Exhibit
10.15
SUPER
LEAGUE GAMING, INC. NOTE PURCHASE AGREEMENT
This
Note Purchase Agreement (this “Agreement”)
is made as of , by and among Super League Gaming, Inc., a
Delaware corporation (the “Company”),
and the investors listed on Exhibit A attached to this
Agreement (each a “Purchaser”
and together the “Purchasers”).
The
parties hereby agree as follows:
1.
Purchase and Sale of 9% Secured
Convertible Promissory Notes.
1.1 Sale
and Issuance.
(a) Subject
to the terms and conditions of this Agreement, each Purchaser
agrees, severally and not jointly, to purchase at the Closing (as
defined below), and the Company agrees to sell and issue to such
Purchaser at such Closing, a 9% Secured Convertible Promissory Note
(the “Note”),
in the original principal amount set forth opposite such
Purchaser’s name on Exhibit A with respect to such
Closing, and in the form attached hereto as Exhibit B, and a callable
common stock purchase warrant in the form attached hereto as
Exhibit C (the
“Warrant”).
The Notes issued to the Purchasers pursuant to this Agreement
(including any Notes issued at the Initial Closing and any
Additional Notes (as defined below) issued at Subsequent Closings
(as defined below)) shall be referred to in this Agreement as the
“Notes”.
The Warrants issued to the Purchasers pursuant to this Agreement
(including any Warrants issued at the Initial Closing and any
Additional Warrants (as defined below) issued at Subsequent
Closings) shall be referred to in this Agreement as the
“Warrants”.
The Notes and the Warrants shall be collectively referred to herein
as the “Securities”.
The Company is authorized to sell and issue up to ten million
dollars ($10,000,000) of
Notes pursuant to this Agreement, along with accepting the
conversion of three million dollars ($3,000,000) of issued and outstanding
secured convertible promissory notes of the Company, plus accrued
interest thereon.
For the avoidance
of doubt, the term “Purchaser” herein shall at all
times include the pre- existing secured
convertible noteholders of the Company that are converting their
respective Notes into the
Notes and Warrant issuable hereunder.
1.2 Closings;
Delivery.
(a) The
purchase, sale and issuance of the Notes shall take place at one or
more closings (each of which is referred to in this Agreement as a
“Closing”).
The initial Closing (the “Initial
Closing”) shall take place remotely via the exchange
of documents and signatures on the date hereof, or at such other
time and place as the Company and the Purchasers mutually agree,
either orally or in writing.
(b) If
less than all of the Notes are sold and issued at the Initial
Closing, then the Company may sell and issue at one or more
subsequent Closings (each a “Subsequent
Closing”), on the same terms and conditions as those
contained in this Agreement, up to the balance of the unissued
Notes (the “Additional
Notes”), and accompanying additional warrants
(“Additional
Warrants”) to one or more Persons (as defined below)
as may be approved by the Company in its
sole
discretion (the “Additional
Purchasers”), provided that (i) such Subsequent
Closing is consummated on or before May 31, 2018, and (ii) each
Additional Purchaser shall become a party to, and bound by, each of
the Transaction Agreements (as defined below), in each case as of
the date of such Subsequent Closing, by executing and delivering a
counterpart signature page to each of the Transaction Agreements.
Exhibit A to this
Agreement shall be updated to reflect each Additional Purchaser and
the number of Additional Notes purchased, and Additional Warrants
issued, or to be purchased, by each Additional Purchaser at each
applicable Subsequent Closing, and each such Additional Purchaser
shall be deemed a Purchaser for all purposes under this Agreement
as of the date of such Subsequent Closing.
(c) At
each Closing, the Company shall deliver to each Purchaser
participating in such Closing the following: (i) an executed
Agreement; (ii) an executed Note in the form attached hereto as
Exhibit B; (iii) an
executed Warrant in the form attached hereto as Exhibit C; (iv) an executed
Security Agreement in the form attached hereto as Exhibit D (the
“Security
Agreement”); (v) an executed Intercreditor and
Collateral Agent Agreement in the form attached hereto as
Exhibit E (the
“Intercreditor
Agreement”); (vi) an executed Investors Rights
Agreement in the form attached hereto as Exhibit F (the
“Investors
Rights Agreement”) representing the Note being
purchased by such Purchaser at such Closing against payment of the
purchase price therefor by wire transfer to the following bank
account designated by the Company:
Wells
Fargo Bank, N.A. 11836
San
Vicente Blvd. Los Angeles, CA 90049
Routing
Number: #########
Account
Number: #########
Account
Name: Super League Gaming, Inc.
1.3 Use
of Proceeds. In accordance with the directions of the Board
(as defined below), the Company will use the proceeds from the sale
of the Notes for Business expansion, merger and acquisitions, game
licensing, and working capital. None of the proceeds will be used
to reduce any indebtedness outstanding as of the date of this
Agreement (other than regularly scheduled payments pursuant to
agreements in effect as of the date hereof, if any) or to make any
dividend or distributions to any stockholders or Affiliates of the
Company.
1.4 Lock-Up
Restriction. To preserve an orderly trading market following
the close of the Company’s initial public offering
(“IPO”),
the Conversion Shares (as defined in the 9% Secured Convertible
Promissory Note attached hereto as Exhibit B) and the Warrant
Shares (as defined in the Callable Common Stock Purchase Warrant
attached hereto as Exhibit C) (the Conversion Shares and the
Warrant Shares are collectively referred to in this Section 1.4 as
the “Lock-Up
Shares”) shall have the following lock-up restriction
(i.e., before sales can be made in open market transactions): (i)
20% of the Lock-Up Shares made available for resale in the
Company’s Form 1-A filed with the Securities and Exchange
Commission (“SEC”)
will become freely tradeable on each of the 60-day, 90-day,
120-day, 150-day and 180-day anniversaries of the IPO closing; and
(ii) 20% of the Lock-Up Shares registered in the Company’s
registration statement on Form S-1 (“S-1”),
to be filed within 45 days of the IPO closing with the SEC, will
become freely tradeable on each of the 60-day, 90-day, 120-day,
150-day and 180- day anniversaries
of the date the S-1 is declared effective by the SEC. All Lock-Up
shares not included in the Company’s Form 1-A shall be
included in the Form S-1.
1.5 Defined
Terms Used in this Agreement. In addition to the terms
defined elsewhere in this Agreement, the following terms used in
this Agreement shall be construed to have the meanings set forth or
referenced below.
(a) “Affiliate”
means, with respect to any specified Person, any other Person who,
directly or indirectly, controls, is controlled by or is under
common control with such Person, including, without limitation, any
general partner, managing member, officer or director of such
Person, or such Person’s principal, or any venture capital
fund, financial investment firm or collective investment vehicle
now or hereafter existing that is controlled by one or more general
partners or managing members (or any affiliates thereof, which
shall include any series or cell of a general partner or managing
member that is structured as a series limited liability company)
of, or shares the same management company with, such Person. For
purposes of this definition, the terms “controlling,”
“controlled by,” or “under common control
with” shall mean the possession, directly or indirectly, of
(i) the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise, or (ii) the power to elect
or appoint at least 50% of the directors, managers, general
partners, or Persons exercising similar authority with respect to
such Person. For the avoidance of doubt, an “Affiliate”
of a specified Person shall include (x) such Person’s
partners, members, stockholders, other equity owners, officers,
directors, managers, former or retired partners, former or retired
members, former or retired stockholders, former or retired other
equity owners, and the estate of any of the foregoing and (y) a
parent or subsidiary of a Person that is an entity
(b) “Board”
means the board of directors of the Company.
(c) “Code”
means the Internal Revenue Code of 1986, as amended.
(d) “Company
Covered Person” means, with respect to the Company as
an “issuer” for purposes of Rule 506 promulgated under
the Securities Act, any Person listed in the first paragraph of
Rule 506(d)(1).
(e) “Company
Intellectual Property” means all patents, patent
applications, trademarks, trademark applications, service marks,
service mark applications, tradenames, copyrights, trade secrets,
domain names, mask works, information and proprietary rights and
processes, similar or other intellectual property rights, subject
matter of any of the foregoing, tangible embodiments of any of the
foregoing, licenses in, to and under any of the foregoing, and any
and all such cases as are necessary to the Company in the conduct
of the Company’s business as now conducted and as presently
proposed to be conducted.
(f) “Intercreditor
and Collateral Agent Agreement” means the agreement
among the Company and the Purchasers in the form of Exhibit E attached to this
Agreement.
(g) “Investors’
Rights Agreement” means the agreement among the
Company and the Purchasers in the form of Exhibit F attached to this
Agreement.
(h) “Key
Employee” means any executive-level employee
(including division director and vice president-level positions) as
well as any employee or consultant who either alone or in concert
with others develops, invents, programs or designs any Company
Intellectual Property.
(i) “Knowledge”
including the phrase “to
the Company’s knowledge” shall mean the actual
knowledge, after reasonable investigation, of Ann Hand and David
Steigelfest.
(j) “Material
Adverse Effect” means a material adverse effect on the
business, assets (including intangible assets), liabilities,
financial condition, property, prospects, or results of operations
of the Company.
(k) “Person”
means any individual, corporation, partnership, trust, limited
liability company, association or other entity.
(l) “Securities
Act” means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
(m) “Security
Agreement” means the agreement among the Company and
the Purchasers in the form of Exhibit D attached to this
Agreement.
(n) “Transaction
Agreements” means this Agreement, the Note, the
Warrant, the Security Agreement, the Intercreditor Agreement, the
Collateral Agent Agreement, and the Investors’ Rights
Agreement.
2.
Representations and Warranties of the
Company. A Disclosure Schedule, attached as Exhibit G to this Agreement
(each a “Disclosure
Schedule”), shall be delivered to the Purchasers in
connection with each Closing. Except as set forth on the Disclosure
Schedule delivered to the Purchasers at the applicable Closing,
which exceptions shall be deemed to be part of the representations
and warranties made hereunder, the Company hereby represents and
warrants to the Purchasers that the following representations are
true and complete. The Disclosure Schedule shall be arranged in
sections corresponding to the numbered and lettered sections
contained in this Section 2, and the disclosures in
any section of the Disclosure Schedule shall qualify other sections
in this Section
2 only to the extent it is
readily apparent from a reading of the disclosure that such
disclosure is applicable to such other sections.
2.1 Organization,
Good Standing, Corporate Power and Qualification. The
Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to carry on its business as
presently conducted and as proposed to be conducted. The Company is
duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a
Material Adverse Effect. The Company’s good standing
certificate with the State of Delaware dated February 16, 2018 is
included herewith as Schedule 2.1.
(a) The
authorized capital of the Company consists, immediately prior to
the Initial Closing, of 50,000,000 shares of Common Stock, $0.001
par value. Immediately prior to the Initial Closing, there are
13,810,487 shares of Common Stock issued and outstanding. In
additional there are three million dollars ($3.000,000.00) of
outstanding secured convertible promissory notes that are
converting into the Securities. All of the outstanding shares of
Common Stock have been duly authorized, are fully paid and
nonassessable and were issued in compliance with all applicable
federal and state securities laws. The Company holds no Common
Stock in its treasury.
(b) The
Company has reserved 4,500,000 shares of Common Stock for issuance
to officers, directors, employees, consultants and other service
providers of the Company pursuant to its 2014 Stock Option and
Incentive Plan (the “2014
Plan”), duly adopted by the Board and approved by the
Company stockholders. Of such reserved shares of Common Stock under
the 2014 Plan, (i) zero shares have been issued pursuant to
restricted stock purchase agreements, options to purchase 3,743,820
shares of common stock have been granted and are currently
outstanding, 70,000 shares have been issued pursuant to stock
option exercises, and 686,180 shares of Common Stock remain
available for issuance to officers, directors, employees,
consultants and other service providers of the Company pursuant to
the 2014 Plan. The Company has furnished to the Purchasers complete
and accurate copies of the 2014 Plan and forms of agreements used
thereunder.
(c) Section 2.2(c) of the Disclosure
Schedule sets forth the capitalization of the Company immediately
prior to the Initial Closing including the number of shares of the
following: (i) issued and outstanding Common Stock, including, with
respect to restricted Common Stock, vesting schedule and repurchase
price; (ii) granted stock options, including vesting schedule and
exercise price; (iii) shares of Common Stock reserved for future
award grants under the Stock Plans; and (iv) warrants or other
rights to purchase any of the Company’s authorized and
unissued capital stock. Except for (A) the rights provided in
Section 4 of the
Investors’ Rights Agreement, and (B) the securities
and rights described in Section 2.2 of this Agreement and
Section 2.2(c) of the Disclosure
Schedule, there are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first
refusal or similar rights) or agreements, orally or in writing, to
purchase or acquire from the Company any shares of Common Stock, or
any securities convertible into or exchangeable for shares of
Common Stock.
(d) The
Company has never adjusted or amended the exercise price of any
stock options previously awarded, whether through amendment,
cancellation, replacement grant, repricing, or any other
means.
2.3 Subsidiaries.
The Company does not currently own or control, directly or
indirectly, any interest in any other corporation, partnership,
trust, limited liability company, association, or other business
entity. The Company is not a participant in any partnership or
similar arrangement, other than license agreements with third
parties in the ordinary course and scope of the Company’s
business.
2.4 Authorization.
All corporate action required to be taken by the Board and
stockholders in order to authorize the Company to enter into the
Transaction Agreements, and to issue
the
Notes at each Closing, has been taken or will be taken prior to the
Initial Closing. All action on the part of the officers of the
Company necessary for the execution and delivery of the Transaction
Agreements, the performance of all obligations of the Company under
the Transaction Agreements to be performed as of the Closing has
been taken or will be taken prior to such Closing. The Transaction
Agreements, when executed and delivered by the Company, shall
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective
terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other laws of
general application relating to or affecting the enforcement of
creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or
other equitable remedies, or (iii) to the extent the
indemnification provisions contained in the Investors’ Rights
Agreement may be limited by applicable federal or state securities
laws.
2.5 Valid
Issuance of Securities.
(a) The
Securities, when issued, sold and delivered in accordance with the
terms and for the consideration set forth in this Agreement, will
be validly issued, fully paid and nonassessable and free of
restrictions on transfer other than restrictions on transfer under
the Transaction Agreements, applicable state and federal securities
laws and liens or encumbrances created by or imposed by a
Purchaser. Assuming the accuracy of the representations of the
Purchasers in Section 3
of this Agreement and subject to the filings described in
Section 2.6 below, the Securities
will be issued in compliance with all applicable federal and state
securities laws.
(b) No
“bad actor” disqualifying event described in Rule
506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification
Event”) is applicable to the Company or, to the
Company’s knowledge, any Company Covered Person, except for a
Disqualification Event as to which Rule 506(d)(2)(ii–iv) or
(d)(3), is applicable. The Company has exercised reasonable care,
in accordance with SEC rules and guidance, to determine whether any
Company Covered Person is subject to any Disqualification Event.
The Company has complied, to the extent applicable, with any
disclosure obligations under Rule 506(e) under the Securities
Act.
2.6 Governmental Consents and
Filings. Assuming the accuracy of the representations made
by the Purchasers in Section 3
of this Agreement, no consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing
with, any federal, state or local governmental authority is
required on the part of the Company in connection with the
consummation of the transactions contemplated by this Agreement,
except for (i) filings pursuant to Regulation D of the Securities
Act, and applicable state securities laws, which will be made in a
timely manner; and (ii) the filing of a financing statement on Form
UCC-1 with the California Secretary of State on behalf of the
Purchasers.
2.7 Litigation.
There is no claim, action, suit, proceeding, arbitration,
complaint, charge or investigation pending or, to the
Company’s knowledge, currently threatened (i) against the
Company or any officer, director or Key Employee of the Company; or
(ii) that questions the validity of the Transaction Agreements or
the right of the Company to enter into them, or to consummate the
transactions contemplated by the Transaction Agreements; or (iii)
to the Company’s knowledge, that would reasonably be expected
to have, either individually or in the aggregate, a Material
Adverse Effect. Neither the Company nor, to the Company’s
knowledge, any of its officers, directors or Key
Employees is a
party or is named as subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality (in the case of officers, directors or Key
Employees, such as would affect the Company). There is no action,
suit, proceeding or investigation by the Company pending or which
the Company intends to initiate. The foregoing includes, without
limitation, actions, suits, proceedings or investigations pending
or threatened in writing (or any basis therefor known to the
Company) involving the prior employment of any of the
Company’s employees, their services provided in connection
with the Company’s business, any information or techniques
allegedly proprietary to any of their former employers or their
obligations under any agreements with prior employers.
2.8 Intellectual Property. The
Company owns or possesses sufficient legal rights to all Company
Intellectual Property without (i) any conflict with, or
infringement of, the rights of others, other than the rights of
third parties in, to and under third-party patents and patent
applications (“Third-Party
Patent Rights”), and (ii) to the knowledge of the
Company, any conflict with, or infringement of, any Third-Party
Patent Rights. No product or service marketed or sold (or proposed
to be marketed or sold) by the Company violates or will violate any
license or infringes or will infringe (x) any
intellectual property rights of any other party other than
Third-Party Patent Rights and (y) to the knowledge of the Company,
any Third-Party Patent Rights. Other than with respect to
commercially available software products under standard end-user
object code license agreements, there are no outstanding options,
licenses, agreements, claims, encumbrances or shared ownership
interests of any kind relating to the Company Intellectual
Property, nor is the Company bound by or a party to any options,
licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, proprietary rights and processes of any
other Person. The Company is not aware of any violation by a third
party of any Company Intellectual Property, and the Company has not
received any communications alleging that the Company has violated
or, by conducting its business, would violate any of the patents,
trademarks, service marks, tradenames, copyrights, trade secrets,
mask works or other proprietary rights or processes of any other
Person. The Company has obtained and possesses valid licenses to
use all of the software programs present on the computers and other
software-enabled electronic devices that it owns or leases or that
it has otherwise provided to its employees for their use in
connection with the Company’s business. It will not be
necessary to use any inventions of any of its employees or
consultants (or Persons it currently intends to hire) made prior to
their employment by the Company. Each employee and consultant has
assigned to the Company all intellectual property rights he or she
owns that are related to the Company’s business as now
conducted and as presently proposed to be conducted. Section 2.8 of the Disclosure
Schedule lists all Company patents, patent applications,
trademarks, trademark applications, service marks, service mark
applications, tradenames, domain names, copyrights, and licenses to
and under any of the foregoing. The Company has not embedded, used
or distributed any open source, copyleft or community source code
(including, but not limited to, any libraries or code, software,
technologies or other materials that are licensed or distributed
under any General Public License, Lesser General Public License or
similar license arrangement or other distribution model described
by the Open Source Initiative at www.opensource.org)
(collectively “Open
Source Software”) in, or in connection with, any of
its products or services that are generally available or in
development in any manner that would materially restrict the
ability of the Company to protect its proprietary interests in any
such product or service or in any manner that would (i) require, or
purport to require, any Company Intellectual Property (other than
the Open Source Software itself) to be disclosed or distributed in
source code form, or to be licensed for the
purpose
of making derivative works; (ii) restrict, or purport to restrict,
the consideration that could be charged for the distribution or use
of any Company Intellectual Property, or otherwise limit, or
purport to limit, the use of any Company Intellectual Property for
commercial purposes; (iii) create, or purport to create, any
obligation on the Company with respect to any Company Intellectual
Property owned by the Company, or otherwise grant, or purport to
grant, to any third party any rights in or to, or immunities under,
Company Intellectual Property owned by the Company; or (iv) impose,
or purport to impose, any other limitation, restriction or
condition on the right of the Company with respect to its use or
distribution of any Company Intellectual Property. For purposes of
this Section
2.8, the Company shall be
deemed to have knowledge of a patent right if the Company has
actual knowledge of the patent right or would be found to be on
notice of such patent right as determined by reference to United
States patent laws.
2.9 Compliance
with Other Instruments. The Company is not in violation or
default (i) of any provisions of its Amended & Restated
Certificate of Incorporation (“Restated Certificate”) or Bylaws,
(ii) of any instrument, judgment, order, writ or decree, (iii)
under any note, indenture or mortgage, or (iv) under any lease,
agreement, contract or purchase order to which it is a party or by
which it is bound that is required to be listed on the Disclosure
Schedule, or (v) to its knowledge, of any provision of federal or
state statute, rule or regulation applicable to the Company, the
violation of which would have a Material Adverse Effect. The
execution, delivery and performance of the Transaction Agreements
and the consummation of the transactions contemplated by the
Transaction Agreements will not result in any such violation or be
in conflict with or constitute, with or without the passage of time
and giving of notice, either (i) a default under any such
provision, instrument, judgment, order, writ, decree, contract or
agreement; or (ii) an event which results in the creation of any
lien, charge or encumbrance upon any assets of the Company or the
suspension, revocation, forfeiture, or nonrenewal of any material
permit or license applicable to the Company.
2.10 Agreements;
Actions.
(a) Except
for the Transaction Agreements, issued and outstanding employment
agreements with executives of the Company, the existing real
property lease agreement for the Company’s headquarters
located at 2906 Colorado Ave., Santa Monica, CA 90404, there are no
agreements, understandings, instruments, contracts or proposed
transactions to which the Company is a party or by which it is
bound that involve (i) obligations (contingent or otherwise) of, or
payments to, the Company in excess of $100,000, or (ii) the grant
of rights to manufacture, produce, assemble, license, market, or
sell its products to any other Person that limit the
Company’s exclusive right to develop, manufacture, assemble,
distribute, market or sell its products.
(b) The
Company has not (i) declared or paid any dividends or authorized or
made any distribution upon or with respect to any class or series
of its capital stock, or (ii) sold, exchanged or otherwise disposed
of any of its assets or rights, other than the sale of its
inventory in the ordinary course of business.
(c) The
Company is not a guarantor or indemnitor of any indebtedness
of any other
Person.
2.11 Certain
Transactions.
(a) Other
than (i) standard employee benefits generally made available to all
employees, (ii) executive employment agreements for Ann Hand and
David Steigelfest, (iii) standard director and officer
indemnification agreements approved by the Board, and (iv) the
purchase of shares of the Company’s capital stock and the
issuance of options and warrants to purchase shares of the
Company’s Common Stock, in each instance, approved in the
written minutes of the Board, there are no agreements,
understandings or proposed transactions between the Company and any
of its officers, directors, consultants or Key Employees, or any
Affiliate thereof.
(b) The
Company is not indebted, directly or indirectly, to any of its
directors, officers or employees or to their respective spouses or
children or to any Affiliate of any of the foregoing, other than in
connection with expenses or advances of expenses incurred in the
ordinary course of business or employee relocation expenses and for
other customary employee benefits made generally available to all
employees. None of the Company’s directors, officers or
employees, or any members of their immediate families, or any
Affiliate of the foregoing are, directly or indirectly, indebted to
the Company or, to the Company’s knowledge, have any (i)
material commercial, industrial, banking, consulting, legal,
accounting, charitable or familial relationship with any of the
Company’s customers, suppliers, service providers, joint
venture partners, licensees and competitors, (ii) direct or
indirect ownership interest in any firm or corporation with which
the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation which competes with the
Company except that directors, officers or employees or
stockholders of the Company may own stock in (but not exceeding two
percent (2%) of the outstanding capital stock of) publicly traded
companies that may compete with the Company or (iii) financial
interest in any material contract with the Company.
2.12 Rights
of Registration and Voting Rights. Except as provided in the
Investors’ Rights Agreement, and in Section 2.12 of the
Disclosure Schedule, the Company is not under any obligation to
register under the Securities Act any of its currently outstanding
securities or any securities issuable upon exercise or conversion
of its currently outstanding securities. To the Company’s
knowledge, no stockholder of the Company has entered into any
agreements with respect to the voting of capital shares of the
Company.
2.13 Property.
The property and assets that the Company owns are free and clear of
all mortgages, deeds of trust, liens, loans and encumbrances,
except for statutory liens for the payment of current taxes that
are not yet delinquent and encumbrances and liens that arise in the
ordinary course of business and do not materially impair the
Company’s ownership or use of such property or assets. With
respect to the property and assets it leases, the Company is in
compliance with such leases and, to its knowledge, holds a valid
leasehold interest free of any liens, claims or encumbrances other
than those of the lessors of such property or assets. The Company
does not own any real property.
2.14 Financial
Statements. The Company has delivered to each Purchaser its
audited financial statements for the fiscal years ended December
31, 2015 and December 31, 2016 and its unaudited financial
statements (including balance sheet, income statement and statement
of stockholders’ equity) for the fiscal year ended December
31, 2017 (collectively, the “Financial
Statements”). The Financial Statements have been
prepared in accordance with generally accepted
accounting
principles (“GAAP”)
applied on a consistent basis throughout the periods indicated,
except that the Financial Statements may not contain all footnotes
required by GAAP. The Financial Statements fairly present in all
material respects the financial condition and operating results of
the Company as of the dates, and for the periods, indicated
therein, subject to normal year-end audit adjustments. Except as
set forth in the Financial Statements, the Company has no material
liabilities or obligations, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent
to December 31, 2017; (ii) obligations under contracts and
commitments incurred in the ordinary course of business; and (iii)
liabilities and obligations of a type or nature not required under
GAAP to be reflected in the Financial Statements, which, in all
such cases, individually and in the aggregate would not have a
Material Adverse Effect. The Company maintains and will continue to
maintain a standard system of accounting established and
administered in accordance with GAAP.
2.15 Changes.
Since December 31, 2017, there has not been:
(a) any
change in the assets, liabilities, financial condition or operating
results of the Company, except changes in the ordinary course of
business that have not caused, in the aggregate, a Material Adverse
Effect;
(b) any
damage, destruction or loss, whether or not covered by insurance,
that would have a Material Adverse Effect;
(c) any
waiver or compromise by the Company of a valuable right or of a
material debt owed to it;
(d) any
satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation by the Company, except in the ordinary
course of business and the satisfaction or discharge of which would
not have a Material Adverse Effect;
(e) any
material change to a material contract or agreement by which the
Company or any of its assets is bound or subject;
(f) any
material change in any compensation arrangement or agreement with
any employee, officer, director or stockholder;
(g) any
mortgage, pledge, transfer of a security interest in, or lien,
created by the Company, with respect to any of its material
properties or assets, except liens for taxes not yet due or payable
and liens that arise in the ordinary course of business and do not
materially impair the Company’s ownership or use of such
property or assets;
(h) any
loans or guarantees made by the Company to or for the benefit of
its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances
made in the ordinary course of its business;
(i) any
declaration, setting aside or payment or other distribution in
respect of any of the Company’s capital stock, or any direct
or indirect redemption, purchase, or other acquisition of any of
such stock by the Company;
(j) any sale,
assignment or transfer of any Company Intellectual Property that
could reasonably be expected to result in a Material Adverse
Effect;
(k) receipt
of notice that there has been a loss of, or material order
cancellation by, any major customer of the Company;
(l) to
the Company’s knowledge, any other event or condition of any
character, other than events affecting the economy or the
Company’s industry generally, that could reasonably be
expected to result in a Material Adverse Effect; or
(m) any
arrangement or commitment by the Company to do any of the things
described in this Subsection 2.15.
(a) As
of the April 1, 2018, the Company employs 41 full-time employees
and has five (5) consultants or independent
contractors.
(b) To
the Company’s knowledge, none of its employees is obligated
under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree
or order of any court or administrative agency, that would
materially interfere with such employee’s ability to promote
the interest of the Company or that would conflict with the
Company’s business. Neither the execution or delivery of the
Transaction Agreements, nor the carrying on of the Company’s
business by the employees of the Company, nor the conduct of the
Company’s business as now conducted and as presently proposed
to be conducted, will, to the Company’s knowledge, conflict
with or result in a breach of the terms, conditions, or provisions
of, or constitute a default under, any contract, covenant or
instrument under which any such employee is now
obligated.
(c) The
Company is not delinquent in payments to any of its employees,
consultants, or independent contractors for any wages, salaries,
commissions, bonuses, or other direct compensation for any service
performed for it to the date hereof or amounts required to be
reimbursed to such employees, consultants or independent
contractors. The Company has complied in all material respects with
all applicable state and federal equal employment opportunity laws
and with other laws related to employment, including those related
to wages, hours, worker classification and collective bargaining.
The Company has withheld and paid to the appropriate governmental
entity or is holding for payment not yet due to such governmental
entity all amounts required to be withheld from employees of the
Company and is not liable for any arrears of wages, taxes,
penalties or other sums for failure to comply with any of the
foregoing.
(d) To
the Company’s knowledge, no Key Employee intends to terminate
employment with the Company or is otherwise likely to become
unavailable to continue as a Key Employee, nor does the Company
have a present intention to terminate the employment of any of the
foregoing. The employment of each employee of the Company is
terminable at the will of the Company, other than executives who
have employment agreements with the Company.
(e) The Company has not
made any representations regarding equity incentives to any
officer, employee, director or consultant that are inconsistent
with the share amounts and terms set forth in the minutes of
meetings of the Board.
(f) Each
former Key Employee whose employment was terminated by the Company
has entered into an agreement with the Company providing for the
full release of any claims against the Company or any related party
arising out of such employment.
(g) Section 2.166(g) of the Disclosure
Schedule sets forth each employee benefit plan maintained,
established or sponsored by the Company, or which the Company
participates in or contributes to, which is subject to the Employee
Retirement Income Security Act of 1974, as amended
(“ERISA”).
The Company has made all required contributions and has no
liability to any such employee benefit plan, other than liability
for health plan continuation coverage described in Part 6 of Title
I(B) of ERISA and has complied in all material respects with all
applicable laws for any such employee benefit plan.
(h) The
Company is not bound by or subject to (and none of its assets or
properties is bound by or subject to) any written or oral, express
or implied, contract, commitment or arrangement with any labor
union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or
other labor dispute involving the Company pending, or to the
Company’s knowledge, threatened, which could have a Material
Adverse Effect, nor is the Company aware of any labor organization
activity involving its employees.
(i) None
of the Key Employees or officers or directors of the Company has
been (i) subject to voluntary or involuntary petition under the
federal bankruptcy laws or any state insolvency law or the
appointment of a receiver, fiscal agent or similar officer by a
court for his business or property; (ii) convicted in a criminal
proceeding or named as a subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses); (iii)
subject to any order, judgment or decree (not subsequently
reversed, suspended, or vacated) of any court of competent
jurisdiction permanently or temporarily enjoining him from
engaging, or otherwise imposing limits or conditions on his
engagement in any securities, investment advisory, banking,
insurance, or other type of business or acting as an officer or
director of a public company; or (iv) found by a court of competent
jurisdiction in a civil action or by the Securities and Exchange
Commission or the Commodity Futures Trading Commission to have
violated any federal or state securities, commodities, or unfair
trade practices law, which such judgment or finding has not been
subsequently reversed, suspended, or vacated.
2.17 Tax
Returns and Payments. There are no federal, state, county,
local or foreign taxes due and payable by the Company which have
not been timely paid, excluding approximately $40,000 of state
and local taxes relating to ticket sales from prior periods. There
are no accrued and unpaid federal, state, country, local or foreign
taxes of the Company which are due, whether or not assessed or
disputed. There have been no examinations or audits of any tax
returns or reports by any applicable federal, state, local or
foreign governmental agency. The Company has duly and timely filed
all federal, state, county, local and foreign tax returns required
to have been filed by it and there are in effect no waivers of
applicable statutes of limitations with respect to taxes for any
year.
2.18 Insurance.
The Company has in full force and effect fire and casualty
insurance policies with extended coverage, sufficient in amount
(subject to reasonable deductions) to allow it to replace any of
its properties that might be damaged or destroyed.
2.19 Employee Agreements. Each
current and former employee, consultant and officer of the Company
has executed an agreement with the Company regarding
confidentiality and proprietary information (collectively, the
“Confidential
Information Agreements”). No current or former Key
Employee has excluded works or inventions from his or her
assignment of inventions pursuant to such Key Employee’s
Confidential Information Agreement. Each current and former Key
Employee has executed a non-solicitation agreement. The Company is
not aware that any of its Key Employees is in violation of any
agreement covered by this Section 2.199.
2.20 Permits.
The Company has all franchises, permits, licenses and any similar
authority necessary for the conduct of its business, the lack of
which could reasonably be expected to have a Material Adverse
Effect. The Company is not in default in any material respect under
any of such franchises, permits, licenses or other similar
authority.
2.21 Corporate
Documents. The copy of the minute books of the Company
provided to the Purchasers contains minutes of all meetings of
directors and stockholders and all actions by written consent
without a meeting by the directors and stockholders since the date
of incorporation and accurately reflects in all material respects
all actions by the directors (and any committee of directors) and
stockholders with respect to all transactions referred to in such
minutes.
2.22 Environmental
and Safety Laws. (a) The Company is and has been in
compliance with all Environmental Laws; (b) there has been no
release or threatened release of any pollutant, contaminant or
toxic or hazardous material, substance or waste or petroleum or any
fraction thereof (each a “Hazardous
Substance”), on, upon, into or from any site currently
or heretofore owned, leased or otherwise used by the Company; (c)
there have been no Hazardous Substances generated by the Company
that have been disposed of or come to rest at any site that has
been included in any published U.S. federal, state or local
“superfund” site list or any other similar list of
hazardous or toxic waste sites published by any governmental
authority in the United States; and (d) there are no underground
storage tanks located on, no polychlorinated biphenyls
(“PCBs”)
or PCB-containing equipment used or stored on, and no hazardous
waste as defined by the Resource Conservation and Recovery Act, as
amended, stored on, any site owned or operated by the Company,
except for the storage of hazardous waste in compliance with
Environmental Laws. The Company has made available to the
Purchasers true and complete copies of all material environmental
records, reports, notifications, certificates of need, permits,
pending permit applications, correspondence, engineering studies
and environmental studies or assessments.
For
purposes of this Section
2.22, “Environmental
Laws” means any law, regulation, or other applicable
requirement relating to (a) releases or threatened release of
Hazardous Substance; (b) pollution or protection of employee health
or safety, public health or the environment; or (c) the
manufacture, handling, transport, use, treatment, storage, or
disposal of Hazardous Substances.
2.23 Qualified
Small Business Stock. As of and immediately following each
Closing: (i) the Company will be an eligible corporation as defined
in Section 1202(e)(4) of the Code, (ii) the Company
will not have made purchases of its own stock described in Code
Section
1202(c)(3)(B)
during the one-year period preceding the Initial Closing, except
for purchases that are disregarded for such purposes under Treasury
Regulation Section 1.1202-2 and (iii) the Company’s aggregate
gross assets, as defined by Code Section 1202(d)(2), at no time
between its incorporation and through the Initial Closing have
exceeded $50 million, taking into account the assets of any
corporations required to be aggregated with the Company in
accordance with Code Section 1202(d)(3); provided, however, that in no event
shall the Company be liable to the Purchasers or any other party
for any damages arising from any subsequently proven or identified
error in the Company’s determination with respect to the
applicability or interpretation of Code Section 1202, unless such
determination shall have been given by the Company in a manner
either grossly negligent or fraudulent.
2.24 Data
Privacy. In connection with its collection, storage,
transfer (including without limitation, any transfer across
national borders) and/or use of any personally identifiable
information from any individuals, including, without limitation,
any customers, prospective customers, employees and/or other third
parties (collectively, “Personal
Information”), the Company is and has been in
compliance with all applicable laws in all relevant jurisdictions,
the Company’s privacy policies, and the requirements of any
contract or codes of conduct to which the Company is a party. The
Company has commercially reasonable physical, technical,
organizational and administrative security measures and policies in
place to protect all Personal Information collected by it or on its
behalf from and against unauthorized access, use and/or disclosure.
The Company is and has been in compliance in all material respects
with all laws relating to data loss, theft and breach of security
notification obligations.
2.25 Disclosure.
The Company has made available to the Purchasers all the
information reasonably available to the Company that the Purchasers
have requested for deciding whether to acquire the Notes, including
certain of the Company’s projections describing its proposed
business plan (the “Business
Plan”). No representation or warranty of the Company
contained in this Agreement, as qualified by the Disclosure
Schedule, and no certificate furnished or to be furnished to
Purchasers at any Closing contains any untrue statement of a
material fact or, to the Company’s knowledge, omits to state
a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances
under which they were made. The Business Plan was prepared in good
faith; however, the Company does not warrant that it will achieve
any results projected in the Business Plan. It is understood that
this representation is qualified by the fact that the Company has
not delivered to the Purchasers, and has not been requested to
deliver, a private placement or similar memorandum or any written
disclosure of the types of information customarily furnished to
purchasers of securities.
3.
Representations and Warranties of the
Purchasers. Each Purchaser hereby represents and warrants to
the Company, severally and not jointly, that:
3.1 Authorization.
The Purchaser has full power and authority to enter into the
Transaction Agreements. The Transaction Agreements to which the
Purchaser is a party, when executed and delivered by the Purchaser,
will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except (a)
as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and any other laws of general
application affecting enforcement of creditors’ rights
generally, and as limited by laws relating to the
availability of
specific performance, injunctive relief or other equitable
remedies, or (b) to the extent the indemnification provisions
contained in the Investors’ Rights Agreement may be limited
by applicable federal or state securities laws.
3.2 Purchase
Entirely for Own Account. This Agreement is made with the
Purchaser in reliance upon the Purchaser’s representation to
the Company, which by the Purchaser’s execution of this
Agreement, the Purchaser hereby confirms, that the Notes to be
acquired by the Purchaser will be acquired for investment for the
Purchaser’s own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and
that the Purchaser has no present intention of selling, granting
any participation in, or otherwise distributing the same in
violation of applicable securities laws. By executing this
Agreement, the Purchaser further represents that the Purchaser does
not presently have any contract, undertaking, agreement or
arrangement with any Person to sell, transfer or grant
participations to such Person or to any third Person, with respect
to any of the Notes. The Purchaser has not been formed for the
specific purpose of acquiring the Notes.
3.3 Disclosure
of Information. The Purchaser has had an opportunity to
discuss the Company’s business, management, financial affairs
and the terms and conditions of the offering of the Notes with the
Company’s management and has had an opportunity to review the
Company’s facilities. The foregoing, however, does not limit
or modify the representations and warranties of the Company in
Section 2
of this Agreement or the right of the Purchasers to rely
thereon.
3.4 Restricted
Securities. The Purchaser understands that the Securities,
and the shares of common stock issuable upon conversion and
exercise of the Notes and Warrants, respectively, have not been,
and will not be, registered under the Securities Act, by reason of
a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona
fide nature of the investment intent and the accuracy of the
Purchaser’s representations as expressed herein. The
Purchaser understands that the Notes are “restricted
securities” under applicable U.S. federal and state
securities laws and that, pursuant to these laws, the Purchaser
must hold the Securities, and the shares of common stock issuable
upon conversion and exercise of the Notes and Warrants,
respectively, must be held indefinitely unless they are registered
with the Securities and Exchange Commission and qualified by state
authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges
that the Company has no obligation to register or qualify the
Notes, Warrants or the shares of common stock issuable upon
conversion of the Notes and Warrants, respectively, for resale
except as set forth in the Investors’ Rights Agreement. The
Purchaser further acknowledges that if an exemption from
registration or qualification is available, it may be conditioned
on various requirements including, but not limited to, the time and
manner of sale, the holding period for the shares of common stock
issuable upon the conversion and exercise of the Notes and
Warrants, respectively, and on requirements relating to the Company
which are outside of the Purchaser’s control, and which the
Company is under no obligation and may not be able to
satisfy.
3.5 No
Public Market. The Purchaser understands that no public
market now exists for the Securities, and that the Company has made
no assurances that a public market will ever exist for the
Securities, or the shares of common stock issuable upon conversion
and exercise of the Notes and Warrants, respectively.
3.6 Legends. The Purchaser
understands that the Securities, and any securities issued in
respect of or exchange for the Securities, may be notated with a
legend similar to the following:
“THE SHARES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN
A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.”
(a) Any legend set forth
in, or required by, the other Transaction Agreements.
(b) Any legend required
by the securities laws of any state to the extent
such
laws are applicable to the Securities represented by the
certificate, instrument, or book entry so legended.
3.7 Accredited
Investor. The Purchaser is an accredited investor as defined
in Rule 501(a) of Regulation D promulgated under the Securities
Act.
3.8 No
General Solicitation. Neither the Purchaser, nor any of its
officers, directors, employees, agents, stockholders or partners
has either directly or indirectly, including, through a broker or
finder (a) engaged in any general solicitation, or (b) published
any advertisement in connection with the offer and sale of the
Notes.
3.9 Exculpation
Among Purchasers. The Purchaser acknowledges that it is not
relying upon any Person, other than the Company and its officers
and directors, in making its investment or decision to invest in
the Company. The Purchaser agrees that neither any Purchaser nor
the respective controlling Persons, officers, directors, partners,
agents, or employees of any Purchaser shall be liable to any other
Purchaser for any action heretofore taken or omitted to be taken by
any of them in connection with the purchase of the
Notes.
3.10 Residence.
If the Purchaser is an individual, then the Purchaser resides in
the state or province identified in the address of the Purchaser
set forth on Exhibit
A; if the Purchaser is a partnership, corporation, limited
liability company or other entity, then the office or offices of
the Purchaser in which its principal place of business is
identified in the address or addresses of the Purchaser set forth
on Exhibit
A.
4.
Conditions to the Purchasers’
Obligations at Closing. The obligations of each Purchaser to
purchase Notes at any Closing are subject to the fulfillment, on or
before such Closing, of each of the following conditions, unless
otherwise waived by such Purchaser:
4.1 Representations
and Warranties.
(a) With respect to the
Initial Closing, except as set forth in or modified by the
Disclosure Schedule delivered to the Purchasers at the Initial
Closing, the representations and warranties of the Company
contained in Section 2
shall be true and correct in all respects as of the date of the
Initial Closing.
(b) With
respect to any Subsequent Closing, except as set forth in or
modified by the Disclosure Schedule delivered to the Purchasers at
the Initial Closing (or, if necessary, an updated version of the
Disclosure Schedule delivered to the Purchasers participating in
such Subsequent Closing along with the certificate described in
Section 4.3(b)),
the representations and warranties made by the Company in
Section 2 shall be
true and correct in all material respects (without giving effect to
any limitation as to “materiality” or Material Adverse
Effect set forth therein) on and as of the date of such Subsequent
Closing as though such representations and warranties were made on
and as of such date (other than those representations and
warranties of the Company contained in Section 2 made as of a
specified date or made only with respect to a specified period of
time, which need only be true and correct in all material respects
(without giving effect to any limitation as to
“materiality” or Material Adverse Effect set forth
therein) as of such specified date or with respect to such
specified period of time).
4.2 Performance.
The Company shall have performed and complied with all covenants,
agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by the Company
on or before such Closing.
4.3 Compliance
Certificate.
(a) With
respect to the Initial Closing, the President of the Company shall
deliver to the Purchasers participating in the Initial Closing a
certificate certifying that the conditions specified in
Sections 4.1(a) and
4.2 have been
fulfilled.
(b) With
respect to any Subsequent Closing, the President of the Company
shall deliver to the Purchasers participating in such Subsequent
Closing a certificate certifying that the conditions specified in
Sections 4.1(b) and
4.2 have been
fulfilled.
4.4 Qualifications.
All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful
issuance and sale of the Notes pursuant to this Agreement shall be
obtained and effective as of such Closing.
4.5 Board
of Directors. As of the Initial Closing, the authorized size
of the Board shall be six (6), and the Board shall be comprised of
Ann Hand, David Steigelfest, Jeff Gehl, Robert Stewart, John Miller
and Marc Cummins.
4.6 Investors’
Rights Agreement. The Company and each Purchaser shall have
executed and delivered the Investors’ Rights
Agreement.
4.7 Secretary’s
Certificate. The Secretary of the Company shall have
delivered to the Purchasers at the Initial Closing a certificate
certifying (i) the Bylaws of the Company, and (ii)
resolutions of the
Board approving the Transaction Agreements and the transactions
contemplated under the Transaction Agreements.
4.8 Proceedings
and Documents. All corporate and other proceedings in
connection with the transactions contemplated at such Closing and
all documents incident thereto shall be reasonably satisfactory in
form and substance to each Purchaser, and each Purchaser (or its
counsel) shall have received all such counterpart original and
certified or other copies of such documents as reasonably
requested. Such documents may include good standing
certificates.
5.
Conditions of the
Company’s Obligations at Closing. The obligations of
the Company to sell Notes to the Purchasers at any Closing are
subject to the fulfillment, on or before such Closing, of each of
the following conditions, unless otherwise waived:
5.1 Representations
and Warranties. The representations and warranties of each
Purchaser contained in Section 3
shall be true and correct in all respects as of such
Closing.
5.2 Performance.
The Purchasers shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by
them on or before such Closing.
5.3 Qualifications.
All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful
issuance and sale of the Notes pursuant to this Agreement shall be
obtained and effective as of such Closing.
5.4 Investors’
Rights Agreement. Each Purchaser shall have executed and
delivered the Investors’ Rights Agreement.
6.1 Survival
of Warranties. Unless otherwise set forth in this Agreement,
the representations and warranties of the Company and the
Purchasers contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and each
Closing and shall in no way be affected by any investigation or
knowledge of the subject matter thereof made by or on behalf of the
Purchasers or the Company.
6.2 Successors
and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any
rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided in this
Agreement.
6.3 Governing
Law. This Agreement shall be governed by and construed under
the internal laws of the State of Delaware, irrespective of
conflict of law principles.
6.4 Counterparts.
This Agreement may be executed and delivered via (i) the DocuSign
digital signature service, or (ii) by facsimile signature and in
two (2) or more counterparts,
each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Counterparts may be
delivered via facsimile, electronic mail (including pdf or any
electronic signature complying with the U.S. federal ESIGN Act of
2000, e.g., www.docusign.com)
or other transmission method and any counterpart so delivered shall
be deemed to have been duly and validly delivered and be valid and
effective for all purposes.
6.5 Titles
and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be
considered in construing or interpreting this
Agreement.
6.6 Notices. All notices and other
communications given or made pursuant to this Agreement shall be in
writing and shall be deemed effectively given upon the earlier of
actual receipt, or (a) personal delivery to the party to be
notified, (b) when sent, if sent by electronic mail or facsimile
during normal business hours of the recipient, and if not sent
during normal business hours, then on the recipient’s next
business day, (c) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage
prepaid, or (d) one (1) business day after deposit with a
nationally recognized overnight courier, freight prepaid,
specifying next business day delivery, with written verification of
receipt. All communications shall be sent to the respective parties
at their address as set forth on the signature page or Exhibit A, or to such e-mail
address, facsimile number or address as subsequently modified by
written notice given in accordance with this Section 6.6. If notice is given to
the Company, a copy shall also be sent to Ann Hand, President &
CEO, Super League Gaming, Inc., 2906 Colorado Ave., Santa Monica,
CA 90404, ann.hand@superleague.com.
6.7 Attorneys’
Fees. If any action at law or in equity (including,
arbitration) is necessary to enforce or interpret the terms of any
of the Transaction Agreements, the prevailing party shall be
entitled to reasonable attorneys’ fees, costs and necessary
disbursements in addition to any other relief to which such party
may be entitled.
6.8 Amendments and Waivers. Any
term of this Agreement may be amended, terminated or waived only
with the written consent of the Company and (a) the holders of at
least a majority of the then-outstanding Notes or (b) for an
amendment, termination or waiver effected prior to the Initial
Closing, Purchasers obligated to purchase at least a majority of
the Notes to be issued at the Initial Closing. Notwithstanding the
foregoing, Purchasers purchasing Additional Notes in a Subsequent
Closing may become parties to this Agreement in accordance with
Section 1.2(b) without any amendment of this Agreement pursuant to
this paragraph or any consent or approval of any other Purchaser
(other than any consent or approval explicitly required pursuant to
Section 1.2(b)). Any amendment or waiver effected in accordance
with this Section
6.8 shall be binding upon
each Purchaser and each transferee of the Notes, each future holder
of the Notes, and the Company.
6.9 Severability.
The invalidity or unenforceability of any provision hereof shall in
no way affect the validity or enforceability of any other
provision.
6.10 Delays
or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party under this Agreement, upon
any breach or default of any other party under this Agreement,
shall impair any such right, power or remedy of such non-breaching
or non- defaulting party nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or
in any similar breach or default thereafter occurring; nor shall
any waiver of any single breach or default be deemed a waiver of
any other breach or default theretofore
or
thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of any
party of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set
forth in such writing. All remedies, either under this Agreement or
by law or otherwise afforded to any party, shall be cumulative and
not alternative.
6.11 Entire
Agreement. This Agreement (including the Exhibits hereto),
and the other Transaction Agreements, constitute the full and
entire understanding and agreement between the parties with respect
to the subject matter hereof, and any other written or oral
agreement relating to the subject matter hereof existing between
the parties are expressly canceled.
6.12 Corporate
Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE
SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE
ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF
THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL,
UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY
SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE.
THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON THE QUALIFICATION BEING OBTAINED UNLESS THE SALE
IS SO EXEMPT.
6.13 Dispute
Resolution. The parties (a) hereby irrevocably and
unconditionally submit to the jurisdiction of the federal and state
courts located in Los Angeles County, California for the purpose of
any suit, action or other proceeding arising out of or based upon
this Agreement, (b) agree not to commence any suit, action or other
proceeding arising out of or based upon this Agreement except in
the federal and state courts located in Los Angeles County,
California, and (c) hereby waive, and agree not to assert, by way
of motion, as a defense, or otherwise, in any such suit, action or
proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that its property is exempt
or immune from attachment or execution, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of
the suit, action or proceeding is improper or that this Agreement
or the subject matter hereof may not be enforced in or by such
court.
WAIVER
OF JURY TRIAL: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE
SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY
DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL
NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER
WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL
6.14 No
Commitment for Additional Financing. The Company
acknowledges and agrees that no Purchaser has made any
representation, undertaking, commitment or agreement to provide or
assist the Company in obtaining any financing, investment or other
assistance, other than the purchase of the Notes as set forth
herein and subject to the conditions set forth herein. In addition,
the Company acknowledges and agrees that (a) no statements, whether
written or oral, made by any Purchaser or its representatives on or
after the date of this Agreement shall create an obligation,
commitment or agreement to provide or assist the Company in
obtaining any financing or investment, (b) the Company
shall not rely on any such statement by any Purchaser or its
representatives, and (c) an obligation, commitment or agreement to
provide or assist the Company in obtaining any financing or
investment may only be created by a written agreement, signed by
such Purchaser and the Company, setting forth the terms and
conditions of such financing or investment and stating that the
parties intend for such writing to be a binding obligation or
agreement. Each Purchaser shall have the right, in its sole and
absolute discretion, to refuse or decline to participate in any
other financing of or investment in the Company and shall have no
obligation to assist or cooperate with the Company in obtaining any
financing, investment or other assistance.
[Signature Pages
Follow]
IN
WITNESS WHEREOF, the parties have executed this Note Purchase
Agreement as of the date first written above.
|
|
COMPANY:
SUPER
LEAGUE GAMING, INC.
By: Ann
Hand
Chief
Executive Officer & President
Address:
2906 Colorado
Ave.
Santa
Monica, CA 90404
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|
SIGNATURE PAGE TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
-22-
IN
WITNESS WHEREOF, the Purchaser has executed this Note Purchase
Agreement as of the date first written above.
|
|
PURCHASER:
[Name
of Entity if applicable]
Name:
Title:
|
|
SIGNATURE PAGE TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
-24-
EXHIBIT A SCHEDULE OF PURCHASERS
|
Name
and Address of Purchaser
|
Original
Principal
Amount
of Note
|
No.
of Shares of Common Stock
Underlying
Common Stock
Purchase
Warrant
|
|
|
$
|
Equal
to one hundred percent (100.0%) of the investment amount in the
Notes exercisable at the lesser of (a) $3.60 per share, or (b) a
fifteen percent (15.0%) discount to the price per share
(“Exercise
Price”) of the Company’s initial public offering
(“IPO”).
For the avoidance of doubt, the actual number of shares of common
stock shall be set upon the final determination of the IPO price
per share.
|
|
EXHIBIT A TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
EXHIBIT B
FORM
OF 9% SECURED CONVERTIBLE PROMISSORY NOTE
|
EXHIBIT B TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
EXHIBIT C
FORM
OF CALLABLE COMMON STOCK PURCHASE WARRANT
|
EXHIBIT C TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
EXHIBIT D
FORM
OF SECURITY AGREEMENT
|
EXHIBIT D TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
EXHIBIT E
FORM
OF INTERCREDITOR AND COLLATERAL AGENT AGREEMENT
|
EXHIBIT E TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
EXHIBIT F
FORM
OF INVESTORS’ RIGHTS AGREEMENT
EXHIBIT
F TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
EXHIBIT G
DISCLOSURE
SCHEDULE
This
Disclosure Schedule is made and given pursuant to Section 2 of the Common Stock
Purchase Agreement, dated as of April 24, 2018 (the
“Agreement”),
between Super League Gaming, Inc. (the “Company”)
and the Purchasers listed on Exhibit A thereto. All
capitalized terms used but not defined herein shall have the
meanings as defined in the Agreement, unless otherwise provided.
The section numbers below correspond to the section numbers of the
representations and warranties in the Agreement; provided, however, that any information
disclosed herein under any section number shall be deemed to be
disclosed and incorporated into any other section number under the
Agreement where such disclosure would be appropriate and such
appropriateness is reasonably apparent from the face of such
disclosure. Nothing in this Disclosure Schedule is intended to
broaden the scope of any representation or warranty contained in
the Agreement or to create any covenant. Inclusion of any item in
this Disclosure Schedule (1) does not represent a determination
that such item is material or establish a standard of materiality,
(2) does not represent a determination that such item did not arise
in the ordinary course of business, (3) does not represent a
determination that the transactions contemplated by the Agreement
require the consent of third parties, and (4) shall not constitute,
or be deemed to be, an admission to any third party concerning such
item. This Disclosure Schedule includes brief descriptions or
summaries of certain agreements and instruments, copies of which
are available upon reasonable request. Such descriptions do not
purport to be comprehensive and are qualified in their entirety by
reference to the text of the documents described, true and complete
copies of which have been provided to the Purchasers or their
respective counsel.
EXHIBIT
G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
SECTION
2.1
Good
Standing Certificate
EXHIBIT
G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
Delaware
The FirstState
I,
JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO
HEREBY CERTIFY "SUPER LEAGUE GAMING, INC." IS
DULY
INCORPORTED
UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN
GOOD
STANDING AND
HAS A LEGAL CORPORATE EXISTENCE SO FAR AS THE
RECORDS
OF THIS OFFICE
SHOW AS OF THE SIXTEENTH DAY OF FEBRUARY, A.D.
2018.
AND I DO HEREBY FURTHER
CERTIFY THAT THE ANNUAL REPORTS HAVE
BEEN FILED TO DATE.
AND I HEREBY FURTHER CERTIFY THAT SAID "SUPER LEAGUES
GAMING INC" WAS INCORPORATED ON THE FIRST DAY OF OCTOBER,
A.D.
2014.
AND I HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES
HAVE
BEEN
PAID TO DA.re.
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41 8300
SR#
2013]
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Authentication:
202168294
Date:
02-16-18
SECTION
2.2(c)
Capitalization
As of
the close of business on April 24, 2018, and immediately prior to
the commencement to this Offering, the following represents all
issued and outstanding securities of the Company:
|
FULLY-DILUTED SUMMATION
|
Amount
|
Percentage
|
|
COMMON
STOCK
|
13,810,487
|
68.38%
|
|
OPTIONS
(1)
|
3,743,820
|
18.54%
|
|
RESTRICTED
STOCK UNITS
|
25,000
|
0.12%
|
|
WARRANTS
(2)
|
2,617,489
|
12.96%
|
|
TOTAL OUTSTANDING F-D (3)
|
20,196,796
|
100.00%
|
|
|
|
|
|
(1)
Weighted average exercise price of $2.92 per share; $11,008,852
total exercise value based on 3,763,820 options
outstanding.
|
|
(2)
Weighted average exercise price of $2.98 per share; $7,813,162
total exercise value based on 2,617,489 warrants
outstanding.
(3)
Excludes the
conversion of $3,000,000 of 9% Secured Convertible Promissory Notes
into shares of common stock that
were placed by the Company in February and March 2018. The
foregoing is being converted into this financing round on identical
terms.
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|
EXHIBIT G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
SECTION
2.8
Patents
& Trademarks
|
Patents
Pending
|
Matter
Name/Description
|
|
Application
No.
|
Filing Date
|
Priority Claim
|
|
|
001WO
(PCT –
International)
|
Game
System – Generating Game Projection Views
|
PENDING:
1. Entered
National Phase in the U.S. with 001C1
& 001C2
2. Case
Expires May 5, 2017
|
PCT/US2015/0
29532
|
05/06/2015
|
001PR
(Provisional) filed
11/5/14
|
1. John
Miller
2. David
Steigelfest
|
|
001C1
(U.S. Non-
Provisional)
|
Multi-User Game
System with Trigger- Based Generation of Projection
View
|
PENDING
1. Filed
with Prioritized Examination Request
2. Awaiting
Examination by Patent Office
|
15/179,868
|
06/10/2016
|
Continuation of
001WO
|
1. John
Miller
2. David
Steigelfest
|
|
001C2
(U.S. Non-
Provisional)
|
Multi-User Game
System with Character-Based Generation of Projection
View
|
PENDING
1. Filed
with Prioritized Examination Request
2. Awaiting
Examination by Patent Office
|
15/179,878
|
06/10/2016
|
Continuation of
001WO
|
1. John
Miller
2. David
Steigelfest
|
Registered
Trademarks:
i.
International Class
9 – Serial No. 86725324
ii.
International Class
28 – Serial No. 86725331
iii.
International Class
41 – Serial No. 86725326
2.
Super League Gaming
(Stylized)
a.
Registered with
European Registration Community Mark No. 14945976
3.
Super League Gaming
(logo)
a.
Registered with
European Registration Community Mark No. 14945976
|
EXHIBIT G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
4.
Pending Trademarks
– SLG City Teams
a.
Los Angeles
Shockwaves – stylized and with design; design
only
i.
International
Classes 9, 25, 28, and 41
b.
Dallas Dynamite -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
c.
Miami Menace -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
d.
Chicago Force -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
e.
Boston Revolt -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
f.
Denver Drakes -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
g.
Houston Blast -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
h.
Las Vegas Wildcards
- stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
i.
New York Fury -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
j.
Phoenix Blaze -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
k.
Seattle Siege -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
l.
San Francisco
Ionics - stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
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EXHIBIT G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
m.
Virtual Storm -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
n.
Beijing Brawler - -
stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
o.
Shanghai Roaring
Tigers - stylized and with design; design only
i.
International
Classes 9, 25, 28, and 41
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EXHIBIT G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
SECTION
2.12
Registration
Rights
1. The
investors in the Company’s Series A, B and C common stock
rounds hold unlimited piggyback registration rights, and in the
case of Series B and C round investors such parties hold demand
rights subject to certain restrictions.
|
EXHIBIT G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
SECTION
2.16(g)
Employee
Benefit Plan
None.
|
EXHIBIT G TO NOTE PURCHASE AGREEMENT SUPER LEAGUE GAMING, INC.
|
