SECURITIES PURCHASE AGREEMENT
This
SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of June 19, 2017, by and
between Vet
Online Supply, Inc., a Florida corporation, with headquarters located at
0000 Xxxxxx Xxxxxx, XXX 000, Xxx Xxxxx, XX 00000 (the “Company”), and CROWN
BRIDGE PARTNERS, LLC, a New York limited liability company, with its
address at 0000x 0xx Xxxxxx, Xxxxx 000, Xxx Xxxx, XX 00000 (the “Buyer”).
WHEREAS:
A. |
The
Company and the Buyer are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by the
rules and regulations as promulgated by the United States Securities and
Exchange Commission (the “SEC”) under the Securities Act of 1933, as
amended (the “1933 Act”); |
B. |
Buyer
desires to purchase and the Company desires to issue and sell, upon the
terms and conditions set forth in this Agreement the 2% convertible note
of the Company, in the form attached hereto as Exhibit
A, in the aggregate principal amount of US$25,500.00 (together
with any note(s) issued in replacement thereof or as a dividend thereon or
otherwise with respect thereto in accordance with the terms thereof, the
“Note”), convertible into shares of common stock of the Company (the
“Common Stock”), upon the terms and subject to the limitations and
conditions set forth in such Note. At the time of the issuance of the
Note, the Company shall issue a second 2% convertible back end note of the
Company in the amount of $25,500.00 (the “Second Note”). The Second
Note shall initially be paid for by the Buyer through the issuance
of an offsetting secured note (the “Buyer Note”) in an amount equal to
$25,500.00. Prior to Buyer’s conversion under the Second Note, the Buyer
must have paid off the Buyer Note in cash such that the Second Note may
not be converted until it has been paid for in
cash. |
C. |
The Buyer
wishes to purchase, upon the terms and conditions stated in this
Agreement, such principal amount of Note as is set forth immediately below
its name on the signature pages hereto;
and |
NOW
THEREFORE, the Company and the Buyer severally (and not jointly) hereby
agree as follows:
1. |
PURCHASE
AND SALE OF NOTE. |
a. |
Purchase
of Note. On the Closing Date (as defined below), the Company
shall issue and sell to the Buyer and the Buyer agrees to purchase from
the Company such principal amount of the Note and Second Note as is set
forth immediately below the Buyer’s name on the signature pages hereto,
subject to the express terms of the Note. In connection with the issuance
of the Note, the Company shall issue a warrant to Buyer to
purchase 850,000 shares of common stock (the
“Warrant”). |
1
Form
of Payment. On or around the Closing Date (as defined below), the
Buyer shall pay the purchase price of $21,500.00 (the “Purchase Price”), for the
Note, by wire transfer of immediately available funds, in accordance with the
Company’s written wiring instructions, against delivery of the Note, and (i) the
Company shall deliver such duly executed Note and Second Note on behalf of the
Company, to the Buyer.
b. |
Closing
Date. Subject to the satisfaction (or written waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date
and time of the issuance and sale of the Note pursuant to this Agreement
(the “Closing Date”) shall be 5:00 P.M., Eastern Standard Time on or about
June 19, 2017, or such other mutually agreed upon time. The closing of the
transactions contemplated by this Agreement (the “Closing”) shall occur on
the Closing Date at such location as may be agreed to by the
parties. |
2. |
REPRESENTATIONS
AND WARRANTIES OF THE BUYER.The Buyer represents
and warrants to the Company that: |
a. |
Investment
Purpose. As of the date hereof, the Buyer is purchasing the
Note and the shares of Common Stock issuable upon conversion of or
otherwise pursuant to the Note (including, without limitation, such
additional shares of Common Stock, if any, as are issuable (i) on account
of interest on the Note or (ii) as a result of the events described in
Sections 1.3 and 1.4(g) of the Note, such shares of Common Stock being
collectively referred to herein as the “Conversion Shares” and,
collectively with the Note, the “Securities”) for its own account and not
with a present view towards the public sale or distribution thereof,
except pursuant to sales registered or exempted from registration under
the 1933 Act; provided,
however, that by making the representations herein, the Buyer
does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any
time in accordance with or pursuant to a registration statement or an
exemption under the 1933 Act. |
b. |
Reliance
on Exemptions. The Buyer understands that the Securities
are being offered and sold to it in reliance upon specific exemptions from
the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and
accuracy of, and the Buyer’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Buyer
set forth herein in order to determine the availability of such exemptions
and the eligibility of the Buyer to acquire the
Securities. |
c. |
Information.
The Buyer and its advisors, if any, have been, and for so long as the Note
remain outstanding will continue to be, furnished with all materials
relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities which have been
requested by the Buyer or its advisors. The Buyer and its advisors, if
any, have been, and for so long as the Note remain outstanding will
continue to be, afforded the opportunity to ask questions of the Company.
Notwithstanding the foregoing, the |
2
Company
has not disclosed to the Buyer any material nonpublic information and will
not disclose such information unless such information is disclosed to the public
prior to or promptly following such disclosure to the Buyer. Neither such
inquiries nor any other due diligence investigation conducted by Buyer or any of
its advisors or representatives shall modify, amend or affect Buyer’s right to
rely on the Company’s representations and warranties contained in Section
3 below. The Buyer understands that its investment in the Securities involves a
significant degree of risk. The Buyer is not aware of any facts that may
constitute a breach of any of the Company’s representations and warranties made
herein.
d. |
Governmental
Review. The Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed
upon or made any recommendation or endorsement of the
Securities. |
e. |
Transfer
or Re-sale. The Buyer understands that (i) the sale or re-sale
of the Securities has not been and is not being registered under the 1933
Act or any applicable state securities laws, and the Securities may not be
transferred unless (a) the Securities are sold pursuant to an effective
registration statement under the 1933 Act, (b) the Buyer shall have
delivered to the Company, at the cost of the Buyer, an opinion of counsel
that shall be in form, substance and scope customary for opinions of
counsel in comparable transactions to the effect that the Securities to be
sold or transferred may be sold or transferred pursuant to an exemption
from such registration, which opinion shall be accepted by the Company,
(c) the Securities are sold or transferred to an “affiliate” (as defined
in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule
144”)) of the Buyer who agrees to sell or otherwise transfer the
Securities only in accordance with this Section 2(f) and who is an
Accredited Investor, (d) the Securities are sold pursuant to Rule
144, or (e) the Securities are sold pursuant to Regulation S under the
1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have
delivered to the Company, at the cost of the Buyer, an opinion of counsel
that shall be in form, substance and scope customary for opinions of
counsel in corporate transactions, which opinion shall be accepted by the
Company; (ii) any sale of such Securities made in reliance on Rule 144 may
be made only in accordance with the terms of said Rule and further, if
said Rule is not applicable, any re-sale of such Securities under
circumstances in which the seller (or the person through whom the sale is
made) may be deemed to be an underwriter (as that term is defined in the
0000 Xxx) may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (iii) neither
the Company nor any other person is under any obligation to register such
Securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder (in each case).
Notwithstanding the foregoing or anything else contained herein to the
contrary, the Securities may be pledged as collateral in connection with a
bona
fide margin account or other lending
arrangement. |
f. |
Legends.
The Buyer understands that the Note and, until such time as the Conversion
Shares have been registered under the 1933 Act may be sold pursuant to
Rule 144 or Regulation S without any restriction as to the number of
securities as of a particular date |
3
that
can then be immediately sold, the Conversion Shares may bear a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of the certificates for such Securities):
“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL
BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for sale under an effective registration statement
filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities as of a
particular date that can then be immediately sold, or (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public
sale or transfer of such Security may be made without registration under the
1933 Act, which opinion shall be accepted by the Company so that the sale or
transfer is effected. The Buyer agrees to sell all Securities, including those
represented by a certificate(s) from which the legend has been removed, in
compliance with applicable prospectus delivery requirements, if any. In the
event that the Company does not accept the opinion of counsel provided by the
Buyer with respect to the transfer of Securities pursuant to an exemption from
registration, such as Rule 144 or Regulation S, at the Deadline, it will be
considered an Event of Default pursuant to Section 3.2 of the Note.
g. |
Authorization;
Enforcement. This Agreement has been duly and validly
authorized. This Agreement has been duly executed and delivered on
behalf of the Buyer, and this Agreement constitutes a valid
and binding agreement of the Buyer enforceable in accordance with its
terms. |
4
h. |
Residency.
The Buyer is a resident of the jurisdiction set forth immediately below
the Buyer’s name on the signature pages
hereto. |
3. |
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to the Buyer that: |
a. |
Organization
and Qualification. The Company and each of its Subsidiaries (as
defined below), if any, is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
incorporated, with full power and authority (corporate and other) to own,
lease, use and operate its properties and to carry on its business as and
where now owned, leased, used, operated and conducted. Schedule 3(a)
sets forth a list of all of the Subsidiaries of the Company and the
jurisdiction in which each is incorporated. The Company and each of its
Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which its
ownership or use of property or the nature of the business conducted by it
makes such qualification necessary except where the failure to be so
qualified or in good standing would not have a Material Adverse
Effect. “Material Adverse Effect” means any material adverse effect on the
business, operations, assets, financial condition or prospects of the
Company or its Subsidiaries, if any, taken as a whole, or on the
transactions contemplated hereby or by the agreements or instruments to be
entered into in connection herewith. “Subsidiaries” means any corporation
or other organization, whether incorporated or unincorporated, in which
the Company owns, directly or indirectly, any equity or other ownership
interest. |
b. |
Authorization;
Enforcement. (i) The Company has all requisite corporate power
and authority to enter into and perform this Agreement, the Note and to
consummate the transactions contemplated hereby and thereby and to issue
the Securities, in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement, the Note by the Company and the
consummation by it of the transactions contemplated hereby and thereby
(including without limitation, the issuance of the Note and the issuance
and reservation for issuance of the Conversion Shares issuable upon
conversion or exercise thereof) have been duly authorized by the Company’s
Board of Directors and no further consent or authorization of the Company,
its Board of Directors, or its shareholders is required, (iii) this
Agreement has been duly executed and delivered by the Company by its
authorized representative, and such authorized representative is the true
and official representative with authority to sign this Agreement and the
other documents executed in connection herewith and bind the Company
accordingly, and (iv) this Agreement constitutes, and upon execution and
delivery by the Company of the Note, each of such instruments will
constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its
terms. |
5
c. |
Capitalization.
Except as disclosed in the SEC Documents, no shares are reserved for
issuance pursuant to the Company’s stock option plans, no shares are
reserved for issuance pursuant to securities (other than the Note)
exercisable for, or convertible into or exchangeable for shares of Common
Stock and sufficient shares are reserved for issuance upon conversion of
the Note (as required by the Note and transfer agent share reserve
letter). All of such outstanding shares of capital stock are, or upon
issuance will be, duly authorized, validly issued, fully paid and
non-assessable. No shares of capital stock of the Company are subject to
preemptive rights or any other similar rights of the shareholders of the
Company or any liens or encumbrances imposed through the actions or
failure to act of the Company. Except as disclosed in the SEC Documents,
as of the effective date of this Agreement, (i) there are no outstanding
options, warrants, scrip, rights to subscribe for, puts, calls, rights of
first refusal, agreements, understandings, claims or other commitments or
rights of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for any shares of capital stock of
the Company or any of its Subsidiaries, or arrangements by which the
Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its
Subsidiaries, (ii) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of
any of its or their securities under the 1933 Act and (iii) there are no
anti-dilution or price adjustment provisions contained in any security
issued by the Company (or in any agreement providing rights to security
holders) that will be triggered by the issuance of the Note or the
Conversion Shares. The Company has filed in its SEC Documents
true and correct copies of the Company’s Certificate of Incorporation as
in effect on the date hereof (“Certificate of Incorporation”), the
Company’s By-laws, as in effect on the date hereof (the “By-laws”), and
the terms of all securities convertible into or exercisable for Common
Stock of the Company and the material rights of the holders thereof in
respect thereto. The Company shall provide the Buyer with a written update
of this representation signed by the Company’s Chief Executive on behalf
of the Company as of the Closing Date. |
d. |
Issuance
of Shares. The Conversion Shares are duly authorized and
reserved for issuance and, upon conversion of the Note in accordance with
its respective terms, will be validly issued, fully paid and
non-assessable, and free from all taxes, liens, claims and encumbrances
with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Company and will not
impose personal liability upon the holder
thereof. |
e. |
Acknowledgment
of Dilution. The Company understands and acknowledges the
potentially dilutive effect to the Common Stock upon the issuance of the
Conversion Shares upon conversion of the Note. The Company further
acknowledges that its obligation to issue Conversion Shares upon
conversion of the Note in accordance with this Agreement, the Note is
absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other shareholders of the
Company. |
f. |
No
Conflicts. The execution, delivery and performance of this
Agreement, the Note by the Company and the consummation by the Company of
the transactions |
6
contemplated
hereby and thereby (including, without limitation, the issuance and reservation
for issuance of the Conversion Shares) will not (i) conflict with or result in a
violation of any provision of the Certificate of Incorporation or By-laws, or
(ii) violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or both
could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture, patent,
patent license or instrument to which the Company or any of its Subsidiaries is
a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and regulations of any self-regulatory organizations to
which the Company or its securities are subject) applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any
of its Subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect).
Neither the Company nor any of its Subsidiaries is in violation of its
Certificate of Incorporation, By-laws or other organizational documents and
neither the Company nor any of its Subsidiaries is in default (and no event has
occurred which with notice or lapse of time or both could put the Company or any
of its Subsidiaries in default) under, and neither the Company nor any of its
Subsidiaries has taken any action or failed to take any action that would give
to others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party or by which any property or assets of the Company
or any of its Subsidiaries is bound or affected, except for possible defaults as
would not, individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its Subsidiaries, if any, are not being conducted,
and shall not be conducted so long as the Buyer owns any of the Securities, in
violation of any law, ordinance or regulation of any governmental entity. Except
as specifically contemplated by this Agreement and as required under the 1933
Act and any applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency, regulatory agency,
self-regulatory organization or stock market or any third party in order for it
to execute, deliver or perform any of its obligations under this Agreement, the
Note in accordance with the terms hereof or thereof or to issue and sell the
Note in accordance with the terms hereof and to issue the Conversion Shares upon
conversion of the Note. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to the date
hereof. The Company is not in violation of the listing requirements of the
Over-the- Counter Bulletin Board (the “OTCBB”), the OTCQB or any similar
quotation system, and does not reasonably anticipate that the Common Stock will
be delisted by the OTCBB, the OTCQB or any similar quotation system, in the
foreseeable future. The Company and its Subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
g. |
SEC
Documents; Financial Statements. The Company has timely filed
all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the “1934 Act”)
(all of the foregoing filed prior to the date
hereof and all exhibits
included |
7
therein
and financial statements and schedules thereto and documents (other than
exhibits to such documents) incorporated by reference therein, being hereinafter
referred to herein as the “SEC Documents”). The Company has delivered to the
Buyer true and complete copies of the SEC Documents, except for such exhibits
and incorporated documents. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the statements made in any such SEC Documents is, or has
been, required to be amended or updated under applicable law (except for such
statements as have been amended or updated in subsequent filings prior the date
hereof). As of their respective dates, the financial statements of the Company
included in the SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles,
consistently applied, during the periods involved and fairly present in all
material respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments). Except as
set forth in the financial statements of the Company included in the SEC
Documents, the Company has no liabilities, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business, and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in such financial statements, which, individually or in the aggregate,
are not material to the financial condition or operating results of the Company.
The Company is subject to the reporting requirements of the 1934 Act. For the
avoidance of doubt, filing of the documents required in this Section 3(g)
via the SEC’s Electronic Data Gathering, Analysis, and Retrieval system
(“XXXXX”) shall satisfy all delivery requirements of this Section 3(g).
h. |
Absence
of Certain Changes. There have been no material adverse change
and no material adverse development in the assets, liabilities, business,
properties, operations, financial condition, results of operations,
prospects or 1934 Act reporting status of the Company or any of its
Subsidiaries. |
i. |
Absence
of Litigation. There is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge
of the Company or any of its Subsidiaries, threatened against or affecting
the Company or any of its Subsidiaries, or their officers or directors in
their capacity as such, that could have a Material Adverse Effect.
Schedule 3(i) contains a complete list and summary description of any
pending or, to the knowledge of the Company, threatened proceeding against
or affecting the Company or any of its Subsidiaries, without regard to
whether it would have a Material Adverse Effect. The Company and
its |
8
Subsidiaries
are unaware of any facts or circumstances which might give rise to any of the
foregoing.
j. |
Patents,
Copyrights, etc. The Company and each of its Subsidiaries owns
or possesses the requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets,
trademarks, trademark applications, service marks, service names, trade
names and copyrights (“Intellectual Property”) necessary to enable it to
conduct its business as now operated (and, as presently contemplated to be
operated in the future); Except as disclosed in the SEC Documents, there
is no claim or action by any person pertaining to, or proceeding pending,
or to the Company’s knowledge threatened, which challenges the right of
the Company or of a Subsidiary with respect to any Intellectual Property
necessary to enable it to conduct its business as now operated (and, as
presently contemplated to be operated in the future); to the best of the
Company’s knowledge, the Company’s or its Subsidiaries’ current and
intended products, services and processes do not infringe on any
Intellectual Property or other rights held by any person; and the Company
is unaware of any facts or circumstances which might give rise to any of
the foregoing. The Company and each of its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and
value of their Intellectual Property. |
k. |
No
Materially Adverse Contracts, Etc. Neither the Company nor
any of its Subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or
regulation which in the judgment of the Company’s officers has or is
expected in the future to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is a party to any contract or
agreement which in the judgment of the Company’s officers has or is
expected to have a Material Adverse
Effect. |
l. |
Tax
Status. The Company and each of its Subsidiaries has made or
filed all federal, state and foreign income and all other tax returns,
reports and declarations required by any jurisdiction to which it is
subject (unless and only to the extent that the Company and each of its
Subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and
other governmental assessments and charges that are material in amount,
shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and has set aside on its books
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due
by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim. The Company has not
executed a waiver with respect to the statute of limitations
relating to the assessment or collection of any foreign, federal, state or
local tax. None of the Company’s tax returns is presently being audited by
any taxing authority. |
m. |
Certain
Transactions. Except for arm’s length transactions pursuant to
which the Company or any of its Subsidiaries makes payments in the
ordinary course of business |
9
upon
terms no less favorable than the Company or any of its Subsidiaries could obtain
from third parties and other than the grant of stock options disclosed on
Schedule 3(c), none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company or any of its Subsidiaries
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any corporation, partnership,
trust or other entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
n. |
Disclosure.
All information relating to or concerning the Company or any of its
Subsidiaries set forth in this Agreement and provided to the Buyer
pursuant to Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material
respects and the Company has not omitted to state any material fact
necessary in order to make the statements made herein or therein, in light
of the circumstances under which they were made, not misleading. No event
or circumstance has occurred or exists with respect to the Company or any
of its Subsidiaries or its or their business, properties, prospects,
operations or financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed (assuming for this
purpose that the Company’s reports filed under the 1934 Act are being
incorporated into an effective registration statement filed by the Company
under the 1933 Act). |
o. |
Acknowledgment
Regarding Buyer’s Purchase of Securities. The Company
acknowledges and agrees that the Buyer is acting solely in the capacity of
arm’s length purchasers with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that
the Buyer is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby and any statement made by the Buyer or
any of its respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is not advice or a
recommendation and is merely incidental to the Buyer’ purchase of the
Securities. The Company further represents to the Buyer that the Company’s
decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its
representatives. |
p. |
No
Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any
offers to buy any security under circumstances that would require
registration under the 1933 Act of the issuance of the Securities to the
Buyer. The issuance of the Securities to the Buyer will not be
integrated with any other issuance of the Company’s securities (past,
current or future) for purposes of any shareholder approval provisions
applicable to the Company or its
securities. |
10
q. |
No
Brokers. The Company has taken no action which would give rise
to any claim by any person for brokerage commissions, transaction fees or
similar payments relating to this Agreement or the transactions
contemplated hereby. |
r. |
Permits;
Compliance. The Company and each of its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and
orders necessary to own, lease and operate its properties and to carry on
its business as it is now being conducted (collectively, the “Company
Permits”), and there is no action pending or, to the knowledge of the
Company, threatened regarding suspension or cancellation of any of the
Company Permits. Neither the Company nor any of its Subsidiaries is in
conflict with, or in default or violation of, any of the Company Permits,
except for any such conflicts, defaults or violations which, individually
or in the aggregate, would not reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has
received any notification with respect to possible conflicts, defaults or
violations of applicable laws, except for notices relating to possible
conflicts, defaults or violations, which conflicts, defaults or violations
would not have a Material Adverse Effect. |
s. |
Environmental
Matters. |
(i) |
There
are, to the Company’s knowledge, with respect to the Company or any of its
Subsidiaries or any predecessor of the Company, no past or present
violations of Environmental Laws (as defined below), releases of any
material into the environment, actions, activities, circumstances,
conditions, events, incidents, or contractual obligations which may give
rise to any common law environmental liability or any liability under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 or similar federal, state, local or foreign laws and neither the
Company nor any of its Subsidiaries has received any notice with respect
to any of the foregoing, nor is any action pending or, to the Company’s
knowledge, threatened in connection with any of the foregoing. The term
“Environmental Laws” means all federal, state, local or foreign laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata), including, without limitation, laws
relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants contaminants, or toxic or hazardous substances or
wastes (collectively, “Hazardous Materials”) into the environment, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials, as well as all authorizations, codes, decrees, demands or
demand letters, injunctions, judgments, licenses, notices or notice
letters, orders, permits, plans or regulations issued, entered,
promulgated or approved thereunder. |
(ii) |
Other
than those that are or were stored, used or disposed of in compliance with
applicable law, no Hazardous Materials are contained on or about any real
property currently owned, leased or used by
the Company or any of its Subsidiaries, and
no |
11
Hazardous
Materials were released on or about any real property previously owned, leased
or used by the Company or any of its Subsidiaries during the period the property
was owned, leased or used by the Company or any of its Subsidiaries, except in
the normal course of the Company’s or any of its Subsidiaries’ business.
(iii) |
There are
no underground storage tanks on or under any real property owned, leased
or used by the Company or any of its Subsidiaries that are not in
compliance with applicable law. |
t. |
Title
to Property. Except as disclosed in the SEC Documents the
Company and its Subsidiaries have good and marketable title in fee simple
to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects or such as would not have a Material Adverse
Effect. Any real property and facilities held under lease by the Company
and its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as would not have a Material
Adverse Effect. |
u. |
Internal
Accounting Controls. Except as disclosed in the SEC Documents
the Company and each of its Subsidiaries maintain a system of internal
accounting controls sufficient, in the judgment of the Company’s board of
directors, to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any
differences. |
v. |
Foreign
Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any Subsidiary has, in the course of
his actions for, or on behalf of, the Company, used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended,
or made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or
employee. |
w. |
Solvency.
The Company (after giving effect to the transactions contemplated by this
Agreement) is solvent (i.e.,
its assets have a fair market value in excess of the amount required to
pay its probable liabilities on its existing debts as they become absolute
and matured) and currently the Company has no information that would lead
it to reasonably |
12
conclude
that the Company would not, after giving effect to the transaction contemplated
by this Agreement, have the ability to, nor does it intend to take any action
that would impair its ability to, pay its debts from time to time incurred in
connection therewith as such debts mature. The Company did not receive a
qualified opinion from its auditors with respect to its most recent fiscal year
end and, after giving effect to the transactions contemplated by this Agreement,
does not anticipate or know of any basis upon which its auditors might issue a
qualified opinion in respect of its current fiscal year. For the avoidance of
doubt any disclosure of the Borrower’s ability to continue as a “going concern”
shall not, by itself, be a violation of this Section 3(w).
x. |
No
Investment Company. The Company is not, and upon the issuance
and sale of the Securities as contemplated by this Agreement will not be
an “investment company” required to be registered under the Investment
Company Act of 1940 (an “Investment Company”). The Company is not
controlled by an Investment Company. |
y. |
Insurance.
Upon written request the Company will provide to the Buyer true and
correct copies of all policies relating to directors’ and officers’
liability coverage, errors and omissions coverage, and commercial general
liability coverage, if any. |
z. |
Breach
of Representations and Warranties by the Company. If the
Company breaches any of the representations or warranties set forth in
this Section 3, and in addition to any other remedies available to the
Buyer pursuant to this Agreement, it will be considered an Event of
default under Section 3.4 of the Note. |
4. |
COVENANTS. |
a. |
Best
Efforts. The parties shall use their commercially reasonable
best efforts to satisfy timely each of the conditions described in Section
6 and 7 of this Agreement. |
b. |
Use
of Proceeds. The Company shall use the proceeds from the sale
of the Note for working capital and other general corporate purposes and
shall not, directly or indirectly, use such proceeds for any loan to or
investment in any other corporation, partnership, enterprise or other
person (except in connection with its currently existing direct or
indirect Subsidiaries). |
c. |
Financial
Information. The Company agrees to send or make available the
following reports to the Buyer until the Buyer transfers, assigns, or
sells all of the Securities: |
(i)
within ten (10) days after the filing with the SEC, a copy of its Annual Report
on Form 10-K its Quarterly Reports on Form 10-Q and any Current Reports on Form
8-K; (ii) within one (1) day after release, copies of all press releases issued
by the Company or any of its Subsidiaries; and (iii) contemporaneously with the
making available or giving to the shareholders of the Company, copies of any
notices or other information the Company makes available or gives to such
shareholders. For the avoidance of doubt, filing
the documents required in (i) above via
13
XXXXX
or releasing any documents set forth in (ii) above via a recognized wire service
shall satisfy the delivery requirements of this Section 4(f).
d. |
Listing.
The Company shall promptly secure the listing of the Conversion Shares
upon each national securities exchange or automated quotation system, if
any, upon which shares of Common Stock are then listed (subject to
official notice of issuance) and, so long as the Buyer owns any of the
Securities, shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of all Conversion Shares from time to
time issuable upon conversion of the Note. The Company will obtain
and, so long as the Buyer owns any of the Securities, maintain the listing
and trading of its Common Stock on the OTCBB, OTCQB, OTC Pink or any
equivalent replacement exchange, the Nasdaq National Market (“Nasdaq”),
the Nasdaq SmallCap Market (“Nasdaq SmallCap”), the New York Stock
Exchange (“NYSE”), or the NYSE MKT and will comply in all respects with
the Company’s reporting, filing and other obligations under the bylaws or
rules of the Financial Industry Regulatory Authority (“FINRA”) and such
exchanges, as applicable. The Company shall promptly provide to the
Buyer copies of any material notices it receives from the OTCBB, OTCQB and
any other exchanges or quotation systems on which the Common Stock is then
listed regarding the continued eligibility of the Common Stock for listing
on such exchanges and quotation systems. |
e. |
Corporate
Existence. So long as the Buyer beneficially owns
any Note, the Company shall maintain its corporate existence and shall not
sell all or substantially all of the Company’s assets, except in the event
of a merger or consolidation or sale of all or substantially all of the
Company’s assets, where the surviving or successor entity in such
transaction (i) assumes the Company’s obligations hereunder and under the
agreements and instruments entered into in connection herewith and (ii) is
a publicly traded corporation whose Common Stock is listed for trading on
the OTCBB, OTCQB, OTC Pink, Nasdaq, NasdaqSmallCap, NYSE or
AMEX. |
f. |
No
Integration. The Company shall not make any offers or sales
of any security (other than the Securities) under circumstances that
would require registration of the Securities being offered or sold
hereunder under the 1933 Act or cause the offering of the Securities to be
integrated with any other offering of securities by the Company for the
purpose of any stockholder approval provision applicable to the Company or
its securities. |
g. |
Failure
to Comply with the 1934 Act. So long as the Buyer
beneficially owns the Note, the Company shall comply with the reporting
requirements of the 1934 Act; and the Company shall continue to be subject
to the reporting requirements of the 1934
Act. |
h. |
Trading
Activities. Neither the Buyer nor its affiliates has an open
short position (or other hedging or similar transactions) in the common
stock of the Company and the Buyer agree that it shall not, and that it
will cause its affiliates not to, engage in any
short |
14
sales
of or hedging transactions with
respect to the common
stock of the Company.
i. |
Breach
of Covenants. If the Company breaches any of the covenants set
forth in this Section 4, and in addition to any other remedies available
to the Buyer pursuant to this Agreement, it will be considered an
event of default under Section 3.3 of the
Note. |
5. |
Transfer
Agent Instructions. Prior to registration of the Conversion
Shares under the 1933 Act or the date on which the Conversion Shares may
be sold pursuant to Rule 144 without any restriction as to the
number of Securities as of a particular date that can then be immediately
sold, all such certificates shall bear the restrictive legend specified in
Section 2(g) of this Agreement. The Company warrants that: (i) no
stop transfer instructions to give effect to Section 2(f) hereof (in the
case of the Conversion Shares, prior to registration of the Conversion
Shares under the 1933 Act or the date on which the Conversion Shares may
be sold pursuant to Rule 144 without any restriction as to the number of
Securities as of a particular date that can then be immediately sold),
will be given by the Company to its transfer agent and that the Securities
shall otherwise be freely transferable on the books and records of the
Company as and to the extent provided in this Agreement and the Note; (ii)
it will not direct its transfer agent not to transfer or delay, impair,
and/or hinder its transfer agent in transferring (or issuing)
(electronically or in certificated form) any certificate for Conversion
Shares to be issued to the Buyer upon conversion of or otherwise pursuant
to the Note as and when required by the Note and this Agreement; and (iii)
it will not fail to remove (or directs its transfer agent not to remove or
impairs, delays, and/or hinders its transfer agent from removing) any
restrictive legend (or to withdraw any stop transfer instructions in
respect thereof) on any certificate for any Conversion Shares issued to
the Buyer upon conversion of or otherwise pursuant to the Note as and when
required by the Note and this Agreement. Nothing in this Section shall
affect in any way the Buyer’s obligations and agreement set forth in
Section 2(g) hereof to comply with all applicable prospectus delivery
requirements, if any, upon re-sale of the Securities. If the Buyer
provides the Company, at the cost of the Buyer, with (i) an opinion of
counsel in form, substance and scope customary for opinions in comparable
transactions, to the effect that a public sale or transfer of such
Securities may be made without registration under the 1933 Act and such
sale or transfer is effected or (ii) the Buyer provides reasonable
assurances that the Securities can be sold pursuant to Rule 144, the
Company shall permit the transfer, and, in the case of the Conversion
Shares, promptly instruct its transfer agent to issue one or more
certificates, free from restrictive legend, in such name and in such
denominations as specified by the Buyer. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to
the Buyer, by vitiating the intent and purpose of the transactions
contemplated hereby. Accordingly, the Company acknowledges that the remedy
at law for a breach of its obligations under this Section may be
inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Section, that the Buyer shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate transfer, without the
necessity of showing economic loss and without any bond or other security
being required. |
15
6. |
CONDITIONS
PRECEDENT TO THE COMPANY’S OBLIGATIONS TO SELL. The obligation
of the Company hereunder to issue and sell the Note to the Buyer at the
Closing is subject to the satisfaction, at or before the Closing Date of
each of the following conditions thereto, provided that these conditions
are for the Company’s sole benefit and may be waived by the Company at any
time in its sole discretion: |
a. |
The Buyer
shall have executed this Agreement and delivered the
same to
the Company. |
b. |
The Buyer
shall have delivered the Purchase Price in accordance
with Section
1(b) above. |
c. |
The
representations and warranties of the Buyer shall be true and correct in
all material respects as of the date when made and as of the Closing Date
as though made at that time (except for representations and warranties
that speak as of a specific date), and the Buyer shall have performed,
satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Buyer at or prior to the Closing
Date. |
d. |
No
litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or
in any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this
Agreement. |
7. |
CONDITIONS
PRECEDENT TO THE BUYER’S OBLIGATION TO PURCHASE. The obligation
of the Buyer hereunder to purchase the Note at the Closing is subject to
the satisfaction, at or before the Closing Date of each of the following
conditions, provided that these conditions are for the Buyer’s sole
benefit and may be waived by the Buyer at any time in its sole
discretion: |
a. |
The
Company shall have executed this Agreement and delivered
the same
to the Buyer. |
b. |
The
Company shall have delivered to the Buyer duly executed Note (in
such denominations as the Buyer shall request) in accordance with Section
1(b) above. |
c. |
The
representations and warranties of the Company shall be true and correct in
all material respects as of the date when made and as of the Closing Date
as though made at such time (except for representations and warranties
that speak as of a specific date) and the Company shall have performed,
satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing Date.
The Buyer shall have received a |
16
certificate
or certificates, executed by the chief executive officer of the Company, dated
as of the Closing Date, to the foregoing effect and as to such other matters as
may be reasonably requested by the Buyer including, but not limited to
certificates with respect to the Company’s Certificate of Incorporation, By-laws
and Board of Directors’ resolutions relating to the transactions contemplated
hereby.
d. |
No
litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or
in any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this
Agreement. |
e. |
No event
shall have occurred which could reasonably be expected to have a Material
Adverse Effect on the Company including but not limited to a change in
the 1934 Act reporting status of the Company or the failure of the
Company to be timely in its 1934 Act reporting
obligations. |
f. |
The
Conversion Shares shall have been authorized for quotation on the OTCBB,
OTCQB or any similar quotation system and trading in the Common Stock on
the OTCBB, OTCQB or any similar quotation system shall not have been
suspended by the SEC or the OTCBB, OTCQB or any similar quotation
system. |
g. |
The Buyer
shall have received an officer’s certificate described in Section 3(c)
above, dated as of the Closing Date. |
8. |
GOVERNING
LAW; MISCELLANEOUS. |
a. |
Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada without regard to
principles of conflicts of laws. Any action brought by either party
against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. The parties to this
Agreement hereby irrevocably waive any objection to
jurisdiction and venue of any action instituted hereunder and shall not
assert any defense based on lack of jurisdiction or venue or based upon
forum
non conveniens. The Company and Buyer waive trial by jury.
The prevailing party shall be entitled to recover from the other
party its reasonable attorney’s fees and costs. In the event that any
provision of this Agreement or any other agreement delivered in connection
herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent
that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove
invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision of any agreement. Each party hereby
irrevocably waives personal service of process and consents to process
being served in any suit, action or proceeding in connection with this
Agreement or any |
17
other
Transaction Document by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address
in effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any other manner permitted by law.
b. |
Counterparts;
Signatures by Facsimile. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered
to the other party. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement. |
c. |
Headings.
The headings of this Agreement are for convenience of reference only and
shall not form part of, or affect the interpretation of, this
Agreement. |
d. |
Severability.
In the event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision hereof. |
e. |
Entire
Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the
Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or
amended other than by an instrument in writing signed by the
majority in interest of the Buyer. |
f. |
Notices.
All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with
charges prepaid, or (iv) transmitted by hand delivery, telegram,
facsimile, or electronic mail addressed as set forth below or to such
other address as such party shall have specified most recently by written
notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery, delivery
by facsimile, with accurate confirmation generated by the transmitting
facsimile machine, or delivery by electronic mail when sent, at the
address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be
received) or (b) on the second business day following the date of mailing
by |
18
express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company, to:
Vet
Online Supply, Inc. 0000 Xxxxxx Xxxxxx, XXX 000 Xxx Xxxxx, XX 00000
e-mail: xxxxxx@xxxxxxxxxxxxxxxxx.xxx
If
to the Holder, to:
CROWN
BRIDGE PARTNERS, LLC
0000x
0xx Xxxxxx, Xxxxx 000 Xxx Xxxx, XX 00000
e-mail: Xxxx@XxxxxXxxxxxXxxxxxx.xxx
Each
party shall provide notice to the other party of any change in address.
g. |
Successors
and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and assigns. Neither the
Company nor the Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the
other. Notwithstanding the foregoing, subject to Section 2(f), the Buyer
may assign its rights hereunder to any person that purchases Securities in
a private transaction from the Buyer or to any of its “affiliates,” as
that term is defined under the 1934 Act, without the consent of the
Company. |
h. |
Third
Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other
person. |
i. |
Survival.
The representations and warranties of the Company and the agreements and
covenants set forth in this Agreement shall survive the closing hereunder.
The Company agrees to indemnify and hold harmless the Buyer and all their
officers, directors, employees and agents for loss or damage arising as a
result of or related to any breach by the Company of any of its
representations, warranties and covenants set forth in this Agreement or
any of its covenants and obligations under this Agreement, including
advancement of expenses as they are
incurred. |
j. |
Further
Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably
request |
19
in
order to carry out the intent and accomplish the purposes of this Agreement and
the consummation of the transactions contemplated hereby.
k. |
No
Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any
party. |
l. |
Remedies. |
(i) |
The
Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer by vitiating the intent and purpose of
the transaction contemplated hereby. Accordingly, the Company acknowledges
that the remedy at law for a breach of its obligations under this
Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement, that
the Buyer shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein,
to an injunction or injunctions restraining, preventing or curing any
breach of this Agreement and to enforce specifically the terms and
provisions hereof, without the necessity of showing economic loss and
without any bond or other security being
required. |
(ii) |
In
addition to any other remedy provided herein or in any document executed
in connection herewith, Borrower shall pay Holder for all costs, fees and
expenses in connection with any litigation, contest, dispute, suit or any
other action to enforce any rights of Holder against Borrower in
connection herewith, including, but not limited to, costs and expenses and
attorneys’ fees, and costs and time charges of counsel to Holder. In
furtherance of the foregoing, Borrower shall pay an amount equal to
$25,000 to the Holder immediately upon the Holder’s filing of any
litigation, contest, dispute, suit or any other action to enforce any
rights of Holder against Borrower in connection herewith, which such
amount shall be used to pay Holder’s attorneys’ fees, cost and expenses.
Additional amounts shall be paid by Borrower to Holder immediately upon
Borrower’s receipt of invoices from Holder’s attorney evidencing the
charges and fees assessed in connection with any such litigation, contest,
dispute, suit or any other action to enforce any rights of Holder and,
upon receiving such invoices which indicate outstanding fees in excess of
$25,000 at any time, Borrower shall promptly pay an additional $25,000 to
Holder to be used in satisfaction of additional attorneys’ fees, and costs
and time charges of counsel to Holder. Such payments shall continue
indefinitely until said litigation, contest, dispute, suit or any other
action to enforce any rights of Holder against Borrower is settled
to the satisfaction of the Holder. Further, Borrower agrees to save
and hold Holder harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such
costs and expenses. |
m. |
Publicity.
The Company, and the Buyer shall have the right to review a reasonable
period of time before issuance of any press releases, SEC, OTCQB (or other
applicable trading market), or FINRA filings, or any other public
statements with respect to the |
20
transactions
contemplated hereby; provided,
however,
that the Company shall be entitled, without the prior approval of the
Buyer, to make any press release or SEC, OTCQB (or other applicable trading
market) or FINRA filings with respect to such transactions as is required by
applicable law and regulations (although the Buyer shall be consulted by the
Company in connection with any such press release prior to its release and shall
be provided with a copy thereof).
n. |
Piggyback
Registration Rights. The Company hereby grants the Buyer the
piggyback registration rights set forth on Exhibit B hereto, with respect
to the Note, the shares of Common Stock in which the Note is convertible
into, so long as the Note is outstanding. |
[
- signature page follows - ]
21
IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused this
Agreement to be duly executed as of the date first above written.
Vet
Online Supply, Inc.
By:/s/Xxxxxx Xxxxx
Name:
Xxxxxx Xxxxx
Title:
Chief Executive Officer
CROWN
BRIDGE PARTNERS, LLC
By:/s/Xxxx Xxxxxx
Name:
Xxxx Xxxxxx
Title: Managing
Member
AGGREGATE
SUBSCRIPTION AMOUNT:
Aggregate
Principal Amount of Note: US$25,500.00
Aggregate
Purchase Price: US$21,500.00*
*The
purchase price of $21,500.00, relating to the Note, shall be paid within a
reasonable amount of time after the full execution of the Note and all
related transaction documents.
22
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This
REGISTRATION RIGHTS AGREEMENT (the “Agreement”),
dated as of June 19, 2017 (the “Execution
Date”), is entered into by and between Vet Online Supply, Inc., a Florida
corporation, with headquarters located at 0000 Xxxxxx Xxxxxx, XXX 000, Xxx
Xxxxx, XX 00000 (the “Company”),
and Crown Bridge Partners, LLC, a New York limited liability company, with
its address at 0000x 0xx Xxxxxx, Xxxxx 000, Xxx Xxxx, XX 00000 (the “Investor”).
RECITALS
A. |
Pursuant
to the securities purchase agreement entered into by and between the
Company and the Investor of this even date (the “Securities
Purchase Agreement”), the Company has agreed to issue and sell to
the Investor, the 2% convertible note in the aggregate principal amount of
US$25,500.00 (the “Note”),
which is convertible into an indeterminate number of shares of the
Company’s common stock (collectively the “Common
Stock”); |
B. |
As
an inducement to the Investor to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively,
the “1933
Act”), and applicable state securities laws, with respect to the
shares of Common Stock issuable pursuant to the conversion of the
Note. |
C. |
NOW
THEREFORE, in consideration of the foregoing promises and the
mutual covenants contained hereinafter and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Investor hereby agree as
follows: |
SECTION 1
DEFINITIONS
1.1 As used
in this Agreement, the following terms shall have the following
meanings:
“Execution
Date” shall have the meaning set forth in the preambles. “Investor”
shall have the meaning set forth in the preambles.
"Person"
means a corporation, a limited liability company, an association, a partnership,
an organization, a business, an individual, a governmental or political
subdivision thereof or a governmental agency.
23
"Potential
Material Event" means any of the following: (i) the possession by the
Company of material information not ripe for disclosure in the Registration
Statement, which shall be evidenced by determinations in good faith by the Board
of Directors of the Company that disclosure of such information in the
Registration Statement would be detrimental to the business and affairs of the
Company, or (ii) any material engagement or activity by the Company which would,
in the good faith determination of the Board of Directors of the Company, be
adversely affected by disclosure in the Registration Statement at such time,
which determination shall be accompanied by a good faith determination by the
Board of Directors of the Company that the Registration Statement would be
materially misleading absent the inclusion of such information.
"Register,"
"Registered,"
and "Registration"
refer to the Registration effected by preparing and filing one (1) or more
Registration Statements in compliance with the 1933 Act and pursuant to Rule 415
under the 1933 Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement(s) by the United States Securities and Exchange
Commission (the "SEC").
"Registrable
Securities" means (i) all shares of Common Stock issued or issuable
pursuant to the Note, and (ii) any shares of capital stock issued or issuable
with respect to such shares of Common Stock, if any, as a result of any stock
split, stock dividend, recapitalization, exchange or similar event or
otherwise, which have not been (x) included in the Registration Statement that
has been declared effective by the SEC, or (y) sold under circumstances meeting
all of the applicable conditions of Rule 144 (or any similar provision then in
force) under the 1933 Act.
"Registration
Statement" means the registration statement of the Company filed under
the 1933 Act covering the Registrable Securities.
"Transaction
Documents" shall mean this Agreement and the Securities Purchase
Agreement between the Company and the Investor as of the date hereof, and any
other agreements between the Company and the Investor executed in conjunction
with this transaction
All
capitalized terms used in this Agreement and not otherwise defined herein shall
have the same meaning ascribed to them as in the Securities Purchase
Agreement.
SECTION 2
REGISTRATION
2.1 |
In the
event that the Company files a Registration Statement or Registration
Statements (as is necessary) on Form S-1 (or, if such form is unavailable
for such a registration, on such other form as is available for such
registration), at any time on or after the issuance date of the Note to
which this Agreement is an exhibit to (June 19, 2017), then such
Registration Statement shall cover the resale by the Investor of all
Registrable Securities (the "Registration
Amount"), and such Registration Statement(s) shall state that, in
accordance with Rule 416 |
24
promulgated
under the 1933 Act, that such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon stock splits, stock dividends or similar transactions..
2.2 |
Notwithstanding
the registration obligations set forth in this Section 2.1, if the staff
of the SEC (the "Staff")
or the SEC informs the Company that all of the unregistered Registrable
Securities cannot, as a result of the application of Rule 415, be
registered for resale as a secondary offering on a single
Registration Statement, the Company agrees to promptly (i) inform Investor
of such fact and use its commercially reasonable efforts to file
amendments to the Registration Statement as required by the SEC and/or
(ii) withdraw the Registration Statement and file a new registration
statement (the "New
Registration Statement"), in either case covering the maximum
number of Registrable Securities permitted to be registered by the SEC, on
Form S-1 to register for resale the Registrable Securities as a secondary
offering. If the Company amends the Registration Statement or files a New
Registration Statement, as the case may be, under clauses (i) or (ii)
above, the Company will use its commercially reasonable efforts to file
with the SEC, as promptly as allowed by the Staff or SEC, one or more
registration statements on Form S-1 to register for resale those
Registrable Securities that were not registered for resale on the
Registration Statement, as amended, or the New Registration Statement
(each, an "Additional
Registration Statement"). Additionally, the Company shall have the
ability to file one or more New Registration Statements to cover the
Registrable Securities once the shares under the initial Registration
Statement referenced in Section 2.1 have been
sold. |
SECTION 3
RELATED OBLIGATIONS
If
the Company decides to file the Registration Statement with the SEC pursuant to
Section 2, the Company will affect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
with respect thereto, the Company shall have the following obligations:
3.1 |
The
Company shall use all commercially reasonable efforts to cause such
Registration Statement relating to the Registrable Securities to become
effective and shall keep such Registration Statement effective until the
earlier to occur of the date on which (A) the Investor shall have sold all
the Registrable Securities; or (B) the Investor has no right to acquire
any additional shares of Common Stock under the Securities Purchase
Agreement (the "Registration
Period"). The Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading. The Company shall use all commercially reasonable efforts to
respond to all SEC comments within ten (10) business days from receipt of
such comments by the Company. The Company shall use all commercially
reasonable efforts to cause the Registration Statement relating to
the Registrable Securities to become effective no later than two (2)
business days after notice from |
25
the
SEC that the Registration Statement may be declared effective. The Investor
agrees to provide all information which is required by law to provide to
the Company, including the intended method of disposition of the Registrable
Securities, and the Company's obligations set forth above shall be conditioned
on the receipt of such information.
3.2 |
The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement
and the prospectus used in connection with such Registration Statement,
which prospectus is to be filed pursuant to Rule 424 promulgated under the
1933 Act, as may be necessary to keep such Registration Statement
effective during the Registration Period, and, during such period, comply
with the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by such Registration
Statement until such time as all of such Registrable Securities shall have
been disposed of in accordance with the intended methods of disposition by
the Investor thereof as set forth in such Registration Statement. In the
event the number of shares of Common Stock covered by the Registration
Statement filed pursuant to this Agreement is at any time insufficient to
cover all of the Registrable Securities, the Company shall amend such
Registration Statement, or file a new Registration Statement (on the short
form available therefor, if applicable), or both, so as to cover all
of the Registrable Securities, in each case, as soon as practicable, but
in any event within thirty (30) calendar days after the necessity therefor
arises. The Company shall use commercially reasonable efforts to cause
such amendment and/or new Registration Statement to become effective as
soon as practicable following the filing
thereof. |
3.3 |
The
Company shall make available to the Investor whose Registrable Securities
are included in any Registration Statement and its legal counsel without
charge (i) promptly after the same is prepared and filed with the SEC at
least one (1) copy of such Registration Statement and any amendment(s)
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits, the prospectus
included in such Registration Statement (including each preliminary
prospectus) and, with regards to such Registration Statement(s), any
correspondence by or on behalf of the Company to the SEC or the staff of
the SEC and any correspondence from the SEC or the staff of the SEC to the
Company or its representatives; (ii) upon the effectiveness of any
Registration Statement, the Company shall make available copies of the
prospectus, via XXXXX, included in such Registration Statement and all
amendments and supplements thereto; and (iii) such other documents,
including copies of any preliminary or final prospectus, as the Investor
may reasonably request from time to time to facilitate the disposition of
the Registrable Securities. |
3.4 |
The
Company shall use commercially reasonable efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement
under such other securities or "blue sky" laws of such states in the
United States as the Investor reasonably requests; (ii) prepare and file
in those jurisdictions, such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as
may be necessary to maintain the effectiveness thereof during the
Registration Period; (iii) take such other actions
as |
26
may
be necessary to maintain such registrations and qualifications in effect at all
times during the Registration Period, and (iv) take all other actions
reasonably necessary or advisable to qualify the Registrable Securities for sale
in such jurisdictions; provided, however, that the Company shall not be required
in connection therewith or as a condition thereto to (A) qualify to do business
in any jurisdiction where it would not otherwise be required to qualify but for
this Section 3.4, or (B) subject itself to general taxation in any such
jurisdiction. The Company shall promptly notify the Investor who holds
Registrable Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or "blue sky" laws of any
jurisdiction in the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.
3.5 |
As
promptly as practicable after becoming aware of such event, the Company
shall notify Investor in writing of the happening of any event as a result
of which the prospectus included in the Registration Statement, as then in
effect, includes an untrue statement of a material fact or omission to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading ("Registration
Default") and use all diligent efforts to promptly prepare a
supplement or amendment to such Registration Statement and take any other
necessary steps to cure the Registration Default (which, if such
Registration Statement is on Form S-3, may consist of a document to be
filed by the Company with the SEC pursuant to Section 13(a), 13(c), 14 or
15(d) of the 1934 Act (as defined below) and to be incorporated by
reference in the prospectus) to correct such untrue statement or
omission, and make available copies of such supplement or amendment to the
Investor. The Company shall also promptly notify the Investor (i) when a
prospectus or any prospectus supplement or post-effective amendment has
been filed, and when the Registration Statement or any post-effective
amendment has become effective (the Company will prepare notification of
such effectiveness which shall be delivered to the Investor on the same
day of such effectiveness and by overnight mail), additionally, the
Company will promptly provide to the Investor, a copy of the effectiveness
order prepared by the SEC once it is received by the Company; (ii) of any
request by the SEC for amendments or supplements to the Registration
Statement or related prospectus or related information, (iii) of the
Company's reasonable determination that a post-effective amendment to the
Registration Statement would be appropriate, (iv) in the event the
Registration Statement is no longer effective, or (v) if the Registration
Statement is stale as a result of the Company's failure to timely file its
financials or otherwise |
3.6 |
The
Company shall use all commercially reasonable efforts to prevent the
issuance of any stop order or other suspension of effectiveness of the
Registration Statement, or the suspension of the qualification of any of
the Registrable Securities for sale in any jurisdiction and, if such an
order or suspension is issued, to obtain the withdrawal of such order
or suspension at the earliest possible moment and to notify the
Investor holding Registrable Securities being sold of the issuance of such
order and the resolution thereof or its receipt
of |
27
actual
notice of the initiation or threat of any proceeding concerning the
effectiveness of the registration statement.
3.7 |
The
Company shall permit the Investor and one (1) legal counsel, designated by
the Investor, to review and comment upon the Registration Statement and
all amendments and supplements thereto at the request of the Investor.
However, any postponement of a filing of a Registration Statement or any
postponement of a request for acceleration or any postponement of the
effective date or effectiveness of a Registration Statement by written
request of the Investor (collectively, the "Investor's
Delay") shall not act to trigger any penalty of any kind, or any
cash amount due or any in-kind amount due the Investor from the Company
under any and all agreements of any nature or kind between the Company and
the Investor. The event(s) of an Investor's Delay shall act to suspend all
obligations of any kind or nature of the Company under any and all
agreements of any nature or kind between the Company and the
Investor. |
3.8 |
At the
request of the Investor, the Company's counsel shall furnish to the
Investor an opinion letter confirming the effectiveness of the
registration statement and the free trading status of the Registrable
Securities. Such opinion letter shall be issued as of the date of the
effectiveness of the registration statement and be in a form reasonably
acceptable to the Investor, Company's transfer agent, and Investor's
broker(s). |
3.9 |
The
Company shall hold in confidence and not make any disclosure of
information concerning the Investor unless (i) disclosure of such
information is necessary to comply with federal or state securities laws,
(ii) the disclosure of such information is necessary to avoid or
correct a misstatement or omission in any Registration Statement, (iii)
the release of such information is ordered pursuant to a subpoena or other
final, non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available
to the public other than by disclosure in violation of this Agreement or
any other agreement. The Company agrees that it shall, upon learning that
disclosure of such information concerning the Investor is sought in or by
a court or governmental body of competent jurisdiction or through other
means, give prompt written notice to the Investor and allow the Investor,
at the Investor's expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order covering such
information. |
3.10 |
The
Company shall use all commercially reasonable efforts to maintain
designation and quotation of all the Registrable Securities covered by any
Registration Statement on the principal market in which the Company's
common stock is then traded. If, despite the Company's commercially
reasonable efforts, the Company is unsuccessful in satisfying the
preceding sentence, it shall use commercially reasonable efforts to cause
all the Registrable Securities covered by any Registration Statement to be
listed on each other national securities exchange and automated quotation
system, if any, on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or system.
The Company shall pay all fees and expenses in connection with satisfying
its obligation under this Section 3.10. |
28
3.11 |
The
Company shall cooperate with the Investor to facilitate electronic
delivery of the Registrable Securities or if requested by the Investor,
the preparation of certificates to be offered pursuant to the Registration
Statement and enable such certificates to be in such denominations or
amounts, as the case may be, as the Investor may reasonably request and
after any sales of such Registrable Securities by the Investor, such
certificates not bearing any restrictive
legend). |
3.12 |
The
Company shall provide a transfer agent for all the Registrable Securities
not later than the effective date of the first Registration Statement
filed pursuant hereto. |
3.13 |
If
requested by the Investor, the Company shall (i) as soon as reasonably
practical incorporate in a prospectus supplement or post-effective
amendment such information as the Investor reasonably determines
should be included therein relating to the sale and distribution of
Registrable Securities, including, without limitation, information with
respect to the offering of the Registrable Securities to be sold in such
offering; (ii) make all required filings of such prospectus supplement or
post-effective amendment as soon as reasonably possible after being
notified of the matters to be incorporated in such prospectus supplement
or post-effective amendment; and (iii) supplement or make amendments to
any Registration Statement if reasonably requested by the
Investor. |
3.14 |
The
Company shall use all commercially reasonable efforts to cause the
Registrable Securities covered by the applicable Registration Statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to facilitate the disposition of such
Registrable Securities. |
3.15 |
The
Company shall otherwise use all commercially reasonable efforts to comply
with all applicable rules and regulations of the SEC in connection with
any registration hereunder. |
3.16 |
Within
two (2) business day after the Registration Statement which includes
Registrable Securities is declared effective by the SEC, the Company shall
deliver to the transfer agent for such Registrable Securities, with copies
to the Investor, confirmation that such Registration Statement has been
declared effective by the SEC. |
3.17 |
The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of Registrable Securities pursuant
to the Registration Statement. |
SECTION 4
OBLIGATIONS OF THE INVESTOR
4.1 |
At least
five (5) calendar days prior to the first anticipated filing date of the
Registration Statement the Company shall notify the Investor in writing of
the information the Company requires from the
Investor for the Registration Statement.
It shall be a condition |
29
precedent
to the obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities and the Investor agrees to
furnish to the Company that information regarding itself, the Registrable
Securities and the intended method of disposition of the Registrable Securities
as shall reasonably be required to effect the registration of such Registrable
Securities and the Investor shall execute such documents in connection with such
registration as the Company may reasonably request.
4.2 |
The
Investor, by its acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of any Registration Statement
hereunder. |
4.3 |
The
Investor agrees that, upon receipt of written notice from the Company
of the happening of any event of the kind described in Section 3.6
or the first sentence of 3.5, the Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration
Statement(s) covering such Registrable Securities until the Investor's
receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3.6 or the first sentence of
3.5. |
SECTION 5
EXPENSES OF REGISTRATION
All
legal expenses, other as set forth in the Securities Purchase Agreement,
incurred in connection with registrations including comments, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, and printing fees shall be paid
by the Company.
SECTION 6
INDEMNIFICATION
In
the event any Registrable Securities are included in the Registration Statement
under this Agreement:
6.1 |
To the
fullest extent permitted by law, the Company, under this Agreement,
will, and hereby does, indemnify, hold harmless and defend the Investor
who holds Registrable Securities, the directors, officers, partners,
employees, counsel, agents, representatives of, and each Person, if any,
who controls, any Investor within the meaning of the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934
Act") (each, an "Indemnified
Person"), against any losses, claims, damages, liabilities,
judgments, fines, penalties, charges, costs, attorneys' fees, amounts paid
in settlement or expenses, joint or several (collectively, "Claims"),
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory
agency, body or the SEC, whether pending or threatened, whether or not an
indemnified party is or may be a party thereto ("Indemnified |
30
Damages"),
to which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of
a material fact in the Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other "blue sky" laws of any jurisdiction in
which the Investor has requested in writing that the Company register or qualify
the Shares ("Blue
Sky Filing"), or the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which the statements therein were made, not
misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in the final prospectus (as amended or supplemented, if the
Company files any amendment thereof or supplement thereto with the SEC) or the
omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to the Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, "Violations").
Subject to the restrictions set forth in Section 6.3 the Company shall
reimburse the Investor and each such controlling person, promptly as such
expenses are incurred and are due and payable, for any reasonable legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6.1: (i) shall
not apply to a Claim arising out of or based upon a Violation which is due to
the inclusion in the Registration Statement of the information furnished to the
Company by any Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto; (ii) shall not be available to the extent such Claim is
based on (a) a failure of the Investor to deliver or to cause to be delivered
the prospectus made available by the Company or (b) the Indemnified Person's use
of an incorrect prospectus despite being promptly advised in advance by the
Company in writing not to use such incorrect prospectus; (iii) any claims based
on the manner of sale of the Registrable Securities by the Investor or of the
Investor's failure to register as a dealer under applicable securities laws;
(iv) any omission of the Investor to notify the Company of any material fact
that should be stated in the Registration Statement or prospectus relating to
the Investor or the manner of sale; and (v) any amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Indemnified Person and shall survive the resale of the
Registrable Securities by the Investor pursuant to the Registration
Statement.
6.2 |
Promptly
after receipt by an Indemnified Person or Indemnified Party under this
Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under
this |
31
Section
6, deliver to the indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the Indemnified Person or
Indemnified Party, the representation by counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The indemnifying party shall pay for only one (1) separate legal
counsel for the Indemnified Persons or the Indemnified Parties, as applicable,
and such counsel shall be selected by the Investor, if the Investor is
entitled to indemnification hereunder, or the Company, if the Company is
entitled to indemnification hereunder, as applicable. The Indemnified Party or
Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or Claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or Claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim
or proceeding affected without its written consent, provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the consent of the Indemnified
Party or Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such Claim.
Following indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnified Party or Indemnified Person
with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.
6.3 |
The
indemnity agreements contained herein shall be in addition to (i) any
cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities
the indemnifying party may be subject to pursuant to the
law. |
32
SECTION 7
CONTRIBUTION
7.1
To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party agrees
to make the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by
law; provided, however, that: (i) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6; (ii) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of fraudulent misrepresentation; and
(iii) contribution by any seller of Registrable Securities shall be limited in
amount to the net amount of proceeds received by such seller from the sale of
such Registrable Securities. Notwithstanding the provisions of this Section, no
Investor shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the net proceeds actually received by such Investor from
the applicable sale of the Registrable Securities subject to the claim exceeds
the amount of any damages that such Investor has otherwise been required to pay,
or would otherwise be required to pay under Section 6.2, by reason of such
untrue or alleged untrue statement or omission or alleged omission.
SECTION 8
REPORTS
UNDER THE 1934 ACT
8.1 |
With a
view to making available to the Investor the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the Investor to sell securities of the
Company to the public without registration ("Rule 144"), provided that the
Investor holds any Registrable Securities are eligible for resale under
Rule 144, the Company agrees to: |
(a) |
make and
keep public information available, as those terms are understood and
defined in Rule 144; |
(b) |
file with
the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements (it being understood that nothing herein
shall limit the Company's obligations under Section 5(c) of the Securities
Purchase Agreement) and the filing of such reports and other documents is
required for the applicable provisions of Rule 144;
and |
(c) |
furnish
to the Investor, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144,
the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so
filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Investor to sell such securities
pursuant to Rule 144 without registration. |
33
SECTION 9
MISCELLANEOUS
9.1 |
Notices.
Any notices or other communications required or permitted to be
given under the terms of this Agreement must be given in accordance with
the Securities Purchase Agreement. |
9.2 |
No
Waivers. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver
thereof. |
9.3 |
No
Assignments. The rights and obligations under this Agreement shall
not be assignable. |
9.4 |
Entire
Agreement/Amendment. This Agreement and the Transaction
Documents constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Agreement and the
Transaction Documents supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof. The provisions of this Agreement may be amended only with the
written consent of the Company and
Investor. |
9.5 |
Headings.
The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof. Whenever required
by the context of this Agreement, the singular shall include the plural
and masculine shall include the feminine. This Agreement shall not be
construed as if it had been prepared by one of the parties, but rather as
if all the parties had prepared the same. |
9.6 |
Counterparts.
This Agreement may be executed in any number of counterparts and by the
different signatories hereto on separate counterparts, each of which, when
so executed, shall be deemed an original, but all such counterparts
shall constitute but one and the same instrument. This Agreement may be
executed by facsimile transmission, PDF, electronic signature or other
similar electronic means with the same force and effect as if such
signature page were an original thereof. |
9.7 |
Further
assurances. Each party shall do and perform, or cause to be done
and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated
hereby. |
9.8 |
Severability.
In case any provision of this Agreement is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such |
34
provision
shall be adjusted rather than voided, if possible, so that it is enforceable to
the maximum extent possible, and the validity and enforceability of the
remaining provisions of this Agreement will not in any way be affected or
impaired thereby.
9.9 |
Law
governing this agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either
party against the other concerning the transactions contemplated by
this Agreement shall be brought only in the state courts or federal courts
located in New York City, New York. The parties to this Agreement hereby
irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum
non conveniens. The
parties executing this Agreement and other agreements referred to herein
or delivered in connection herewith on behalf of the Company agree to
submit to the in personam jurisdiction of such courts and hereby
irrevocably waive trial by jury. The prevailing party shall be
entitled to recover from the other party its reasonable attorney's fees
and costs. In the event that any provision of this Agreement or any other
agreement delivered in connection herewith is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be
deemed inoperative to the extent that it may conflict therewith and shall
be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any
agreement. Each party hereby irrevocably waives personal service of
process and consents to process being served in any suit, action or
proceeding in connection with this Agreement or any other Transaction
Documents by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
law. |
9.10 |
No
third party beneficiaries. This Agreement is intended for the
benefit of the parties hereto and is not for the benefit of, nor may any
provision hereof be enforced by, any other person, except that the Company
acknowledges that the rights of the Investor may be enforced by its
general partner. |
(Signature
page immediately follows)
35
IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective authorized representatives as of the Execution
Date.
Vet
Online Supply, Inc.
By:/s/Xxxxxx Xxxxx
Name:
Xxxxxx Xxxxx
Title:
Chief Executive Officer
CROWN
BRIDGE PARTNERS, LLC
By:/s/Xxxx Xxxxxx
Name:
Xxxx Xxxxxx
Title: Managing
Member
36
NEITHER
THE ISSUANCE NOR SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL
(WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO
RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
Principal Amount: $25,500.00 | Issue Date: June 19, 2017 |
Purchase Price: $21,500.00 | Original Issue Discount: $4,000.00 |
CONVERTIBLE
PROMISSORY BACK END NOTE
FOR
VALUE RECEIVED, VET
ONLINE SUPPLY, INC., a Florida corporation (hereinafter called the
"Borrower"), hereby promises to pay to the order of CROWN
BRIDGE PARTNERS, LLC, a New York limited liability company, or registered
assigns (the "Holder") the principal sum of $25,500.00 (the "Principal Amount"),
together with interest at the rate of two percent (2%) per annum, at maturity or
upon acceleration or otherwise, as set forth herein (the "Note"). The
consideration to the Borrower for this Note is $21,500.00 (the "Consideration").
The Holder shall initially pay the Consideration by the issuance of an
offsetting $25,500.00 promissory note (the "Holder Note") to the Company secured
by assets with a fair market value of not less than $25,500.00 as further
provided in the Holder Note, provided that prior to conversion of this Note, the
Holder must have paid off the Buyer Note in cash. The maturity date shall be
twelve (12) months from the Issue Date (each a "Maturity Date"), and is the date
upon which the principal sum, as well as any accrued and unpaid interest and
other fees, shall be due and payable. This Note may not be prepaid in whole or
in part except as otherwise explicitly set forth herein. Any amount of
principal or interest on this Note, which is not paid by the Maturity Date,
shall bear interest at the rate of the lesser of (i) twenty two percent (22%)
per annum or (ii) the maximum amount permitted under law from the due date
thereof until the same is paid ("Default Interest"). Interest shall commence
accruing on the date that the Note is fully paid and shall be computed on the
basis of a 365-day year and the actual number of days elapsed. All
payments due hereunder (to the extent not converted into the
37
Borrower's
common stock (the "Common Stock") in accordance with the terms hereof) shall be
made in lawful money of the United States of America. All payments shall be made
at such address as the Holder shall hereafter give to the Borrower by written
notice made in accordance with the provisions of this Note. Whenever any amount
expressed to be due by the terms of this Note is due on any day which is not a
business day, the same shall instead be due on the next succeeding day which is
a business day and, in the case of any interest payment date which is not the
date on which this Note is paid in full, the extension of the due date thereof
shall not be taken into account for purposes of determining the amount of
interest due on such date. As used in this Note, the term "business day" shall
mean any day other than a Saturday, Sunday or a day on which commercial banks in
the city of New York, New York are authorized or required by law or
executive order to remain closed.
This
Note carries a prorated original issue discount of $4,000.00 (the "OID"), to
cover the Holder's accounting fees, due diligence fees, monitoring, and/or
other transactional costs incurred in connection with the purchase and sale of
the Note, which is included in the principal balance of this Note. Thus, the
purchase price of this Note shall be $21,500.00, computed as follows: the
Principal Amount minus the OID.
This
Note is free from all taxes, liens, claims and encumbrances with respect to the
issue thereof and shall not be subject to preemptive rights or other similar
rights of shareholders of the Borrower and will not impose personal liability
upon the holder thereof.
The
following additional terms shall apply to this Note:
ARTICLE I. CONVERSION
RIGHTS
1.1 |
Conversion
Right. The Holder shall have the right at any time to convert
all or any part of the outstanding and unpaid principal amount and accrued
and unpaid interest of this Note into fully paid and non-assessable shares
of Common Stock, as such Common Stock exists on the Issue Date, or any
shares of capital stock or other securities of the Borrower into which
such Common Stock shall hereafter be changed or reclassified at the
conversion price (the "Conversion Price") determined as provided herein (a
"Conversion");
provided, however,
that in no event shall the Holder be entitled to convert any portion of
this Note in excess of that portion of this Note upon conversion of which
the sum of (1) the number of shares of Common Stock beneficially
owned by the Holder and its affiliates (other than shares of Common Stock
which may be deemed beneficially owned through the ownership of the
unconverted portion of the Notes or the unexercised or unconverted portion
of any other security of the Borrower subject to a limitation on
conversion or exercise analogous to the limitations contained herein) and
(2) the number of shares of Common Stock issuable upon the
conversion of the portion of this Note with respect to which the
determination of this proviso is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the
outstanding shares of Common Stock. For purposes of the proviso to
the immediately preceding |
38
sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such
proviso, provided,
further,
however,
that the limitations on conversion may be waived by the Holder upon, at the
election of the Holder, not less than 61 days' prior notice to the Borrower, and
the provisions of the conversion limitation shall continue to apply until such
61st day (or such later date, as determined by the Holder, as may be
specified in such notice of waiver). The number of shares of Common Stock
to be issued upon each conversion of this Note shall be determined by dividing
the Conversion Amount (as defined below) by the applicable Conversion Price then
in effect on the date specified in the notice of conversion, in the form
attached hereto as Exhibit A (the "Notice of Conversion"), delivered to the
Borrower or Borrower's transfer agent by the Holder in accordance with Section
1.4 below; provided that the Notice of Conversion is submitted by facsimile or
e-mail (or by other means resulting in, or reasonably expected to result in,
notice) to the Borrower or Borrower's transfer agent before 6:00 p.m., New York,
New York time on such conversion date (the "Conversion Date"). The term
"Conversion Amount" means, with respect to any conversion of this Note, the sum
of (1) the principal amount of this Note to be converted in such
conversion plus
(2) at the Holder's option, accrued and unpaid interest, if any, on such
principal amount at the interest rates provided in this Note to the Conversion
Date, plus
(3) at the Holder's option, Default Interest, if any, on the amounts referred to
in the immediately preceding clauses (1) and/or (2) plus
(4) at the Holder's option, any amounts owed to the Holder pursuant to Sections
1.3 and 1.4(g) hereof.
1.2 |
Conversion
Price. |
(a) |
Calculation
of Conversion Price. The Conversion Price shall be the Variable
Conversion Price (as defined herein) (subject to equitable adjustments for
stock splits, stock dividends or rights offerings by the Borrower relating
to the Borrower's securities or the securities of any subsidiary of the
Borrower, combinations, recapitalization, reclassifications, extraordinary
distributions and similar events) (also subject to adjustment as further
described herein). The "Variable Conversion Price" shall mean 55%
multiplied by the Market Price (as defined herein) (representing a
discount rate of 45%). "Market Price" means the lowest one (1) Trading
Price (as defined below) for the Common Stock during the twenty (20)
Trading Day period ending on the last complete Trading Day prior to the
Conversion Date. "Trading Price" means, for any security as of any date,
the lowest traded price on the NASDAQ, Over-the- Counter Pink Marketplace,
OTCQB, or applicable trading market (the "Primary Market") as reported by
a reliable reporting service ("Reporting Service") designated by the
Holder (i.e. xxx.Xxxxxx.xxx) or, if the Primary Market is not the
principal trading market for such security, on the principal securities
exchange or trading market where such security is listed or traded or, if
the lowest intraday trading price of such security is not available in any
of the foregoing manners, the lowest intraday price of any market makers
for such security that are quoted on the OTC Markets. If the
Trading Price cannot be calculated for such security
on |
39
such
date in the manner provided above, the Trading Price shall be the fair market
value as mutually determined by the Borrower and the holders of a majority in
interest of the Notes being converted for which the calculation of the Trading
Price is required in order to determine the Conversion Price of such Notes.
"Trading Day" shall mean any day on which the Common Stock is
tradable for any period on the Primary Market, or on the principal securities
exchange or other securities market on which the Common Stock is then being
traded. In the event that shares of the Borrower's Common Stock are not
deliverable via DWAC following the conversion of any amount hereunder, an
additional ten percent (10%) discount shall be factored into the Conversion
Price until this Note is no longer outstanding (resulting in a discount rate of
55% assuming no other adjustments are triggered hereunder).
Each time,
while this Note is outstanding, the Borrower enters into a Section 3(a)(9)
transaction (including but not limited to the issuance of new promissory notes
or of a replacement promissory note), or Section 3(a)(10) transaction, in which
any 3rd
party has the right to convert monies owed to that 3rd
party (or receive shares pursuant to a settlement or otherwise) at a
discount to market greater than the Variable Conversion Price in effect at that
time (prior to all other applicable adjustments in the Note), then the Variable
Conversion Price shall be automatically adjusted to such greater discount
percentage (prior to all applicable adjustments in this Note) until this Note is
no longer outstanding. Each time, while this Note is outstanding, the Borrower
enters into a Section 3(a)(9) transaction (including but not limited to the
issuance of new promissory notes or of a replacement promissory note), or
Section 3(a)(10) transaction, in which any 3rd
party has a look back period greater than the look back period in effect
under the Note at that time, then the Holder's look back period shall
automatically be adjusted to such greater number of days until this Note is no
longer outstanding. The Borrower shall give written notice to the Holder, with
the adjusted Variable Conversion Price and/or adjusted look back period (each
adjustment that is applicable due to the triggering event), within one (1)
business day of an event that requires any adjustment described in the two
immediately preceding sentences.
Holder shall be
entitled to deduct $500.00 from the conversion amount in each Notice of
Conversion to cover Holder's deposit fees associated with each Notice of
Conversion.
1.3 |
Authorized
Shares. The Borrower covenants that during the period the
conversion right exists, the Borrower will reserve from its authorized and
unissued Common Stock a sufficient number of shares, free from preemptive
rights, to provide for the issuance of Common Stock upon the full
conversion of this Note. The Borrower is required at all times
to have authorized and reserved ten times the number of shares that is
actually issuable upon full conversion of the Note (based on the
Conversion Price of the Notes in effect from time to time)(the "Reserved
Amount"). The Reserved Amount shall be increased from time to time in
accordance with the Borrower's obligations hereunder. The Borrower
represents that upon issuance, such shares will be duly and validly
issued, fully paid and non-assessable. In addition, if the Borrower shall
issue any securities or make any change to its capital structure which
would |
40
change
the number of shares of Common Stock into which the Notes shall be convertible
at the then current Conversion Price, the Borrower shall at the same time make
proper provision so that thereafter there shall be a sufficient number of shares
of Common Stock authorized and reserved, free from preemptive rights, for
conversion of the outstanding Notes. The Borrower (i) acknowledges that it has
irrevocably instructed its transfer agent to issue certificates for the Common
Stock issuable upon conversion of this Note, and (ii) agrees that its issuance
of this Note shall constitute full authority to its officers and agents who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock in accordance with the terms
and conditions of this Note.
If,
at any time the Borrower does not maintain the Reserved Amount it will be
considered an Event of Default under Section 3.2 of the Note.
1.4 |
Method
of Conversion. |
(a) |
Mechanics
of Conversion. Subject to Section 1.1, this Note may be
converted by the Holder in whole or in part at any time from time to time
after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable
means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to
Section 1.4(b), surrendering this Note at the principal office of the Borrower. |
(b) |
Surrender
of Note Upon Conversion. Notwithstanding anything to the
contrary set forth herein, upon conversion of this Note in accordance with
the terms hereof, the Holder shall not be required to physically surrender
this Note to the Borrower unless the entire unpaid principal amount of
this Note is so converted. The Holder and the Borrower shall maintain
records showing the principal amount so converted and the dates of such
conversions or shall use such other method, reasonably satisfactory to the
Holder and the Borrower, so as not to require physical surrender of this
Note upon each such conversion. In the event of any dispute or
discrepancy, such records of the Borrower shall, prima
facie, be controlling and determinative in the absence of manifest
error. Notwithstanding the foregoing, if any portion of this Note is
converted as aforesaid, the Holder may not transfer this Note unless the
Holder first physically surrenders this Note to the Borrower, whereupon
the Borrower will forthwith issue and deliver upon the order of the Holder
a new Note of like tenor, registered as the Holder (upon payment by the
Holder of any applicable transfer taxes) may request, representing in the
aggregate the remaining unpaid principal amount of this Note. The Holder
and any assignee, by acceptance of this Note, acknowledge and agree that,
by reason of the provisions of this paragraph, following conversion of a
portion of this Note, the unpaid and unconverted principal amount of this
Note represented by this Note may be less than the amount stated on the
face hereof. |
(c) |
Payment
of Taxes. The Borrower shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of |
41
Common
Stock or other securities or property on conversion of this Note in a name other
than that of the Holder (or in street name), and the Borrower shall not be
required to issue or deliver any such shares or other securities or property
unless and until the person or persons (other than the Holder or the custodian
in whose street name such shares are to be held for the Holder's account)
requesting the issuance thereof shall have paid to the Borrower the amount of
any such tax or shall have established to the satisfaction of the Borrower that
such tax has been paid.
(d) |
Delivery
of Common Stock Upon Conversion. Upon receipt by the Borrower
from the Holder of a facsimile transmission or e-mail (or other reasonable
means of communication) of a Notice of Conversion meeting the requirements
for conversion as provided in this Section 1.4, the Borrower shall issue
and deliver or cause to be issued and delivered to or upon the order of
the Holder certificates for the Common Stock issuable upon such conversion
within two (2) business days after such receipt (the "Deadline") (and,
solely in the case of conversion of the entire unpaid principal amount
hereof, surrender of this Note) in accordance with the terms
hereof. |
(e) |
Obligation
of Borrower to Deliver Common Stock. Upon receipt by the
Borrower of a Notice of Conversion, the Holder shall be deemed to be the
holder of record of the Common Stock issuable upon such conversion, the
outstanding principal amount and the amount of accrued and unpaid interest
on this Note shall be reduced to reflect such conversion, and, unless the
Borrower defaults on its obligations under this Article I, all rights with
respect to the portion of this Note being so converted shall forthwith
terminate except the right to receive the Common Stock or other
securities, cash or other assets, as herein provided, on such conversion.
If the Holder shall have given a Notice of Conversion as provided herein,
the Borrower's obligation to issue and deliver the certificates for Common
Stock shall be absolute and unconditional, irrespective of the absence of
any action by the Holder to enforce the same, any waiver or consent with
respect to any provision thereof, the recovery of any judgment
against any person or any action to enforce the same, any failure or delay
in the enforcement of any other obligation of the Borrower to the holder
of record, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder of any
obligation to the Borrower, and irrespective of any other circumstance
which might otherwise limit such obligation of the Borrower to the Holder
in connection with such conversion. The Conversion Date specified in the
Notice of Conversion shall be the Conversion Date so long as the Notice of
Conversion is received by the Borrower before 6:00 p.m., New York, New
York time, on such date. |
(f) |
Delivery
of Common Stock by Electronic Transfer. In lieu of delivering
physical certificates representing the Common Stock issuable upon
conversion, provided the Borrower is participating in the Depository Trust
Company ("DTC") Fast Automated Securities Transfer ("FAST") program, upon
request of the Holder and its compliance with the provisions
contained in Section 1.1 and in this Section 1.4, the Borrower shall use
its best efforts to cause its transfer agent to electronically transmit
the Common Stock |
42
issuable
upon conversion to the Holder by crediting the account of Holder's Prime Broker
with DTC through its Deposit Withdrawal Agent Commission ("DWAC") system.
(g) |
Failure
to Deliver Common Stock Prior to Deadline. Without in any way
limiting the Holder's right to pursue other remedies, including actual
damages and/or equitable relief, the parties agree that if delivery of the
Common Stock issuable upon conversion of this Note is not delivered by the
Deadline (other than a failure due to the circumstances described in
Section 1.3 above, which failure shall be governed by such Section) the
Borrower shall pay to the Holder $2,000 per day in cash, for each day
beyond the Deadline that the Borrower fails to deliver such Common Stock.
Such cash amount shall be paid to Holder by the fifth day of the month
following the month in which it has accrued or, at the option of the
Holder (by written notice to the Borrower by the first day of the month
following the month in which it has accrued), shall be added to the
principal amount of this Note, in which event interest shall accrue
thereon in accordance with the terms of this Note and such additional
principal amount shall be convertible into Common Stock in accordance with
the terms of this Note. The Borrower agrees that the right to
convert is a valuable right to the Holder. The damages resulting from a
failure, attempt to frustrate, interference with such conversion right are
difficult if not impossible to qualify. Accordingly the parties
acknowledge that the liquidated damages provision contained in this
Section 1.4(g) are justified. |
(h) |
DTC;
Sub-Xxxxx. If the Borrower fails to maintain its status as "DTC
Eligible" for any reason, or, if the Variable Conversion Price is equal to
or lower than $0.01, then an additional fifteen percent (15%)
discount shall be factored into the Variable Conversion Price until this
Note is no longer outstanding (resulting in a discount rate of 60%,
assuming no other adjustments are triggered
hereunder. |
1.5 |
Concerning
the Shares. The shares of Common Stock issuable upon
conversion of this Note may not be sold or transferred unless (i) such
shares are sold pursuant to an effective registration statement under the
Act or (ii) the Borrower or its transfer agent shall have been furnished
with an opinion of counsel (which opinion shall be in form, substance and
scope customary for opinions of counsel in comparable transactions) to the
effect that the shares to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration or (iii) such
shares are sold or transferred pursuant to Rule 144 under the Act (or a
successor rule) ("Rule 144") or (iv) such shares are transferred to an
"affiliate" (as defined in Rule 144) of the Borrower who agrees to sell or
otherwise transfer the shares only in accordance with this Section 1.5 and
who is an Accredited Investor. Except as otherwise provided (and subject
to the removal provisions set forth below), until such time as the shares
of Common Stock issuable upon conversion of this Note have been registered
under the Act or otherwise may be sold pursuant to Rule 144 without any
restriction as to the number of securities as of a particular date that
can then be immediately sold, each certificate for shares of Common Stock
issuable upon conversion of this Note that has not been so included in an
effective registration statement or that has not been sold pursuant to an
effective registration |
43
statement
or an exemption that permits removal of the legend, shall bear a legend
substantially in the following form, as appropriate:
"NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."
The
legend set forth above shall be removed and the Borrower shall issue to the
Holder a new certificate therefore free of any transfer legend if (i) the
Borrower or its transfer agent shall have received an opinion of counsel, in
form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Common Stock
may be made without registration under the Act, which opinion shall be accepted
by the Borrower so that the sale or transfer is effected or (ii) in the case of
the Common Stock issuable upon conversion of this Note, such security is
registered for sale by the Holder under an effective registration statement
filed under the Act or otherwise may be sold pursuant to Rule 144 without
any restriction as to the number of securities as of a particular date that can
then be immediately sold. In the event that the Borrower does not accept
the opinion of counsel provided by the Holder with respect to
the transfer of Securities pursuant to an exemption from registration, such as
Rule 144 or Regulation S, at the Deadline, it will be considered an Event of
Default pursuant to Section 3.2 of the Note.
1.6 |
[Intentionally
Omitted]. |
1.7 |
Status
as Shareholder. Upon submission of a Notice of Conversion by a
Holder, (i) the shares covered thereby (other than the shares, if any,
which cannot be issued because their issuance would exceed such Holder's
allocated portion of the Reserved Amount or Maximum Share Amount) shall be
deemed converted into shares of Common Stock and (ii) the Holder's rights
as a Holder of such converted portion of this Note shall cease and
terminate, excepting only the right to receive certificates for such
shares of Common Stock and to any remedies provided herein or otherwise
available at law or in equity to |
44
such
Holder because of a failure by the Borrower to comply with the terms of this
Note. Notwithstanding the foregoing, if a Holder has not received certificates
for all shares of Common Stock prior to the tenth (10th) business day after the
expiration of the Deadline with respect to a conversion of any portion of this
Note for any reason, then (unless the Holder otherwise elects to retain its
status as a holder of Common Stock by so notifying the Borrower) the Holder
shall regain the rights of a Holder of this Note with respect to such
unconverted portions of this Note and the Borrower shall, as soon as
practicable, return such unconverted Note to the Holder or, if the Note has not
been surrendered, adjust its records to reflect that such portion of this Note
has not been converted. In all cases, the Holder shall retain all of its rights
and remedies (including, without limitation, (i) the right to receive Conversion
Default Payments pursuant to Section 1.3 to the extent required thereby
for such Conversion Default and any subsequent Conversion Default and (ii) the
right to have the Conversion Price with respect to subsequent conversions
determined in accordance with Section 1.3) for the Borrower's failure to convert
this Note.
ARTICLE II. CERTAIN
COVENANTS
2.1 |
Distributions
on Capital Stock. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not without the Holder's
written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash,
property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of
additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or
distribution in respect of its capital stock except for distributions pursuant to any shareholders' rights plan which is
approved by a majority of the Borrower's disinterested directors. |
2.2 |
Restriction
on Stock Repurchases. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not without the Holder's
written consent redeem, repurchase or otherwise acquire (whether for cash
or in exchange for property or other securities or otherwise)
in any one transaction or series of related transactions any shares of
capital stock of the Borrower or any warrants, rights or options to
purchase or acquire any such shares. |
ARTICLE III. EVENTS OF
DEFAULT
If
any of the following events of default (each, an "Event of Default") shall
occur:
3.1 |
Failure
to Pay Principal or Interest. The Borrower fails to pay the
principal hereof or interest thereon when due on this Note, whether at
maturity, upon acceleration or otherwise, and such breach continues for a
period of five (5) days. |
3.2 |
Conversion
and the Shares. The Borrower fails to reserve a sufficient
amount of shares of common stock as required under the terms of this Note
(including |
45
Section
1.3 of this Note)(and such breach continues for a period of five (5) days),
fails to issue shares of Common Stock to the Holder (or announces or threatens
in writing that it will not honor its obligation to do so) upon exercise
by the Holder of the conversion rights of the Holder in accordance with the
terms of this Note, fails to transfer or cause its transfer agent to transfer
(issue) (electronically or in certificated form) shares of Common Stock issued
to the Holder upon conversion of or otherwise pursuant to this Note as and when
required by this Note, the Borrower directs its transfer agent not to
transfer or delays, impairs, and/or hinders its transfer agent in transferring
(or issuing) (electronically or in certificated form) shares of Common Stock to
be issued to the Holder upon conversion of or otherwise pursuant to this Note as
and when required by this Note, or fails to remove (or directs its transfer
agent not to remove or impairs, delays, and/or hinders its transfer agent from
removing) any restrictive legend (or to withdraw any stop transfer instructions
in respect thereof) on any shares of Common Stock issued to the Holder upon
conversion of or otherwise pursuant to this Note as and when required by this
Note (or makes any written announcement, statement or threat that it does not
intend to honor the obligations described in this paragraph) and any such
failure shall continue uncured (or any written announcement, statement or threat
not to honor its obligations shall not be rescinded in writing) for two (2)
business days after the Holder shall have delivered a Notice of
Conversion. It is an obligation of the Borrower to remain current in
its obligations to its transfer agent. It shall be an event of default of this
Note, if a conversion of this Note is delayed, hindered or frustrated due to a
balance owed by the Borrower to its transfer agent. If at the option of the
Holder, the Holder advances any funds to the Borrower's transfer agent in order
to process a conversion, such advanced funds shall be paid by the Borrower
to the Holder within five (5) business days of a demand from the Holder, either
in cash or as an addition to the balance of the Note, and such choice of payment
method is at the discretion of the Borrower.
3.3 |
Breach
of Covenants. The Borrower breaches any material covenant or
other material term or condition contained in this Note and any collateral
documents and such breach continues for a period of ten (10) days after
written notice thereof to the Borrower from the
Holder. |
3.4 |
Breach
of Representations and Warranties. Any
representation or warranty of the Borrower made herein or in any
agreement, statement or certificate given in writing pursuant hereto or in
connection herewith, shall be false or misleading in any material
respect when made and the breach of which has (or with the passage of time
will have) a material adverse effect on the rights of the Holder with
respect to this Note. |
3.5 |
Receiver
or Trustee. The Borrower or any subsidiary of the Borrower
shall make an assignment for the benefit of creditors, or apply for or
consent to the appointment of a receiver or trustee for it or for a
substantial part of its property or business, or such a receiver or
trustee shall otherwise be appointed. |
46
3.6 |
Judgments.
Any money judgment, writ or similar process shall be entered or
filed against the Borrower or any subsidiary of the Borrower or any of its
property or other assets for more than $75,000, and shall remain
unvacated, unbonded or unstayed for a period of twenty (20) days unless
otherwise consented to by the Holder, which consent will not be
unreasonably withheld. |
3.7 |
Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other
proceedings, voluntary or involuntary, for relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or against the
Borrower or any subsidiary of the
Borrower. |
3.8 |
Delisting
of Common Stock. The Borrower shall fail to maintain the
listing or quotation of the Common Stock on the Primary Market or an
equivalent replacement exchange, the Nasdaq Global Market, the Nasdaq
Capital Market, the New York Stock Exchange, or the NYSE
MKT. |
3.9 |
Failure
to Comply with the Exchange Act. The Borrower shall
fail to comply with the reporting requirements of the Exchange Act
(including but not limited to becoming delinquent in its filings), and/or
the Borrower shall cease to be subject to the reporting requirements of
the Exchange Act. |
3.10 |
Liquidation.
Any dissolution, liquidation, or winding up of
Borrower or any substantial portion of its
business. |
3.11 |
Cessation
of Operations. Any cessation of operations by Borrower or
Borrower admits it is otherwise generally unable to pay its debts as such
debts become due, provided, however, that any disclosure of the Borrower's
ability to continue as a "going concern" shall not be an admission that
the Borrower cannot pay its debts as they become due, or any disposition
or conveyance of any material asset of the
Company. |
3.12 |
Financial
Statement Restatement. The Borrower replaces its auditor, or
any restatement of any financial statements filed by the Borrower with the
SEC for any date or period from two years prior to the Issue Date of this
Note and until this Note is no longer outstanding, if the result of such
restatement would, by comparison to the unrestated financial statement,
have constituted a material adverse effect on the rights of the Holder
with respect to this Note. |
3.13 |
Replacement
of Transfer Agent. In the event that the Borrower replaces its
transfer agent, and the Borrower fails to provide prior to the effective
date of such replacement, a fully executed Irrevocable Transfer Agent
Instructions (including but not limited to the provision to irrevocably
reserve shares of Common Stock in the Reserved Amount) signed by the
successor transfer agent to Borrower and the
Borrower. |
47
3.14 |
Cross-Default.
Notwithstanding anything to the contrary contained in this Note or the
other related or companion documents, a breach or default by the Borrower
of any covenant or other term or condition contained in any of the other
financial instrument, including but not limited to all convertible
promissory notes, currently issued, or hereafter issued, by the Borrower,
to the Holder or any other 3rd
party (the "Other Agreements"), after the passage of all applicable
notice and cure or grace periods, shall, at the option of the Holder, be
considered a default under this Note, in which event the Holder shall be
entitled to apply all rights and remedies of the Holder under the terms of
this Note by reason of a default under said Other Agreement or
hereunder. |
3.15 |
Inside
Information. Any attempt by the Borrower or its officers,
directors, and/or affiliates to transmit, convey, disclose, or any actual
transmittal, conveyance, or disclosure by the Borrower or its officers,
directors, and/or affiliates of, material non-public information
concerning the Borrower, to the Holder or its successors and assigns,
which is not immediately cured by Borrower's filing of a Form 8-K pursuant
to Regulation FD on that same date. |
3.16 |
No
bid. At any time while this Note is outstanding, the lowest
Trading Price on the Primary Market or other applicable principal trading
market for the Common Stock is equal to or less than
$0.0001. |
3.17 |
Trading
Volume. At any time while this Note is outstanding, the
aggregate dollar trading volume of the Borrower's Common Stock is less
than twenty thousand dollars ($20,000.00) in any 5 trading day
period. |
Upon
the occurrence and during the continuation of any Event of Default specified in
Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13,
3.14, 3.15, 3.16, and/or 3.17 exercisable through the delivery of written notice
to the Borrower by such Holders (the "Default Notice"), and upon the occurrence
of an Event of Default specified the remaining sections of Articles III, the
Note shall become immediately due and payable and the Borrower shall pay to the
Holder, in full satisfaction of its obligations hereunder, an amount equal to
150%
multiplied by the then outstanding entire balance of the Note
(including principal and accrued and unpaid interest) plus
Default Interest, if any, plus
any amounts owed to the Holder pursuant to Sections 1.4(g) hereof (collectively,
in the aggregate of all of the above, the "Default Sum"), and all other amounts
payable hereunder shall immediately become due and payable, all without demand,
presentment or notice, all of which hereby are expressly waived, together with
all costs, including, without limitation, legal fees and expenses, of
collection, and the Holder shall be entitled to exercise all other rights and
remedies available at law or in equity.
If the Borrower
fails to pay the Default Amount within five (5) business days of written notice
that such amount is due and payable, then the Holder shall have the right at any
time, so long as the Borrower remains in default (and so long and to the extent
that there are sufficient
48
authorized
shares), to require the Borrower, upon written notice, to immediately issue, in
lieu of the Default Amount, the number of shares of Common Stock of the Borrower
equal to the Default Amount divided by the Conversion Price then in effect,
subject to issuance in tranches due to the beneficial ownership limitations
contained in this Note.
Notwithstanding
anything to the contrary herein or in any of the other transaction documents
relating to this Note, (a) the parties hereto acknowledge and agree that Holder
maintains a right of offset pursuant to the terms of the Holder Note, which
permits the Holder to deduct amounts owed by Borrower under this Note from
amounts otherwise owed by Holder under the Holder Note, and (b) in the event of
the occurrence of any Event of Default herein, or at any other time as further
provided in the Holder Note, the Holder shall be entitled to deduct and offset
any amount owing by the Holder under the Holder Note, as applicable, from any
amount owed by the Borrower under this Note.
ARTICLE IV.
MISCELLANEOUS
4.1 |
Failure
or Indulgence Not Waiver. No failure or delay on the part of
the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privileges. All
rights and remedies existing hereunder are cumulative to, and not
exclusive of, any rights or remedies otherwise
available. |
4.2 |
Notices.
All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with
charges prepaid, or (iv) transmitted by hand delivery, telegram,
facsimile, or electronic mail addressed as set forth below or to such
other address as such party shall have specified most recently by written
notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery, upon
electronic mail delivery, or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the
address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be
received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or
upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall
be: |
49
If
to the Borrower, to:
VET
ONLINE SUPPLY, INC.
0000
Xxxxxx Xxxxxx, XXX 000 Xxx Xxxxx, XX 00000
e-mail:
xxxxxx@xxxxxxxxxxxxxxxxx.xxx If to the Holder:
CROWN
BRIDGE PARTNERS, LLC
0000x
0xx
Xxxxxx, Xxxxx 000 Xxx Xxxx, XX 00000
e-mail: Xxxx@XxxxxXxxxxxXxxxxxx.xxx
with
a copy to:
Xxxxx
Xxxxxxx, Esq. Legal & Compliance, LLC
000
Xxxxxxxx Xxxxxx, Xxxxx 000 Xxxx Xxxx Xxxxx, XX 00000
e-mail: XXxxxxxx@XxxxxxxxXxxxxxxxxx.xxx
4.3 |
Amendments.
This Note and any provision hereof may only be amended by an
instrument in writing signed by the Borrower and the Holder. The
term "Note" and all reference thereto, as used throughout this
instrument, shall mean this instrument as originally executed, or if
later amended or supplemented, then as so amended or
supplemented. |
4.4 |
Assignability.
This Note shall be binding upon the Borrower and its successors and
assigns, and shall inure to be the benefit of the Holder and its
successors and assigns. Each transferee of this Note must be an
"accredited investor" (as defined in Rule 501(a) of the 1933 Act).
Notwithstanding anything in this Note to the contrary, this Note may be
pledged as collateral in connection with a bona fide
margin account or other lending
arrangement. |
4.5 |
Cost
of Collection. If default is made in the payment of this Note,
the Borrower shall pay the Holder hereof costs of collection, including
reasonable attorneys' fees. |
4.6 |
Governing
Law. This Note shall be governed by and construed in
accordance with the laws of the State of Nevada without regard to
principles of conflicts of laws. Any action brought by either
party against the other concerning the |
50
transactions
contemplated by this Note shall be brought only in the state courts or federal
courts located in New York City, NY. The parties to this Note hereby irrevocably
waive any objection to jurisdiction and venue of any action instituted hereunder
and shall not assert any defense based on lack of jurisdiction or venue or
based upon forum
non conveniens. The Borrower and Holder waive trial by jury. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Note or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provision of
any agreement. Each party hereby irrevocably waives personal service
of process and consents to process being served in any suit, action or
proceeding in connection with this Agreement or any other Transaction Document
by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other
manner permitted by law.
4.7 |
Certain
Amounts. Whenever pursuant to this Note the Borrower is
required to pay an amount in excess of the outstanding principal amount
(or the portion thereof required to be paid at that time) plus accrued and
unpaid interest plus Default Interest on such interest, the Borrower and
the Holder agree that the actual damages to the Holder from the
receipt of cash payment on this Note may be difficult to determine and the
amount to be so paid by the Borrower represents stipulated damages and not
a penalty and is intended to compensate the Holder in part for loss of the
opportunity to convert this Note and to earn a return from the sale of
shares of Common Stock acquired upon conversion of this Note at a price in
excess of the price paid for such shares pursuant to this Note. The
Borrower and the Holder hereby agree that such amount of stipulated
damages is not plainly disproportionate to the possible loss to the Holder
from the receipt of a cash payment without the opportunity to convert this
Note into shares of Common Stock. |
4.8 |
Remedies.
The Borrower acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Holder, by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the Borrower
acknowledges that the remedy at law for a breach of its obligations under
this Note will be inadequate and agrees, in the event of a breach or
threatened breach by the Borrower of the provisions of this Note, that the
Holder shall be entitled, in addition to all other available remedies at
law or in equity, and in addition to the penalties assessable herein, to
an injunction or injunctions restraining, preventing or curing any breach
of this Note and to enforce specifically the terms and provisions thereof,
without the necessity of showing economic loss and without any bond or
other security being |
51
required.
4.9 |
Prepayment.
Notwithstanding anything to the contrary contained in this Note, the
Borrower may prepay any amount outstanding under this Note, during the
initial 90 day period after the Issue Date, by making a payment to the
Holder of an amount in cash equal to 135% multiplied the amount that the
Borrower is prepaying, subject to the Holder's prior written acceptance in
Holder's sole discretion. Notwithstanding anything to the contrary
contained in this Note, the Borrower may prepay any amount outstanding
under this Note, during the 91st
through 180 day period after the Issue Date, by making a payment to
the Holder of an amount in cash equal to 150% multiplied the amount that
the Borrower is prepaying, subject to the Holder's prior written
acceptance in Holder's sole discretion. The Borrower may not prepay any
amount outstanding under this Note after the 180th
day after the Issue Date. |
4.10 |
Section
3(a)(10) Transactions. If at any time while this Note is
outstanding, the Borrower enters into a transaction structured in
accordance with, based upon, or related or pursuant to, in whole or in
part, Section 3(a)(10) of the Securities Act (a "3(a)(10) Transaction"),
then a liquidated damages charge of 25% of the outstanding principal
balance of this Note at that time, will be assessed and will become
immediately due and payable to the Holder, either in the form of cash
payment or as an addition to the balance of the Note, as determined by
mutual agreement of the Borrower and
Holder. |
4.11 |
Reverse
Split Penalty. If at any time while this Note is outstanding,
the Borrower effectuates a reverse split with respect to the Common Stock,
then a liquidated damages charge of 15% of the outstanding principal
balance of this Note at that time, will be assessed and will become
immediately due and payable to the Holder, either in the form of cash
payment or as an addition to the balance of the Note, as determined by
mutual agreement of the Borrower and
Holder. |
4.12 |
Right
of First Refusal. If at any time while this Note is
outstanding, the Borrower has a bona fide offer of capital or financing
from any 3rd
party, that the Borrower intends to act upon, then the
Borrower must first offer such opportunity to the Holder to provide such
capital or financing to the Borrower on the same terms as each respective
3rd
party's terms. Should the Holder be unwilling or unable to provide
such capital or financing to the Borrower within 10 trading days
from Holder's receipt of written notice of the offer (the "Offer Notice")
from the Borrower, then the Borrower may obtain such capital or financing
from that respective 3rd
party upon the exact same terms and conditions offered by the
Borrower to the Holder, which transaction must be completed within 30 days
after the date of the Offer Notice. If the Borrower does not receive
the capital or financing from the respective 3rd
party within 30 days after the date of the respective Offer Notice,
then the Borrower must again offer the capital or financing opportunity to
the Holder as described above, and the process detailed above shall be
repeated. The Offer Notice must be sent via electronic mail to
Xxxx@XxxxxXxxxxxXxxxxxx.xxx. |
[signature
page to follow]
52
IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its
duly authorized officer this June 19, 2017.
VET
ONLINE SUPPLY, INC.
By:
Xxxxxx Xxxxx
Name:
Xxxxxx
Xxxxx
Title:
Chief
Executive Officer
53
EXHIBIT
A -- NOTICE OF CONVERSION
The
undersigned hereby elects to convert $ principal
amount of the Note (defined below) into that number of shares of Common Stock to
be issued pursuant to the conversion of the Note ("Common Stock") as set
forth below, of VET ONLINE SUPPLY, INC., a Florida corporation (the
"Borrower") according to the conditions of the convertible note of the Borrower
dated as of June 19, 2017 (the "Note"), as of the date written below. No fee
will be charged to the Holder for any conversion, except for transfer taxes, if
any.
[
] The Borrower shall electronically transmit the Common Stock issuable
pursuant to this Notice of Conversion to the account of the undersigned or
its nominee with DTC through its Deposit Withdrawal Agent Commission system
("DWAC Transfer").
Name
of DTC Prime Broker: Account Number:
[
] The undersigned hereby requests that the Borrower issue a
certificate or certificates for the number of shares of Common
Stock set forth below (which numbers are based on the Holder's calculation
attached hereto) in the name(s) specified immediately below or, if additional
space is necessary, on an attachment hereto:
CROWN
BRIDGE PARTNERS, LLC
0000x
0xx
Xxxxxx, Xxxxx 000 Xxx Xxxx, XX 00000
e-mail:
Xxxx@XxxxxXxxxxxXxxxxxx.xxx
Date
of Conversion:
Applicable
Conversion Price $
Number
of shares of common stock to be Issued Pursuant to Conversion of the
Notes:
Amount
of Principal Balance Due remaining Under the Note after this Conversion:
CROWN
BRIDGE PARTNERS, LLC
By:
Name:
Title:
Date:
54