SECURITIES EXCHANGE AGREEMENT
SECURITIES EXCHANGE AGREEMENT
This Securities Exchange Agreement (this "Agreement") is dated as of September 25, 2017, by and among PureSafe Water Systems, Inc. (the "Seller"), GME Innotainment, Inc. (the "Purchaser"), and Sustainable Resources Corporation, a Delaware corporation (the "Company").
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"), the Seller desires to sell to the Purchaser, and the Purchaser desires to purchase from the Seller one thousand (1,000) shares of the Company’s common stock, representing one hundred percent (100%) of the issued and outstanding shares of the Company’s common stock (the "Shares"), in exchange the issuance by Purchaser of a 5 year, $3,000,000 non-convertible promissory note, bearing interest at 5% per annum, in favor of the Seller, pursuant to a tax free exchange, as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Sellers and the Purchaser agree as follows:
ARTICLE I
DEFINITIONS
1.1Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings indicated in this Section 1.1:
"Business Day" means any day except Saturday, Sunday and any day which shall be a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
"Closing" means the closing of the purchase and sale of the Shares pursuant to Section 2.1.
"Closing Date" means the Business Day when this Agreement has been executed and delivered by the applicable parties thereto, and all conditions precedent to the Parties obligations pursuant to this Agreement have been satisfied or waived.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
“Shares” means one thousand (1,000) shares of common stock held by the Seller which are the subject of this Agreement.
"Liens" means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
"Person" means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.
ARTICLE II
EXCHANGE
2.1Closing. At the Closing, Purchaser shall deliver a non-convertible promissory note in the principal amount of three million dollars ($3,000,000), bearing interest at 5% per annum, a form of which is attached hereto as Exhibit A (the “Note”) to Seller, and the Seller shall deliver to Purchaser the Shares. The Purchaser shall grant to Seller a twelve (12) month option to purchase for cash up to thirty percent (30%) of the Purchaser’s then outstanding (at time of exercise) common stock at a price equal to seventy five percent (75%) of the average of trading prices for Purchaser’s common stock during the first thirty (30) days following the Close. Upon satisfaction of the conditions set forth in Section 2.2, the Closing shall occur at the offices of the Company, or such other location as the parties shall mutually agree, on or before October 1, 2017.
Royalty Agreement.Purchaser shall enter into a royalty agreement with Seller such that, beginning July 1, 2018 and thereafter, Seller shall receive five percent (5%) of the Gross Revenue earned by the Company on all product sales, as set forth in a Royalty Agreement attached hereto as Exhibit B.
2.2Closing Conditions.
(a)At each Closing the Seller shall deliver to the Purchaser:
ieach of this Agreement and the Royalty Agreement duly executed by the Seller and the Company;
ii certificates evidencing the Shares, registered in the name of the Purchaser.
(b)At the Closing the Purchaser shall deliver or cause to be delivered to the Seller the following:
ithis Agreement duly executed by the Purchaser; and
iithe Note, payable to the Seller; and
(c)All representations and warranties of each party contained herein shall remain true and correct as of the Closing Date and all conditions precedent to be performed by each party shall have been performed if due prior to such date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1Representations and Warranties of the Company. The Company hereby makes the following representations and warranties set forth below to the Purchaser:
(a)Subsidiaries. The Company has no direct or indirect subsidiaries.
(b)Organization and Qualification. The Company is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is not in violation of any of the provisions of its articles of organization, bylaws or other organizational or charter documents. The Company is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be,
i.could not, individually or in the aggregate adversely affect the legality, validity or enforceability of this Agreement,
ii.has had or could not reasonably be expected to result in a material adverse effect on the results of operations, assets, prospects, business or condition (financial or otherwise) of the Company, or
iii.could not, individually or in the aggregate, adversely impair the Company's ability to perform fully on a timely basis its obligations under this Agreement (any of (i), (ii) or (iii), a "Material Adverse Effect").
(c)Authorization- Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder or thereunder. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further consent or action is required by the Company. This Agreement has been (or upon delivery will be) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and general principles of equity..
(d)No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not:
i.conflict with or violate any provision of the Company' articles of organization, bylaws or other charter documents, or
ii.conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or
iii.result, in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected; except in the case of each of clauses (ii) and (iii), such as has not had or could not reasonably be expected to result in a Material Adverse Effect.
(e)Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and performance by the Company of this Agreement.
(f)Shares. The Shares are duly authorized and validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company other than any restrictions on transfer provided for in this Agreement.
(g)Capitalization. The capitalization of the Company as of the Closing Date is as described on Schedule 3.1(g) and will remain as of the Closing Date. The Company has not issued any Shares since such date. Except as set forth on Schedule 3.1(g), there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any Shares, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional Shares, or securities or rights convertible or exchangeable into Shares.
(h)Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an "Action") which:
i.adversely affects or challenges the legality, validity or enforceability of any of this Agreement or the Shares; or
ii.could reasonably be expected to result in a Material Adverse Effect. Neither the Company, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty that has had or could reasonably be expected to result in a Material Adverse Effect.
(i)Regulatory Permits. The Company possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their business, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect ("Material
Permits"), and the Company has not received any notice of proceedings relating to the revocation or modification of any Material Permit.
(j)Title to Assets. The Company has good and marketable title in fee simple to all real property owned by it that is material to the business of the Company and good and marketable title in all personal property owned by it that is material to the business of the Company, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company is held by it under valid, subsisting and enforceable leases of which the Company is in compliance, except where the failure to be in compliance would not reasonably be expected to result in a Material Adverse Effect.
(k)Patents and Trademarks. The Company has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights necessary or material for use in connection with its businesses and which the failure to so have has had or could reasonably be expected to result in a Material Adverse Effect (collectively, the "Intellectual Property Rights"). The Company has not received a written notice that the Intellectual Property Rights used by the Company violates or infringes upon the rights of any Person that has had or could reasonably be expected to result in a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights that has had or could reasonably be expected to result in a Material Adverse Effect.
(l)Insurance. The Company maintains no insurance.
(m)Certain Fees. No brokerage or finder's fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement, and the Company has not taken any action that would cause the Purchaser to be liable for any such fees or commissions.
(n)Financial Statements. The financial statements of the Company as supplied to the Purchasers ("Financial Statements") comply in all material respects with applicable accounting requirements with respect thereto as in effect at the time of filing. The Financial Statements have been prepared in accordance with GAAP, except as may
be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(o)Tax Status. The Company has made or filed all federal, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal, statute or local tax. None of the Company's tax returns is presently being audited by any taxing authority.
(p)Minute Books. The minute books of the Company made available to the Purchaser contain a complete summary of all meetings and written consents in lieu of meetings of directors and stockholders since the time of incorporation.
(q)Employee Benefits. The Company has never had any plans which are subject to ERISA.
(r)Business Records and Due Diligence. Prior to the Closing, the Company has delivered (or will deliver) to the Purchaser all records and documents relating to the Company, which the Company and possesses, including, without limitation, books, records, government filings, Tax Returns, Charter Documents, corporate records, stock records, consent decrees, orders, and correspondence, director and stockholder minutes, resolutions and written consents, stock ownership records, financial information and records, and other documents used in or associated with the Company.
(s)No Undisclosed Liabilities. Except as otherwise disclosed in the Company' Financial Statements, the Company has no other undisclosed liabilities whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or
otherwise. The Company represents that at the date of Closing, except as set forth on Schedule 3.1 (y) the Company shall have no liabilities or obligations whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise.
3.2Representations and Warranties of the Purchaser. The Purchaser represents and warrants as of the date hereof and as of the Closing Date to the Company as follows:
(a)Organization; Authority. The Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder. The execution, delivery and performance by the Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of the Purchaser. This Agreement, to which it is party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms except
ias limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally,
iias limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and
iiiinsofar as indemnification and contribution provisions may be limited by applicable law.
(b)Investment Intent. The Purchaser understands that the Shares are "restricted securities" and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Shares or any part thereof, has no present intention of distributing any of such Shares and has no arrangement or understanding with any other persons regarding the distribution of such Shares. The Purchaser is acquiring the Shares hereunder in the ordinary course of its business. The Purchaser does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Shares.
(c)No Undisclosed Liabilities. Except as otherwise disclosed to the Seller, Purchaser has no other undisclosed liabilities whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise. Purchaser represents that at the date of Closing, except as set forth on Schedule 3.2 (c), Purchaser shall have no liabilities or obligations whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise.
3.3Representations and Warranties of the Seller. The Seller represents and warrants as of the date hereof and as of the Closing Date to the Company as follows:
(a)Ownership. The Seller is the legal, beneficial and registered owner of the Shares, free and clear of any liens, security interest, charges or other encumbrances of any nature whatsoever. The Shares are validly issued, fully paid and non-assessable.
(b)No Conflict. The execution, delivery and performance by the Seller of this Agreement, and the consummation of the transactions contemplated hereby, will not
iconflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any contractual obligations or other agreements of the Seller, or
iiviolate any provision of law applicable to the Seller.
(c)Consents. No registration, filing with the consent or approval of, or other action by, any federal, state or other governmental authority, agency, regulatory body, third party or other Person is or will be required in connection with the execution, delivery and performance by the Seller of this Agreement and the consummation of the transactions contemplated hereby.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1Transfer Restrictions.
(a)The Note, or any portion thereof, may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Note, the Purchaser may require the transferor thereof to provide an opinion of counsel selected by the transferor and reasonably acceptable to Purchaser, the form
and substance of which opinion shall be reasonably satisfactory to the Purchaser, to the effect that such transfer does not require registration of such Note under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of the Seller under this Agreement.
(b)The Seller agrees to the imprinting, so long as is required by this Section 4.1(b), of the following legend on any certificate evidencing the Note:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
4.2Operating Assets.Purchaser shall segregate its current operating assets and associated liabilities, as necessary, into a separate subsidiary, potentially to be spun off at a later date.
4.3Financial Statements. At the Company’s sole expense, each of the Company and the Purchaser shall provide the necessary (audited) financials in order to satisfy the required regulatory and /or OTC disclosure within 60 days of the Closing. Purchaser shall file to become an alternative reporting entity with the OTC.
4.4Management.Yves Michel shall be appointed to appropriate positions as officer and director of the Purchaser at an annual salary of $150,000, plus a commission of 6.5% of all Gross Sales generated by him. Existing management and board of the Company shall resign at the Closing, but remain available to serve Purchaser, as necessary, upon mutually satisfactory terms.
4.5Balance Sheet.All existing debt obligations (loans) on the Purchaser’s balance sheet shall be converted to long term liabilities with a maturity date of no earlier than 2 years from Closing Date.
4.6Announcements.Prior to the issuance of any press release or any other public statement with respect to the contents of this Agreement, or the transaction contemplated hereby, each party shall agree in writing as to the content, manner and
timing of any such release or statement, except as may be required by law or applicable exchange.
ARTICLE V
MISCELLANEOUS
5.1Fees and Expenses. Except as otherwise set forth in this Agreement, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all stamp and other taxes and duties levied in connection with the sale of the Shares.
5.2Entire Agreement. This Agreement, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.3Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of
(a)the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 6:00 p.m. (New York time) on a Business Day;
(b)the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Business Day or later than 6:00 p.m. (New York time) on any Business Day;
(c)the second Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service; or
(d)upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.
5.4Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the parties, or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to
any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.
5.5Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof 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.
5.6Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.
5.7No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
5.8Governing Law; Venue; Waiver of Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the County of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. The parties hereby waive all rights to a trial by jury. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorney's fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
5.9Survival. The representations, warranties and covenants contained herein shall survive for a period of 12 months after the Closing Date and delivery of the Shares, as applicable.
5.10 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof
5.11Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
THE BALANCE OF THIS PAGE INTETIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
SELLER
PURESAFE WATER SYSTEMS, INC.
By: /s/ Leslie Kessler
Leslie Kessler
Chief Executive Officer
PURCHASER
GME INNOTAINMENT, INC.
By: /s/_Matthew Miller
Matthew Miller
Chief Executive Officer
COMPANY
SUSTAINABLE RESOURCES CORPORATION
By: /s/ Yves Michel
Yves Michel
President
