any) in exchange for, and as an adequate
and sufficient consideration for, Buyer granting Seller the right to accelerate the payment of the Purchased Amount of Future Receipts.
16. Risk
Sharing Acknowledgments and Arrangements.
a. Seller
and Buyer each hereby acknowledges and agrees that:
i. The Purchased
Future Receipts represent a portion of Seller’s Future Receipts.
ii. This
Agreement consummates the sale of the Purchased Future Receipts at a discount, not the borrowing of funds by Seller from Buyer. Buyer
does not charge Seller and will not collect from Seller any interest on the monies used by Buyer for the purchase of the Purchased Future
Receipts. The period of time that it will take Buyer to collect the Purchased Amount is not fixed, is unknown to both parties as of the
Effective Date of this Agreement and will depend on how well or not well Seller’s business will be performing following the Effective
Date. As an extreme example, in the event Seller’s business ceases to exist after Buyer’s purchase of the Purchased Future
Receipts as a result of a drying up of revenues for reasons outside Seller’s control, Buyer may never collect all or a substantial
portion of the Purchased Future Receipts and will never recover the moneys it spent on such purchase.
iii. The
amount of the Initial Installment set forth in Section 1 of this Agreement is calculated based upon the information concerning an average
amount of Receipts collected by Seller’s business immediately prior to the Effective Date of this Agreement, as well as representations
regarding the Seller’s estimated Future Receipts, which information was provided by the Seller to Buyer.
iv. The
amounts of Seller’s Future Receipts may increase or decrease over time.
v. If, based
upon the Reconciliation and/or the Adjustment procedures described above, it will be determined that the actual amounts of the Specified
Percentage of the Future Receipts get reduced in comparison to the amount of the Initial Installment as of the Effective Date set forth
in Section 1 of this Agreement, and in comparison to the amount that both Seller and Buyer may have anticipated or projected because
Seller’s business has slowed down, or if the full Purchased Amount is not remitted because Seller’s business went bankrupt
or otherwise ceased operations in the ordinary course of business (but not due to Seller’s willful or negligent mishandling of
its business or due to Seller’s failure to comply with its obligations under this Agreement), Seller would not be in breach of
or in default under this Agreement.
b. Buyer’s
Risk Acknowledgments. Buyer agrees to purchase the Purchased Future Receipts knowing the risks that Seller’s business may
slow down or fail, and Buyer assumes this risk based exclusively upon the information provided to it by Seller and related to the business
operations of Seller’s business prior to the date hereof, and upon Seller’s representations, warranties and covenants contained
in this Agreement that are designed to give Buyer a reasonable and fair opportunity to receive the benefit of its bargain. Furthermore,
Buyer hereby acknowledges and agrees that Seller shall be excused from performing its obligations under this Agreement in the event Seller’s
business ceases its operations exclusively due to the following reasons (collectively, the “Valid Excuses”):
i. adverse
business conditions that occurred for reasons outside Seller’s control and not due to Seller’s willful or negligent mishandling
of its business;
ii. loss
of the premises where the business operates (but not due to Seller’s breach of its obligations to its landlord), provided however
that Seller does not continue and/or resume business operations at another location;
iii. bankruptcy
of Seller; and/or
iv. natural
disasters or similar occurrences beyond Seller’s control.
c. Application
of Amounts Received by Buyer. Buyer reserves the right to apply amounts received by it under this Agreement to any fees or other
charges due to Buyer from Seller prior to applying such amounts to reduce the outstanding amount of the Purchased Amount. Any ACH payments
and/or payments which clear after the Effective Date of this Agreement shall be applied to the balance hereunder.
d. Not
a Loan. Seller and Buyer agree that the Purchase Price is paid to Seller in consideration for the acquisition of the Purchased
Future Receipts and that payment of the Purchase Price by BUYER is not intended to be, nor shall it be construed as, a loan from Buyer
to Seller that requires absolute and unconditional repayment on a maturity date. To the contrary, Buyer’s ability to receive the
Purchased Amount pursuant to this Agreement, and the date when the Purchased Amount is delivered to Buyer in full (if ever) are subject
to and conditioned upon performance of Seller’s business. If, nevertheless, a court having jurisdiction over this Agreement and
the parties hereto shall have determined that Buyer has charged or received interest hereunder in excess of the highest rate allowed
by law, then the rate of such interest received by Buyer shall automatically be reduced to the maximum rate permitted by applicable law
and Buyer shall promptly refund to Seller any interest received by Buyer in excess of the maximum lawful rate.
17. Applicable
Fees. Seller acknowledges that the Applicable Fees were agreed upon between Seller and Buyer prior to Seller entering into this
Agreement, were subject to arm-length negotiation between Buyer and Seller, and a detailed list of the Applicable Fees is set forth in
Rider 1 of this Agreement, which is attached hereto and made a part hereof.
18. Prior
Balance. Seller represents and warrants that Rider 2, which is attached hereto and made a part hereof, contains true and correct
information as to the name(s) of Seller’s creditors and the amounts that Seller owes each of those creditors as of the Effective
Date (and these amounts being a portion of the Prior Balance), and that as of the date hereof there are no creditors of Seller which
may otherwise encumber the Purchased Future Receipts other than those listed in Rider 2. Seller indemnifies and holds harmless Buyer
for any and all damages and losses (including without limitation legal fees and expenses) incurred by Buyer as the result of such representation
being untrue, incorrect or incomplete.
19. Origination
Fee. Seller hereby agrees for Buyer to withhold from the Purchase Price the Origination Fee contained in Rider 1, which is attached
hereto and made a part hereof.
20. No
Reduction of Purchase Price. Seller hereby: (i) agrees to pay the Applicable Fees, the Prior Balance and the Origination
Fee (the sum of those, hereinafter, the “Closing Costs”) in full; (ii) hereby authorizes Buyer to apply a portion of the
Purchase Price due to Seller pursuant to this Agreement toward satisfaction of Seller’s obligation to pay the Closing Costs by
deducting the amount of the Closing Costs from the Purchase Price prior to delivering it to Seller; and (iii) agrees that deduction of
the Closing Costs from the Purchase Price shall not be deemed to be a reduction of the Purchase Price.
REPRESENTATIONS,
WARRANTIES AND COVENANTS
21. Seller
represents, warrants and covenants that as of this date and during the term of this Agreement:
a. Financial
Condition and Financial Information. Seller’s bank and financial statements, copies of which have been furnished to Buyer,
and future statements which may be furnished hereafter pursuant to this Agreement or upon Buyer’s request, fairly represent the
financial condition of Seller as of the dates such statements were issued, and prior to execution of the Agreement there has been no
material adverse changes, financial or otherwise, in such condition, operation or ownership of Seller. Seller has a continuing, affirmative
obligation to advise Buyer of any material adverse change in its financial condition, operation or ownership, and/or online banking log-in
credentials. Buyer may request Seller’s bank statements at any time during the term of this Agreement and Seller shall provide
them to Buyer within two (2) Workdays of such request. Seller’s failure to do so, and/or cutting off Buyer’s online access
to the Approved Bank Account, is a material breach of this Agreement.
b. Governmental
Approvals. Seller is in compliance and, during the term of this Agreement, shall be in compliance with all laws and has valid
permits, authorizations and licenses to own, operate and lease its properties and to conduct the business in which it is presently engaged.
c. Good
Standing. Seller is a corporation/limited liability company/limited partnership/other type of entity that is in good standing
and duly incorporated or otherwise organized and validly existing under the laws of its jurisdiction of incorporation or organization
and has full power and authority necessary to carry its business as it is now being conducted.
d. Authorization.
Seller has all requisite power to execute, deliver and perform this Agreement and consummate the transactions contemplated hereunder;
entering into this Agreement will not result in breach or violation of, or default under, any agreement or instrument by which Seller
is bound or any statute, rule, regulation, order or other law to which Seller is subject, nor require the obtaining of any consent, approval,
permit or license from any governmental authority having jurisdiction over Seller. All organizational and other proceedings required
to be taken by Seller to authorize the execution, delivery and performance of this Agreement have been taken. The person signing this
Agreement on behalf of Seller has full power and authority to bind Seller to perform its obligations under this Agreement.
e. Accounting
Records and Tax Returns. Seller will treat receipt of the Purchase Price and payment of the Purchased Amount in a manner evidencing
sale of its future receipts in its accounting records and tax returns and further agrees that Buyer is entitled to audit Seller’s
accounting records upon reasonable notice in order to verify compliance. Seller hereby waives any rights of privacy, confidentiality
or taxpayer privilege in any litigation or arbitration arising out of this Agreement in which Seller asserts that this transaction is
anything other than a sale of future receipts.
f. Taxes;
Workers Compensation Insurance. Seller has paid and will promptly pay, when due, all taxes, including without limitation, income,
employment, sales and use taxes, imposed upon Seller’s business by law, and will maintain workers compensation insurance required
by applicable governmental authorities.
g. Business
Insurance. Seller maintains and will maintain general liability and business-interruption insurance naming Buyer as loss payee
and additional insured in the amounts and against risks as are satisfactory to Buyer and shall provide Buyer proof of such insurance
upon request.
h. Electronic
Check Processing Agreement. Seller shall not change its Approved Processor, add terminals, change its Approved Bank Account(s)
or take any other action that could have any adverse effect upon Seller’s obligations or impede Buyer’s rights under this
Agreement, without Buyer’s prior written consent.
i. No
Diversion of Future Receipts. Seller shall not allow any event to occur that would cause a diversion of any portion of Seller’s
Future Receipts from the Approved Bank Account or Approved Processor without Buyer’s written permission.
j. Change
of Name or Location. Seller, any successor-in-interest of Seller, and Guarantor shall not conduct Seller’s businesses under
any name other than as disclosed to the Approved Processor and Buyer, shall not change and/or transfer ownership in/of the Seller and
will not change any of its places of business without first obtaining Buyer’s written consent.
k. Prohibited
Business Transactions. Seller shall not: (i) transfer or sell all or substantially all of its assets (including without limitation
the Collateral (as such term is defined in Section 22) or any portion thereof) without first obtaining Buyer’s consent; or (ii)
make or send notice of its intended bulk sale or transfer.
l. No
Closing of Business. Seller will not sell, dispose, transfer or otherwise convey all or substantially all of its business or
assets without first: (i) obtaining the express written consent of Buyer, and (ii) providing Buyer with a written agreement of a purchaser
or transferee of Seller’s business or assets to assume all of Seller’s obligations under this Agreement pursuant to documentation
satisfactory to Buyer. Seller represents that it has no current plans to close its business either temporarily (for renovations, repairs
or any other purpose), or permanently. Seller agrees that until Buyer shall have received the Purchased Amount in full, Seller will not
voluntarily close its business on a permanent or temporarily basis for renovations, repairs, or any other purposes. Notwithstanding the
foregoing, Seller shall have the right to close its business temporarily if such closing is necessitated by a requirement to conduct
renovations or repairs imposed upon Seller’s business by legal authorities having jurisdiction over Seller’s business (such
as from a health department or fire department), or if such closing is necessitated by circumstances outside Seller’s reasonable
control. Prior to any such temporary closure of its business, Seller shall provide Buyer ten (10) business days advance notice.
m. No
Pending Bankruptcy. As of the date of Seller’s execution of this Agreement, Seller is not insolvent, has not filed, and
does not contemplate filing, any petition for bankruptcy protection under any title of the United States Code and there has been no involuntary
bankruptcy petition brought or pending against Seller. Seller represents that it has not consulted with a bankruptcy attorney on the
issue of filing bankruptcy or some other insolvency proceeding within six months immediately preceding the date of this Agreement.
n. Estoppel
Certificate. Seller will at any time, and from time to time, upon at least one (1) day’s prior notice from Buyer to Seller,
execute, acknowledge and deliver to Buyer and/or to any other person or entity specified by Buyer, a statement certifying that this Agreement
is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified
and stating the modification(s) and stating the date(s) on which the Purchased Amount or any portion thereof has been repaid.
o. Unencumbered
Future Receipts. Seller has and will continue to have good, complete and marketable title to all Future Receipts, free and clear
of any and all liabilities, liens, claims, changes, restrictions, conditions, options, rights, mortgages, security interests, equities,
pledges and encumbrances of any kind or nature whatsoever or any other rights or interests other than by virtue or entering into this
Agreement. Seller specifically warrants and represents that it is not currently bound by the terms of any future receivables and/or factoring
agreement which may encumber in any way the Future Receipts.
p. No
Stacking. Seller shall not further encumber the Future Receipts, without first obtaining written consent of Buyer. Any further
encumbrance by seller of the Future Receipts is a material breach of this Agreement.
q. Business
Purpose. Seller is entering into this Agreement solely for business purposes and not as a consumer for personal, family or household
purposes.
r. No
Default Under Contracts with Third Parties. Seller’s execution of and/or performance of its obligations under this Agreement
will not cause or create an event of default by Seller under any contract, which Seller is or may become a party to.
s. Right
of Access. In order to ensure Seller’s compliance with the terms of this Agreement, Seller hereby grants Buyer the right
to enter, without notice, the premises of Seller’s business for the purpose of inspecting and checking Seller’s transaction
processing terminals to ensure the terminals are properly programmed to submit and/or batch Seller’s daily receipts to the Approved
Processor and to ensure that Seller has not violated any other provision of this Agreement. Furthermore, Seller hereby grants Buyer and
its employees and consultants access to Seller’s employees and records and all other items of property located at the Seller’s
place of business during the term of this Agreement. Seller hereby agrees to provide Buyer, upon request, all and any information concerning
Seller’s business operations, banking relationships, names and contact information of Seller’s suppliers, vendors and landlord(s),
to allow Buyer to interview any of those parties.
t. Phone
Recordings and Contact. Seller agrees that any call between Seller and Buyer and its owners, managers, employees and agents may
be recorded and/or monitored. Furthermore, Seller acknowledges and agrees that: (i) it has an established business relationship with
Buyer, its managers, employees and agents (collectively, the “Buyer Parties”) and that Seller may be contacted by
any of the Buyer Parties from time-to-time regarding Seller’s performance of its obligations under this Agreement or regarding
other business transactions; (ii) it will not claim that such communications and contacts are unsolicited or inconvenient; and (iii)
any such contact may be made by any of the Buyer Parties in person or at any phone number (including mobile phone number), email addresses,
or facsimile number belonging to Seller’s office, or its owners, managers, officers, or employees.
u. Knowledge
and Experience of Decision Makers. The persons authorized to make management and financial decisions on behalf Seller with respect
to this Agreement have such knowledge, experience and skill in financial and business matters in general and with respect to transactions
of a nature similar to the one contemplated by this Agreement so as to be capable of evaluating the merits and risks of, and making an
informed business decision with regard to, Seller entering into this Agreement.
v. Seller’s
Due Diligence. The person authorized to sign this Agreement on behalf of Seller: (i) has received all information that such person
deemed necessary to make an informed decision with respect to a transaction contemplated by this Agreement; and (ii) has had unrestricted
opportunity to make such investigation as such person desired pertaining to the transaction contemplated by this Agreement and verify
any such information furnished to him or her by Buyer.
w. Consultation
with Counsel. The person(s) signing this Agreement of behalf of Seller: (a) has read and fully understands the content of this
Agreement; (b) has consulted to the extent he/she wished with Seller’s own counsel in connection with the entering into this Agreement;
(c) has made sufficient investigation and inquiry to determine whether this Agreement is fair and reasonable to Seller, and whether this
Agreement adequately reflects his or her understanding of its terms.
x. Buyer’s
Consent. Seller agrees that in every instance Seller’s rights under this Agreement are contingent upon first obtaining
Buyer’s consent, such consent may be withheld, granted or conditioned at Buyer’s sole and absolute discretion.
y. No
Reliance on Oral Representations. This Agreement contains the entire agreement between Seller and Buyer with respect to the subject
matter of this Agreement and supersedes each course of conduct previously pursued or acquiesced in, and each oral agreement and representation
previously made, by Buyer or any of the Buyer Parties with respect thereto (if any), whether or not relied or acted upon. No course of
performance or other conduct subsequently pursued or acquiesced in, and no oral agreement or representation subsequently made, by the
Buyer Parties, whether or not relied or acted upon, and no usage of trade, whether or not relied or acted upon, shall amend this Agreement
or impair or otherwise affect Seller’s obligations pursuant to this Agreement or any rights and remedies of the parties to this
Agreement.
z. No
Additional Fees Charged. Seller hereby acknowledges and agrees that: (i) other than the Closing Costs, if any, Buyer is not charging
any additional fees to Seller; and (ii) if Seller is charged with any fee and/or cost not listed in this Agreement or the Riders hereto,
such fee is not charged by Buyer. Moreover, as all working capital received under this Agreement is required to ensure Seller’s
continued success, Seller warrants and covenants not to pay any fee and/or commission with regard to this transaction other than as provided
for herein.
PLEDGE
OF SECURITY
22. Pledge.
As security for the prompt and complete payment and performance of any and all liabilities, obligations, covenants or agreements of Seller
under this Agreement (and any future amendments of this Agreement, if any) (hereinafter referred to collectively as the “Obligations”),
Seller hereby pledges, assigns and hypothecates to Buyer (collectively, “Pledge”) and grants to Buyer a continuing,
perfected and first priority lien upon and security interest in, to and under all of Seller’s right, title and interest in and
to the following (collectively, the “Collateral”), whether now existing or hereafter from time to time
acquired:
a. all accounts,
including without limitation, all deposit accounts, accounts-receivable, and other receivables, chattel paper, documents, equipment,
general intangibles, instruments, and inventory, as those terms are defined by Article 9 of the Uniform Commercial Code (the “UCC”),
now or hereafter owned or acquired by Seller; and
b. all Seller’s
proceeds, as such term is defined by Article 9 of the UCC.
23. Termination
of Pledge. Upon the payment and performance by Seller in full of the Obligations, the security interest in the Collateral pursuant
to this Pledge shall automatically terminate without any further act of either party being required, and all rights to the Collateral
shall revert to Seller. Upon any such termination, Buyer will execute, acknowledge (where applicable) and deliver such satisfactions,
releases and termination statements, as Seller shall reasonably request.
24. Representations
with Respect to Collateral. Seller hereby represents and warrants to Buyer that the execution, delivery and performance by Seller
of this Pledge, and the remedies in respect of the Collateral under this Pledge (i) have been duly authorized; (ii) do not require the
approval of any governmental authority or other third party or require any action of, or filing with, any governmental authority or other
third party to authorize same (other than the filing of the UCC -1s); and (iii) do not and shall not (A) violate or result in the breach
of any provision of law or regulation, any order or decree of any court or other governmental authority, and/or (B) violate, result in
the breach of or constitute a default under or conflict with any indenture, mortgage, deed of trust, agreement or any other instrument
to which Seller is a party or by which any of Seller’s assets (including, without limitation, the Collateral) are bound.
25. Further
Assurances. Upon the request of Buyer, Seller, at Seller’s sole cost and expense, shall execute and deliver all such further
UCC-1s, continuation statements, assurances and assignments of the Collateral and consents with respect to the pledge of the Collateral
and the execution of this Pledge, and shall execute and deliver such further instruments, agreements and other documents and do such
further acts and things, as Buyer may request in order to more fully effectuate the purposes of this Pledge and the assignment of the
Collateral and obtain the full benefits of this Pledge and the rights and powers herein created.
26. Attorney-in-Fact.
Seller hereby authorizes Buyer at any time to take any action and to execute any instrument, including without limitation to file one
or more financing statements and/or continuation statements, to evidence and perfect the security interest created hereby and irrevocably
appoints Buyer as its true and lawful attorney-in-fact, which power of attorney shall be coupled with an interest, with full authority
in the place and stead of Seller and in the name of Seller or otherwise, from time to time, in Buyer’s sole and absolute discretion,
including without limitation (a) for the purpose of executing such statements in the name of and on behalf of Seller, and thereafter
filing any such financing and/or continuation statements, and (b) to receive, endorse and collect all instruments made payable to Seller.
EVENTS
OF DEFAULT AND REMEDIES
27. Events
of Default. The occurrence of any of the following events shall constitute an “Event of Default” by Seller:
a. Seller
shall violate any term, condition or covenant in this Agreement governing Seller’s obligations of timely delivery and in full of
Initial Installments (or Adjusted Installments, as the case may be) to Buyer, and timely and in full payment to Buyer of any other sums
due for any reason whatsoever other than as the result of Seller’s business ceasing its operations exclusively due to any of the
Valid Excuses.
b. Any representation
or warranty by Seller made in this Agreement shall prove to have been incorrect, false or misleading in any material respect when made.
c. Seller
shall default under any of the terms, covenants and conditions of any other agreement with Buyer (if any) which is related to the instant
Agreement.
d. Seller
uses multiple depository accounts without obtaining prior written consent of Buyer in each instance.
e. Seller
fails to deposit any portion of its Future Receipts into the Approved Bank Account;
f. Seller
changes the Approved Bank Account or Approved Processor without obtaining prior written consent of BUYER in each instance.
g. Seller
interferes with Buyer’s collection of Initial Installments (or Adjusted Installments, as the case may be).
h. Two (2)
or more ACH transactions attempted by Buyer are rejected by Seller’s bank due to lack of sufficient funds in the Approved Bank
Account, without Seller giving Buyer prior notice and a valid reason for said lack of funds.
i. Buyer
receives an “R02”, “R07”, “R08”, “R16”, “R29” or any other similar ACH response
code indicating that Buyer’s ACH transactions have been stopped, not authorized, or the account has been frozen or closed and Buyer
has not been given proper notice and reason for said response code.
j. The Guaranty
shall for any reason cease to be in full force and effect.
28. Default
under the Agreement. In case any Event of Default occurs and is not waived by Buyer, in writing, Buyer may declare Seller in
default under this Agreement without notice.
29. Seller’s
Obligations Upon Default. Upon occurrence of an Event of Default due to Seller’s breach of its obligations under this Agreement,
Seller shall immediately deliver to Buyer the entire unpaid portion of the Purchased Amount. In addition, Seller shall also pay to Buyer,
as additional damages, any reasonable expenses incurred by Buyer in connection with recovering the monies due to Buyer from Seller pursuant
to this Agreement, including without limitation the costs of retaining collection firms and reasonable attorneys’ fees and disbursements
(collectively, “Reasonable Damages”). The parties agree that Buyer shall not be required to itemize or prove its Reasonable
Damages and that the fair value of the Reasonable Damages shall be calculated as thirty-three percent (33%) of the undelivered portion
of the Purchased Amount of Future Receipts upon the occurrence of an event of default, or seventy- five hundred dollars ($7,500.00),
whichever is greater. The entire sum due to Buyer pursuant to this Section 29 shall bear simple interest from the Default Payment Date
until is paid in full, at the rate of 9.00% per annum (and such interest shall accrue daily).
30. Remedies
Upon Default. Upon Seller’s default, Buyer may immediately proceed to protect and enforce its rights under this Agreement
and/or Guaranty by:
a. Enforcing
its rights as a secured creditor under the Uniform Commercial Code including, without limitation, notifying any account debtor(s) of
Seller and/or Guarantor(s) as the terms are defined below, of Buyer’s security interest (Buyer understands that in the course of
notifying said account debtor of Seller’s security interest, Seller shall have the right to share any and all information regarding
this Agreement and the Personal Guarantee of Performance);
b. Enforcing
the provisions of the Personal Guarantee of Performance against the Guarantor(s) without first seeking recourse from Seller;
c. Notifying
Seller’s and/or Guarantor’s credit card processor of the sale of Future Purchase Receipts hereunder and to direct such credit
card processor to make payment to Buyer of all or any portion of the amounts received by such credit card processor on behalf of Seller;
and
d. Commencing
a suit in law and/or equity, whether for the specific performance of any covenant, agreement or other provision contained herein, or
to enforce the discharge of Seller’s obligations hereunder (including the Personal Guarantee) or any other legal or equitable right
or remedy including without limitation Buyer’s rights of a secured party under the UCC.
31. Remedies
are not Exclusive. All rights, powers and remedies of Buyer in connection with this Agreement set forth herein may be exercised
at any time after the occurrence of any Event of Default, are cumulative and not exclusive and shall be in addition to any other rights,
powers or remedies provided to Buyer by law or equity.
32. Power
of Attorney. Seller irrevocably appoints Buyer and its representatives as its agents and attorneys-in- fact with full authority
to take any action or execute any instrument or document to do the following: (A) to settle all obligations due to Buyer from any credit
card processor and/or account debtor(s) of Seller; (B) upon occurrence of an Event of Default to perform any and all obligations of Seller
under this Agreement, including without limitation (i) to protect the value of the Collateral by obtaining the required insurance; (ii)
to collect monies due or to become due under or in respect of any of the Collateral; (iii) to receive, endorse and collect any checks,
notes, drafts, instruments, documents or chattel paper in connection with clause (i) or clause (ii) above; (iv) to sign Seller’s
name on any invoice, bill of lading, or assignment directing customers or account debtors, as that term is defined by Article 9 of the
Uniform Commercial Code (“ Account Debtors”), to make payment directly to Buyer (including providing information necessary
to identify Seller); and (v) to file any claims or take any action or institute any proceeding which Buyer may deem necessary for the
collection of any of the unpaid Purchased Amount from the Collateral, or otherwise to enforce its rights with respect to collection of
the Purchased Amount.
ADDITIONAL
TERMS
33. Seller
Deposit Agreement. Seller shall execute an agreement with Buyer that shall authorize Buyer to arrange for electronic fund transfer
services and/or “ACH” payments of Initial Installments (or Adjusted Installments, as the case may be) from the Approved Bank
Account. Seller shall provide Buyer and/or its authorized agent with all information, authorizations and passwords necessary to verify
Seller’s receivables, receipts and deposits into the Approved Bank Account. Seller shall authorize (by executing written authorizations,
if required) Buyer and/or it’s agent to deduct daily the amounts of the Initial Installment (or the Adjusted Installment, as the
case may be) to Buyer from settlement amounts which would otherwise be due to Seller from electronic check transactions and to pay such
amounts to Buyer by permitting Buyer to withdraw the Initial Installments (or the Adjusted Installments, as the case may be) from such
an account. The authorization shall be irrevocable until such time when Seller shall have performed its obligations under this Agreement
in full.
34. Financial
Condition. Seller and its Guarantor(s) authorize Buyer and its agents to investigate their financial status and history and will
provide to Buyer any bank or financial statements, tax returns, etc., as Buyer deems necessary prior to or at any time after execution
of this Agreement. A photocopy of this authorization will be deemed as acceptable for release of financial information. Buyer Seller
hereby authorizes Buyer to receive from time to time updates on such information and financial status.
35. Transactional
History. Seller shall execute written authorization(s) to their bank(s) to provide Buyer with Seller’s banking and/or credit-card
processing history.
36. Indemnification.
Seller and its Guarantor(s) jointly and severally, indemnify and hold harmless to the fullest extent permitted by law Approved Processor,
any ACH processor, customer and/or Account Debtors of the Seller, its/their officers, directors and shareholders against all losses,
damages, claims, liabilities and expenses (including reasonable attorney’s fees) incurred by any ACH processor, customer and/or
Account Debtors of the Seller resulting from (a) claims asserted by Buyer for monies owed to Buyer from Seller and (b) actions taken
by any ACH processor, customer and/or Account Debtor of the Seller in reliance upon information or instructions provided by Buyer.
37. No
Liability. In no event shall Buyer be liable for any claims asserted by Seller or its Guarantor under any legal theory for lost
profits, lost revenues, lost business opportunities, exemplary, punitive, special, incidental, indirect or consequential damages, each
of which is hereby knowingly and voluntarily waived by Seller and Guarantor(s).
MISCELLANEOUS
38. Modifications;
Agreements. No modification, amendment, waiver or consent of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by both parties.
39. Assignment.
Buyer may assign, transfer or sell its rights or delegate its duties hereunder, either in whole or in part without prior notice to the
Seller. Seller shall not assign its rights or obligations under this Agreement without first obtaining Buyer’s written consent.
40. Notices.
All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice request, demand, claim, or
other communication hereunder shall be deemed duly given (a) when delivered personally to the recipient, (b) one (1) business day after
being sent to the recipient by recognized overnight courier service, or (c) three (3) business days after being mailed to the recipient
by certified, return receipt requested and postage prepaid, and addressed to the intended recipient as set forth in the preamble of this
Agreement.
41. Waiver
Remedies. No failure on the part of Buyer to exercise, and no delay in exercising, any right under this Agreement, shall operate
as a waiver thereof, nor shall any single or partial exercise of any right under this Agreement preclude any other or further exercise
thereof or the exercise of any other right. The remedies provided hereunder are cumulative and not exclusive of any remedies provided
by law or equity.
42. Binding
Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted
assigns.
43. Governing
Law, Venue and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of New
York. Seller consents to the jurisdiction of the federal and state courts located in the State of New York, including but not limited
to the County of Kings and agrees that (subject to Section 49 of this Agreement) such courts shall be the exclusive forum for all actions,
proceedings or litigation arising out of or relating to this Agreement or subject matter thereof ("Dispute"), notwithstanding
that other courts may have jurisdiction over the parties and the subject matter, and the parties waive any forum non conveniens or other
objection to such jurisdiction and venue. Purchaser may serve Seller with legal process for any Dispute via certified mail by mailing
same to Seller’s address set forth herein or Seller’s current or last known address at the time of suit, and upon such mailing,
service shall be proper irrespective of whether a signed certified mail return receipt is returned to Purchaser.
44. Survival
of Representation, etc. All representations, warranties and covenants herein shall survive the execution and delivery of this
Agreement and shall continue in full force until all obligations under this Agreement shall have been satisfied in full and this Agreement
shall have expired.
45. Severability.
In case any of the provisions in this Agreement are found to be invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of any other provision contained herein shall not in any way be affected or impaired. Any provision of this Agreement
that may be found by a court having jurisdiction to be prohibited by law shall be ineffective only to the extent of such prohibition
without invalidating the remaining provisions hereof.
46. Entire
Agreement. This Agreement embodies the entire agreement between Seller and Buyer and supersedes all prior agreements and understandings
relating to the subject matter hereof. The Exhibit(s), Riders and Addendums, if any, to this Agreement are part of this Agreement.
47. JURY
TRIAL WAIVER. THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION
WITH OR IN ANY WAY RELATED TO THE TRANSACTIONS OF WHICH THIS AGREEMENT IS A PART OR THE ENFORCEMENT HEREOF. EACH PARTY HERETO ACKNOWLEDGES
THAT IT MAKES THIS WAIVER KNOWINGLY, WILLINGLY AND VOLUNTARILY AND WITHOUT DURESS, AND ONLY AFTER EXTENSIVE CONSIDERATION AND DISCUSSIONS
OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS.
48. CLASS
ACTION WAIVER. EACH PARTY HERETO WAIVES ANY RIGHT TO ASSERT ANY CLAIMS AGAINST THE OTHER PARTY, AS A REPRESENTATIVE OR MEMBER IN
ANY CLASS OR REPRESENTATIVE ACTION, EXCEPT WHERE SUCH WAIVER IS PROHIBITED BY LAW OR IS AGAINST PUBLIC POLICY. TO THE EXTENT EITHER PARTY
IS PERMITTED BY LAW OR COURT OF LAW TO PROCEED WITH A CLASS OR REPRESENTATIVE ACTION AGAINST THE OTHER, THE PARTIES HEREBY AGREE THAT:
(1) THE PREVAILING PARTY SHALL NOT BE ENTITLED TO RECOVER ATTORNEYS’ FEES OR COSTS ASSOCIATED WITH PURSUING THE CLASS OR REPRESENTATIVE
ACTION (NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT TO THE CONTRARY); AND (2) THE PARTY WHO INITIATES OR PARTICIPATES AS A
MEMBER OF THE CLASS WILL NOT SUBMIT A CLAIM OR OTHERWISE PARTICIPATE IN ANY RECOVERY SECURED THROUGH THE CLASS OR REPRESENTATIVE ACTION.
49. ARBITRATION.
THE PARTIES ACKNOWLEDGE AND AGREE THAT, PROVIDED THAT NO SUIT, ACTION OR PROCEEDING HAS BEEN ALREADY COMMENCED IN CONNECTION WITH ANY
MATTER ARISING OUT OF OR RELATED TO THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT, EACH BUYER, SELLER, AND ANY GUARANTOR OF SELLER SHALL
HAVE THE RIGHT TO REQUEST THAT ALL DISPUTES AND CLAIMS ARISING OUT OF OR RELATING TO THE CONSTRUCTION AND INTERPRETATION OF THIS AGREEMENT,
ARE SUBMITTED TO ARBITRATION. THE PARTY SEEKING ARBITRATION SHALL FIRST SEND A WRITTEN NOTICE OF INTENT TO ARBITRATE TO ALL OTHER PARTIES,
BY CERTIFIED MAIL UPON SENDING OF SUCH NOTICE, A PARTY REQUESTING ARBITRATION MAY COMMENCE AN ARBITRATION PROCEEDING WITH THE AMERICAN
ARBITRATION ASSOCIATION (“AAA”) OR NATIONAL ARBITRATION FORUM (“NAF”). EACH SELLER, GUARANTOR AND BUYER SHALL
PAY THEIR OWN ATTORNEYS’ FEES INCURRED DURING THE ARBITRATION PROCEEDING. THE PARTY INITIATING THE ARBITRATION SHALL PAY ANY ARBITRATION
FILING FEE, ADMINISTRATION FEE AND ARBITRATOR’S FEE.
50. Counterparts
and Facsimile Signatures. This Agreement can be signed in one or more counterparts, each of which shall constitute an original
and all of which when taken together, shall constitute one and the same agreement. Signatures delivered via facsimile and/or via Portable
Digital Format (PDF) shall be deemed acceptable for all purposes, including without limitation the evidentially purposes.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.
| FOR SELLER # 1 |
FOR THE SELLER # 2 (if any) |
| By: /s/ Henry Levinski |
By: /s/ Danta Picazo |
| Name: HENRY
DONALD LEVINSKI |
Name: DANTE PICAZO |
Title: Owner/Agent/Manager
EIN: 82-5497827 |
Title: Owner/Agent/Manager
EIN: 82-5497827 |
AGREE
TO BE BOUND BY THE PROVISIONS OF THIS AGREEMENT APPLICABLE TO AND CONCERNING GUARANTOR.
| OWNER/GUARANTOR # 1 |
OWNER/GUARANTOR # 2 (if any) |
| By: /s/ Henry Levinski |
By: /s/ Danta Picazo |
| Name: HENRY DONALD LEVINSKI |
Name: DANTE PICAZO |
| SSN: 555-84-9055 |
SSN: 465-02-7624 |
PARK
AVE FUNDING
By: _________________________
Name:
Title:
EXHIBIT
A
PERSONAL
GUARANTY OF PERFORMANCE
This
Personal Guaranty of Performance (this “Guaranty”) is executed as of August
8, 2022, by the undersigned individual(s) whose name(s) and signature(s) appear in
the signature box of this Guaranty (individually and collectively, jointly and severally, “Guarantor”) for the
benefit of PARK AVE FUNDING (“Buyer”).
WHEREAS:
A. Pursuant
to that Future Receivables Sale and Purchase Agreement (the “Agreement”), dated as of August
8, 2022, between Buyer and the Seller(s) listed below (collectively and individually, “Seller”),
Buyer has purchased a portion of Future Receipts of Seller.
B. Each
Guarantor is an owner, officer, manager or affiliate of Seller and will directly benefit from Buyer and Seller entering into the Agreement.
C. Buyer
is not willing to enter into the Agreement unless Guarantor irrevocably, absolutely and unconditionally guarantees to Buyer prompt and
complete performance of all of the obligations of Seller under the Agreement (each such obligation, individually, an “Obligation”
and all such obligations, collectively, the “Obligations”).
NOW,
THEREFORE, as an inducement for Buyer to enter into the Agreement, and for other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, Guarantor does hereby agree as follows:
1. Defined
Terms. All capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Agreement.
2. Guaranty
of Obligations. Guarantor hereby irrevocably, absolutely and unconditionally guarantees to Buyer prompt, full, faithful and complete
performance and observance of all of Seller’s Obligations; and Guarantor unconditionally covenants to Buyer that if default or
breach shall at any time be made by Seller in the Obligations, Guarantor shall well and truly pay or perform (or cause to be paid or
performed) the Obligations and pay all damages and other amounts stipulated in the Agreement with respect to the non-performance of the
Obligations, or any of them.
3. Guarantor’s
Additional Covenants. The liability of Guarantor hereunder shall not be impaired, abated, deferred, diminished, modified, released,
terminated or discharged, in whole or in part, or otherwise affected, by any event, condition, occurrence, circumstance, proceeding,
action or failure to act, with or without notice to, or the knowledge or consent of, Guarantor, including, without limitation:
a. any
amendment, modification or extension of the Agreement or any Obligation;
b. any
extension of time for performance, whether in whole or in part, of any Obligation given prior to or after default thereunder;
c. any
exchange, surrender or release, in whole or in part, of any security that may be held by Buyer at any time under the Agreement;
d. any
other guaranty now or hereafter executed by Guarantor or anyone else;
e. any
waiver of or assertion or enforcement or failure or refusal to assert or enforce, in whole or in part, any Obligation, claim, cause of
action, right or remedy which Buyer may, at any time, have under the Agreement or with respect to any guaranty or any security which
may be held by Buyer at any time for or under the Agreement or with respect to the Seller;
f. any
act or omission or delay to do any act by Buyer which may in any manner or to any extent vary the risk of Guarantor or which would otherwise
operate as a discharge of Guarantor as a matter of law;
g. the
release of any other guarantor from liability for the performance or observance of any Obligation, whether by operation of law or otherwise;
h. the
failure to give Guarantor any notice whatsoever;
i. any
right, power or privilege that Buyer may now or hereafter have against any person, entity or collateral.
4. Guarantor’s
Other Agreements. Guarantor will not dispose, convey, sell or otherwise transfer, or cause Seller to dispose, convey, sell or otherwise
transfer, any material business assets of Seller outside of the ordinary course of Seller’s business without the prior written
consent of Buyer, which consent may be withheld for any reason, until receipt of the entire Purchased Amount. Guarantor shall pay to
Buyer upon demand all expenses (including, without limitation, reasonable attorneys’ fees and disbursements) of, or incidental
to, or relating to the enforcement or protection of Buyer’s rights hereunder or Buyer’s rights under the Agreement. This
Guaranty is binding upon Guarantor and Guarantor’s heirs, legal representatives, successors and assigns and shall inure to the
benefit of and may be enforced by the successors and assigns of Buyer. If there is more than one Guarantor, the obligations of the Guarantors
hereunder shall be joint and several. The obligation of Guarantor shall be unconditional and absolute, regardless of the unenforceability
of any provision of any agreement between Seller and Buyer, or the existence of any defense, setoff or counterclaim, which Seller may
assert. Buyer is hereby authorized, without notice or demand and without affecting the liability of Guarantor hereunder, to at any time
renew or extend Seller’s obligations under the Agreement or otherwise modify, amend or change the terms of the Agreement. Guarantor
is hereby notified and consents that a negative credit report reflecting on his/her credit record may be submitted to a credit-reporting
agency if the Guarantor does not honor the terms of this Guaranty.
5. Waiver;
Remedies. No failure on the part of Buyer to exercise, and no delay in exercising, any right under this Guaranty shall operate as
a waiver, nor shall any single or partial exercise of any right under this Guaranty preclude any other or further exercise of any other
right. The remedies provided in this Guaranty are cumulative and not exclusive of any remedies provided by law or equity. In the event
that Seller fails to perform any obligation under the Agreement, Buyer may enforce its rights under this Guaranty without first seeking
to obtain performance for such default from Seller or any other guarantor.
6. Acknowledgment
of Purchase. Guarantor acknowledges and agrees that the Purchase Price paid by Buyer to Seller in exchange for the Purchased Amount
of Future Receipt is a payment for an adequate consideration and is not intended to be treated as a loan or financial accommodation from
Buyer to Seller. Guarantor specifically acknowledges that Buyer is not a lender, bank or credit card processor, and that Buyer has not
offered any loans to Seller, and Guarantor waives any claims or defenses of usury in any action arising out of this Guaranty. Guarantor
acknowledges that the Purchase Price paid to Seller is good and valuable consideration for the sale of the Purchased Amount.
7. Governing
Law and Jurisdiction. This Guaranty shall be governed by and construed exclusively in accordance with the laws of the State of New
York, without regards to any applicable principles of conflicts of law. Any lawsuit, action or proceeding arising out of or in connection
with this Guaranty shall be instituted exclusively in any court sitting in New York State (the “Acceptable Forum”). The parties
agree that the Acceptable Forum is convenient and submit to the jurisdiction of the Acceptable Forum and waive any and all objections
to inconvenience of the jurisdiction or venue. Should a proceeding be initiated in any other forum, each of the parties to this Guaranty
irrevocably waives any right to oppose any motion or application made by any other party to transfer such proceeding to the Acceptable
Forum. Seller and its Guarantor(s) acknowledge and agree that the Purchase Price is being paid and received by Seller in New York, that
the Specified Percentage of the Future Receipts are being delivered to Buyer in New York, and that the transaction contemplated in the
Agreement was negotiated, and is being carried out, in New York. Seller and its Guarantor(s) acknowledge and agree that New York has
a reasonable relationship to this Guaranty.
8. JURY
WAIVER. THE PARTIES WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION
WITH OR IN ANY WAY RELATED TO THE TRANSACTIONS OF WHICH THIS GUARANTY IS A PART OR ITS ENFORCEMENT, EXCEPT WHERE SUCH WAIVER IS PROHIBITED
BY LAW OR DEEMED BY A COURT OF LAW TO BE AGAINST PUBLIC POLICY. THE PARTIES ACKNOWLEDGE THAT EACH MAKES THIS WAIVER KNOWINGLY, WILLINGLY
AND VOLUNTARILY AND WITHOUT DURESS, AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH THEIR ATTORNEYS.
9. CLASS
ACTION WAIVER. THE PARTIES WAIVE ANY RIGHT TO ASSERT ANY CLAIMS AGAINST THE OTHER PARTY AS A REPRESENTATIVE OR MEMBER IN ANY CLASS
OR REPRESENTATIVE ACTION, EXCEPT WHERE SUCH WAIVER IS PROHIBITED BY LAW OR DEEMED BY A COURT OF LAW TO BE AGAINST PUBLIC POLICY. TO THE
EXTENT EITHER PARTY IS PERMITTED BY LAW OR COURT OF LAW TO PROCEED WITH A CLASS OR REPRESENTATIVE ACTION AGAINST THE OTHER, THE PARTIES
AGREE THAT: (I) THE PREVAILING PARTY SHALL NOT BE ENTITLED TO RECOVER ATTORNEYS’ FEES OR COSTS ASSOCIATED WITH PURSUING THE CLASS
OR REPRESENTATIVE ACTION (NOT WITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT); AND (II) THE PARTY WHO INITIATES OR PARTICIPATES AS
A MEMBER OF THE CLASS WILL NOT SUBMIT A CLAIM OR OTHERWISE PARTICIPATE IN ANY RECOVERY SECURED THROUGH THE CLASS OR REPRESENTATIVE ACTION.
10. ARBITRATION.
THE PARTIES ACKNOWLEDGE AND AGREE THAT, PROVIDED THAT NO SUIT, ACTION OR PROCEEDING HAS BEEN ALREADY COMMENCED IN CONNECTION WITH
ANY MATTER ARISING OUT OF OR RELATED TO THIS GUARANTY AND/OR THE TRANSACTION CONTEMPLATED BY THE AGREEMENT, EACH BUYER, SELLER AND GUARANTOR
SHALL HAVE THE RIGHT TO REQUEST THAT ALL DISPUTES AND CLAIMS ARISING OUT OF OR RELATING TO THE CONSTRUCTION AND/OR INTERPRETATION OF
THIS GUARANTY ARE SUBMITTED TO ARBITRATION. THE PARTY SEEKING ARBITRATION SHALL FIRST SEND A WRITTEN NOTICE OF INTENT TO ARBITRATE TO
ALL OTHER PARTIES, BY CERTIFIED MAIL. UPON SENDING OF SUCH NOTICE, A PARTY REQUESTING ARBITRATION MAY COMMENCE AN ARBITRATION PROCEEDING
WITH THE AMERICAN ARBITRATION ASSOCIATION (“AAA”) OR NATIONAL ARBITRATION FORUM (“NAF”). EACH SELLER, GUARANTOR
AND BUYER SHALL PAY THEIR OWN ATTORNEYS’ FEES INCURRED DURING THE ARBITRATION PROCEEDING. THE PARTY INITIATING THE ARBITRATION
SHALL PAY ANY ARBITRATION FILING FEE, ADMINISTRATION FEE AND ARBITRATOR’S FEE.
11. Severability.
If for any reason any court of competent jurisdiction finds any provisions of this Guaranty to be void or voidable, the parties agree
that the court may reform such provision(s) to render the provision(s) enforceable ensuring that the restrictions and prohibitions contained
in this Guaranty shall be effective to the fullest extent allowed under applicable law.
12. Opportunity
for Attorney Review. The Guarantor represents that he/she has carefully read this Guaranty and has had a reasonable opportunity
to –and to the extent he or she wishes did– consult with his or her attorney. Guarantor understands the contents of this
Guaranty and signs this Guaranty as his or her free act and deed.
13. Counterparts
and Facsimile Signatures. This Guaranty may be signed in one or more counterparts, each of which shall constitute an original
and all of which when taken together shall constitute one and the same agreement. Facsimile or scanned documents shall have the same
legal force and effect as an original and shall be treated as an original document for evidentiary purposes.
AGREED
AND ACCEPTED:
| OWNER/GUARANTOR # 1 |
OWNER/GUARANTOR # 2 (if any) |
| By: /s/ Henry Levinski |
By: /s/ Danta Picazo |
| Name: HENRY DONALD LEVINSKI |
Name: DANTE PICAZO |
| SSN: 555-84-9055 |
SSN: 465-02-7624 |
PARK
AVE FUNDING
By: _________________________
Name:
Title:
RIDER
1
TO THE
FUTURE RECEIVABLES SALE AND PURCHASE AGREEMENT (“Agreement”)
Between PARK AVE FUNDING
(“BUYER”)
And CHINA
INFRASTRUCTURE CONSTRUCTION CORP (“Seller”),
dated
August 8, 2022.
APPLICABLE
FEES
1. Possible
Conflicts. If there is any conflict or inconsistency between any of the provisions of this Rider and any of the provisions of
the Future Receivables Sale and Purchase Agreement (the “Agreement”) to which this Rider is attached, all such conflicts
and inconsistencies shall be resolved in favor of the provisions of this Rider.
2. Definitions.
All capitalized terms used in this Rider shall have the meaning set forth in the Agreement unless otherwise indicated herein.
3. Applicable
Fees. The parties agree that the Applicable Fees which Seller shall pay to Buyer, pursuant to Section 17 of the Agreement shall
be as follows:
a.
Origination Fee: $4,500.00 , or up to ten percent (10%) of the Purchase Price (the cost of the due diligence and
underwriting of Seller’s business performed by Buyer. As a general rule, the Origination Fee varies and depends on the complexity
of underwriting required on a business including without limitation, sophistication of Seller’s principals, difficulty in ascertaining
Seller’s receivables and account debtors, sources of Seller’s revenue flow, etc.).
b.
UCC Fee: $250.00
c. NSF
Fee: $35.00 per NSF
d. ACH
Rejection Fee: $35.00 per rejection
e. Default
Fee: See Section 29 of the Agreement
4. Authorization.
Seller hereby authorizes Buyer to apply a portion of the Purchase Price due to Seller pursuant to the Agreement toward satisfaction of
Seller’s obligation to pay the Applicable Fees pursuant to Section 17 of the Agreement by deducting the amount of the Applicable
Fees from the Purchase Price prior to delivering it to Seller.
5. No
Reduction of Purchase Price. Seller hereby agrees that deduction of the Applicable Fees from the Purchase Price shall not be
deemed to reduce the Purchase Price.
Seller
and Buyer agree that this Rider shall be attached to the Agreement and shall be made a part thereof.
| FOR THE SELLER |
FOR THE SELLER #2 (If any) |
| By: /s/ Henry Levinski |
By: /s/ Dante Picazo |
| Name: HENRY DONALD LEVINSKI |
Name: DANTE PICAZO |
RIDER
2
TO THE
FUTURE RECEIVABLES SALE AND PURCHASE AGREEMENT
( “Agreement”)
Between
PARK AVE FUNDING (“BUYER”)
and
CHINA INFRASTRUCTURE CONSTRUCTION CORP
( “Seller”)
dated August 8, 2022.
PRIOR
BALANCE
1. Possible
Conflicts. If there is any conflict or inconsistency between any of the provisions of this Rider and any of the provisions of
the Future Receivables Sale and Purchase Agreement (the “Agreement”) to which this Rider is attached, all such conflicts
and inconsistencies shall be resolved in favor of the provisions of this Rider.
2. Definitions.
All capitalized terms used in this Rider shall have the meaning set forth in the Agreement unless otherwise indicated herein.
3. Prior
Balance. Seller represents and warrants that the following list of its creditors and the amounts that Seller owes its creditors
as of the Effective Date of the Agreement is true, correct and complete:
TOTAL
PRIOR BALANCE: $0.00
4. Authorization.
Seller hereby authorizes Buyer to apply a portion of the Purchase Price due to Seller pursuant to the Agreement toward satisfaction of
Seller’s obligation to pay the Prior Balance pursuant to Section 18 of the Agreement by deducting the amount of the Prior Balance
from the Purchase Price prior to delivering it to Seller, and to forward the specific amounts owed by Seller to Buyer and/or the creditors
listed in this Rider.
5. No
Reduction of Purchase Price. Seller hereby agrees that deduction of the Prior Balance from the Purchase Price shall not be deemed
to reduce the Purchase Price.
6. Indemnification.
Seller hereby indemnifies and holds harmless Buyer for any and all damages and losses (including without limitation legal fees
and expenses) incurred by Buyer as the result of the information set forth in this Rider being untrue or incorrect or incomplete.
Seller
and Buyer agree that this Rider shall be attached to the Agreement and shall be made a part thereof.
| OWNER/GUARANTOR # 1 |
OWNER/GUARANTOR # 2 (if any) |
| By: /s/ Henry Levinski |
By: /s/ Danta Picazo |
| Name: HENRY DONALD LEVINSKI |
Name: DANTE PICAZO |
| SSN: 555-84-9055 |
SSN: 465-02-7624 |
PARK
AVE FUNDING
By: _________________________
Name:
Title:
Dear Seller,
Thank you
for your interest in working with PARK AVE FUNDING. We look forward to working with you for as long as you need.
As part
of the underwriting process, PARK AVE FUNDING will require viewing access to your bank account prior to and during the Future Receivables
Sale and Purchase Agreement. Please be assured that we carefully safeguard your confidential information, and only essential personnel
will have access to it.
Please fill
out the form below with the information necessary to access your account.
* Be sure
to indicate capital or lower-case letters.
Name of
bank: ______________________________________________
Bank portal
website: __________________________________________
Username: _________________________________________________
Password: __________________________________________________
Security
Question/Answer 1: ___________________________________
Security
Question/Answer 2: ___________________________________
Security
Question/Answer 3: ___________________________________
Any
other information necessary to access your account: __________________________________
AUTHORIZATION
AGREEMENT
FOR
AUTOMATED CLEARING HOUSE TRANSACTIONS
CHINA INFRASTRUCTURE CONSTRUCTION CORP(“Seller”)
hereby authorizes Buyer to present automated clearinghouse (“ACH”) debits to the following checking account in the amount
of the Initial Installment. In addition, if any Default occurs under the Agreement, Seller authorizes Buyer to debit any and all accounts
controlled by Seller or controlled by any entity with the same Federal Tax Identification Number as Seller up to the total amount, including
but not limited to, all fees and charges, due to Buyer from Seller under the terms of the Agreement. All capitalized terms herein shall
be as defined in the Future Receivables Sale and Purchase Agreement attached hereto. Lastly, Seller agrees to be bound by the ACH Rules
as set by NACHA.
Name
of Bank: BANK OF AMERICA
Account
Number: 488056617849
Routing
Number: 111000025
Seller
’s EIN: 82-5497827
| Signature: /s/ Henry Levinski |
Signature: /s/ Dante Picazo |
| Name: HENRY
DONALD LEVINSKI |
Name: DANTE PICAZO |
| Date: August 8, 2022 |
Date: August 8, 2022 |
PLEASE
ATTACH A VOIDED CHECK
EXHIBIT
B
LIST
OF ADDITIONAL PARTIES IN WHOSE ASSETS SELLER HAS GRANTED BUYER A BLANKET SECURITY INTEREST:
Buyer
may file a UCC-1 financing statement with the appropriate Secretary of State(s) reflecting a blanket security interest in the assets
of the above-listed entities.
Dated:
August 8, 2022
| Signature: /s/ Henry Levinski |
Signature: /s/ Dante Picazo |
| Name: HENRY
DONALD LEVINSKI |
Name: DANTE PICAZO |
| Date: August 8, 2022 |
Date: August 8, 2022 |
Exhibit 23.1
To Whom It May Concern:
We hereby consent
to the use in this Registration Statement to form S-1 of our audit opinion report dated March 21, 2022, with respect to the audited financial
statements of China Infrastructure Construction Corp included in form S-1 for the period ended
May 31, 2021. We also consent to the references to us under the headings “Experts” in
such Registration Statement.
Very truly yours,
/s/PWR CPA, LLP
PWR CPA, LLP
Houston, TX
Exhibit 107
CALCULATION OF REGISTRATION FEE
|
Title of each class of
securities to be registered |
Amount
to be
registered1 |
Proposed
maximum
offering price
per
share2 |
Proposed
maximum
aggregate
offering
price3 |
Amount of
registration fee |
| Common Stock, par value $0.001 per share |
3,859,674,139 |
$0.0021 |
$8,105,315.69 |
$751.37 |
| 1 | Consists of 2,380,952,381 shares to be sold by the Registrant and 1,478,721,758 shares to be sold by
the Selling Stockholders. |
| 2 | Estimated solely to calculate the registration
fee according to Rule 457(c) under the Securities Act, based upon the average of the high and low prices for the Common Stock, as reported
by OTC Markets Group Inc. on August 18, 2022. |
| 3 | Calculated in accordance with Rule 457(c) of the Securities Act. |
