UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 25, 2014 |
|
|
|
KLEANGAS ENERGY TECHNOLOGIES,
INC.
(Exact name of registrant as
specified in its chapter) |
|
Delaware
(State or other jurisdiction
of incorporation |
333-176820
(Commission
File Number) |
26-2808844
(IRS Employer
Identification No.) |
|
|
|
|
|
3001 N. Rocky Pt. RD. Suite 200 Tampa, Florida
(Address of principal executive offices) |
33771
(Zip Code) |
|
|
|
(727) 330-3774
Registrant's telephone number,
including area code |
|
--------------------------------------------------------------
(Former
name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
[ ] |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[ ] |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[ ] |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
SECTION 1. REGISTRANT’S
BUSINESS AND OPERATIONS
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Premier Venture Partners LLC
On July 17, 2014, the Board of Directors of
Kleangas Energy Technologies, Inc. a Delaware corporation (the “Company”), finalized and authorized the execution of
that certain term sheet for a $12,000,000 investment in the Company (the "Term Sheet") with Premier Venture Partners
LLC, a California limited liability company ("Premier Venture"). Subsequently, on July 25, 2014, the Board of Directors
of the Company finalized and authorized the execution of that certain preferred stock purchase agreement (the "Stock Purchase
Agreement") with Premier Venture Partners LLC, a California limited liability company ("Premier Venture") and associated
registration rights agreement dated July 25, 2014 with Premier Venture (the "Registration Rights Agreement").
Stock Purchase Agreement
In accordance with the terms and provisions
of the Stock Purchase Agreement, Premier Venture shall purchase up to 12,000 of the Company's Series F Preferred Shares (the "Series
F Preferred Shares") for a purchase price of $1,000 per Series F Preferred Share subject to adjustment (the "Purchase
Price"). For the first purchase of Series F Preferred Shares, Premier Venture agrees to be irrevocably bound to purchase the
number of shares equal to the lesser of: (i) 150 Series F Preferred Shares; and (ii) 400% of the average daily trading volume of
the common shares for the twenty trading days prior to the filing of the registration statement divided by 1,000 (the "First
Purchase Shares").
From time to time during the open period ("Open
Period" means the period beginning on the earlier of: (i) 30 days after the payment for the First Purchase Shares; and (ii)
192 days after the agreement date of July 24, 2014 if the registration statement has not been declared effective by the SEC prior
to such date) and ending on the earlier to occur of (x) the date which is 48 months from July 24, 2014 or termination of the Stock
Purchase Agreement), the Company may in its sole discretion deliver a put notice to Premier Venture which states the number of
Series F Preferred Shares that the Company intends to sell to Premier Venture on a closing date (the "Put"). On not less
than the 13th trading day after receipt of the Put (the "Request Date"), the Company shall deliver the Purchased Series
F Preferred Shares and Premier Venture shall pay to the Company the respective Purchase Price.
The maximum number of Series F Preferred Shares
that the Company shall be entitled to Put to Premier Venture shall not exceed the lesser of: (i) 400% of the average daily dollar
trading value of the common shares for the twenty trading days prior to the Put divided by 1,000; and (ii) the number of shares
for each Put as set forth on Exhibit C attached to the Stock Purchase Agreement, which Exhibit C is a table of maximum monthly
purchases (the "Purchase Limit"). During the Open Period, the Company shall not be entitled to submit a Put more than
once in any thirty-day period. However, if the lowest individual daily VWAP of the common shares in the ten trading days prior
to a Put is great than $0.008, then for purposes of Exhibit C and the Purchase Limit, the number of Series F Preferred Shares shall
be multiplied by 150%.
The Stock Purchase Agreement also provides
that if the average VWAP for the ten trading days after the Request Date is less than
85% of the average of the VWAPs for the ten trading days prior to the Request Date, then the Purchase Price for each Series F Preferred
Share for such Put shall be reduced to an amount equal to such percentage multiplied by the Purchase Price (the "Adjustment
to Purchase Price"). "VWAP" means the ratio of the value traded to total volume over a particular time and reflects
the measurement of the average price a stock traded at over the trading horizon. It is generally calculated by adding the dollars
traded for every transaction (price multiplied by number of shares traded) and then dividing by the total shares traded for the
day.
The closing of each purchase by Premier Venture
of the Series F Preferred Shares shall occur on the date which in the 13th trading day following the applicable Put (each, a "Closing
Date"). Prior to such Closing Date, the Company shall issue to Premier Venture a certificate representing the Series F Preferred
Shares being purchased and on the Closing Date Premier Venture shall deliver to the Company the Purchase Price.
Upon the execution date of the Stock Purchase
Agreement, the Company shall issue to Premier Venture 720 Series F Preferred Shares. In order to advance the date of this first
Put, the Company intends to file an S-1 registration statement covering the common stock issuable upon conversion of the Series
F Preferred Shares from the First Purchase Shares together with the common shares issued from conversion of 360 of the 720 commitment
shares (the "Commitment Shares"). Premier Venture agreed to be irrevocably bound to purchase the First Purchase Shares
subject to the effectiveness of the Registration Statement.
Lastly, the Company may not make a Put under
any of the following circumstances: (i) the Company is no longer a SEC reporting company or is late in any required filings; (ii)
the Company has failed to deliver to Premier Ventures any shares of common stock that it has requested pursuant to a conversion
of the Series F Preferred Shares; and (iii) during the 10 trading days prior to a Put, the Company's common stock had a closing
bid of less than $0.0004 per share.
The Company shall authorize and reserve the
number of shares of common stock equal to the amount of 500% of the number of shares issuable upon conversion of all of the outstanding
Series F Preferred Shares.
The "Registrable Securities" means
the conversion shares deliverable to Premier Venture pursuant to the conversion into common shares of: (i) one-half of the commitment
shares; (ii) the first purchase by Premier Ventures of the Series F Preferred Shares; and (iii) any common shares issued or issuable
with respect to such common shares as a result of any stock split, stock dividend, recapitalization, exchange or similar event.
Registration Rights
Agreement
On July 25, 2014, the Company entered into
the registration rights agreement with Premier Venture (the "Registration Rights Agreement"). Pursuant to the terms and
provisions of the Registration Rights Agreement, the Company is obligated to file a registration statement (the "Registration
Statement") with the Securities and Exchange Commission to cover the Registrable Securities within thirty (30) days from the
date of execution of the Registration Rights Agreement,. The Company must use its commercially reasonable efforts to cause the
Registration Statement to be declared effective by the Securities and Exchange Commission.
ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE
AGREEMENT
Effective on July 1, 2014, the Board of Directors
approved the termination of that certain equity purchase agreement dated February 28, 2014 (the "Equity Purchase Agreement")
previously entered into with Premier Venture Partners LLC, a California limited liability company ("Premier Venture"),
and associated registration rights agreement dated February 28, 2014 with Premier Venture (the "Equity Registration Rights
Agreement") regarding the prior $12,000,000 funding. The Stock Purchase Agreement and Registration Right Agreement replaces
and supersedes the Equity Purchase Agreement and Equity Registration Rights Agreement.
SECTION 3. SECURITIES AND TRADING MATTERS
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
Effective
on July 24, 2014, the Board of Directors authorized the issuance of the Commitment Shares in accordance with the terms and provisions
of the Stock Purchase Agreement. Therefore, the Company issued an aggregate of 720 Series F Preferred Shares to Premier Venture.
The Series F Preferred Shares were issued to Premier Venture in reliance on Section 4(2) and/or Regulation D promulgated under
the United States Securities Act of 1933, as amended (the “Securities Act”). Neither the Series F Preferred Shares
nor the underlying shares of common stock have been registered under the Securities Act or under any state securities laws and
may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption
from the registration requirements. Premier Venture acknowledged that the securities issued have not been registered under the
Securities Act, that it understood the economic risk of an investment in the securities, and that it had the opportunity to ask
questions of and receive answers from the Company’s management concerning any and all matters related to acquisition of the
securities.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business
Acquired.
Not applicable.
(b) Pro forma Financial Information.
Not applicable.
(c) Shell Company Transaction.
Not applicable.
(d) Exhibits.
10.1 Stock Purchase Agreement dated July 25, 2014 between Kleangas Energy Technologies Inc. and Premier Venture Partners LLC.
10.2 Registration Rights Agreement dated July 25, 2014 between Kleangas Energy Technologies Inc. and Premier Venture Partners LLC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: July 29, 2014 |
Kleangas Energy Technologies Inc. |
|
/s/Bo Linton |
|
|
By: Bo Linton |
|
|
Its: CEO |
Exhibit 10.1
PREFERRED STOCK PURCHASE AGREEMENT
This PREFERRED
STOCK PURCHASE AGREEMENT (the “Agreement”), dated as of July 25, 2014 (the “Agreement Date”),
is entered into by and between Kleangas Energy Technologies, Inc., a Delaware corporation with its principal executive office at
3001 N. Rocky Point Rd., Suite 200, Tampa, FL 33771 (the “Company”), and Premier Venture Partners, LLC, a California
limited liability company (the “Investor”), with its principal executive officers at 4221 Wilshire Blvd., Suite
355, Los Angeles, CA 90010.
RECITALS
A. The
parties desire that, upon the terms and subject to the conditions contained herein, the Investor shall invest up to
Twelve Million Dollars ($12,000,000) to purchase the Company’s Series F Convertible Preferred Stock par value $0.001
per share (the “Series F Preferred Stock”);
B.
Such investments will be made in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities
Act of 1933, as amended (the “1933 Act”), Rule 506 of Regulation D promulgated by the SEC under the 1933 Act,
and/or upon such other exemption from the registration requirements of the 1933 Act as may be available with respect to any or
all of the investments to be made hereunder; and
C. Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration
Rights Agreement substantially in the form attached hereto as Exhibit A (the “Registration Rights Agreement”)
pursuant to which the Company has agreed to provide certain registration rights under the 1933 Act, and the rules and regulations
promulgated thereunder, and applicable state securities laws.
NOW THEREFORE,
in consideration of the foregoing recitals, which shall be considered an integral part of this Agreement, the covenants and agreements
set forth hereafter, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Investor hereby agree as follows:
SECTION
1
DEFINITIONS
1.1 For
all purposes of and under this Agreement, the following terms shall have the respective meanings below, and such meanings shall
be equally applicable to the singular and plural forms of such defined terms.
“1933 Act”
shall have the meaning set forth in the recitals.
“1934 Act”
shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the
SEC thereunder, all as the same will then be in effect.
“Adjustment
Pricing Period” shall mean, with respect to a particular Put Notice, the Ten (10) Trading Days immediately after the
applicable Put Notice Date unless modified pursuant to Section 2.9.
“Affiliate”
shall have the meaning set forth in Section 5.7.
“Agreement”
shall have the meaning set forth in the preamble.
“Agreement Date”
shall have the meaning set forth in the preamble.
“Articles of Incorporation”
shall have the meaning set forth in Section 4.3.
“By-laws”
shall have the meaning set forth in Section 4.3.
“Closing”
shall have the meaning set forth in Section 2.6.
“Closing Date”
shall have the meaning set forth in Section 2.6.
“Common Shares”
shall mean shares of the Company’s common stock, par value $0.001 per share
“Commitment Shares”
shall mean 720 shares of the Series F Preferred Stock.
“Control”
or “Controls” shall have the meaning set forth in Section 5.7.
“Conversion Shares”
means Common Shares issued or issuable upon conversion of the Shares into Common Shares.
“Delivery Default Day”
shall have the meaning set forth in Section 2.10.
“Delivery Default Period”
shall have meaning set forth in Section 2.10.
“Effective Date”
shall mean the date the SEC declares effective under the 1933 Act the Registration Statement covering the Registrable Securities.
“Environmental Laws”
shall have the meaning set forth in Section 4.13.
“First Purchase Shares”
shall have meaning set forth in Section 2.2.
“Indemnified Liabilities”
shall have the meaning set forth in Section 9.
“Indemnitees”
shall have the meaning set forth in Section 9.
“Indemnitor”
shall have the meaning set forth in Section 9.
“Investor”
shall have the meaning set forth in the preamble.
“Material Adverse Effect”
shall have the meaning set forth in Section 4.1.
“Open Period”
shall mean the period beginning on the earlier of (i) thirty (30) days after the payment for the First Purchase Shares and
(ii) 192 days after the Agreement Date (if the Registration Statement has not been declared effective by the SEC prior to such
date) and ending on the earlier to occur of (x) the date which is forty eight (48) months from the Agreement Date; or (y) termination
of the Agreement in accordance with Article 8.
“Principal Market”
shall mean the New York Stock Exchange, the NYSE Amex, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, OTCQX, OTCQB, or OTC Pink Current Information, whichever is the principal market on which the Common Stock is listed.
“Purchase Price”
for the First Purchase Shares shall have the meaning set forth in Section 2.2 and for all subsequent purchases under this
Agreement shall have the meaning set forth in Section 2.8.
“Put” shall
have the meaning set forth in Section 2.3.
“Put Amount”
shall have the meaning set forth in Section 2.3.
“Put Notice”
shall mean a written notice sent to the Investor by the Company stating (i) the Put Amount in Shares that the Company intends to
sell to the Investor pursuant to the terms of the Agreement (ii) the current number of Common Shares issued and outstanding on
such date, (iii) the number of Common Stock reserved for Investor upon conversion of the Shares into Common Stock, and (iv) the
Put Notice Number.
“Put Notice Date”
shall mean the Trading Day on which the Investor receives a Put Notice, determined as follows: a Put Notice shall be deemed delivered
on (a) the Trading Day it is received by facsimile or otherwise by the Investor if such notice is received prior to 9:30 am Eastern
Time, or (b) the immediately succeeding Trading Day if it is received by facsimile or otherwise after 9:30 am Eastern Time on a
Trading Day. No Put Notice may be deemed delivered on a day that is not a Trading Day.
“Put Notice Number”
shall mean the number equal to the number of Put Notices issued to Investor including the Put Notice being currently submitted.
“Registrable Securities”
means the Conversion Shares deliverable to the Investor pursuant to the conversion into Common Shares of (i) one half of the Commitment
Shares, (ii) the First Purchase Shares, and (ii) any Common Shares issued or issuable with respect to such Common Shares, 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 Rights
Agreement” shall have the meaning set forth in the recitals.
“Registration Statement”
means the registration statement of the Company filed under the 1933 Act covering the resale of the Registrable Securities issuable
hereunder by the Investor, in the manner described in such Registration Statement.
“Related Party”
shall have the meaning set forth in Section 5.7.
“Resolutions”
shall have the meaning set forth in Section 7.5.
“SEC” shall
mean the U.S. Securities and Exchange Commission.
“SEC Documents”
shall have the meaning set forth in Section 4.6.
“Shares” shall
mean the shares of the Series F Preferred Stock purchased in connection with this Agreement.
“Subsidiaries”
shall have the meaning set forth in Section 4.1.
“Trading Day”
shall mean any day on which the Principal Market for the Common Stock is open for trading, from the hours of 9:30 am until 4:00
pm.
“Transaction Documents”
shall mean this Agreement and the Registration Rights Agreement between the Company and the Investor as of the date herewith, and
any other agreements between the Company and the Investor executed in conjunction with this transaction.
“VWAP” means
the volume weighted average price (the aggregate sales price of all trades of Common Shares during a Trading Day divided by the
total number of Common Shares traded during such Trading Day) of the Common Shares during a Trading Day. For any Trading Day that
requires that requires the computation of a VWAP pursuant to this Agreement and on such Trading Day no Common Shares traded during
that Trading Day, then such Trading Day shall not be considered a Trading Day for purposes of computing a VWAP under this Agreement.
SECTION
2
PURCHASE AND SALE OF COMMON STOCK
2.1 Purchase
and Sale Of Common Stock. Subject to the terms and conditions set forth herein, the Company shall issue and sell to the Investor,
and the Investor shall purchase from the Company, up to Twelve Thousand (12,000) Shares.
2.2 First
Purchase of Shares. Subject to the terms of this Section 2.2., the Company agrees to be irrevocably bound to purchase the
number of Shares equal to the lesser of (i) 150 Shares and (ii) 400% of the average daily dollar trading value of the Common Shares
for the twenty Trading Days prior to filing of the Registration Statement divided by 1,000. For purposes of convenience, the determination
of the twenty day period in the preceding sentence may be determined as of any date that is within three Trading Days prior to
the filing of the Registration Statement. The Purchase Price for the purchase of Shares covered by this Section 2.2 shall be $1,000
per Share and shall not be subject to adjustment based on market price of Common Shares as of the Effective Date. The only condition
for Investor’s purchase of Shares pursuant to this Section 2.2 is the effectiveness of the Registration Statement covering
the Registrable Securities and the Company not being in breach of any of the Transaction Documents. Investor shall make payment
for the Shares purchased pursuant to this Section 2.2 within five (5) business days of the Effective Date. The Shares purchased
pursuant to this Section 2.2 shall be referred to as the First Purchase Shares.
2.3 Subsequent Purchase of Shares; Delivery of Put Notices. From time to time during the Open Period, the Company may,
in its sole discretion, deliver a Put Notice to the Investor which states the number of Shares that the Company intends to sell
to the Investor on a Closing Date (the “Put”). The Put Notice shall be in the form attached hereto as Exhibit
B and incorporated herein by reference. The maximum number of Shares that the Company shall be entitled to Put to the Investor
per any applicable Put Notice (the “Put Amount”) shall not exceed the lesser of (i) 400% of the average daily
dollar trading value of the Common Shares for the twenty Trading Days prior to the Put Notice divided by 1,000 and (ii) the number
of Shares for each Put Notice Number as detailed on Exhibit C. During the Open Period, the Company shall not be entitled
to submit a Put Notice more than once in any 30 days period
2.4 Increase in the Put Amount. If the lowest individual daily VWAP of the Common Shares in the Ten (10) Trading Days
prior to a Put Notice is greater than $.008, then for purposes of subsection (ii) of the definition of Put Amount in Section 2.3,
the number of Shares on Exhibit C for such Put Notice shall be multiplied by 150%.
2.5 Conditions to Investor’s Obligation to Purchase Shares. Notwithstanding anything to the contrary in this Agreement,
the Company shall not be entitled to deliver a Put Notice and the Investor shall not be obligated to purchase any Shares at a Closing
unless each of the following conditions are satisfied:
(a) at
all times during the period beginning on the related Put Notice Date and ending on and including the related Closing Date,
the Common Shares (i) shall have been listed or quoted for trading on the Principal Market, (ii) shall not have been
suspended from trading thereon, and (iii) the Company shall not have been notified of any pending or threatened proceeding or
other action to suspend the trading of the Common Stock;
(b) the Company
has delivered all Conversion Shares pursuant to a conversion request delivered by the Investor to the Company.
(c)
at all times during the period beginning ten days prior to the related Put Notice Date and ending on and including the
related Closing Date, the closing bid for the Common Shares is not less than $.0004 per share.
(d)
the Company has complied with its obligations and is otherwise not in breach of or in default under the Transaction Documents
unless such breach or default has been cured prior to the delivery of the Put Notice or a Closing, as the case may be;
(e) no injunction shall have been issued and remain in force, or action commenced by a governmental authority which has not
been stayed or abandoned, prohibiting the purchase or the issuance of the Shares;
(f)
the Company has paid all amounts required to be paid pursuant to Section 5.13; and
(g) the issuance
of the Shares will not violate any shareholder approval requirements of the Principal Market.
If any of the events described
in clauses (a) through (g) above occurs between the delivery of a Put Notice and a Closing, then the Investor shall have no obligation
to purchase the Put Amount of Shares set forth in the applicable Put Notice.
2.6 Mechanics of Purchase of Shares by Investor. Subject to the satisfaction of the conditions set forth in Sections
2.5, 7 and 8 of this Agreement and unless extended pursuant to Section 2.7, the closing of the purchase by the Investor of Shares
(a “Closing”) shall occur on the date which is the thirteenth (13th) Trading Day following the applicable Put
Notice Date (each a “Closing Date”). Prior to such Closing Date, the Company shall issue to Investor
a certificate representing the Shares being purchased and on the Closing Date, the Investor shall deliver to the Company the Purchase
Price to be paid for such Shares as set forth in Section 2.8.
2.7 Extension of the Closing Date. The Closing Date stated in Section 2.6 shall be extended by one Trading Day for each
Delivery Default Day during the Delivery Default Period.
2.8 Purchase Price. Subject to the adjustment pursuant to Section 2.9 below, the Purchase Price for the Shares shall
be $1,000 per Share
2.9 Adjustment to Purchase Price. If the average of ten lowest individual daily VWAPs during the Adjustment Pricing Period
is less than 85% of the average of the individual daily VWAPs for the eight (8) Trading Days prior to the Put Notice Date, then
the Purchase Price for each Share for such Put Notice shall be reduced to an amount equal to such percentage multiplied by the
Purchase Price in Section 2.8. For purpose of example, if the average of ten lowest individual daily VWAPs during the Adjustment
Pricing Period is $.003 and the average of the individual daily VWAPs for the eight (8) Trading Days prior to the Put Notice Date
is $.004, then the Purchase Price shall be $750 per Share (.003/.004 X $1,000). The Adjustment Pricing Period shall be extended
by one additional Trading Day for each Delivery Default Day occurring during the Delivery Default Period.
2.10 Delivery Default Period. For purposes of this Agreement, if during the period beginning Ten Trading Days prior to
any particular Put Notice and ending on the Trading Day immediately prior to the Closing for such Put Notice (“Delivery
Default Period”), the Company has not delivered any requested Conversion Shares by DWAC to the Investor’s brokerage
account by the second Trading Day after such request was submitted to the Company, then each subsequent Trading Day prior to the
actually receipt of such Conversion Shares shall be a “Delivery Default Day.”
SECTION
3
INVESTOR’S REPRESENTATIONS, WARRANTIES AND COVENANTS
The Investor represents
and warrants to the Company, and covenants, that:
3.1
Sophisticated Investor. The Investor has, by reason of its business and financial experience, such knowledge, sophistication
and experience in financial and business matters and in making investment decisions of this type that it is capable of (i) evaluating
the merits and risks of an investment in the Shares and making an informed investment decision; (ii) protecting its own interest;
and (iii) bearing the economic risk of such investment for an indefinite period of time.
3.2 Authorization; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf
of the Investor and is a valid and binding agreement of the Investor enforceable against the Investor in accordance with its terms,
subject to enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and
remedies.
3.3
Accredited Investor. Investor is an “Accredited Investor” as that term is defined in Rule 501(a) of
Regulation D of the 1933 Act.
3.4
No conflicts. The execution, delivery and performance of the Transaction Documents by the Investor and the consummation
by the Investor of the transactions contemplated hereby and thereby will not result in a violation of operating agreement or other
organizational documents of the Investor.
3.5
Investment Purposes. The Investor is purchasing the Shares for its own account for investment purposes and not with
a view towards distribution and agrees to resell or otherwise dispose of the Shares solely in accordance with the registration
provisions of the 1933 Act (or pursuant to an exemption from such registration provisions).
3.6
No Registration as a Dealer. The Investor is not and will not be required to be registered as a “dealer”
under the 1934 Act, either as a result of its execution and performance of its obligations under this Agreement or otherwise.
3.7 Good Standing. The Investor is a limited liability company, duly organized, validly existing and in good standing
in the State of California.
3.8
Tax Liabilities. The Investor understands that it is liable for its own tax liabilities.
3.9
Regulation M. The Investor will comply with Regulation M under the 1934 Act, if applicable.
3.10 No short sales. No short sales shall be permitted by the Investor or its affiliates during the period commencing
on the Agreement Date and continuing through the termination of this Agreement.
SECTION
4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as
set forth in the Schedules attached hereto, or as disclosed on the Company’s SEC Documents, the Company represents and warrants
to the Investor that:
4.1
Organization and Qualification. The Company is a corporation duly organized and validly existing in good standing
under the laws of the state of incorporation, and has the requisite corporate power and authorization to own its properties and
to carry on its business as now being conducted. Both the Company and the companies it owns or controls (“Subsidiaries”)
are duly qualified to do business and are in good standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or
be in good standing would not have a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect
” means a change, event, circumstance, effect or state of facts that has had or is reasonably likely to have, a material
adverse effect on the business, properties, assets, operations, results of operations, financial condition or prospects of the
Company and its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements and instruments
to be entered into in connection herewith, or on the authority or ability of the Company to perform its obligations under the Transaction
Documents.
4.2
Authorization; Enforcement; Compliance with Other Instruments.
(a) The Company
has the requisite corporate power and authority to enter into and perform its obligations under the Transaction Documents,
and to issue the Shares in accordance with the terms hereof and thereof.
(b) The
execution and delivery of the Transaction Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby, including without limitation the issuance of the Shares pursuant to this Agreement, have
been duly and validly authorized by the Company’s Board of Directors and no further consent or authorization is
required by the Company and its Board of Directors, and no further consent or authorization is currently required by its
shareholders.
(c) The
Transaction Documents have been duly and validly executed and delivered by the Company.
(d)
The Transaction Documents constitute the valid and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’
rights and remedies.
4.3 Capitalization.
As of the date hereof, the authorized Common Shares of the Company consists of 4,989,999,000 Common Shares of which as of the
date hereof, there are 3,057,561,098 shares issued and outstanding. All of such outstanding shares have been, or upon issuance
will be, validly issued and are fully paid and nonassessable. As of the date hereof, the authorized Preferred Shares of the Company
consists of 10,001,000 Preferred Shares as follows: (i) 200 Series A Preferred Shares; (ii) 100 Series B Preferred Shares; (iii)
5,300 Series C Preferred Shares; (iv) 400 Series D Preferred Shares; (v) 7,995,000 Series D Preferred Shares; and (vi) 12,720
Series F Preferred Shares. Of the Preferred Shares, 10,000,000 shares of Series E are issued and outstanding. No other series
of Preferred Shares is issued and outstanding.
Except
as disclosed in the Company’s publicly available filings with the SEC or as otherwise set forth on Schedule 4.3:
(a) no
shares of the Company’s capital stock are subject to preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company;
(b) there are
no outstanding debt securities;
(c)
there are no outstanding shares of capital stock, options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or
any of its Subsidiaries, or contracts, commitments, understandings 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 or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible
into, any shares of capital stock of the Company or any of its Subsidiaries;
(d) there are no
agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act (except the Registration Rights Agreement);
(e) there are no outstanding securities of the Company or any of its Subsidiaries which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may
become bound to redeem a security of the Company or any of its Subsidiaries;
(f) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance
of the Shares as described in this Agreement;
(g) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar
plan or agreement; and
(h)
there is no dispute as to the classification of any shares of the Company’s capital stock.
The Company has furnished to
the Investor, or the Investor has had access through EDGAR to, true and correct copies of the Company’s Articles of Incorporation,
as in effect on the date hereof (the “Articles of Incorporation”), and 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 and the material rights of the holders thereof in respect thereto.
4.4
Reservation of Conversion Shares; Issuance of Shares. As of the Agreement Date, the Company will have reserved the
amount of Conversion Shares for issuance pursuant to the Transaction Documents, which will have been duly authorized and reserved
(subject to adjustment pursuant to the Company’s covenant set forth in Section 5.5 below) pursuant to this Agreement.
In the event the Company cannot reserve a sufficient number of Conversion Shares for issuance pursuant to Shares issued in connection
with this Agreement, the Company will use its best efforts to authorize and reserve for issuance the number of Common Shares required
for the Company to perform its obligations hereunder as soon as reasonably practicable. Upon issuance in accordance with this Agreement,
the Shares will be validly issued, fully paid for and non-assessable and free from all taxes, liens and charges with respect to
the issuance thereof.
4.5
No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Articles of Incorporation,
any Certificate of Designations, Preferences and Rights of any outstanding series of preferred stock of the Company or the By-laws;
or (ii) conflict with, or constitute a material default (or an event which with notice or lapse of time or both would become a
material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material
agreement, contract, indenture mortgage, indebtedness or instrument to which the Company or any of its Subsidiaries is a party,
or to the Company’s knowledge result in a violation of any law, rule, regulation, order, judgment or decree (including United
States federal and state securities laws and regulations and the rules and regulations of the Principal Market or principal securities
exchange or trading market on which the Common Shares are traded or listed) 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. Neither the Company nor its Subsidiaries
is in violation of any term of, or in default under, the Articles of Incorporation, any Certificate of Designations, Preferences
and Rights of any outstanding series of preferred stock of the Company or the By-laws or their organizational charter or by-laws,
respectively, or any contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its Subsidiaries, except for possible conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations that would not individually or in the aggregate have or constitute a Material Adverse
Effect. The business of the Company and its Subsidiaries is not being conducted, and shall not be conducted, in violation of any
law, statute, ordinance, rule, order or regulation of any governmental authority or agency, regulatory or self-regulatory agency,
or court, except for possible violations the sanctions for which either individually or in the aggregate would not have a Material
Adverse Effect. Except as specifically contemplated by this Agreement and as required under the 1933 Act or any securities laws
of any states, to the Company’s knowledge, the Company is not required to obtain any consent, authorization, permit or order
of, or make any filing or registration (except the filing of a registration statement as outlined in the Registration Rights Agreement
between the parties) with, any court, governmental authority or agency, regulatory or self-regulatory agency or other third party
in order for it to execute, deliver or perform any of its obligations under, or contemplated by, the Transaction Documents in accordance
with the terms hereof or thereof. All consents, authorizations, permits, 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 and are in
full force and effect as of the date hereof. The Company and its Subsidiaries are unaware of any facts or circumstances which might
give rise to any of the foregoing. The Company is not, and will not be, in violation of the listing requirements of the Principal
Market as in effect on the date hereof and on each of the Closing Dates and is not aware of any facts which would reasonably lead
to delisting of the Common Shares by the Principal Market in the foreseeable future.
4.6 SEC
Documents; Financial Statements. As of the date hereof, the Company has 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 1934 Act (all of
the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein, and amendments thereto, being hereinafter referred to as the
“SEC Documents”). The Company has delivered to the Investor or its representatives, or they have had
access through EDGAR to, true and complete copies of the SEC Documents. As of their respective filing 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 or the time they were amended, if amended, contained any untrue statement of a material fact or omitted 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. 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 generally
accepted accounting principles, by a firm that is a member of the Public Companies Accounting Oversight Board
(“PCAOB”) consistently applied, during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit adjustments). No other written information provided
by or on behalf of the Company to the Investor which is not included in the SEC Documents, including, without limitation,
information referred to in Section 4.3 of this Agreement, contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements therein, in the light of the circumstance under which they are or
were made, not misleading. Neither the Company nor any of its Subsidiaries or any of their officers, directors, employees or
agents have provided the Investor with any material, nonpublic information which was not publicly disclosed prior to the date
hereof and any material, nonpublic information provided to the Investor by the Company or its Subsidiaries or any of their
officers, directors, employees or agents prior to any Closing Date shall be publicly disclosed by the Company prior to such
Closing Date.
4.7
Absence of Certain Changes. Except as otherwise set forth in the SEC Documents, the Company does not intend to change
the business operations of the Company in any material way. The Company has not taken any steps, and does not currently expect
to take any steps, to seek protection pursuant to any bankruptcy law nor does the Company or its Subsidiaries have any knowledge
or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings.
4.8
Absence of litigation and/or Regulatory Proceedings. Except as set forth in the SEC Documents, there is no action,
suit, 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 executive officers of Company or any of its Subsidiaries, threatened against or affecting
the Company, the Common Stock or any of the Company’s Subsidiaries or any of the Company’s or the Company’s Subsidiaries’
officers or directors in their capacities as such, in which an adverse decision could have a Material Adverse Effect.
4.9
Acknowledgment Regarding Investor’s Purchase of Shares. The Company acknowledges and agrees that the Investor
is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby
and thereby and any advice given by the Investor or any of its respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely incidental to the Investor’s purchase of the Shares,
and is not being relied on by the Company. The Company further represents to the Investor that the Company’s decision to
enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.
4.10 No Undisclosed
Events, Liabilities, Developments or Circumstances. Except as set forth in the SEC Documents or required with respect to the
Transaction Documents, as of the date hereof, no event, liability, development or circumstance has occurred or exists, or to the
Company’s knowledge is contemplated to occur, with respect to the Company or its Subsidiaries or their respective business,
properties, assets, prospects, operations or financial condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement filed with the SEC relating to an issuance and sale by the Company of its
Common Stock and which has not been publicly announced.
4.11 Employee
Relations. Neither the Company nor any of its Subsidiaries is involved in any union labor dispute nor, to the knowledge
of the Company or any of its Subsidiaries, is any such dispute threatened. Neither the Company nor any of its Subsidiaries is
a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that relations with their
employees are good. No executive officer (as defined in Rule 501(f) of the 1933 Act) has notified the Company that such
officer intends to leave the Company’s employ or otherwise terminate such officer’s employment with the
Company.
4.12 Intellectual
Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade
names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted. Except
as set forth in the SEC Documents, none of the Company’s trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations, trade secrets or
other intellectual property rights necessary to conduct its business as now or as proposed to be conducted have expired or terminated,
or are expected to expire or terminate within two (2) years from the date of this Agreement. The Company and its Subsidiaries
do not have any knowledge of any infringement by the Company or its Subsidiaries of trademark, trade name rights, patents, patent
rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or other similar
rights of others, or of any such development of similar or identical trade secrets or technical information by others and, except
as set forth in the SEC Documents, there is no claim, action or proceeding being made or brought against, or to the Company’s
knowledge, being threatened against, the Company or its Subsidiaries regarding trademark, trade name, patents, patent rights,
invention, copyright, license, service names, service marks, service mark registrations, trade secret or other infringement; and
the Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. The
Company and its Subsidiaries have taken commercially reasonable security measures to protect the secrecy, confidentiality and
value of all of their intellectual properties.
4.13 Environmental
Laws. The Company and its Subsidiaries (i) are, to the knowledge of the management and directors of the Company and its
Subsidiaries, in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”); (ii) have, to the knowledge of the management and directors of the
Company, received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct
their respective businesses; and (iii) are in compliance, to the knowledge of the management and directors of the Company,
with all terms and conditions of any such permit, license or approval where, in each of the three (3) foregoing cases, the
failure to so comply would have, individually or in the aggregate, a Material Adverse Effect.
4.14 Title. The Company and its Subsidiaries have 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
except such as are described in the SEC Documents or such as do not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company or any of its Subsidiaries. Any real property and facilities
held under lease by the Company or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with
such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings
by the Company and its Subsidiaries.
4.15 Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company reasonably believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company nor any of its Subsidiaries has been refused any
insurance coverage sought or applied for and neither the Company nor its Subsidiaries has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
4.16 Regulatory
Permits. The Company and its Subsidiaries have in full force and effect all certificates, approvals, authorizations and permits
from the appropriate federal, state, local or foreign regulatory authorities and comparable foreign regulatory agencies, necessary
to own, lease or operate their respective properties and assets and conduct their respective businesses, and neither the Company
nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate,
approval, authorization or permit, except for such certificates, approvals, authorizations or permits which if not obtained, or
such revocations or modifications which, would not have a Material Adverse Effect.
4.17
Internal Accounting Controls. Except as otherwise set forth in the SEC Documents, the Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient 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 by a firm with membership to the
PCAOB 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. The Company’s management has determined that the Company’s
internal accounting controls were not effective as of the date of this Agreement as further described in the SEC Documents.
4.18 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.
4.19 Tax
Status. The Company and each of its Subsidiaries has made or filed all United States federal and state 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 provision 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.
4.20 Certain Transactions. Except as set forth in the SEC Documents filed at least ten (10) days prior to the date hereof
and except for arm’s length transactions pursuant to which the Company makes payments in the ordinary course of business
upon terms no less favorable than the Company could obtain from disinterested third parties and other than the grant of stock options
disclosed in the SEC Documents, 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, such that disclosure would be required in the SEC Documents.
4.21 Dilutive Effect. The Company understands and acknowledges that the number of Common Shares issuable upon conversion
of the Shares issued pursuant to this Agreement will increase in certain circumstances depending on trading price prior to the
conversion of the Shares. The Company’s executive officers and directors have studied and fully understand the nature of
the transactions contemplated by this Agreement and recognize that they have a potential dilutive effect on the shareholders of
the Company. The Board of Directors of the Company has concluded, in its good faith business judgment, and with full understanding
of the implications, that such issuance is in the best interests of the Company. The Company specifically acknowledges that, subject
to such limitations as are expressly set forth in the Transaction Documents, its obligation to issue Common Shares pursuant to
the Shares issued pursuant to this Agreement is absolute and unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other shareholders of the Company.
4.22 Preferred
Shares Designation. The Company has delivered to Investor a copy of the filed preferred stock designation authorizing the
issuance of the Shares.
4.23 No
general solicitation. Neither the Company, nor any of its affiliates, nor any person acting on its behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or
sale of the Common Stock to be offered as set forth in this Agreement.
4.24 No brokers, finders or financial advisory fees or commissions. No brokers, finders or financial advisory fees or
commissions will be payable by the Company, its agents or Subsidiaries, with respect to the transactions contemplated by this Agreement
4.25 FAST/ DWAC. The Company’s transfer agent is participating in The Depository Trust Company (“DTC”)
Fast Automated Securities Transfer (“FAST”) program and the Conversion Shares are eligible for inclusion in
the FAST program.
SECTION
5
COVENANTS OF THE COMPANY
5.1 Best
efforts. The Company shall use all commercially reasonable efforts to timely satisfy each of the conditions set forth in Section
7 of this Agreement.
5.2 Reporting
status. Until one of the following occurs, the Company shall file all reports required to be filed with the SEC pursuant to
the 1934 Act, and the Company shall not terminate its status, or take an action or fail to take any action, which would terminate
its status as a reporting company under the 1934 Act: (i) this Agreement terminates pursuant to Section 8 and the Investor
has the right to sell all of the Conversion Shares without restrictions pursuant to Rule 144 promulgated under the 1933 Act, or
such other exemption, or (ii) the date on which the Investor has sold all the Conversion Shares and this Agreement has been terminated
pursuant to Section 8.
5.3 Use
of proceeds. The Company will use the proceeds from the sale of the Shares for general corporate and working capital
purposes and acquisitions or assets, businesses or operations or for other purposes that the Board of Directors, in its good
faith deem to be in the best interest of the Company.
5.4 Financial information. During the Open Period, the Company agrees to make available to the Investor via EDGAR or
other electronic means the following documents and information on the forms set forth: (i) within five (5) Trading Days after the
filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports
on Form 8-K and any Registration Statements or amendments filed pursuant to the 1933 Act; (ii) copies of any notices and other
information made available or given to the shareholders of the Company generally, contemporaneously with the making available or
giving thereof to the shareholders; and (iii) within two (2) calendar days of filing or delivery thereof, copies of all documents
filed with, and all correspondence sent to, the Principal Market, any securities exchange or market, or the Financial Industry
Regulatory Association, unless such information is material nonpublic information.
5.5 Reservation
of Shares. The Company shall take all action necessary to, at all times, have authorized and reserved the number of Common
Shares equal to the amount of 500% of the amount of Conversion Shares issuable upon conversion of all of the outstanding Shares.
In the event that the Company determines that it does not have a sufficient number of Common Shares to reserve and keep available
for issuance as described in this Section 5.5, the Company shall use all commercially reasonable efforts to increase the
number of authorized Common Shares by seeking shareholder approval for the authorization of such additional shares.
5.6 Listing.
The Company shall promptly secure and maintain the listing of Common Shares on the Principal Market and each other national securities
exchange and automated quotation system, if any, upon which Common Shares are then listed. Neither the Company nor any of its
Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Shares
on the Principal Market (excluding suspensions of not more than one (1) Trading Day resulting from business announcements by the
Company). The Company shall promptly provide to the Investor copies of any notices it receives from the Principal Market regarding
the continued eligibility of the Common Shares for listing on such automated quotation system or securities exchange. The Company
shall pay all fees and expenses in connection with satisfying its obligations under this Section 5.6.
5.7 Transactions
with Affiliates. The Company shall not enter into, amend, modify or supplement, or permit any Subsidiary to enter into, amend,
modify or supplement, any agreement, transaction, commitment or arrangement with any of its or any Subsidiary’s officers,
directors, persons who were officers or directors at any time during the previous two (2) years, shareholders who beneficially
own 5% or more of the Common Stock, or Affiliates or with any individual related by blood, marriage or adoption to any such individual
or with any entity in which any such entity or individual owns a 5% or more beneficial interest (each a “Related Party”),
except for (i) customary employment arrangements and benefit programs on reasonable terms, (ii) any agreement, transaction, commitment
or arrangement on an arms-length basis on terms no less favorable than terms which would have been obtainable from a disinterested
third party other than such Related Party, or (iii) any agreement, transaction, commitment or arrangement which is approved by
a majority of the disinterested directors of the Company. For purposes hereof, any director who is also an officer of the Company
or any Subsidiary of the Company shall not be a disinterested director with respect to any such agreement, transaction, commitment
or arrangement. “Affiliate” for purposes hereof means, with respect to any person or entity, another person
or entity that, directly or indirectly, (i) has a 5% or more equity interest in that person or entity, (ii) has 5% or more common
ownership with that person or entity, (iii) controls that person or entity, or (iv) is under common control with that person or
entity. “Control” or “Controls” for purposes hereof means that a person or entity has the
power, directly or indirectly, to conduct or govern the policies of another person or entity.
5.8 Filing
of form 8-K. On or before the date which is four (4) Trading Days after the Agreement Date, the Company shall file a Current
Report on Form 8-K with the SEC describing the terms of the transaction contemplated by the Transaction Documents in the form
required by the 1934 Act, if such filing is required. The Company shall provide a copy of such Form 8-K to the Investor prior
to such filing within sufficient time prior to such filing to allow Investor to provide comments on the details of such filing.
5.9 Corporate
existence. The Company shall use all commercially reasonable efforts to preserve and continue the corporate existence of
the Company.
5.10 Notice
of Certain Events Affecting Registration; Suspension of Right To Make a Put. The Company shall promptly notify the Investor
upon the occurrence of any of the following events in respect of a Registration Statement or related prospectus in respect of
an offering the Conversion Shares: (i) receipt of any request for additional information by the SEC or any other federal or state
governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration
Statement or related prospectus; (ii) the issuance by the SEC or any other federal or state governmental authority of any stop
order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose; (iii)
receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the
Conversion Shares for sale in any jurisdiction or the initiation or notice of any proceeding for such purpose; (iv) the happening
of any event that makes any statement made in such Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the
Registrable Securities from time to time issuable under the terms of the Transaction Documents. Neither the Company nor any of
its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common
Shares on the Principal Market (excluding suspensions of not more than one (1) Trading Day resulting from business announcements
by the Company). The Company shall promptly provide to the Investor copies of any notices it receives from the Principal Market
regarding the continued eligibility of the Common Shares for listing on such automated quotation system or securities exchange.
The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 5.10.
5.11 Transfer
Agent, Prime Broker. Upon the Effective Date, and for so long as the Registration Statement is effective, the Company shall
deliver instructions to its transfer agent to issue shares to the Investor that are covered for resale by the Registration Statement,
and the Company shall ensure that upon delivery to the transfer agent of evidence of the sale of any such Shares in accordance
with the Plan of Distribution section of the then current prospectus relating to such Registration Statement, such Shares shall
be issued to the purchaser electronically or if in certificate form, free of restrictive legends in accordance with Section 3.11
of the Registration Rights Agreement. In addition, upon the Effective Date and upon delivery of any conversion notice under the
Shares, the Company’s legal counsel shall, at Investor’s request, provide an opinion letter addressed to the Company’s
transfer agent and any Prime Broker of Investor’s choosing, opining as to the availability of the sale by Investor of such
Conversion Shares covered by the Registration Statement or exempt from registration based on Rule 144 under the 1933 Act.
5.12 Regulation
D Filings. The Company shall file on a timely basis all notices of sale required to be filed pursuant to Regulation D under
the 1933 Act, as amended with respect to the transactions contemplated by this Agreement
5.13 Delivery
of Conversion Shares. From and after the date that the Conversion Shares are available to be sold pursuant to the Registration
Statement or under Rule 144 of 1933 Act, the Company shall, no later than the second Trading Day following the delivery by the
Investor to the Company or the Company’s transfer agent (with notice to the Company) of a conversion notice requesting conversion
of the Shares into Common Shares, as directed by the Investor, either: (A) issue and deliver (or cause to be issued and delivered)
to the Investor a certificate representing such Conversion Shares that is free from all restrictive and other legends or (B) cause
the Company’s transfer agent to credit the Investor’s or its designee’s account at DTC through its Deposit/Withdrawal
at Custodian (DWAC) system with the number of shares equal to the Conversion Shares being so converted (the date by which such
certificate is required to be delivered to the Investor or such credit is so required to be made to the account of the Investor
or its designee at DTC pursuant to the foregoing is referred to herein as the “Required Delivery Date”). If
the Company fails on or prior to the Required Delivery Date to either (i) issue and deliver (or cause to be issued and delivered)
to the Investor a certificate representing the Conversion Shares that is free from all restrictive and other legends or (ii) cause
the Company’s transfer agent to credit the balance account of the Investor or its designee at DTC through its Deposit/Withdrawal
at Custodian (DWAC) system with the number of shares of requested Conversion Shares, then, in addition to all other remedies available
to the Investor, the Company shall pay to Investor an amount equal to the lesser of (i) $1,000 per Trading Day after the Required
Delivery Date until the actual delivery date and (ii) the number of Conversion Shares requested by Investor multiplied by the
amount equal to the daily VWAP as of the Required Delivery Date minus the individual VWAP of the actual delivery date of such
Conversion Shares. The Company acknowledges that the amounts required to be paid pursuant to this Section 5.13 are less than the
actual potential damage incurred by the Investor and therefore not a penalty. To the extent applicable or necessary, the Company
shall cooperate with Investor to provide, at Company’s expense, any legal opinions required to sell any Commitment Shares
pursuant to Rule 144 under the 1933 Act.
5.14 Correction
of Preferred Stock Designation. The Company acknowledges that the preferred stock designation for the Shares (the “Designation”)
contained certain technical errors and agrees to file an amended and restated Designation (in the form attached hereto as Exhibit
D) prior to the filing of the Registration Statement. Upon filing of such amended and restated Designation, the Company shall
provide a stamped copy to Investor within three business days of receipt by the Company. Other than as provided by this Section
5.14, the Company may not make any other modifications to the Designation without the written approval of the Investor.
5.15 Acknowledgement
of terms. The Company hereby represents and warrants to the Investor that: (i) it is voluntarily entering into this Agreement
of its own freewill, (ii) it is not entering this Agreement under economic duress, (iii) the terms of this Agreement are reasonable
and fair to the Company, and (iv) the Company has had independent legal counsel of its own choosing review this Agreement, advise
the Company with respect to this Agreement, and represent the Company in connection with this Agreement.
SECTION
6
CONDITIONS OF THE COMPANY’S OBLIGATION TO SELL
The obligation hereunder of the
Company to issue and sell the Shares to the Investor is further subject to the satisfaction, at or before each Closing Date, of
each of the following conditions set forth below. These conditions are for the Company’s sole benefit and may be waived by
the Company at any time in its sole discretion.
6.1 The
Investor shall have executed this Agreement and the Registration Rights Agreement and delivered the same to the Company.
6.2 No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
SECTION
7
FURTHER CONDITIONS OF THE INVESTOR’S OBLIGATION TO PURCHASE
The obligation of the Investor
hereunder to purchase the Shares is subject to the satisfaction, on or before each Closing Date, of each of the following conditions
set forth below.
7.1 The
Company shall have executed the Transaction Documents and delivered the same to the Investor. The designation of preferred stock
authorizing the Shares has not been modified or withdrawn by the Company.
7.2 The
Common Shares shall be authorized for quotation on the Principal Market and trading in the Common Shares shall not have been suspended
by the Principal Market or the SEC, at any time beginning on the date hereof and through and including the respective Closing
Date (excluding suspensions of not more than one (1) Trading Day resulting from business announcements by the Company, provided
that such suspensions occur prior to the Company’s delivery of the Put Notice related to such Closing).
7.3 The
representations and warranties of the Company shall be true and correct as of the date when made and as of the applicable Closing
Date as though made at that time and the Company shall have performed, satisfied and complied with the covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company on or before such
Closing Date. The Investor may request an update as of such Closing Date regarding the representation contained in Section
4.3.
7.4 The
Company shall have executed and delivered to the Investor the Shares being purchased by the Investor at each Closing.
7.5 The
Board of Directors of the Company shall have adopted resolutions consistent with Section 4.2(ii) (the “Resolutions”)
and such Resolutions shall not have been amended or rescinded prior to such Closing Date.
7.6 No
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated
by this Agreement.
7.7 Intentionally
Omitted.
7.8 If applicable, the shareholders of the Company shall have approved the increase in the authorized Common Shares as required
to accommodate the reservation of Common Shares pursuant to Section 5.5 pursuant to the requirements of law of the Company’s
state of incorporation, the Company’s Articles of Incorporation and By-laws.
7.9 The conditions to such Closing set forth in Section 2.5 shall have been satisfied on or before such Closing Date.
7.10 The
Company shall have certified to the Investor the number of Common Shares outstanding when a Put Notice is given to the Investor.
The Company’s delivery of a Put Notice to the Investor constitutes the Company’s certification of the existence of
the necessary number of Conversion Shares reserved for issuance.
SECTION
8
TERMINATION
8.1 This
Agreement shall terminate upon any of the following events:
(a) when
the Investor has purchased an maximum number Shares being offered pursuant to this Agreement;
(b) on
the date which is forty eight (48) months after the Agreement Date;;
(c) the
trading of the Common Stock is suspended by the SEC, the Principal Market or FINRA for a period of two (2) consecutive Trading
Days during the Open Period; or,
(d) the
Common Stock ceases to be registered under the 1934 Act or listed or traded on the Principal Market or the Registration Statement
is no longer effective (except as permitted hereunder).. Immediately upon the occurrence of one of the above-described events,
the Company shall send written notice of such event to the Investor.
8.2 Investor may terminate this Agreement upon the following circumstances:
(a) the
Company has failed to deliver any Conversion Shares within five Trading Days of the Required Delivery Date,
(b)
a “freeze” or “chill has been place on the Common Shares by the DTC; and
(c) the
Company has materially breached any of the Transaction Documents and has failed to cure such breach within a 15 days of notice
to the Company of such breach.
8.3 Any
and all Shares, Conversion Shares, or penalties, if any, due under this Agreement shall be immediately payable and due upon termination
of this Agreement.
SECTION
9
INDEMNIFICATION
In
consideration of the parties mutual obligations set forth in the Transaction Documents, each of the parties (in such capacity,
an “Indemnitor”) shall defend, protect, indemnify and hold harmless the other and all of the other party’s
shareholders, officers, directors, employees, counsel, and direct or indirect investors and any of the foregoing person’s
agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated
by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and reasonable expenses in connection therewith (irrespective
of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result
of, or arising out of, or relating to (i) any misrepresentation or breach of any representation or warranty made by the Indemnitor
or any other certificate, instrument or document contemplated hereby or thereby; (ii) any breach of any covenant, agreement or
obligation of the Indemnitor contained in the Transaction Documents or any other certificate, instrument or document contemplated
hereby or thereby; or (iii) any cause of action, suit or claim brought or made against such Indemnitee by a third party and arising
out of or resulting from the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby, except insofar as any such misrepresentation, breach or any untrue statement,
alleged untrue statement, omission or alleged omission is made in reliance upon and in conformity with information furnished to
Indemnitor which is specifically intended for use in the preparation of any such Registration Statement, preliminary prospectus,
prospectus or amendments to the prospectus. To the extent that the foregoing undertaking by the Indemnitor may be unenforceable
for any reason, the Indemnitor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law. The indemnity provisions contained herein shall be in addition to any cause of action
or similar rights Indemnitor may have, and any liabilities the Indemnitor or the Indemnitees may be subject to.
SECTION
10
MISCELLANEOUS
10.1 Commitment
Shares. In consideration for the Investor’s execution and delivery of this Agreement, concurrently with the execution
and delivery of this Agreement on the Agreement Date, the Company shall deliver six certificates each representing one-sixth of
the amount of Commitment Shares in the name of the Investor or its designee (in which case such designee name shall have been
provided to the Company prior to the Agreement Date). Such certificates shall be delivered to the Investor by overnight courier
at its address set forth in Section 10.7 hereof. For the avoidance of doubt, all of the Commitment Shares shall be fully earned
as of the Agreement Date, regardless of whether the Registration Statement is declared effective or if any Put Notices are issued
by the Company or settled hereunder. Upon issuance, the Commitment Shares shall constitute “restricted securities”
as such term is defined in Rule 144(a)(3) under the Securities Act and shall bear a restrictive legend. Half of the Commitment
Shares shall constitute Registrable Securities and shall be included in the Registration Statement in accordance with the terms
of the Registration Rights Agreement.
10.2 Law
governing this agreement. This Agreement shall be governed by and construed in accordance with the laws of the State of California
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 California or in the federal courts located in Los
Angeles County, California. 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.
10.3 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.
10.4 Headings;
Singular/Plural. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. Whenever required by the context of this Agreement, the singular shall include the plural and
masculine shall include the feminine.
10.5 Severability.
If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability
of any provision of this Agreement in any other jurisdiction.
10.6 Entire
agreement; amendments. This Agreement is the final agreement between the Company and the Investor with respect to the terms
and conditions set forth herein, and, the terms of this Agreement may not be contradicted by evidence of prior, contemporaneous,
or subsequent oral agreements of the Parties.
10.7 Notices.
Any notices or other communications required or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
electronic mail (provided confirmation of transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) business day after deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications
shall be:
If to the Company:
Kleangas Energy Technologies, Inc.
Attn: Bo Linton
3001 N. Rocky Point Rd., Suite 200
Tampa, FL 33771
If to the Investor:
Premier Venture Partners, LLC
4221 Wilshire Blvd., Suite 355
Los Angeles, CA 90010
Fax: (323) 315-2273
Each party shall provide five (5) days
prior written notice to the other party of any change in address or facsimile number.
10.8 No assignment. This Agreement may not be assigned.
10.9 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.
10.10 Survival.
The representations and warranties of the Company and the Investor contained in Sections 3 and 4, the agreements and covenants
set forth in Sections 5 and 6, and the indemnification provisions set forth in Section 9, shall survive each of the Closings
and the termination of this Agreement.
10.11 Publicity.
The Company and the Investor shall consult with each other in issuing any press releases or otherwise making public statements
with respect to the transactions contemplated hereby and no party shall issue any such press release or otherwise make any such
public statement without the prior consent of the other party, which consent shall not be unreasonably withheld or delayed, except
that no prior consent shall be required if such disclosure is required by law, in which such case the disclosing party shall provide
the other party with prior notice of such public statement. The Investor acknowledges that this Agreement and all or part of the
Transaction Documents may be deemed to be “material contracts” as that term is defined by Item 601(b)(10) of Regulation
S-K, and that the Company may therefore be required to file such documents as exhibits to reports or registration statements filed
under the 1933 Act or the 1934 Act. The Investor further agrees that the status of such documents and materials as material contracts
shall be determined solely by the Company, in consultation with its counsel.
10.12 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.
10.13
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, as the parties mutually
agree that each has had a full and fair opportunity to review this Agreement and seek the advice of counsel on it.
10.14 Remedies.
The Investor shall have all rights and remedies set forth in this Agreement and the Registration Rights Agreement and all rights
and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which
the Investor has by law. Any person having any rights under any provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to recover damages by reason of any default or breach of any provision
of this Agreement, including the recovery of reasonable attorneys fees and costs, and to exercise all other rights granted by
law.
10.15
Expenses. Except as otherwise set forth below or elsewhere in the Transaction Documents (including but not limited
to Section 5 of the Registration Rights Agreement), each party shall pay the fees and expenses of its advisers, the accountants
and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery
and performance of this Agreement. Any attorneys’ fees and expenses incurred by either the Company or the Investor in connection
with the preparation, negotiation, execution and delivery of any amendments to this Agreement or relating to the enforcement of
the rights of any party, after the occurrence of any breach of the terms of this Agreement by another party or any default by another
party in respect of the transactions contemplated hereunder, shall be paid on demand by the party which breached the Agreement
and/or defaulted, as the case may be. The Company shall pay all stamp and other taxes and duties levied in connection with the
issuance of any Securities
10.16 Payment
set aside. To the extent that the Company makes a payment or payments to the Investor hereunder or under the Registration
Rights Agreement or the Investor enforces or exercises its rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law
or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to
be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
10.17 Pricing
of Common Shares. For purposes of this Agreement, the VWAP of the Common Stock shall be as reported on Bloomberg, L.P., Quotestream,
or other applicable service.
SECTION
11
NON-DISCLOSURE OF NON-PUBLIC INFORMATION
The Company
shall not disclose non-public information to the Investor, its advisors, or its representatives.
Nothing in
the Transaction Documents shall require or be deemed to require the Company to disclose non-public information to the Investor
or its advisors or representatives, and the Company represents that it does not disseminate non-public information to any investors
who purchase stock in the Company in a public offering, to money managers or to securities analysts, provided, however, that notwithstanding
anything herein to the contrary, the Company will, as hereinabove provided, immediately notify the advisors and representatives
of the Investor and, if any, underwriters, of any event or the existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware, constituting non-public information (whether or not requested of
the Company specifically or generally during the course of due diligence by such persons or entities), which, if not disclosed
in the prospectus included in the Registration Statement would cause such prospectus to include a material misstatement or to omit
a material fact required to be stated therein in order to make the statements, therein, in light of the circumstances in which
they were made, not misleading. In addition, neither the Company or any of its Subsidiaries, nor any of their respective directors,
officers, employees or agents shall disclose any material non-public information about the Company to the Investor, unless a simultaneous
public announcement thereof is made by the Company in the manner contemplated by Regulation FD. In the event of a breach of the
foregoing covenant by the Company or any of its Subsidiaries, or any of their respective directors, officers, employees and agents
(as determined in the reasonable good faith judgment of the Investor), (i) the Investor shall promptly provide written notice of
such breach to the Company and (ii) after such notice has been provided to the Company and in addition to any other remedy provided
herein or in the other Transaction Documents, the Investor shall have the right to make a public disclosure, in the form of a press
release, public advertisement or otherwise, of such material, non-public information without the prior approval by the Company,
any of its Subsidiaries, or any of their respective directors, officers, employees or agents; provided that the Company shall have
failed to publicly disclose such material, non-public information within 24 hours following such demand by the Investor. The Investor
shall not have any liability to the Company, any of its Subsidiaries, or any of their respective directors, officers, employees,
stockholders or agents, for any such disclosure.
SECTION
12
ACKNOWLEDGEMENTS OF THE PARTIES
Notwithstanding
anything in this Agreement to the contrary, the parties hereto hereby acknowledge and agree to the following: (i) the Investor
makes no representations or covenants that it will not engage in trading in the securities of the Company, other than the Investor
will not short the Common Shares; (ii) the Company shall comply with its obligations under Section 5.8 in a timely manner; (iii)
the Company has not and shall not provide material non-public information to the Investor unless prior thereto the Investor shall
have executed a written agreement regarding the confidentiality and use of such information; and (iv) the Company understands and
confirms that the Investor will be relying on the acknowledgements set forth in clauses (i) through (iii) above if the Investor
effects any transactions in the securities of the Company.
(Signature page immediately
follows)
IN WITNESS
WHEREOF, the parties have caused this Preferred Stock Purchase Agreement to be duly executed by their respective authorized
representatives as of the Agreement Date.
“COMPANY”:
|
“INVESTOR”: |
Kleangas Energy Technologies, Inc.,
a Delaware corporation
By: ________________________
Name: ________________________
Title: ________________________
|
Premier Venture Partners, LLC,
a California limited liability company
By: ________________________
Name: ________________________
Title: ________________________
|
LIST OF EXHIBITS
Exhibit A Registration Rights Agreement
Exhibit B Put Notice
Exhibit C Maximum Share Purchases
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
See attached.
EXHIBIT B
FORM OF PUT NOTICE
Date: ___________
Premier Venture Partners, LLC
4221 Wilshire Blvd., Suite 355
Los Angeles, CA 90010
RE: Put Notice
Number __
Dear Mr.__________,
This is to inform you that as
of today, Kleangas Energy Technologies, Inc., a Delaware corporation (the “Company”), hereby elects to exercise
its right pursuant to the Preferred Stock Purchase Agreement to require Premier Venture Partners, LLC to purchase shares of its
Series F Preferred Stock (the “Shares”). The Company hereby certifies that:
The amount of Shares to be purchased:
_____________.
Number of Common Shares issued
and outstanding _____________.
Number of Common Shares irrevocable
reserved with the Company’s transfer agent for issuance to Premier Venture Partners upon conversion of the Shares. ____________.
Regards,
Kleangas Energy Technologies,
Inc.
By: ________________________
Name: ________________________
Title: ________________________
EXHIBIT C
MAXIMUM NUMBER OF PURCHASED
SHARES
Put Notice Number |
Number of Shares |
1 |
150 |
2 |
150 |
3 |
150 |
4 |
150 |
5 |
150 |
6 |
150 |
7 |
175 |
8 |
175 |
9 |
175 |
10 |
175 |
11 |
175 |
12 |
175 |
13 |
215 |
14 |
215 |
15 |
215 |
16 |
215 |
17 |
215 |
18 |
215 |
19 |
265 |
20 |
265 |
21 |
265 |
22 |
265 |
23 |
265 |
24 |
265 |
25 |
320 |
26 |
320 |
27 |
320 |
28 |
320 |
29 |
320 |
30 |
320 |
31 |
395 |
32 |
395 |
33 |
395 |
34 |
395 |
35 |
395 |
36 |
395 |
37 |
480 |
38 |
480 |
39 |
480 |
40 |
480 |
41 |
480 |
42 |
480 |
Total |
12,000 |
EXHIBIT D
AMENDED AND RESTATED DESIGNATION
OF
SERIES F PREFERRED STOCK
Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT
(the “ Agreement ”), dated as of July 25, 2014 (the “Agreement Date”), is entered into by
and between Kleangas Energy Technologies, Inc., a Delaware corporation with its principal executive office at 3001 N. Rocky Point
Rd., Suite 200, Tampa, FL 33771 (the “Company”), and Premier Venture Partners, LLC, a California limited liability
company (the “Investor”), with its principal executive officers at 4221 Wilshire Blvd., Suite 355, Los Angeles,
CA 90010.
RECITALS
A. Pursuant to the Preferred Stock Purchase Agreement entered into by and between the Company and the Investor of this even date (the
“Preferred Stock Purchase Agreement”), the Company has agreed to issue and sell to the Investor up to 12,720
shares of the Company’s Series F Convertible Preferred Stock (the “Series F Preferred Stock”);
B. As an inducement to the Investors to execute and deliver the Preferred Stock 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 Preferred Stock Purchase Agreement.
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:
“Agreement 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.
“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 the Conversion Shares deliverable to the Investor pursuant to the conversion into Common Shares of (i) one half of the Commitment
Shares, (ii) the First Purchase Shares, and (ii) any Common Shares issued or issuable with respect to such Common Shares, 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 Preferred Stock 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 Preferred
Stock Purchase Agreement.
SECTION
2
REGISTRATION
2.1 The
Company shall use all commercially reasonable efforts to, within thirty (30) days of the date of this Agreement, file with
the SEC 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), covering the resale by the Investor of
Registrable Securities which Registration Statement shall state that, in accordance with Rule 416 promulgated under the 1933
Act, such Registration Statement also covers such indeterminate number of additional shares of Common Shares as may become
issuable upon stock splits, stock dividends or similar transactions.
2.2 The
Company shall use all commercially reasonable efforts to have the Registration Statement(s) declared effective by the
SEC.
2.3 The
Company agrees not to include any other securities in the Registration Statement covering the Registrable Securities without
Investor’s prior written consent which Investor may withhold in its sole discretion. Furthermore, the Company agrees
that it will not file any other Registration Statement for other securities, until thirty calendar days after the
Registration Statement for the Registrable Securities is declared effective by the SEC.
2.4 Intentionally Omitted.
2.5 The
Registrable Securities included in any Registration Statement and any increase in the number of Registrable Securities
included therein shall be allocated pro rata among the Investors based on the number of Registrable Securities held by each
Investor at the time such Registration Statement covering such initial number of Registrable Securities or increase thereof
is declared effective by the SEC. In the event that an Investor sells or otherwise transfers any of such Investor’s
Registrable Securities, each transferee or assignee (as the case may be) that becomes an Investor shall be allocated a pro
rata portion of the then-remaining number of Registrable Securities included in such Registration Statement for such
transferor or assignee (as the case may be). Any Common Shares included in a Registration Statement and which remain
allocated to any Person which ceases to hold any Registrable Securities covered by such Registration Statement shall be
allocated to the remaining Investors, pro rata, based on the number of Registrable Securities then held by such Investors
which are covered by such Registration Statement.
SECTION
3
RELATED OBLIGATIONS
At such
time as the Company is obligated to prepare and 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 (i) the Investor shall have sold all the Registrable Securities actually issued or that the Company has an
obligation to issue; or (ii) the date that the Registrable Securities may be sold pursuant to Rule 144 under the 1933 Act
(such period referred to as 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 five (5) business days after notice from 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 Common Shares 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, assuming the Company has sufficient authorized
shares at that time, and if it does not, within thirty (30) calendar days after such shares are authorized. 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 EDGAR, 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 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 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 least two (2) business’s day prior to their filing
with the SEC. 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. 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.
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. 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.
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 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. The Investor covenants and agrees that, in connection with any sale of Registrable Securities by it pursuant
to the Registration Statement, it shall comply with the “Plan of Distribution” section of the then current prospectus
relating to such Registration Statement.
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, unless the Investor has notified
the Company in writing of an election to exclude all of the Investor’s Registrable Securities from such Registration Statement.
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.
4.4 The
Investor covenants and agrees that it will comply with the prospectus delivery requirements of the 1933 Act as applicable to it
in connection with sales of Registrable Securities pursuant to a Registration Statement.
SECTION
5
EXPENSES OF REGISTRATION
All legal
expenses, other than underwriting discounts and commissions and other than as set forth in the Preferred Stock 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 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 In
connection with any Registration Statement in which Investor is participating, the Investor agrees to severally and jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6.1, the Company, each of its directors,
each of its officers who signs the Registration Statement, each Person, if any, who controls the Company within the meaning of
the 1933 Act or the 1934 Act and the Company’s agents (collectively and together with an Indemnified Person, an “Indemnified
Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934
Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the
extent, and only to the extent, that such Violation is due to the inclusion in the Registration Statement of the written information
furnished to the Company by the Investor expressly for use in connection with such Registration Statement; and, subject to Section
6.3, the Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending
any such Claim; provided, however, that the indemnity agreement contained in this Section 6.2 and the agreement with respect
to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Investor, which consent shall not be unreasonably withheld; provided, further, however,
that the Investor shall only be liable under this Section 6.2 for that amount of a Claim or Indemnified Damages as does not exceed
the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the resale of the Registrable Securities by the Investor pursuant to the Registration Statement. Notwithstanding
anything to the contrary contained herein, the indemnification agreement contained in this Section 6.2 with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus were corrected on a timely basis in the prospectus, as then amended or supplemented. This indemnification
provision shall apply separately to each Investor and liability hereunder shall not be joint and several.
6.3 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 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.
6.4 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.
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 1933 Act) 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 Preferred Stock 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.
SECTION
9
MISCELLANEOUS
9.1 Notices.
Any notices or other communications required or permitted to be given under the terms of this Agreement that must be in writing
will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic
mail (provided a confirmation of transmission is mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to
the party to receive the same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
Kleangas Energy Technologies, Inc.
Attn: Bo Linton
3001 N. Rocky Point Rd., Suite 200
Tampa, FL 33771
If to the Investor:
Premier Venture Partners, LLC
4221 Wilshire Blvd., Suite 355
Los Angeles, CA 90010
Fax: (323) 315-2273
Each party shall provide five (5) days
prior written notice to the other party of any change in address or facsimile number.
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 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 California
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 California or in the federal courts located in Los
Angeles County, California. 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)
IN WITNESS
WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed by their respective authorized representatives
as of the Agreement Date.
“COMPANY”:
|
“INVESTOR”: |
Kleangas Energy Technologies, Inc.,
a Delaware corporation
By: ________________________
Name: ________________________
Title: ________________________
|
Premier Venture Partners, LLC,
a California limited liability company
By: ________________________
Name: ________________________
Title: ________________________
|
Kleangas Energy Technolo... (CE) (USOTC:KGET)
Historical Stock Chart
From May 2024 to May 2024
Kleangas Energy Technolo... (CE) (USOTC:KGET)
Historical Stock Chart
From May 2023 to May 2024