Purebase Corp 8-K, filed Aug 7, 2025
Purebase Corp (PUBC)
About this 8-K
Purebase Corp filed this 8-K on August 7, 2025, reporting on events of July 31, 2025.
Items reported
- Item 1.01: Entered into a material agreement
- Item 3.02: Unregistered sale of equity
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Item 1.01 Entry into a Material Definitive Agreement.
Loan Agreement
On July 31, 2025 (the “Effective Date”), Purebase Corporation, a Nevada corporation (“the Company”), together with Dockter Farms, LLC, a California limited liability company (“Dockter Farms”) entered into a loan agreement (the “Loan Agreement”) with J.J. Astor & Co., a Utah corporation (the “Lender”) for the aggregate principal amount of $500,000. The Company plans to use the proceeds from the loan for working capital and general corporate purposes.
As consideration for entering into the Loan Agreement, the Company will issue 750,000 shares of its common stock to the Lender (the “Bonus Shares”). If, ninety (90) days after the Effective Date, the market price of the Company’s common stock, as quoted on any applicable trading market or exchange, is not greater than fifty cents ($0.50) per share, the Company will issue an additional 750,000 shares to the Lender.
To induce the Lender to enter into the Loan Agreement, Mr. Scott Dockter, the Company’s Chief Executive Officer, executed an Affidavit of Confession of Judgment in favor of the Lender.
Secured Promissory Note
On the Effective Date the Company issued the Lender a secured promissory note (the “Note”) to evidence the amount loaned. The Note was issued with an original issue discount of $150,000, resulting in a principal amount of $650,000 and a purchase price of $500,000.
The Note has a maturity date of May 5,2026. The Note will be repaid in forty (40) week installments, of which (a) the first eight (8) weekly installments shall be in the amount of $8,125 each and (b) the remaining thirty-two (32) weekly installments shall be in the amount of $18,281.25 each, commencing August 5, 2025.
After an occurrence of an event of default, as described in the Note, it shall become immediately due and payable and the Company will pay a default amount of the sum of: (1) the amount obtained by multiplying (x) the then outstanding principal amount, by (y) 120%, plus (2) default interest accruing on such Default Principal Amount (as defined in the Note) at the default rate of interest of 19% per annum, compounded daily, and (3) all other amounts, costs, expenses, and liquidated damages due, if any.
While the Note remains outstanding, the Company may not, without the Lender’s written consent: (i) amend or modify the terms of any existing indebtedness, (ii) incur additional indebtedness, (iii) grant liens on any of its assets, or (iv) enter into transactions with any affiliates.
The Note will rank senior to all other indebtness of the Company.
Pledge and Security Agreement
The Company’s obligations under the Note are guaranteed and secured by a senior first lien security interest in all of the assets and properties of the Company, as well as all of the equity interests in Dockter Farms, pursuant to a pledge and security agreement (the “Security Agreement”) entered into by the Company, Dockter Farms, and the Lender. In addition, Dockter Farms granted the Lender a deed of trust on certain real property pursuant to a Second Deed of Trust. The Security Agreement also contains rights and obligations, representations and warranties, and events of default applicable to the Company that are customary for agreements of this type.
The foregoing descriptions of the Loan Agreement, the Note and the Security Agreement are qualified in their entirety by reference to the full text of such documents, copies of which are attached to this report as Exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
Reference is made to the disclosure set forth under Item 1.01 above, which disclosure is incorporated herein by reference.
The issuance of the Bonus Shares is exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, as transactions by an issuer not involving any public offering.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |
| 10.1 | Loan Agreement, dated as of July 31 2025, between Dockter Farms LLC, J.J. Astor & Co., and Purebase Corporation | |
| 10.2 | Secured Promissory Note, dated as of July 31, 2025, between Purebase Corporation, Dockter Farms LLC and J.J. Astor & Co., | |
| 10.3 | Pledge and Security Agreement, dated as of July 31, 2025, between Dockter Farms LLC, J.J. Astor & Co. and Purebase Corporation. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Purebase has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
| PUREBASE CORPORATION | ||
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| Dated: August 6, 2025 | By: | /s/ A. Scott Dockter |
| A. Scott Dockter | ||
| Chief Executive Officer | ||
Exhibit 10.1
LOAN AGREEMENT
This Loan Agreement (this “Agreement”) is dated as of July 31, 2025 (the “Agreement Date”) and is made and entered into by and between Purebase Corporation, a Nevada corporation (“Purebase”) and Dockter Farms LLC, a California limited liability company (“Dockter” and together with Purebase, the “Borrowers”) and J.J. Astor & Co., a Utah corporation (including its successors and permitted assigns, the “Lender”).
WHEREAS, the Borrowers wish to borrow the sum of $500,000 (the “Loan”) and the Borrowers wish to enter into this Agreement and the Exhibits hereto and issue to the Lender, the $650,000 Original Issue Amount secured installment promissory note in the form of Exhibit A hereto (the “Note”); and
WHEREAS, the Borrowers are willing to secure payment of the Note by (a) granting to the Lender a senior and first priority Lien on and security interest in all of the assets and properties of the Borrowers and all of the Equity Interests in Dockter, pursuant to the pledge and security interest be entered into by the Borrowers on the Funding Date and in the form of Exhibit B hereto (the “Security Agreement”); and (b) granting to the Lender a second deed of trust on 347 acres of real estate owned by Dockter and located at 14110 and 14140 Ridge Road, Sutter Creek, California (the “Property”) pursuant to the Second Deed of Trust to be entered into by Dockter on the Funding Date and in the form of Exhibit C hereto (the “Second Deed of Trust”); and
WHEREAS, the Borrowers and the Lender are executing and delivering this Agreement in reliance upon an exemption from securities registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), afforded by the provisions of Section 4(a)(2) and/or Rule 506(b) of Regulation D promulgated thereunder by the U.S. Securities and Exchange Commission.
NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Borrowers and the Lender agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. In addition to the terms defined elsewhere in this Agreement:
(a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Note (as defined herein), and (b) the following terms have the meanings set forth in this Agreement.
“$” means United States Dollars.
“Acceleration Event” has the meaning as that term is defined in the Note.
“Acceleration Notice” has the meaning as that term is defined in the Note.
“Action” shall have the meaning ascribed to such term in Section 3.01(i).
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Agreement Date” shall have the meaning as defined in the Recitals.
“Boards” means the board of directors, board of managers or manager of the Borrowers and the Subsidiaries, as the context may require or permit.
“Bonus Shares” shall mean 750,000 shares of Purebase Common Stock, which Bonus Shares may be increased to 1,500,000 shares of Purebase Common Stock, as hereinafter provided.
“Borrowers Disclosure Schedule” means the disclosure schedule submitted by the Borrowers to the Lender as exceptions to or disclosures in respect of the representations and warranties of the Borrowers set forth in this Agreement.
“Business Day” means any day except Saturday, Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of Utah are authorized or required by law or other governmental action to close. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
“Confession of Judgment Affidavit” means the affidavit to be executed on the Funding Date by Scott Dockter, the Chief Executive Officer of Purebase and the member and manager of Dockter on behalf of the Borrowers and in the form of Exhibit D attached hereto, which shall be delivered to the Lender to be held in escrow by the Lender and filed with the applicable federal court in California, and Utah to enter judgment against the Borrowers, if an only if, a default in payment by the Borrowers beyond any available Grace Period of the Weekly Installment Payments that are due and payable under the Note shall occur (a “Payment Default”), which Payment Default shall constitute an Event of Default thereunder.
“Closing” means the closing of the transactions contemplated by this Agreement pursuant to Section 2.01.
“Common Stock” means the common stock, $0.001 par value per share, of Purebase.
“Covenant Compliance Agreement” means the agreement dated the Agreement Date and in the form of Exhibit E attached hereto duly executed by Scott Dockter.
“Default Amount” shall have the meaning as that term is defined in the Note.
“Equity Interests” means all shares of capital stock of Purebase (whether denominated as Common Stock or preferred stock), and all equity interests, beneficial, partnership or membership interests of Dockter, as well as joint venture interests, participations or other ownership or profit interests in or equivalents (regardless of how designated) of each of the Borrowers, whether voting or non-voting.
“Equity Interest Equivalents” means any promissory note, debentures or warrants that are convertible into or exercisable for Equity Interests.
“Equity Investment” means any joint venture, partnership or other direct or indirect investments of the Borrowers in Equity Interests.
“Equity Receipts” means the aggregate amount of cash received by the Borrowers in consideration for any issuance or sale by either Borrowers on or after the Effective Date of (a) any of its Equity Interests or (b) any other note or other evidence of Indebtedness, security or instrument representing Equity Interests or any Equity Interest Equivalents in such Person, excluding any cash received (i) pursuant to an Exempt Issuance and reduced by any commissions or other transaction expenses paid by the Borrowers in connection with any such issuance or sale, or (ii) pursuant to any Indebtedness permitted hereunder.
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“Exempt Issuance” means and is limited to: (a) the issuance by the Borrowers of the Note and the Second Deed of Trust, (b) the issuance of the Senior Lender Note and Senior Deed of Trust, (c) the issuance by the Borrowers of Equity Interests or Equity Interest Equivalents in connection with any financing where the proceeds are used to reduce funded Indebtedness or to retire maturing Indebtedness (including Indebtedness owed to the Lender and the Senior Lender), or for working capital and/or other corporate purposes excluding the payment of any dividends or distributions to stockholders or Affiliates of the Borrowers, and (d) subject at all times to the prior written consent and approval of the Lender (i) securities issued in connection with any joint venture, commercial or collaborative relationship, or the acquisition or license by the Borrowers or other Borrowers of the securities, businesses, property or other assets of another person; and (ii) the issuance by the Borrowers of any Equity Interests or Equity Interest Equivalents to any directors, officers, employees or consultants of the Borrowers or other Borrowers in the form of profits interests restricted stock awards or options to purchase Equity Interests that are issued to any employee, officer, director or consultant for services provided to the Borrowers or other Borrowers in their capacity as such. For the avoidance of doubt, the term “Exempt Issuance” does not mean or include the issuance of any other Indebtedness for borrowed money or other debt securities, unless otherwise approved and consented to in writing in advance by the Lender.
“Flow of Funds Agreement” means the agreement between the Borrowers and the Lender in the form of Exhibit F annexed hereto.
“Funding Amount” means ninety-six percent (96%) of the amount of the Loan, after deduction of a $20,000 Origination Fee due from the Borrowers to the Lender, representing four percent (4.0%) of the Loan which shall be retained by the Lender at Closing of the issuance of the Note on the Funding Date for its own account, all as set forth in the Flow of Funds Agreement.
“Funding Date” means the Business Day when all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to: (i) the Lender’s obligations to fund the Loan and provide working capital to the Borrowers as provided in the Flow of Funds Agreement, and (ii) the Borrowers’ obligations to deliver the Note and the other Transaction Documents, shall have been satisfied or waived. Subject to the foregoing conditions being met the parties will undertake to consummate the Funding Date by 5:00 p.m. Pacific time on or before July 31, 2025, or as soon thereafter as is reasonably practicable.
“Funding Request” shall mean the written request of the Borrowers to the Lender to make the Loan which shall be provided to the Lender on a date which shall be not later than three (3) Business Days (or such shorter period as Lender may agree) prior to the Agreement Date.
“Knowledge of the Borrowers” and similar statements refer to the actual knowledge of any executive officer of the Borrowers after due inquiry of those persons employed by the Borrowers charged with administrative or operational responsibility for such matter.
“Grace Period” has the meaning as that term is defined in the Note.
“Indebtedness” has the meaning as that term is defined in the Note.
“Insolvency Proceeding” means (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of any Person’s creditors generally or any substantial portion of such Person’s creditors, in each case undertaken under U.S. federal, state or foreign law.
“Intellectual Property” has the meaning ascribed to such term in Section 3.01(n).
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“Liens” shall mean a lien, charge, security interest, deed of trust, mortgage, encumbrance, right of first refusal, preemptive right or other restriction or adverse claim of a third party against property.
“Loan” shall have the meaning as defined in the Recitals.
“Borrowers” shall have the meaning as defined in the Recitals.
“Material Adverse Effect” shall have the meaning ascribed to such term in Section 3.01(a) and Section 3.01(b).
“Net Proceeds” means the aggregate cash proceeds received by the Borrowers in connection with the applicable transaction, net of the direct costs relating to transaction, including, without limitation, legal, accounting, consulting, printing and investment banking fees, sales commissions and underwriters’ discounts, and taxes paid or payable as a result of the transaction.
“Note” has the meaning as defined in the Recitals.
“Obligations” means (a) the unpaid principal of and interest on the Note (including interest included in Default Amounts accruing after an Event of Default or the maturity of the Loan and Note, (b) interest accruing after the filing of any petition in bankruptcy, or the commencement of any Insolvency Proceeding relating to any Borrower, whether or not a claim for post-filing or post-petition interest is allowed or allowable in such proceeding) in respect of the Loan and Note and (c) all other obligations and liabilities (including any fees or expenses that accrue after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to any Borrower, whether or not a claim for post-filing or post-petition interest is allowed or allowable in such proceeding) of the Borrowers to the Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, payment obligations, fees, indemnities, costs, expenses (including all reasonable and documented out-of-pocket fees, charges and disbursements of counsel to the Lender) that are required to be paid by any Borrower pursuant any Loan Document or otherwise. For the avoidance of doubt, the Obligations shall not include any obligations arising under any warrants or other equity instruments issued by any Borrower to the Lender.
“Original Principal Amount” shall have the meaning as that term is defined in the Note.
“Origination Fee” shall mean (a) the sum of $20,000 which shall be deducted from the Funding Amount on the Funding Date of the Note and retained by the Lender.
“Outstanding Principal Amount” shall have the meaning as that term is defined in the Note.
“Payment Notice” shall have the meaning as that term is defined in the Note.
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“Permitted Indebtedness” means (a) the Borrowers’ Indebtedness to the Lender; (b) Indebtedness to the Senior Lender, (c) Indebtedness to vendors, suppliers, service providers or other trade creditors incurred in the ordinary course of business; (d) other Indebtedness of the Borrowers that is disclosed to the Lender in Section 3.01(g) and Section 3.01(r) of the Borrowers Disclosure Schedule and which is unsecured and junior in priority to the Borrowers’ Indebtedness to the Lender under this Agreement and the other Transaction Documents; (e) other Indebtedness of the Borrowers existing on the Agreement Date and disclosed to the Lender in Section 3.01(g) and Section 3.01(r) of the Borrowers Disclosure Schedule; (f) intercompany Indebtedness; (g) by endorsement of instruments or items of payment for deposit to the general account of such Person, (h) guaranteed Indebtedness incurred for the benefit of Borrowers and their Subsidiaries if the primary obligation is permitted by this Agreement, including guarantees with respect to Indebtedness permitted under this Agreement and other guarantees of operating leases or other contract obligations not constituting Indebtedness not prohibited by this Agreement, (i) additional unsecured Indebtedness (including purchase money Indebtedness and capital leases) in an aggregate outstanding amount not to exceed $50,000, (j) Indebtedness incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation or in respect of performance bonds or surety bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (k) Indebtedness incurred in respect of netting services and ordinary course of business overdraft protection in connection with deposit accounts permitted under the Transaction Documents; (l) contingent obligations incurred in the ordinary course of business with respect to surety and appeal bonds, performance bonds, and other similar obligations; (m) Indebtedness representing reasonable deferred compensation owed to officers, employees and directors incurred in the ordinary course of business and consistent with past practice; (n) the financing of insurance premiums in the ordinary course of business; (o) Indebtedness owing to banks or other financial institutions under corporate credit cards issued to officers and employees for business related expenses in the ordinary course of business, (p) Indebtedness with respect to health, disability and other employee benefits incurred in the ordinary course of business and consistent with past practice, and (q) extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (p) above, provided that the principal amount thereof is not increased or the payment terms thereof are not modified to impose more burdensome terms upon the Borrowers, as the case may be.
“Permitted Liens” means (i) Liens in favor of the Senior Lender, (ii) Liens in favor of the Lender, (iii) pledges or deposits made in the ordinary course of business to secure payment of workmen’s compensation, or to participate in any fund in connection with workmen’s compensation, unemployment insurance, old-age pensions or other social security programs, (iv) Liens of mechanics, materialmen, warehousemen, carriers, landlords or other nonconsensual restrictions imposed by operation of law (or contractual restatements of the same); (v) Liens for taxes, assessments or governmental or similar charges which have not been recorded/filed with the applicable secretary of state and which are not delinquent, are for sums less than $50,000 in the aggregate or which are being diligently contested in good faith and by appropriate proceedings and adequate reserves with respect thereto are maintain on the books of the Borrowers, (vi) Liens arising solely by virtue of any contractual or statutory or common law provisions relating to banker’s liens, rights to set off or similar rights and remedies as to deposit accounts, (vii) judgement liens that, to the extent not released, would reasonably be expected to result in a Material Adverse Effect, (viii) Liens consisting of zoning restrictions, easements or other restrictions on the use of real property, none of which materially impairs the use of such property or the value thereof, and none of which is violated in any material respect by existing or proposed structures or land use, (ix) customary anti-assignment provisions in leases and other contracts entered into in the ordinary course of business, (x) Liens arising from the filing of precautionary UCC financing statements relating solely to personal property leased pursuant to “true” operating leases entered into in the ordinary course of business of the Borrowers and their Subsidiaries, (xi) Liens in favor of the Lender, (xii) purchase money Liens or Liens securing capital leases, to the extent the underlying Indebtedness obligation constitutes Permitted Indebtedness, (xiii) other Liens existing as of the Funding Date that are disclosed on Section 3.01(r) to the Borrowers Disclosure Schedule, (xiv) leases or subleases granted to others in each case not interfering with the ordinary conduct of the business of any Borrowers or any of its Subsidiaries, (xv) deposits securing the performance of leases and other contracts in the ordinary course of business (but not to include any contracts in respect of the payment for borrowed money), and (xvi) Liens on insurance proceeds to the extent securing the permitted financing of insurance premiums in the ordinary course of business.
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“Person” means an individual or any corporation, partnership, trust, incorporated or un-incorporated association, joint-venture, limited liability company, joint-stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Property” means approximately 347 acres of real estate owned by Dockter, located at 14110 and 14140 Ridge Road, Sutter Creek, California, which has been appraised on September 6, 2024 at an estimated market value of $5,460,000 and is subject to a $1,600,000 First Deed of Trust held by the Senior Lender.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.
“Second Deed of Trust” means the deed of trust issued by Dockter in favor of the Lender dated as of the date hereof, and in the form of Exhibit C attached hereto.
“Security Agreement” means the Pledge and Security Agreement, dated as of the date hereof, and in the form of Exhibit B attached hereto.
“Senior Lender” means Integrity Private Capital Fund I, LLC, a California limited liability company, that holds a $1,600,000 First Deed of Trust on the Property.
“Senior Lender Financing Agreement” means the loan and security agreement dated March 27, 2025 among Dockter and the Senior Lender of which an aggregate of approximately $1,600,000 of Indebtedness is currently is outstanding as of the Agreement Date.
“Transaction Documents” means the collective reference to (a) this Agreement, (b) the Note, (c) the Security Agreement, (d) the Second Deed of Trust, (e) Confession of Judgment Affidavit, (f) the Covenant Compliance Agreement, (g) the Bonus Shares, and (h) the Funds Flow Agreement. All other appendices, exhibits and schedules hereto and thereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.
ARTICLE II
THE LOAN
Section 2.01 Funding Date.
(a) On the Funding Date, upon the terms and subject to the conditions set forth herein and in the other Transaction Documents to be executed and delivered by the parties hereto and thereto, the Lender hereby agrees to make the Loan of $500,000, less the $20,000 Origination Fee which shall be retained by the Lender, and the Borrowers hereby agrees to issue to the Lender the Note in the $650,000 Original Principal Amount, and the Lender hereby agrees to accept from the Borrowers the Note.
(b) On the Funding Date, the Lender shall deliver to the Borrowers, via wire transfer, of immediately available funds, an amount equal to approximately $480,000, representing the $500,000 Funding Amount, less the Origination Fee, as set forth in the Flow of Funds Agreement.
(c) The Borrowers shall deliver to the Lender such Note and other Transaction Documents to be delivered as of the Funding Date and the Lender shall deliver the other items set forth in Section 2.02 deliverable at the Closing.
(d) Upon satisfaction (or waiver) of the conditions set forth in Sections 2.02 and 2.03, the Funding shall occur as the parties shall mutually agree or may be closed remotely by electronic delivery of documents.
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Section 2.02 Funding Date Deliverables.
(a) By Lender. On or prior to the Funding Date, the Lender shall deliver or cause to be delivered to the Borrowers the following:
| (i) | this Agreement duly executed by the Lender; |
| (ii) | the Security Agreement, the form of which is attached hereto as Exhibit B, duly executed by the Lender; |
| (iii) | the Second Deed of Trust the form of which is attached hereto as Exhibit C, duly executed by the Lender; |
| (iv) | the $480,000 Funding Amount as set forth in the Flow of Funds Agreement, by wire transfer to the Borrowers pursuant to the wiring instructions to be provided by the Borrowers; and |
| (v) | the Flow of Funds Agreement duly executed by the Lender and in the form of Exhibit E attached hereto; and |
(b) By the Borrowers. On or prior to the Funding Date, the Borrowers shall deliver or cause to be delivered to the Lender:
| (i) | this Agreement, duly executed by an authorized officer and the member and manager on behalf of the Borrowers; |
| (ii) | the Note, the form of which is attached hereto as Exhibit A, registered in the name of the Lender or its registered assigns, in the $650,000 Original Principal Amount calculated in accordance herewith, duly executed by an authorized officer and the member and manager on behalf of the Borrowers; |
| (iii) | the Security Agreement, the form of which is attached hereto as Exhibit B, executed by a duly authorized officer and the member and manager of the Borrowers; |
| (iv) | the Second Deed of Trust, the form of which is attached hereto as Exhibit C, executed by a duly authorized officer and the member and manager of the Borrowers; |
| (v) | the Confession of Judgment Affidavit in the form of Exhibit D executed by Scott Dockter; which shall be held in escrow by the Lender and which may be filed by the Lender with the federal district court of Amador County, California and in the Utah Court if, and only if, a Payment Default (as defined therein) under the Note shall have occurred and be continuing; |
| (vi) | the Covenant Compliance Agreement in the form of Exhibit E executed by Scott Dockter; |
| (vii) | the Flow of Funds Agreement duly executed by the Borrowers and in the form of Exhibit F attached hereto; |
| (viii) | a stock certificate duly executed by the Chief Executive Officer and Secretary of Purebase evidencing the Bonus Shares registered in the name of the Lender and to be delivered to the Lender on the Funding Date; |
| (ix) | the Borrowers will cause to be delivered to the Lender certificates evidencing 100% of the Equity Interests of Dockter, duly executed by Scott Dockter, as the Pledged Collateral under the Security Agreement; and |
| (x) | an officer’s and members certificate of each of the Borrowers certifying its: (A) charter (or similar formation document); (B) good standing certificate in its state of incorporation or formation; (C) bylaws (or similar governing document); and (D) resolutions of its Board of Directors of Purebase and the Manager of Dockter approving and authorizing the execution, delivery and performance of the Transaction Documents to which it is (or is to be) a party. |
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Section 2.03 Funding Date Conditions.
(a) The obligations of the Borrowers hereunder in connection with the Closing are subject to the following conditions being met (it being understood that the Borrowers may waive any of the conditions for the Funding hereafter):
| (i) | the accuracy in all material respects on the Funding Date of the Lender’s representations and warranties contained herein; |
| (ii) | all obligations, covenants and agreements of the Lender required to be performed at or prior to the Funding Date shall have been performed; and |
| (iii) | the delivery by the Lender of the items set forth in Section 2.02(a) of this Agreement. |
(b) The obligations of the Lender hereunder in connection with the Funding are subject to the following conditions being met (it being understood that the Lender may waive any of the conditions for the Funding hereafter):
| (i) | the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) when made and on the Funding Date of the representations and warranties of the Borrowers contained herein (unless such representation or warranty is made as of a specific date, in which case, it shall be accurate as of such date); |
| (ii) | all obligations, covenants and agreements of the Borrowers required to be performed at or prior to the Funding Date shall have been performed; |
| (iii) | the delivery by the Borrowers of all of the items and documents set forth and described in Section 2.02(b) of this Agreement; |
| (iv) | there shall have been no Material Adverse Effect with respect to the Borrowers since the date hereof; and |
| (v) | the Borrowers shall furnish the Lender with the wiring instructions for the Funding Amount. |
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Borrowers. The Borrowers hereby jointly and severally represent and warrant to the Lender on behalf of the Borrowers, as well as any Subsidiary that is formed or acquired by any of the Borrowers following the Funding Date, that, other than as set forth in the applicable Section of the Borrowers Disclosure Schedule, the following representations are true and complete as of the date of the date hereof and as of the Funding Date.
(a) Organization and Qualification. Each of the Borrowers has been duly incorporated or otherwise organized, validly existing and in good standing under the laws of their respective states of formation. Each of the Borrowers have the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. None of the Borrowers are in violation or default of any of the provisions of its certificate of formation (or equivalent formation document) and limited liability company agreement (or equivalent governing document), each, as amended and in effect. A complete and correct copy of the certificate of formation (or equivalent formation document) and limited liability company agreement (or equivalent governing document) of the Borrowers, each as amended and in effect on the date of this Agreement and as will be in effect on the applicable Funding Date, is attached to the officer’s certificate referenced in Section 2.02(b) or Section 2.04(b), as applicable. There are no other organizational or charter documents of the Borrowers. The Borrowers are duly qualified to conduct business and are in good standing as a foreign corporation or other limited liability company 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, would not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document; (ii) a material adverse effect on the results of operations, assets, business or financial condition of the Borrowers taken as a whole; or (iii) a material adverse effect on the Borrowers’ ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions, (ii) conditions generally affecting the industry in which the Borrowers operates, (iii) any changes in financial or securities markets in general, (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof, (v) any pandemic, epidemics or human health crises (including COVID-19), (vi) any changes in applicable laws or accounting rules, (vii) the announcement, pendency or completion of the transactions contemplated by the Transaction Documents, or (viii) any action required or permitted by the Transaction Documents or any action taken (or omitted to be taken) with the written consent of or at the written request of the Lender.
(b) Authorization; Enforcement. Each of the Borrowers have the requisite power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents by the Borrowers and the consummation by them of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Borrowers and no further action is required by the Borrowers or their Board of Directors or Managers in connection therewith (other than the Required Approvals). Each Transaction Document to which the Borrowers are a party has been (or upon delivery will have been) duly executed by the Borrowers and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Borrowers enforceable against the Borrowers in accordance with their respective terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally; (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
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(c) No Conflicts. The execution, delivery and performance by the Borrowers of the Transaction Documents to which it is (or is to be) a party and the consummation by the Borrowers of the other transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Borrowers’ certificate of formation, limited liability company agreement or other organizational or charter documents; (ii) conflict with, or constitute a default under, result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of the Borrowers, 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, agreement or other instrument (evidencing Indebtedness of the Borrowers, or otherwise) or by which any property or asset of the Borrowers are bound or affected; or (iii) subject to the Required Approvals, conflict with or 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 Borrowers are subject (including federal and State Securities Laws and regulations), or by which any property or asset of the Borrowers are bound or affected; except in the case of each of clauses (ii) and (iii), such as would not reasonably be expected to result in a Material Adverse Effect.
(d) Filings, Consents and Approvals. The Borrowers are 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 their execution, delivery and performance of the Transaction Documents, other than: (i) such consents, waivers, or authorizations as have been obtained before the Closing; and (ii) the filing of Form D with the Securities and Exchange Commission and such filings as are required to be made under applicable State Securities Laws (collectively, the “Required Approvals”).
(e) Intentionally Omitted.
(f) Capitalization. As of the date hereof, the capitalization of the Borrowers and each of the Existing Subsidiaries are as set forth in Section 3.01(f) of the Borrowers Disclosure Schedule. The Borrowers have no Indebtedness, except as otherwise disclosed in Section 3.01(f) of the Borrowers Disclosure Schedule or other Permitted Indebtedness. The Borrowers have not issued any Equity Interests, Equity Interests Equivalents or other equity interests (other than Exempt Issuances) or (without duplication) pursuant to the conversion and/or exercise of Equity Interests Equivalents outstanding as of the date hereof, except as set forth on Schedule 3.01(f) of the Borrowers Disclosure Schedule. Except in instances where valid waivers have been obtained, no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as set forth in Section 3.01(f) of the Borrowers Disclosure Schedule, as of the date hereof, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any Equity Interests or the capital stock of the Subsidiary, or contracts, commitments, understandings or arrangements by which the Borrowers are or may become bound to issue additional Equity Interests or Equity Interests Equivalents or capital stock of the Subsidiary. The issuance and sale of the Note will not obligate the Borrowers to issue any securities to any Person (other than the Lender) and will not result in the right of any holder of Borrowers securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding Equity Interests of the Borrowers are duly authorized, validly issued, fully paid and non-assessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Except for the Required Approvals and waivers that have heretofore been obtained, no further approval or authorization of any stockholder, Board of Directors or other Person(s) is required for the issuance and sale of the Note hereunder.
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(g) Undisclosed Liabilities. The Borrowers have no liability, indebtedness, obligation, expense, claim or deficiency of any type, whether accrued, absolute, contingent, matured, unmatured or otherwise, required to be reflected in financial statements in accordance with GAAP, which individually or in the aggregate: (A) has not been reflected in the latest balance sheet included in the financial statements referenced hereinabove; or (B) has not arisen: (i) in the ordinary course of business, consistent with past practices, since the date of the latest balance sheet included in such financial statements in an amount that does not exceed $25,000 in any one case or $50,000 in the aggregate, (ii) pursuant to or in connection with this Agreement or other Transaction Document, or (iii) are executory performance obligations to be performed after the date hereof in the ordinary course of business pursuant to agreement(s) entered into in the ordinary course of business, consistent with past practices. The Borrowers are not in default with respect to any Indebtedness.
(h) Material Changes. Since the date of the latest financial statements made available to Lender prior to the date hereof: (A) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect; (B) the Borrowers have not incurred any liabilities (contingent or otherwise) other than (i) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice, and (ii) liabilities not required to be reflected in the Borrowers’ financial statements pursuant to generally accepted accounting principles (“GAAP”); (C) the Borrowers have not materially altered their method of accounting; (D) the Borrowers have not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock; and (E) the Borrowers have not issued any equity securities except in favor of an officer, director or consultant pursuant to an existing Borrowers equity incentive plans.
(i) Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Borrowers, threatened against or affecting the Borrowers, or any of their respective properties or assets before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which: (A) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents; or (B) if there were an unfavorable decision, would reasonably be expected to result in a Material Adverse Effect. In the last five (5) years, none of the Borrowers is or has been the subject of any Action involving: (x) a claim of breach of fiduciary duty; or (y) fraud (statutory or common law), embezzlement, misappropriation or conversion of property or rights, or any other crime involving deceit.
(j) Labor Relations. No labor dispute exists or, to the knowledge of the Borrowers, is imminent with respect to any of the employees of the Borrowers which would reasonably be expected to result in a Material Adverse Effect. None of the Borrowers’ employees is a member of a union that relates to such employee’s relationship with the Borrowers, and the Borrowers are not a party to any collective bargaining agreement. The Borrowers believe that their relationship with their employees is satisfactory. No executive officer, to the knowledge of the Borrowers, is in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement. To the best of the Borrowers’ knowledge, it is in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours.,.
(k) Compliance. Except as disclosed set forth in Section 3.01(k) of the Borrowers Disclosure Schedule, the Borrowers: (i) are neither in default under nor in violation of, nor has the Borrowers received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement (whether or not such default or violation has been waived) and is not being paid off in connection with the proceeds of the Loan; (ii) are not in violation of any order of any court, arbitrator or governmental body; and (iii) are not and has not been in material violation of any statute, law, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment.
(l) Regulatory Permits. The Borrowers possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct its business, except where the failure to possess such permits would not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and the Borrowers have not received any notice of proceedings relating to the revocation or modification of any Material Permit.
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(m) Title to Assets. The Borrowers have good and marketable title in fee simple to all real property and good and marketable title in all personal property owned by it that, in each case, is material to the business of the Borrowers, in each case free and clear of all Liens, except for Permitted Liens. Any real property and facilities held under lease by the Borrowers are held by it under valid, subsisting and enforceable leases with which the Borrowers are in compliance except as disclosed in Schedule 3.1(m) of the Borrowers Disclosure Schedule.
(n) Intellectual Property. (i) The Borrowers own, or have the right to use in the conduct of their business, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, software, websites, domain names, meta data, licenses and other intellectual property rights and similar rights as necessary or material for use in connection with its business as presently conducted (collectively, the “Intellectual Property”); (ii) the Borrowers have not received written notice that any of the Intellectual Property violates or infringes upon the intellectual property rights of any other Person; (iii) all Intellectual Property are enforceable by the Borrowers, and to the knowledge of the Borrowers there is no existing infringement by any other Person of any of the Intellectual Property, except where the failure to be so enforceable or for such infringements as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and (iv) the Borrowers have taken reasonable security measures to protect the secrecy, confidentiality and value of all of its Intellectual Property.
(o) Transactions with Officers, Directors and Employees. Except as set forth in Schedule 3.1(o) of the Borrowers Disclosure Schedule, none of the officers or directors of the Borrowers and, to the knowledge of the Borrowers, none of the employees of the Borrowers, is presently a party to any transaction with the Borrowers (other than for services as employees, officers and directors and related party Note), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from, any such officer, director or employee or, to the knowledge of the Borrowers, any entity in which any such officer, director or employee has a substantial interest or is an officer, director, trustee, member or partner, in each case other than for: (x) payment of salary or fees for services rendered; (y) reimbursement for expenses incurred on behalf of the Borrowers; and (z) other employee benefits, including stock option agreements under any stock option plan of the Borrowers.
(p) Indebtedness. All Indebtedness owed by the Borrowers to all other Persons is disclosed in Section 3.01(g) and Section 3.01(r) of the C Disclosure Schedule and, except as disclosed on such Schedules, is unsecured.
(q) Private Placement. Assuming the accuracy of the Lender’s representations and warranties set forth in Section 3.02, no registration under the Securities Act is required for the offer and sale of the Note by the Borrowers to the Lender as contemplated hereby.
(r) Investment Company. The Borrowers are not, and are not an Affiliate of, and immediately after receipt of payment for the Note will not be or be an Affiliate of, a Person required to register as an ‘investment company’ within the meaning of the Investment Company Act of 1940, as amended. The Borrowers shall conduct its business in a manner so that it will not be an “investment company” subject to registration under the Investment Company Act of 1940, as amended.
(s) Disclosure. All disclosure furnished by or on behalf of the Borrowers to the Lender regarding the Borrowers, its business and the transactions contemplated hereby, taken as a whole, is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading in any material respect.
(t) No Integrated Offering. Assuming the accuracy of the Lender’s representations and warranties set forth in Section 3.02, neither the Borrowers, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Note to be integrated with prior offerings by the Borrowers for purposes of the Securities Act which would require the registration of any such securities under the Securities Act.
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(u) Solvency. The Borrowers, on a consolidated basis, will not, after the Funding Date, incur debts beyond their general ability to pay such debts (including Permitted Indebtedness) as they mature in the ordinary course (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Borrowers have no knowledge of any facts or circumstances which lead it to believe that they will be required in the foreseeable future to file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction.
(v) Tax Status. Except as set forth in Section 3.01(v) of the Borrowers Disclosure Schedule, the Borrowers have filed all material federal, state and foreign income and franchise tax returns and has paid or accrued all material taxes shown as due thereon, and the Borrowers have no knowledge of a material tax deficiency which has been asserted or threatened against the Borrowers.
(w) No General Solicitation. Neither the Borrowers nor any Person acting on behalf of the Borrowers have offered or sold the Note by any form of general solicitation or general advertising. The Borrowers have offered the Note for sale only to the Lender.
(x) Insurance. As set forth in Section 3.01(x) of the Borrowers Disclosure Schedule, the Borrowers are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Borrowers reasonably believes to be prudent and customary in the businesses in which the Borrowers are engaged. The Borrowers have no reason to believe that they will not be able to renew insurance coverage as and when such coverage expires or to obtain sufficient coverage from similar insurers.
(y) Acknowledgment Regarding Lender’s Purchase of the Note. The Borrowers acknowledge and agree that the Lender is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Borrowers further acknowledge that Lender is not acting as a financial advisor or fiduciary of the Borrowers (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by Lender or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Lender’s purchase of the Note. The Borrowers further represents to the Lender that the Borrowers’ decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Borrowers and its representatives.
(z) No Disqualification Events. With respect to the Note and Bonus Shares to be offered and sold hereunder in reliance on Rule 506(b) under the Securities Act\, none of the Borrowers, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Borrowers, any beneficial owner of twenty percent (20%) or more of the Borrowers’ outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Borrowers in any capacity at the time of sale is subject to any of the ‘Bad Actor’ disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Borrowers have exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Borrowers have complied, to the extent applicable, with their disclosure obligations under Rule 506(e), and has furnished to the Lender a copy of any disclosures provided thereunder.
(aa) Other Covered Persons. The Borrowers are not aware of any Person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of any Securities.
(bb) Foreign Corrupt Practices. To the knowledge of the Borrowers, neither the Borrowers nor any agent or other person acting on behalf of the Borrowers, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds; (iii) failed to disclose fully any contribution made by the Borrowers (or made by any person acting on its behalf of which the Borrowers are aware) which is in violation of law; or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act.
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(cc) Office of Foreign Assets Control. Neither the Borrowers nor, to the Borrowers’ knowledge, any director or executive officer of the Borrowers are currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(dd) U.S. Real Property Holding Corporation. The Borrowers are not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Borrowers shall so certify upon Lender’s request.
(ee) Bank Holding Company Act. Neither the Borrowers nor any of its Affiliates is subject to the Bank Holding Company Act of 1956, as amended (“BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (“Federal Reserve”). Neither the Borrowers nor any of its Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Borrowers nor any of its Affiliates exercise a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(ff) Money Laundering. The operations of the Borrowers are and have been conducted at all times in compliance in all material respects with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Borrowers with respect to the Money Laundering Laws is pending or, to the knowledge of the Borrowers, threatened.
(gg) Representations. The representations and warranties of the Borrowers contained in this Agreement, and the certificate(s) furnished or to be furnished to the Lender at the Closing, when taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein not misleading in any material respect in light of the circumstances under which they were made, as supplemented from time to time. The Borrowers acknowledge and agree that the representations contained in section 3.02 shall not modify, amend or affect Lender’s right to rely on the Borrowers’ representations and warranties contained in this section 3.01 or elsewhere in this Agreement or any representations and warranties contained in any other Transaction Document, or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transactions contemplated hereby.
Section 3.02 Representations and Warranties of the Lender.
The Lender, for itself and for no other Person, hereby represents and warrants as of the date hereof and as of the Funding Date to the Borrowers as follows (unless as of a specific date therein, in which case they shall be accurate as of such date):
(a) Authority; Organization. The Lender has full power and authority to enter into this Agreement and to perform all obligations required to be performed by it hereunder. The Lender 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 the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by the Lender of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate or similar action on the part of the Lender. Each Transaction Document to which it is a party has been duly executed by the Lender, and when delivered by the Lender in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Lender, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies, and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(b) Own Account. The Lender understands that the Note and Bonus Shares, are “restricted securities” and have not been registered under the Securities Act or any applicable State Securities Law and is acquiring the Note and Bonus Shares, as principal for its own account and not with a view to or for distributing or reselling such Note and Bonus Shares, or any part thereof in violation of the Securities Act or any applicable State Securities Law, has no intention of assigning or distributing any of such Note and Bonus Shares in violation of the Securities Act or any applicable State Securities Law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such the Note and Bonus Shares (this representation and warranty not limiting the Lender’s right to sell the Note and/or Bonus Shares, in compliance with applicable federal and State Securities Laws) in violation of the Securities Act or any applicable State Securities Law. The Lender is acquiring the Note and Bonus Shares hereunder in the ordinary course of its business.
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(c) Non-Transferrable. The Lender agrees: (i) that the Lender will not sell, assign, pledge, give, transfer or otherwise dispose of the Note and Bonus Shares or any interest therein, or make any offer or attempt to do any of the foregoing, except in a private transaction which is exempt from the registration provisions of the Securities Act and all applicable State Securities Laws or if the Bonus Shares have been registered for resale by Purebase under the Securities Act, (ii) that the certificates representing the Note and Bonus Shares will bear a legend making reference to the foregoing restrictions, and (iii) that the Borrowers and their Affiliates shall not be required to give effect to any purported transfer of such the Note, except upon compliance with the foregoing restrictions.
(d) Lender Status. The Lender is an “accredited investor” as defined in Rule 501(a) under Regulation D of the Securities Act. The undersigned agrees to furnish any additional information requested by the Borrowers or any of its Affiliates to assure compliance with applicable U.S. federal and state securities laws in connection with the purchase and sale of the Note. Any information that has been furnished or that will be furnished by the undersigned to evidence its status as an accredited investor is accurate and complete and does not contain any misrepresentation or material omission.
(e) Experience of The Lender. The Lender, either alone or together with its representatives, has such knowledge, sophistication, and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Note, and has so evaluated the merits and risks of such investment. The Lender is able to bear the economic risk of an investment in the Note and, at the present time, is able to afford a complete loss of such investment.
(f) No Trading Market. The Lender acknowledges that there is currently no trading market for the Note and that none is expected to develop for the Note.
(g) General Solicitation. The Lender acknowledges that neither the Borrowers nor any other person offered to sell the Note and Bonus Shares to it by means of any form of general solicitation or advertising, including, but not limited to: (i) any advertisement, article, notice, or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or (ii) any seminar or meeting whose attendees were invited by any general solicitation or general advertising.
(h) Confidentiality. Other than to other Persons party to this Agreement and its advisors who have agreed to keep information confidential or have a fiduciary obligation to keep such information confidential, the Lender has maintained the confidentiality of all disclosures made to it in connection with the transaction (including the existence and terms of this transaction).
(i) Foreign Lender. The Lender is a United States person and not a foreign Lender.
(j) Information from Borrowers. The Lender and its investment managers, if any, have been afforded the opportunity to obtain any information necessary to verify the accuracy of any representations or information presented by the Borrowers in this Agreement and have had all inquiries to the Borrowers answered, and have been furnished all requested materials, relating to the Borrowers and the Offering and sale of the Note and anything set forth in the Transaction Documents. Neither the Lender nor the Lender’s investment managers, if any, have been furnished any offering literature by the Borrowers or any of its Affiliates, associates, or agents other than the Transaction Documents, and the agreements referenced therein.
(k) Speculative Nature of Investment; Risk Factors. THE LENDER UNDERSTANDS THAT AN INVESTMENT IN THE NOTE INVOLVES A HIGH DEGREE OF RISK. The Lender acknowledges that: (i) any projections, forecasts or estimates as may have been provided to the Lender are purely speculative and cannot be relied upon to indicate actual results that may be obtained through this investment; any such projections, forecasts and estimates are based upon assumptions which are subject to change and which are beyond the control of the Borrowers or its management, (ii) the tax effects which may be expected by this investment are not susceptible to absolute prediction, and new developments and rules of the Internal Revenue Service, audit adjustment, court decisions or legislative changes may have an adverse effect on one or more of the tax consequences of this investment, and (iii) the Lender has been advised to consult with his own advisor regarding legal matters and tax consequences involving this investment. The Lender represents that the Lender’s investment objective is speculative in that the Lender seeks the maximum total return through an investment in a broad spectrum of securities, which involves a higher degree of risk than other investment styles and therefore the Lender’s risk exposure is also speculative. The Note offered hereby is highly speculative and involves a high degree of risk and Lender should only purchase these securities if Lender can afford to lose its entire investment.
(l) Money Laundering. The operations of the Lender are and have been conducted at all times in compliance with the Money Laundering Laws, and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Lender with respect to the Money Laundering Laws is pending or, to the knowledge of the Lender, threatened.
The Borrowers acknowledges and agrees that the representations contained in Section 3.02 shall not modify, amend or affect the Lender’s right to rely on the Borrowers’ representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.
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ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
Section 4.01 Affirmative and Negative Covenants. Each of the Borrowers hereby covenants and agrees after the date hereof that until all obligations and Indebtedness owed to the Lender shall have been paid in full, without the prior written approval of the Lender:
(a) the Borrowers shall not incur any Indebtedness, other than Permitted Indebtedness a refinancing of the Indebtedness underlying the Senior Lender Financing Agreement which (i) does not increase the amount thereof or (ii) impose a Lien on or security interest in the assets and properties and/or the Equity Interest of the Borrowers which are secured under the Security Agreement, or as otherwise expressly permitted by this Agreement (“Additional Indebtedness”), unless in each case the net cash proceeds to the Borrowers or such Borrowers of such Additional Indebtedness shall be used to prepay 100% of the then Outstanding Principal Amount of the Note (including any Default Amount and accrued interest thereon), or the issuance such Additional Indebtedness shall otherwise be approved in advance by the Lender;
(b) the Borrowers shall not engage in the public or private sale of any securities, including convertible and non-convertible notes or debentures, Equity Interests or Equity Interests Equivalents, except Exempt Issuances, or as otherwise expressly permitted in this Agreement, the Note or other Transaction Documents, unless 100% of the net cash proceeds to the Borrowers from such sale or sales are used to repay all or a portion of the then Outstanding Principal Amount of the Note (including any Default Amount and accrued interest thereon);
(c) no payments of Indebtedness shall be paid to the stockholders or Purebase or any other Affiliate of the Borrowers, other than payments of deferred compensation to members of the board of directors, managers and employees of or consultants to the Borrowers;
(d) the Borrowers shall not permit any Person to have a Lien of any of the assets of any of the Borrowers, except for Permitted Liens;
(e) the Borrowers shall materially comply with all of the additional affirmative and negative covenants set forth in the Note and the Security Agreement; and
(f) in the event that following ninety (90) days from the Funding Date, the market price of the Purebase Common Stock as traded on any applicable trading market or exchange shall be not in excess of fifty cents ($0.50) per share, then and in such event Purebase shall issue to the Lender an additional 750,000 shares of Purebase Common Stock (the “Additional Bonus Shares”).
Section 4.02 Transfer Restrictions.
(a) The Lender agrees to the imprinting of a legend on any of the Note, in the following form:
THIS SECURITY HAS 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. [THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THIS SECURITY.
THIS SECURITY WAS ISSUED WITH “ORIGINAL ISSUE DISCOUNT” (AS DEFINED IN §1273(A) OF THE INTERNAL REVENUE CODE AND TREASURY REGULATION §1.1273-1PROMULGATED THEREUNDER). THE HOLDER CAN OBTAIN THE INFORMATION DESCRIBED IN TREASURY REGULATION § 1.1275-3 BY WRITING TO THE CHIEF FINANCIAL OFFICER OF THE BORROWERSS AT THE ADDRESS PROVIDED FOR IN THE LOAN AGREEMENT
Section 4.03 Use of Proceeds; Restrictions on Certain Payments. The Borrowers shall use the net proceeds hereunder for general working capital purposes and other general corporate purposes.
Section 4.04 Future Subsidiary. Any direct or indirect Subsidiary of the Borrowers that is formed or acquired after the Funding Date and before the Note shall have been repaid in full shall promptly thereafter execute and deliver (or otherwise join and agreed to be bound as a Debtor under) the Security Agreement.
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Section 4.05 Integration. The Borrowers shall not sell, offer for sale, or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Note to the Lender in a manner that would require the registration under the Securities Act of the issuance and sale of the Note to the Lender.
Section 4.06 Publicity. The Borrowers and the Lender shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and neither the Borrowers nor the Lender shall issue any such press release or otherwise make any such public statement without the prior written consent of the Borrowers with respect to any press release of the Lender, or without the prior consent of the Lender with respect to any press release of the Borrowers mentioning the Lender, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement, or communication.
Section 4.07 Indemnification of Lender. The Borrowers shall jointly and severally indemnify, reimburse and hold harmless the Lender and its partners, members, shareholders, officers, directors, employees and agents (and any other persons with other titles that have similar functions) (collectively, “Indemnitees”) from and against any and all direct losses, direct claims, liabilities, damages, penalties, suits, costs and expenses, of any kind or nature (including reasonable and documented out of pocket fees relating to the cost of investigating and defending any of the foregoing) imposed on, incurred by or asserted against such Indemnitee in any way related to or arising from or alleged to arise from: (i) any breach of any of the representations, warranties, covenants or agreements made by the Borrowers in this Agreement or in the other Transaction Documents and (ii) any action instituted against such Indemnitee in any capacity, or any of them or their respective Affiliates, by any stockholder of the Borrowers who is not an Affiliate of such Indemnitee, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Indemnitee’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Indemnitee may have with any such stockholder or any violations by such Indemnitee of state or federal securities laws or any conduct by such Indemnitee which results from the gross negligence or willful misconduct of the Indemnitee as determined by a final, non-appealable decision of a court of competent jurisdiction).
ARTICLE V
MISCELLANEOUS
Section 5.01 Termination. This Agreement may be terminated by the Lender by written notice to the Borrowers if the Closing has not been consummated on or before the third Business Day after the date of the execution and delivery of this Agreement by both the Borrowers and the Lender; provided that such termination will not affect the right of any party to sue for any breach by the other party.
Section 5.02 Fees and Expenses. The Borrowers shall bear the expenses of the Borrowers and the Lender incurred in connection with the negotiation, preparation, execution, delivery and performance of the Transaction Documents, including, without limitation, pre-agreed reasonable and documented out of pocket attorneys’ and consultants’ fees and expenses (including reasonable and documented out of pocket fees to Lender’s counsel), reasonable and documented out of pocket fees relating to any amendments or modifications of the Transaction Documents or any consents or waivers of provisions in the Transaction Documents, reasonable and documented out of pocket fees for the preparation of opinions of counsel, escrow fees, and costs of restructuring the transactions contemplated by the Transaction Documents. When possible, the Borrowers must pay these fees directly, including, but not limited to, any and all wire fees, otherwise the Borrowers must make immediate payment for reimbursement to the Lender for all fees and expenses immediately upon written notice by the Lender or the submission of an invoice by the Lender. In addition, the Borrowers shall pay the Origination Fees to the Lender as specified hereinabove.
Section 5.03 Entire Agreement. The Transaction Documents, 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.
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Section 5.04 Notices. Any notice, request, instruction or other document to be given hereunder by any party to the others shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, or by or email:
if to Lender:
J.J. Astor & Co.
26 S Rio Grande Street, #2072
Salt Lake City, Utah 84101
Attn: Michael Pope, CEO
Email: michael.p@jjastor.com
with a copy (which shall not constitute notice) to:
Michelman & Robinson LLP
10880 Wilshire Boulevard, 19th floor
Los Angeles CA 90024
Attn: Mehdi Sinaki, Esq.
Email: msinaki@mrllp.com
if to the Borrowers:
Purebase Corporation
3090 Boeing Rd.
Cameron Park, CA 95682
Attn: Scott Dockter, CEO
Email: sdockter@purebase.com
Docker Farms LLC
3090 Boeing Rd.
Cameron Park, CA 95682
Attn: Scott Dockter, Member and Manager
Email: sdockter@purebase.com
with a copy (which shall not constitute notice) to:
Crone Law Group PC
12121 Wilshire Blvd, Suite 810
Los Angeles, CA 90024
Attn: Cassi Olson Esq.
Email: colson@cronelawgroup.com
or to such other persons or addresses as may be designated in writing by the party to receive such notice as provided above.
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Section 5.05 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented, or amended except in a written instrument signed, in the case of an amendment, by the Borrowers and the Lender or, in the case of a waiver, by the party against whom enforcement of any such waived provision 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 any party to exercise any right hereunder in any manner impair the exercise of any such right.
Section 5.06 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Borrowers may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Lender (other than by merger). With consent of the Borrowers (unless an Event of Default is continuing), the Lender may assign any or all of its rights under this Agreement to any Person to whom the Lender assigns or transfers the Note, and/or participate any of such rights in connection with granting of any participation of the Note, provided that such transfer or participation complies with all applicable federal and State Securities Laws and that any such transferee or participant agrees in writing by the provisions of the Transaction Documents that apply to the Lender.
Section 5.07 No 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.
Section 5.08 Arbitration and Governing Law.
(a) Arbitration of Disputes. In the event and to the extent that a claim or dispute arises out of, or in relation to this Agreement or any other Transaction Document, including without limitation, the terms, construction, interpretation, performance, termination, breach, or enforceability of this Agreement or such Transaction Document(s), the Parties hereby each agree that the claim or dispute shall be, at the election of any Party within thirty (30) days after the claim or dispute arises, resolved by mandatory binding arbitration, except that Lender may, at its election, maintain any action for equitable relief in the United States District Court in Salt Lake City, Utah, including seeking the appointment of a receiver, judicial foreclosure, an accounting of Collateral, restraining orders or injunctions or other equitable relief without a right to compel arbitration by the Borrowers. To the extent that an arbitration occurs, the Parties agree that the arbitration shall be held in Salt Lake City, Utah and shall be administered by JAMS and the arbitration shall be conducted in accordance with the Expedited Procedures of the JAMS Comprehensive Arbitration Rules and Procedures except as otherwise agreed in this Agreement. The arbitrator shall be chosen in accordance with the procedures of JAMS, and shall base the award on applicable Utah law, and in connection therewith each of the Borrowers hereby expressly waive any right to seek an exemption from Nevada law or Utah law based on any public policies or principles of any other State. The Parties agree that the arbitration shall be conducted before a single arbitrator. Judgment on the award may be entered in any federal or state court in the State of Utah and in the federal courts of any other State, including Nevada or North Carolina. The Parties further agree that the costs of the arbitration shall be divided equally between the Borrowers and the Lender until a prevailing Party is determined, at which time the non-prevailing Party shall be charged the prevailing Party’s share of the arbitration fees. Each Party may pursue arbitration solely in an individual capacity, and not as a representative or class member in any purported class or representative proceeding. The arbitrator may not consolidate more than one Person’s claims and may not otherwise preside over any form of a representative or class proceeding. This arbitration section is governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16.
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(b) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of Utah, without regard to the principles of conflict of laws thereof. Each Party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a Party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced at the discretion of the plaintiff(s), exclusively in either United States District Court for the District of Clark County, Nevada (the “Nevada Court”), the United States District Court for the Central District of California, Western Division (the “California Court”) or the federal and state courts sitting in Salt Lake County, Salt Lake City, Utah (the “Utah Court”). Each Party hereto hereby irrevocably submits to the exclusive jurisdiction of the Nevada Court, the California Court or the Utah Court for 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 any of the Transaction Documents), 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 such Nevada Court, the California Court or the Utah Court, or that such Nevada Court, the California Court or the Utah Court are 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 other manner permitted by applicable law. If any Party shall commence an Action or Proceeding to enforce any provisions of the Transaction Documents, then the prevailing Party in such Action or Proceeding shall be reimbursed by the other Party for its reasonable and documented out of pocket attorney’s fees and other reasonable and documented out of pocket costs and expenses incurred in the investigation, preparation and prosecution of such Action or Proceeding.
Section 5.09 Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Note and other Transaction Documents.
Section 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 or by e-mail delivery of a “.pdf” format data file, 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 or “.pdf” signature page was an original thereof.
Section 5.11 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
Section 5.12 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever the Lender exercises a right, election, demand or option under a Transaction Document and the Borrowers does not timely perform its related obligations within the periods therein provided, then the Lender may rescind or withdraw, in its sole discretion from time to time upon written notice to the Borrowers, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.
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Section 5.13 Replacement of the Note. If any certificate or instrument evidencing the Note is mutilated, lost, stolen or destroyed, the Borrowers shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Borrowers of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable and documented out of pocket third-party costs (including customary indemnity) associated with the issuance of such replacement the Note.
Section 5.14 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Lender and the Borrowers will be entitled to seek specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.
Section 5.15 Payment Set Aside. To the extent that the Borrowers makes a payment or payments to the Lender pursuant to any Transaction Document or the Lender enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Borrowers, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
Section 5.16 Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto. In addition, each and every reference to share prices and shares of Equity Interests in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Equity Interests that occur after the date of this Agreement.
Section 5.17 Headings. 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.
Section 5.18 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be duly executed by their respective authorized signatories as of the Agreement Date set forth above.
| Borrowers: | ||
| PUREBASE CORPORATION | ||
| By: | ||
| Name: | Scott Dockter, | |
| Title: | Chief Executive Officer | |
| DOCKTER FARMS LLC | ||
| By: | ||
| Name: | Scott Dockter, | |
| Title: | Member and Manager | |
| Lender: | ||
| J.J. ASTOR & CO. | ||
| By: | ||
| Name: | Michael Pope | |
| Title: | Chief Executive Officer | |
BORROWERS DISCLOSURE SCHEDULES
Schedule 3.01(f)
Capitalization
| Borrowers | Record Owner of all Outstanding Equity Securities of the Borrowers | Authorized Equity Securities | Issued and Outstanding Equity Securities |
Outstanding options, warrants, scrip rights to subscribe to, calls or commitments:
Schedule 3.01(g)
Undisclosed Liabilities
Schedule 3.01(k)
Compliance
Schedule 3.01(m)
Title to Assets
Schedule 3.01(o)
Transactions with Officers, Directors and Employees
Schedule 3.01(p)
Indebtedness
Schedule 3.01(r)
Liens
Schedule 3.01(w)
Tax Status
Schedule 3.01(x)
Insurance
| Insurance | Policy Period | Type of Insurance |
Exhibit 10.2
Exhibit A to Loan Agreement
Senior Secured Note
THIS SECURITY HAS 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. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THIS SECURITY.
| Original Issue Date: July 31, 2025 | Funding Amount | $ | 480,000 | |||
| Final Maturity Date: May 5, 2026 | Original Principal Amount: | $ | 650,000 |
PUREBASE CORPORATION AND DOCKTER FARMS LLC
JUNIOR SECURED NOTE
THIS JUNIOR SECURED NOTE is a duly authorized and validly issued promissory note of Purebase Corporation, a Nevada corporation (“Purebase”) and Dockter Farms LLC, a California limited liability company (“Dockter” and together with Purebase, the “Borrowers”), designated as its senior secured note (the “Note”).
FOR VALUE RECEIVED, the Borrowers jointly and severally promises to pay to the order of J.J. Astor & Co., (the “Lender”) or any other subsequent holder of this Note (together with the Lender, the “Holder”), the Original Principal Amount of this Note as set forth above (the “Original Principal Amount”) in forty (40) weekly installments of which (a) the first eight (8) weekly installments shall be in the amount of $8,125 each and (b) the remaining thirty-two (32) weekly installments shall be in the amount of $18,281.25 each (collectively, the “Weekly Installment Payments”) commencing on August 5, 2025 (being seven calendar days after the Funding Date) and thereafter on each succeeding Tuesday of the next succeeding thirty-nine (39) weeks until the Final Maturity Date as set forth above, or such earlier date as this Note is required or permitted to be repaid as provided hereunder (as the case may be, the “Maturity Date”). This Note is subject to the following additional provisions:
Section 1. Definitions. This is the Initial Note, as defined in the Loan Agreement. For the purposes hereof, in addition to the terms defined elsewhere in this Note: (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Loan Agreement, and (b) the following terms shall have the following meanings:
“Bankruptcy Event” means any of the following events: (a) either of the Borrowers commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to either of the Borrowers, (b) there is commenced against the Borrowers any such case or proceeding that is not dismissed within 60 days after commencement, (c) either of the Borrowers is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) either of the Borrowers suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) either of the Borrowers thereof makes a general assignment for the benefit of creditors, (f) either of the Borrowers calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts, (g) either of the Borrowers admits in any legal proceeding that it is generally unable to pay its debts as they become due, (h) either of the Borrowers, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
“Business Day” shall have the meaning as that term is defined in the Loan Agreement.
“Change of Control Transaction” means the occurrence after the date hereof of any of: (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock or membership interest of either of the Borrowers, by contract or otherwise) of in excess of 50% of the voting securities of the Borrowers , (b) either of the Borrowers merges into or consolidates with any other Person, or any Person merges into or consolidates with either of the Borrowers and, after giving effect to such transaction, the stockholders or member of the Borrowers immediately prior to such transaction own less than 50% of the aggregate voting power of the Borrowers or the successor entity of such transaction, (c) either of the Borrowers sells or transfers all or substantially all of its assets to another Person and the stockholders or member of the Borrowers immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction, or (d) the execution by either of the Borrowers of an agreement to which the Borrowers is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.
“Confession of Judgment Affidavit” shall have the meaning as that term is defined in the Loan Agreement.
“Contingent Obligation” means, with respect to either of the Borrowers any obligation of such Borrowers guaranteeing or intended to guarantee any Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, (a) the direct or indirect guaranty, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Borrowers of the obligation of a primary obligor, (b) the obligation to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement, and (c) any obligation of such Borrowers, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, assets, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term “Contingent Obligation” shall not include any product warranties extended in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation with respect to which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto (assuming such Borrowers is required to perform thereunder), as determined by such Borrowers in good faith.
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“Default Amount” means, with respect to this Note, the sum of: (1) the amount obtained by multiplying (x) the Outstanding Principal Amount of this Note, by (y) 120% (the “Default Principal Amount”), plus (2) default interest accruing on such Default Principal Amount at the default rate of interest of 19% per annum, compounded daily, and (3) all other amounts, costs, expenses, and liquidated damages due under or in respect of this Note, if any.
“Equity Interests” and “Equity Interests Equivalents” shall have the meanings as those terms are defined in the Loan Agreement.
“Equity Receipts” shall have the meaning as that term is defined in the Loan Agreement.
“Event of Default” shall have the meaning set forth in Section 5(a).
“Indebtedness” means, with respect to any Person, without duplication, (a) all indebtedness of such Person for borrowed money; (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables and accrued expenses or other accounts payable incurred in the ordinary course of such Person’s business); (c) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments or upon which interest payments are customarily made; (d) all reimbursement, payment or other obligations and liabilities of such Person created or arising under any conditional sales or other title retention agreement with respect to property used and/or acquired by such Person, even though the rights and remedies of the lessor, seller and/or lender thereunder may be limited to repossession or sale of such property, (e) all Capitalized Lease Obligations of such Person; (f) all obligations and liabilities, contingent or otherwise, of such Person, in respect of letters of credit, acceptances and similar facilities other than obligations and liabilities that are cash collateralized on terms reasonably satisfactory to the required lenders; (g) all net obligations and liabilities, calculated on a basis reasonably satisfactory to the Lender and in accordance with accepted practice, of such Person under hedging agreements; (h) all monetary obligations under any receivables factoring, receivable sales or similar transactions and all monetary obligations under any synthetic lease, tax ownership/operating lease, off-balance sheet financing or similar financing; (h) all Contingent Obligations; and (i) all obligations referred to in clauses (a) through (j) of this definition of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien upon property owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, provided, however that if recourse in respect of any Indebtedness of the foregoing is limited to specific assets, then such Indebtedness shall be deemed to be equal to the lesser of (x) the aggregate unpaid amount of such Indebtedness and (y) the fair market value of the asset encumbered thereby as determined by such Person in good faith; provided further, that Indebtedness shall not include (i) purchase price holdbacks arising in the ordinary course of business in respect of a portion of the purchase price of an asset to satisfy warranties or other unperformed obligations of the seller of such asset, (ii) endorsements of checks or drafts arising in the ordinary course of business, and (iii) any earnout or similar purchase price obligation until such obligation is required to be reflected on the balance sheet of such Person in accordance with GAAP. The Indebtedness of any Person shall include the Indebtedness of any partnership of or joint venture in which such Person is a general partner or a joint venturer, so long as, in the case of a joint venture, such Indebtedness is recourse to any Borrowers. For the avoidance of doubt, “Indebtedness” shall exclude operating leases.
“Loan Agreement” means the Loan Agreement, dated as of July 29, 2025 by and among the Borrowers and the Lender, as the original Holder of the Note, as amended, modified, or supplemented from time to time in accordance with its terms.
“Maturity Date” shall mean the earlier to occur of (a) the occurrence of an Event of Default, or (b) May 5, 2026, being forty (40) weeks after the Funding Date.
“Minimum Installment Payment” has the meaning set forth in Section 2(a).
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“Original Issue Date” means the date of the first issuance of this Note, regardless of any transfers of any Note and regardless of the number of instruments which may be issued to evidence such Note.
“Original Principal Amount” means $650,000 as set forth on the first page of this Note
“Outstanding Principal Amount” means at any point in time the Original Principal Amount less all Minimum Installment Payments made or any prepayment(s) of this Note.
“Payment Amount” means, at any point in time with respect to the Note at any time, the sum of: (a) the Original Principal Amount of this Note or the Default Amount (as applicable), at such time, less (b) all Minimum Installment Payments and any prepayments previously made, including any Prepayment Discount if any, plus (c) all other amounts, costs, expenses, and liquidated damages due under or in respect of this Note.
“Principal Amount” means, with respect to the Note at any time, the then Outstanding Principal Amount of such Note; provided that from and after the occurrence of an Event of Default the Principal Amount shall be the Default Amount.
“Scheduled Payment Date” means, on Tuesday of each week from and after the Original Issue Date, commencing with August 5, 2025 and continuing on each of the following Tuesday of each week for the next succeeding thirty-nine (39) consecutive weeks.
“Utah Courts” shall have the meaning set forth in Section 6(d).
Section 2. Payment, Prepayment; Interest.
(a) On each Scheduled Payment Date, the Borrowers shall make Weekly Installment Payments of the Outstanding Principal Amount under this Note in an amount of not less than (a) $8,125 each in the first eight (8) weeks and (b) $18,281.25 each in the remaining thirty-two (32) weeks (each a “Minimum Installment Payment”) until the entire Payment Amount (or, if an Event of Default shall have previously occurred, the entire Default Amount) shall have been paid in full. On the Maturity Date, the entire then Payment Amount (or, if an Event of Default shall have previously occurred, the entire Default Amount) shall become immediately due and payable.
(b) This Note shall be immediately payable in full upon a Change of Control Transaction.
(c) The Outstanding Principal Amount of this Note, plus accrued interest hereon shall be subject to mandatory prepayment to the extent of any Equity Receipts received by either of the Borrowers from consummation of the sale additional Indebtedness for borrowed money or from the sale of Equity Interests or Equity Interests Equivalents, whether pursuant to Sale of Control or in connection with any public of private financing (each a “Mandatory Prepayment”). Any such Mandatory Prepayment shall be applied to the Weekly Installments of Minimum Installment Payments in the order of last maturing Indebtedness.
(d) From and after the occurrence of an Event of Default, the Outstanding Principal Amount of this Note shall increase to the Default Amount and this Note shall bear interest accruing at a default rate of interest equal to nineteen percent (19%) per annum, calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, compounded daily, and shall accrue daily until payment in full of the Default Amount.
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Section 3. Registration of Transfers and Exchanges.
(a) Different Denominations. This Note may be exchanged by the Holder for an equal aggregate Principal Amount of Note of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.
(b) Investment Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in the Loan Agreement and may be transferred or exchanged only in compliance with the Loan Agreement and applicable federal and state securities laws and regulations.
(c) Reliance on Note Register. Prior to due presentment for transfer to the Borrowers of this Note, the Borrowers and any agent of the Borrowers may treat the Person in whose name this Note is duly registered on the official Note register of the Borrowers as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Borrowers nor any such agent shall be affected by notice to the contrary.
Section 4. Covenants. As long as any portion of this Note remains outstanding, unless the Lender shall have otherwise given prior written consent, the Borrowers shall not directly or indirectly:
(a) violate any of the affirmative or negative covenants set forth in the Loan Agreement or other Transaction Documents, including, without limitation, the Second Deed of Trust and the Security Agreement;
(b) cause any of the Borrowers to amend articles of incorporation or by-laws or the certificate of formation or LLC Agreement, in any manner that materially and adversely affects any rights of the Lender or other holders of Note;
(c) amend, restate or otherwise modify any of the existing terms of any outstanding Indebtedness, whether or not set forth in the Borrowers Disclosure Schedule, except to the extent that they are expressly permitted under the Loan Agreement;
(d) issue, repay, repurchase or offer to repay, repurchase or otherwise acquire Equity Interests or Equity Interests Equivalents, except to the extent that they are Exempt Issuances and as expressly permitted under the Loan Agreement;
(e) incur, repay, repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than as expressly permitted under the Loan Agreement, provided that, such payments shall not be permitted if, at such time, or after giving effect to such payment, any Event of Default exist or occur;
(f) grant or suffer to exist any Liens on its property or assets, other than Permitted Liens;
(g) pay cash dividends or distributions on any Equity Interests or Equity Equivalents;
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(h) enter into any transaction with any Affiliate of the Borrowers, unless such transaction is approved in advance by the Lender and made on an arm’s-length basis and expressly approved by a majority of the disinterested Members of the Borrowers (even if less than a quorum otherwise required for board approval); or
(i) enter into any agreement or commitment with respect to any of the foregoing.
Section 5. Events of Default.
(a) “Event of Default” means, wherever used herein, the occurrence of any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
(i) any default in the payment of any Principal Amount, or Default Amount (as applicable) as and when the same shall become due and payable (whether on a Scheduled Payment Date, the Maturity Date, by Mandatory Prepayment, acceleration or otherwise) which default, solely in the case of required payment of the Minimum Weekly Installment on any Scheduled Payment Date, is not fully cured within two (2) Business Days (the “Grace Period”); provided, that there shall only be two (2) Grace Periods permitted under this Note;
(ii) either of the Borrowers shall fail to observe or perform any other covenant or agreement contained in the Loan Agreement, the Security Agreement, the Second Deed of Trust or this Note, which failure is not cured, if possible to cure, within the earlier to occur of (A) two (2) Business Days after notice of such failure sent by the Lender or by any other holder of Note to the Borrowers and (B) two (2) Business Days after the Borrowers has become aware of such failure;
(iii) a default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall occur under the Loan Agreement, this Note or any of the other Transaction Documents or under other Permitted Indebtedness;
(iv) any other holder of Indebtedness of the Borrowers shall declare a default and accelerate payment of any such Indebtedness;
(v) any representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Lender or any other Holder shall be untrue or incorrect in any material respect as of the date when made;
(vi) either of the Borrowers shall be subject to a Bankruptcy Event;
(vii) either of the Borrowers shall default (following the expiration of all cure or waiting periods and the provision of all notices required under the applicable agreement(s)) on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, capital lease, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any Indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $50,000, whether such Indebtedness now exists or shall hereafter be created, and (b) results in such Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable; or
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(viii) a final non-appealable judgment by any competent court for the payment of money in an amount of at least $50,000 is rendered against either of the Borrowers, and the same remains undischarged and unpaid for a period of 45 days during which execution of such judgment is not effectively stayed.
(b) Remedies Upon Event of Default. If any Event of Default occurs and is continuing, this Note shall become, at the Holder’s election, immediately due and payable in the Default Amount, and the Holder shall have the right, to exercise its rights and remedies in connection with this Note and under the other Transaction Documents, including enforcing its rights under the Security Agreement and Second Deed of Trust and is expressly authorized to enter the Confession of Judgment Affidavit with the Nevada Court, the California Court and/or the Utah Court. Upon the payment in full of the Default Amount in accordance with the terms of this Note, the Holder shall promptly surrender this Note to or as directed by the Borrowers. In connection with such acceleration or exercise described herein, the Holder need not provide, and each of the Borrowers hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law, including entering the Confession of Judgment Affidavit with the Nevada Court, in the federal court located in Amador County California Court and/or the Utah Court and foreclosing on the Property under the Second Deed of Trust. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 5(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
Section 6. Miscellaneous.
(a) Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder shall be in writing and delivered personally, by email attachment, or sent by a nationally recognized overnight courier service, addressed to the Borrowers, at the address set forth on in the Loan Agreement, or such other, email address, or address as the Borrowers may specify for such purposes by notice to the Holder delivered in accordance with this Section 6(a). Any and all notices or other communications or deliveries to be provided by the Borrowers hereunder shall be in writing and delivered personally, by facsimile, by email attachment, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number, email address or address of the Holder appearing on the books of the Borrowers, or if no such facsimile number or email attachment or address appears on the books of the Borrowers, at the principal place of business of such Holder, as set forth in the Loan Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of: (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment to the email address set forth on the signature pages attached hereto prior to 5:30 p.m. (Eastern time) on any date, (ii) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment to the email address set forth on the signature pages attached hereto on a day that is not a Business Day or later than 5:30 p.m. (Eastern time) on any Business Day, (iii) the second Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.
(b) Absolute Obligation, Security and Ranking. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Borrowers, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Borrowers and is secured by and under the Subsidiary Agreement. This Note is a direct debt obligation of the Borrowers and ranks senior to all other to all other evidence of Indebtedness of the Borrowers or any of its Subsidiaries.
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(c) Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Borrowers shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the Principal Amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, and customary indemnity reasonably satisfactory to the Borrowers.
(d) Arbitration of Disputes. In the event and to the extent that a claim or dispute arises out of, or in relation to this Agreement or any other Transaction Document, including without limitation, the terms, construction, interpretation, performance, termination, breach, or enforceability of this Agreement or such Transaction Document(s), the Parties hereby each agree that the claim or dispute shall be, at the election of any Party within thirty (30) days after the claim or dispute arises, resolved by mandatory binding arbitration in Utah, except that Lender may, at its election, maintain any action for equitable relief in the Third Judicial District, Salt Lake County, Utah, including seeking the appointment of a receiver, judicial foreclosure, an accounting of Collateral, restraining orders or injunctions or other equitable relief without a right to compel arbitration by the Borrowers or any Subsidiary Guarantor. To the extent that an arbitration occurs, the Parties agree that the arbitration shall be administered by JAMS and the arbitration shall be conducted in accordance with the Expedited Procedures of the JAMS Comprehensive Arbitration Rules and Procedures except as otherwise agreed in this Agreement. The arbitrator shall be chosen in accordance with the procedures of JAMS, and shall base the award on applicable Utah law, and in connection therewith each of the Borrowers hereby expressly waive any right to seek an exemption from Utah law based on any public policies or principles of any other State. The Parties agree that the arbitration shall be conducted before a single arbitrator. Judgment on the award may be entered in any federal or state court in the State of Utah and in the federal courts of any other State. The Parties further agree that the costs of the arbitration shall be divided equally between the Borrowers and the Lender until a prevailing Party is determined, at which time the non-prevailing Party shall be charged the prevailing Party’s share of the arbitration fees. Each Party may pursue arbitration solely in an individual capacity, and not as a representative or class member in any purported class or representative proceeding. The arbitrator may not consolidate more than one Person’s claims and may not otherwise preside over any form of a representative or class proceeding. This arbitration section is governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16.
(e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of Utah, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the federal court sitting in the County of Salt Lake, Utah (the “Utah Court”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the Utah Court 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 any of the Transaction Documents), 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 such Utah Court, or such Utah Court 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 Note 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 of the Lender to foreclose on the Second Deed of Trust in the California Court or to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby. If any party shall commence an Action or Proceeding to enforce any provisions of this Note, 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 in the investigation, preparation and prosecution of such Action or Proceeding.
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(f) Waiver. Any waiver by the Borrowers or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Borrowers or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion. Any waiver by the Borrowers or the Holder must be in writing.
(g) Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Borrowers covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Borrowers from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and the Borrowers (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.
(h) Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual damages for any failure by the Borrowers to comply with the terms of this Note. The Borrowers covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Borrowers (or the performance thereof). The Borrowers acknowledge that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Borrowers therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Borrowers shall provide all information and documentation to the Holder that is reasonably requested by the Holder to enable the Holder to confirm the Borrowers’ compliance with the terms and conditions of this Note.
(i) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
(j) Headings. The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.
Section 7. Amendments; Waivers. Any modifications, amendments or waivers of the provisions hereof shall be subject to Section 5.05 of the Loan Agreement.
Balance of this page left blank – signature page follows
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IN WITNESS WHEREOF, each of Borrowers has caused this Junior Secured Note to be duly executed by a duly authorized officer or the member as of the date and year first above indicated.
| Borrowers: | ||
| Purebase Corporation | ||
| By: | ||
| Name: | Scott Dockter, | |
| Title: | Chief Executive Officer | |
| Dockter Farms LLC | ||
| By: | ||
| Name: | Scott Dockter, | |
| Title: | Member and Manager | |
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Exhibit 10.3
Exhibit B to Loan Agreement
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) dated as of July 31, 2025 is made and entered into by and among (a) Purebase Corporation, a Nevada corporation (“Purebase”) and Dockter Farms LLC, a California limited liability company (“Dockter” and together with Purebase, the “Borrowers”) and (b) any Person who becomes a party to this Agreement by execution of a joinder in the form of Exhibit A attached hereto, which shall include all other direct or indirect Subsidiaries of the Borrowers hereafter formed or acquired after the date hereof for so long as this Agreement remains in effect (the “Additional Subsidiaries” and together with the Borrowers are hereinafter sometimes referred to individually as a “Debtor” and, collectively, as the “Debtors”), on the one hand, and J.J. Astor & Co., a Utah corporation (the “Lender”) in its capacity as Lender and as Collateral Agent for the benefit of itself as the Lender and any other lender (if any), on the other hand (such Lender, for itself and as Collateral Agent, together with its respective successors and assigns, a “,” and collectively the “Secured Parties”).
W I T N E S S E T H:
WHEREAS, the Lender is a party to the Loan Agreement (as hereafter defined) pursuant to which such Lender will make a Loan to the Borrowers in the sum of $500,000 (the “Loan”), less a $20,000 Origination Fee to be retained by the Lender (the “Funding Amount”), the proceeds of which shall be used as provided in the Loan Agreement, and in consideration for such Loan the Lender shall receive from the Borrowers a Note in an original aggregate principal amount of $650,000 (together with any promissory Note or other securities issued in exchange or substitution therefor or replacement thereof, and as any of the same may be amended, supplemented, restated or modified and in effect from time to time, the “Note”); and
WHEREAS, the Note is secured pursuant to the Second Deed of Trust issued by Dockter in favor of the Lender with respect to the Property as defined in the Loan Agreement; and
WHEREAS, capitalized terms used herein but not otherwise defined shall have the meanings set forth in the Loan Agreement and in the Note; and
WHEREAS, each Debtor will derive substantial benefit and advantage from the financial accommodations provided by the Lender to the Borrowers set forth in the Loan Agreement and the Note, and it will be to each such Debtor’s direct interest and economic benefit to obtain said financial accommodations from Lender; and
WHEREAS, to induce Lender to enter into the Loan Agreement and make the Loan, and Lender as security for its Obligations for the benefit of the Lender and any other Secured Parties, and their respective successors and assigns, each Debtor has agreed to pledge and grant to the Lender a first priority Lien and security interest in all of Debtors’ right, title and interest in and to the Collateral (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. Unless otherwise defined in this Agreement, all capitalized terms, when used herein shall have the same meaning as they are defined in the Loan Agreement and the Note. In addition, as used herein:
“Accounts” means any “account,” as such term is defined in the UCC, and, in any event, shall include, without limitation, “supporting obligations” as defined in the UCC.
“Bonus Shares” has the meaning as that term is defined in the Loan Agreement.
“Chattel Paper” means any “chattel paper,” as such term is defined in the UCC.
“Collateral” shall have the meaning ascribed thereto in Section 3 hereof.
“Commercial Tort Claims” means “commercial tort claims”, as such term is defined in the UCC.
“Contracts” means all contracts, undertakings, or other agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) in or under which a Debtor may now or hereafter have any right, title or interest, including, without limitation, with respect to an Account, any agreement relating to the terms of payment or the terms of performance thereof.
“Copyrights” means any copyrights, rights and interests in copyrights, works protectable by copyrights, copyright registrations and copyright applications, including, without limitation, the copyright registrations and applications listed on Schedule III attached hereto (if any), and all renewals of any of the foregoing, all income, royalties, damages and payments now and hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present and future infringements of any of the foregoing and the right to sue for past, present and future infringements of any of the foregoing.
“Documents” means any “documents,” as such term is defined in the UCC, and shall include, without limitation, all documents of title (as defined in the UCC), bills of lading or other receipts evidencing or representing Inventory or Equipment.
“Equipment” means any “equipment,” as such term is defined in the UCC and, in any event, shall include, Motor Vehicles.
“Event of Default” shall have the meaning set forth in the Note.
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“Excluded Assets” means each of the following: (i) any lease, license or other agreement or any property subject to a capital lease, purchase money security interest or similar arrangement, to the extent that a grant of a Lien thereon in favor of Secured Parties would violate or invalidate such lease, license, agreement or capital lease, purchase money security interest or similar arrangement or create a right of termination in favor of any other party thereto (other than the Debtors), so long as such provision exists and so long as such lease, license or agreement was not entered into in contemplation of circumventing the obligation to provide Collateral hereunder or in violation of the Loan Agreement, other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law including the bankruptcy code, or principles of equity and (ii) any stock of a Foreign Subsidiary that constitutes more than 65% of the outstanding stock of such Foreign Subsidiary.
“General Intangibles” means any “general intangibles,” as such term is defined in the UCC, and, in any event, shall include, without limitation, all right, title and interest in or under any Contract, models, drawings, materials and records, claims, literary rights, goodwill, rights of performance, Copyrights, Trademarks, Patents, warranties, rights under insurance policies and rights of indemnification.
“Goods” means any “goods”, as such term is defined in the UCC, including, without limitation, fixtures and embedded Software to the extent included in “goods” as defined in the UCC.
“Governmental Authority” means the government of the United States of America or any other nation, or any political subdivision thereof, whether state or local, or any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administration powers or functions of or pertaining to government over any Debtor or any of its subsidiaries, or any of their respective properties, assets or undertakings.
“Instruments” means any “instrument,” as such term is defined in the UCC, and shall include, without limitation, promissory Note, drafts, bills of exchange, trade acceptances, letters of credit, letter of credit rights (as defined in the UCC), and Chattel Paper.
“Inventory” means any “inventory,” as such term is defined in the UCC.
“Investment Property” means any “investment property”, as such term is defined in the UCC.
“Loan Agreement” means the loan agreement, dated as of July 31, 2025 between the Borrowers and the Lender.
“Lien” has the meaning set forth in the Loan Agreement.
“Motor Vehicles” shall mean motor vehicles, tractors, trailers and other like property, whether or not the title thereto is governed by a certificate of title or ownership.
“Obligations” means all obligations, liabilities and indebtedness of every nature of Debtors from time to time owed or owing under or in respect of this Agreement, the Loan Agreement the Note, the Subsidiary Guarantee, the other Transaction Documents, as the case may be, including, without limitation, the principal amount of all debts, claims and indebtedness, accrued and unpaid interest and all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from time to time hereafter owing, due or payable whether before or after the filing of a bankruptcy, insolvency or similar proceeding under applicable federal, state, foreign or other law and whether or not an allowed claim in any such proceeding.
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“Patents” means any patents, pending patents and patent applications, including, without limitation, the inventions and improvements described and claimed therein, all patentable inventions and those patents and patent applications listed on Schedule IV attached hereto (if any), and the reissues, divisions, continuations, renewals, extensions and continuations-in-part of any of the foregoing, and all income, royalties, damages and payments now or hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present and future infringements of any of the foregoing and the right to sue for past, present and future infringements of any of the foregoing.
“Permitted Indebtedness” has the meaning as that term is defined in the Loan Agreement.
“Permitted Liens” has the meaning as that term is defined in the Note.
“Pledged Collateral” means 100% of the membership interest equity of Dockter, and all Instruments and Investment Property whether or not physically delivered to the Collateral Agent according to this Agreement.
“Proceeds” means “proceeds,” as such term is defined in the UCC and, in any event, includes, without limitation, (a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable with respect to any of the Collateral, (b) any and all payments (in any form whatsoever) made or due and payable from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any Governmental Authority (or any person acting under color of Governmental Authority), and (c) any and all other amounts from time to time paid or payable under, in respect of or in connection with any of the Collateral.
“Representative” means any Person acting as agent, representative or trustee on behalf of the Secured Parties from time to time.
“Security Documents” means this Agreement the Second Deed of Trust and any other documents securing the Liens of the Secured Parties hereunder.
“Senior Lender,” “Senior Lender Indebtedness” and “Senior Lender Financing Agreement” have the meanings as those terms are set forth in the Loan Agreement.
“Senior Lender Deed of Trust” has the meaning as that term is set forth in the Loan Agreement.
“Software” means all “software” as such term is defined in the UCC, now owned or hereafter acquired by a Debtor, other than software embedded in any category of Goods, including, without limitation, all computer programs and all supporting information provided in connection with a transaction related to any program.
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“Trademarks” means any trademarks, trade names, corporate names, Borrowers names, business names, fictitious business names, trade styles, service marks, logos, other business identifiers, prints and labels on which any of the foregoing have appeared or appear, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, the trademarks and applications listed in Schedule V attached hereto (if any) and renewals thereof, and all income, royalties, damages and payments now or hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present and future infringements of any of the foregoing and the right to sue for past, present and future infringements of any of the foregoing.
“Transaction Documents” has the meaning as that term is defined in the Loan Agreement.
“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of Utah; provided, that to the extent that the Uniform Commercial Code is used to define any term herein and such term is defined differently in different Articles or Divisions of the Uniform Commercial Code, the definition of such term contained in Article or Division 9 shall govern.
Section 2. Representations, Warranties and Covenants of Debtors. Each Debtor represents and warrants to, and covenants with, the Secured Parties as follows:
(a) Subject to the Permitted Liens, such Debtor has or will have rights in and the power to transfer the Collateral in which it purports to grant a security interest pursuant to Section 3 hereof (subject, with respect to after acquired Collateral, to such Debtor acquiring the same) and no Lien other than Permitted Liens exists or will exist upon such Collateral at any time.
(b) Subject to the Permitted Liens, this Agreement is effective to create in favor of Secured Parties a valid security interest in and Lien upon all of such Debtor’s right, title and interest in and to the Collateral, and upon (i) the filing of appropriate UCC financing statements in the jurisdictions listed on Schedule I attached hereto, and (ii) except for the share capital of the Foreign Subsidiaries, which shall only be delivered to Secured Party upon the occurrence and during the continuation of an Event of Default under the Loan Documents, Motor Vehicles and the delivery to the Secured Parties of the Pledged Collateral together with assignments in blank, such security interest will be a duly perfected security interest (subject to Permitted Liens) in all of the Collateral.
(c) All of the Equipment, Inventory and Goods owned by such Debtor is located at the places as specified on Schedule I attached hereto. Except as disclosed on Schedule I, none of the Collateral is in the possession of any bailee, warehousemen, processor or consignee. Schedule I discloses such Debtor’s name as of the date hereof as it appears in official filings in the state or province, as applicable, of its incorporation, formation or organization, the type of entity of such Debtor (including corporation, partnership, limited partnership or limited liability Borrowers), organizational identification number issued by such Debtor’s state of incorporation, formation or organization (or a statement that no such number has been issued), such Debtor’s state or province, as applicable, of incorporation, formation or organization and the chief place of business, chief executive office and the office where such Debtor keeps its books and records and the states in which such Debtor conducts its business. Such Debtor has only one state or province, as applicable, of incorporation, formation or organization. Such Debtor does not do business and has not done business during the past five years under any trade name or fictitious business name except as disclosed on Schedule II attached hereto.
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(d) No Copyrights, Patents or Trademarks listed on Schedules III, IV and V, respectively, if any, have been adjudged invalid or unenforceable or have been canceled, in whole or in part, or are not presently valid and enforceable. Each of such Copyrights, Patents and Trademarks (if any) is valid and enforceable. Subject to the Permitted Liens, such Debtor is the sole and exclusive owner of the entire and unencumbered right, title and interest in and to each of such Copyrights, Patents and Trademarks, identified on Schedules III, IV and V, as applicable, as being owned by such Debtor, free and clear of any liens (subject to Permitted Liens), charges and encumbrances, including without limitation licenses, shop rights and covenants by such Debtor not to sue third persons. Such Debtor has adopted, used and is currently using, or has a current bona fide intention to use, all of such Trademarks and Copyrights. Such Debtor has no notice of any suits or actions commenced or threatened with reference to the Copyrights, Patents or Trademarks owned by it.
(e) The outstanding Pledged Collateral of each of the Existing Subsidiaries is listed and set forth in Schule VI.
(f) Each Debtor agrees to deliver to the Secured Parties an updated Schedule I, II, III, IV, Vand/or VI within five Business Days of any material change thereto.
(g) Such Debtor does not own any Commercial Tort Claim except for those disclosed on Schedule II hereto (if any).
(h) All Equipment (including, without limitation, Motor Vehicles) owned by a Debtor and subject to a certificate of title or ownership statute is described on Schedule VII hereto.
(i) The Existing Subsidiaries do not have any interest in real property except as disclosed on Schedule VIII (if any). Each Debtor shall deliver to Secured Parties a revised version of Schedule VIII showing any material changes thereto within 10 Business Days of any such change. Except as otherwise agreed to by Secured Parties, all such interests in real property are or shall be subject to a mortgage and deed of trust (in form and substance reasonably satisfactory to the Collateral Agent) in favor of Secured Parties (hereinafter, a “Mortgage”).
Section 3. Collateral. As collateral security for the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the obligations due the Secured Party under the Note, each Debtor hereby pledges and grants to the Collateral Agent, for the benefit of itself and each Secured Party, a Lien on and security interest in and to all of such Debtor’s assets, including all right, title and interest in the following properties and assets of such Debtor, whether now owned by such Debtor or hereafter acquired and whether now existing or hereafter coming into existence and wherever located (all being collectively referred to herein as “Collateral”).
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Notwithstanding anything to the contrary express or implied contained in this Agreement, the Lien on and security interest of the Lender evidenced by the Second Deed of Trust is hereby expressly made junior, subject and subordinate to the senior priority Lien on and senior priority security interest in the Property held by the Senior Lender securing the Senior Indebtedness issued pursuant to the Senior Lender Financing Agreement. In addition, if an Event of Default under the Note shall occur and be continuing, in addition to any other rights and remedies of the Secured Parties under this Agreement, including any public or private sale of the Collateral, the Secured Parties may sell all or any portion of the Bonus Shares in a private transaction or publicly pursuant to Rule 144 promulgated under the Securities Actc of 1933, as amended
The Collateral consists of:
(a) all Instruments, together with all payments thereon or thereunder;
(b) all Accounts;
(c) all Inventory;
(d) all General Intangibles (including payment intangibles (as defined in the UCC) and Software);
(e) all Equipment;
(f) all Documents;
(g) all Contracts;
(h) all Goods;
(i) all rights as beneficiary under the Second Deed of Trust;
(j) all Pledged Collateral and all Investment Property, including without limitation all equity interests now owned or hereafter acquired by Dockter;
(k) all Commercial Tort Claims specified on Schedule VII;
(l) all Trademarks, Patents, Copyrights and other Intellectual Property;
(m) all books and records pertaining to the other Collateral;
(n) all Software; and
(o) all other tangible and intangible property and other assets of such Debtor, including, without limitation, Proceeds, tort claims, products, accessions, rents, profits, income, benefits, substitutions, additions and replacements of and to any of the property of such Debtor described in the preceding clauses of this Section 3 (including, without limitation, any proceeds of insurance thereon, insurance claims and all rights, claims and benefits against any Person relating thereto), other rights to payments not otherwise included in the foregoing, and all books, correspondence, files, records, invoices and other papers, including without limitation all tapes, cards, computer runs, computer programs, computer files and other papers, documents and records in the possession or under the control of such Debtor, or any computer bureau or service Borrowers from time to time acting for such Debtor.
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Notwithstanding anything to the contrary contained herein or in any Transaction Document, in no event shall the security interest granted herein or therein attach to any Excluded Assets.
Section 4. Covenants; Remedies. In furtherance of the grant of the pledge and security interest pursuant to Section 3 hereof, each Debtor hereby agrees with the Secured Parties as follows (subject to the Permitted Liens):
4.1 Delivery and Other Perfection; Maintenance, etc.
(a) Other Documents and Actions. Each Debtor shall give, execute, deliver, file and/or record any financing statement, registration, notice, instrument, document, agreement, or other papers that may be necessary or desirable (in the reasonable judgment of the Secured Parties or their Representative) to create, preserve, perfect or validate the security interest granted pursuant hereto (or any security interest or mortgage contemplated or required hereunder, including with respect to Section 2(h) of this Agreement) or to enable the Secured Parties or their Representative to exercise and enforce the rights of the Secured Parties hereunder with respect to such pledge and security interest, provided that notices to account debtors in respect of any Accounts or Instruments shall be subject to the provisions of clause (d) below. Notwithstanding the foregoing each Debtor hereby irrevocably authorizes the Secured Parties at any time and from time to time to file in any filing office in any jurisdiction any initial financing statements (and other similar filings or registrations under other applicable laws and regulations pertaining to the creation, attachment, or perfection of security interests) and amendments thereto that (a) indicate the Collateral (i) as all assets of such Debtor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC, or (ii) as being of an equal or lesser scope or with greater detail, and (b) contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including whether such Debtor is an organization, the type of organization and any organization identification number issued to such Debtor. Each Debtor agrees to furnish any such information to the Secured Parties promptly upon request. Each Debtor also ratifies its authorization for the Secured Parties to have filed in any jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof.
(b) Books and Records. Each Debtor (or a Borrowers on behalf of a Debtor) shall maintain at its own cost and expense complete and accurate books and records of the Collateral, including, without limitation, a record of all payments received and all credits granted with respect to the Collateral and all other dealings with the Collateral. Upon the occurrence and during the continuation of any Event of Default, each Debtor shall deliver and turn over any such books and records (or true and correct copies thereof) to the Secured Parties or their Representative at any time on demand. Each Debtor shall permit any Representative of the Secured Parties, to inspect such books and records at any time during reasonable business hours upon at least five Business Days’ prior notice (and in no event, more frequently than twice during each 12-month period, unless an Event of Default has occurred and is continuing) and will provide photocopies thereof at such Debtor’s expense to the Secured Parties upon request of any Secured Party.
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(c) Motor Vehicles. Each Debtor shall, promptly upon acquiring same, cause the Secured Parties to be listed as a lienholder on each certificate of title or ownership covering any items of Equipment, including Motor Vehicles, having a value in excess of $100,000 individually or in the aggregate for all such items of Equipment of the Debtor, or otherwise comply with the certificate of title or ownership laws of the relevant jurisdiction issuing such certificate of title or ownership in order to properly evidence and perfect Secured Parties’ security interest in the assets represented by such certificate of title or ownership.
(d) Notice to Account Debtors; Verification. (i) Upon the occurrence and during the continuance of any Event of Default (or if any rights of set-off (other than set-offs against an Account arising under the Contract giving rise to the same Account) or contra accounts may be asserted, upon request of any Secured Party or their Representative, each Debtor shall promptly notify (and each Debtor hereby authorizes the Secured Parties and their Representative so to notify) each account debtor in respect of any Accounts or Instruments or other Persons obligated on the Collateral that such Collateral has been assigned to the Secured Parties hereunder, and that any payments due or to become due in respect of such Collateral are to be made directly to the Secured Parties and (ii) the Secured Parties and their Representative shall have the right at any time or times (but in no event more than once during each 12-month period and acting through a Debtor and not independently, unless an Event of Default has occurred and is continuing) to make direct verification with the account debtors or other Persons obligated on the Collateral of any and all of the Accounts or other such Collateral.
(e) Intellectual Property. Each Debtor represents and warrants that the Copyrights, Patents and Trademarks listed on Schedules III, IV and V, respectively (if any), constitute all of the registered Copyrights and all of the Patents and Trademarks now owned by such Debtor and that are used or are useful in their business. If such Debtor shall (i) obtain rights to any new patentable inventions, any registered Copyrights or any Patents or Trademarks, or (ii) become entitled to the benefit of any registered Copyrights or any Patents or Trademarks or any improvement on any Patent, the provisions of this Agreement above shall automatically apply thereto and such Debtor shall give to Secured Parties prompt written notice thereof. Each Debtor hereby authorizes Secured Parties to modify this Agreement by amending Schedules III, IV and V, as applicable, to include any such registered Copyrights or any such Patents and Trademarks. Each Debtor shall have the duty (i) to prosecute diligently any patent, trademark, or service mark applications pending as of the date hereof or hereafter to the extent the Debtor reasonably believes they are material to the operation of the business of such Debtor, (ii) to preserve and maintain all rights in the Copyrights, Patents and Trademarks, to the extent the Debtor reasonably believes they are material to the operations of the business of such Debtor and (iii) to ensure that the Copyrights, Patents and Trademarks are and remain enforceable, to the extent the Debtor reasonably believes they are material to the operations of the business of such Debtor. Any expenses incurred in connection with such Debtor’s obligations under this Section 4.1(f) shall be borne by such Debtor. Except for any such items that a Debtor reasonably believes (using prudent industry customs and practices) are no longer necessary for the on-going operations of its business, no Debtor shall abandon any material right to file a patent, trademark or service mark application, or abandon any pending patent, trademark or service mark application or any other Copyright, Patent or Trademark without the prior written consent of Secured Parties, which consent shall not be unreasonably withheld.
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(f) Further Identification of Collateral. Each Debtor will, when and as often as reasonably requested by the Secured Parties or their Representative, furnish to the Secured Parties or such Representative, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Secured Parties or their Representative may reasonably request, all in reasonable detail.
(g) Investment Property. Each Debtor will take any and all actions required or requested by the Secured Parties, from time to time, to (i) cause the Secured Parties to obtain exclusive control of any Investment Property owned by such Debtor in a manner acceptable to the Secured Parties, and (ii) obtain from any issuers of Investment Property and such other Persons, for the benefit of the Secured Parties, written confirmation of the Secured Parties’ control over such Investment Property. For purposes of this Section 4.1(g), the Secured Parties shall have exclusive control of Investment Property if (i) such Investment Property consists of certificated securities and a Debtor delivers such certificated securities to the Secured Parties (with appropriate endorsements if such certificated securities are in registered form); (ii) such Investment Property consists of uncertificated securities and either (x) a Debtor delivers such uncertificated securities to the Secured Parties or (y) the issuer thereof agrees, pursuant to documentation in form and substance satisfactory to the Secured Parties, that it will comply with instructions originated by the Secured Parties without further consent by such Debtor, and (iii) such Investment Property consists of security entitlements and either (x) the Secured Parties become the entitlement holders thereof or (y) the appropriate securities intermediary agrees, pursuant to the documentation in form and substance satisfactory to the Collateral Agent, that it will comply with entitlement orders originated by the Secured Parties without further consent by any Debtor. Notwithstanding any pledge of Investment Property by any Debtor hereunder that constitutes equity securities, unless an Event of Default has occurred and is continuing, such Debtor shall retain any voting or consent rights applicable thereto.
(h) Commercial Tort Claims. Each Debtor shall promptly notify Secured Parties of any Commercial Tort Claim acquired by it that concerns a claim in excess of $100,000 and unless otherwise consented to by Secured Parties, such Debtor shall enter into a supplement to this Agreement granting to Secured Parties a Lien on and security interest in such Commercial Tort Claim.
4.2 Other Liens. Other than Permitted Liens, Debtors will not create, permit or suffer to exist, and will defend the Collateral against and take such other action as is necessary to remove, any Lien on the Collateral except Permitted Liens, and will defend the right, title and interest of the Secured Parties in and to the Collateral and in and to all Proceeds thereof against the claims and demands of all Persons whatsoever, other than Permitted Liens.
4.3 Preservation of Rights. Whether or not any Event of Default has occurred or is continuing, the Secured Parties and their Representative may, but shall not be required to, take any steps the Secured Parties or their Representative deems reasonably necessary or appropriate to preserve any Collateral or any rights against third parties to any of the Collateral (other than Permitted Liens), including obtaining insurance for the Collateral at any time when such Debtor has failed to do so, and Debtors shall promptly pay, or reimburse the Secured Parties for, all reasonable expenses incurred in connection therewith.
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4.4 Formation of Subsidiaries; Name Change; Location; Bailees.
(a) No Debtor shall form or acquire any subsidiary unless (i) such Debtor pledges all of the stock or equity interests of such subsidiary to the Secured Parties pursuant to an agreement in a form agreed to by the Collateral Agent, (ii) such subsidiary becomes a party to this Agreement and all other applicable Security Documents and (iii) the formation or acquisition of such subsidiary is not prohibited by the terms of the Transaction Documents.
(b) No Debtor shall (i) reincorporate or reorganize itself under the laws of any jurisdiction other than the jurisdiction in which it is incorporated or organized as of the date hereof, or (ii) otherwise change its name, identity or corporate structure, in each case, without prior written notice to Collateral Agent. Each Debtor will notify Secured Parties promptly in writing prior to any such change in the proposed use by such Debtor of any tradename or fictitious business name other than any such name set forth on Schedule II attached hereto.
(c) Except for the sale of Inventory in the ordinary course of business and other sales of assets expressly permitted by the terms of the Loan Agreement, each Debtor will keep the Collateral at the locations specified in Schedule I. Each Debtor will give Secured Parties thirty (30) day’s prior written notice of any change in such Debtor’s chief place of business or of any new location for any of the Collateral.
(d) If any Collateral is at any time in the possession or control of any warehousemen, bailee, consignee or processor, such Debtor shall, upon the request of Secured Parties or their Representative, notify such warehousemen, bailee, consignee or processor of the Lien and security interest created hereby and shall instruct such Person to hold all such Collateral for Secured Parties’ account subject to Collateral Agent’s instructions.
(e) Each Debtor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement without the prior written consent of Collateral Agent and agrees that it will not do so without the prior written consent of Collateral Agent, subject to such Debtor’s rights under Section 9-509(d)(2) to the UCC.
4.5 Events of Default, Etc. During the period during which an Event of Default shall have occurred and be continuing, but subject at all times to the priority rights of the Senior Lender under the documents evidencing the Existing Senior Indebtedness (the “Existing Senior Indebtedness Documents”):
(a) each Debtor shall, at the request of the Secured Parties or their Representative, assemble the Collateral and make it available to Secured Parties or their Representative at a place or places designated by the Secured Parties or their Representative which are reasonably convenient to Secured Parties or their Representative, as applicable, and such Debtor;
(b) the Secured Parties or their Representative may make any reasonable compromise or settlement deemed desirable with respect to any of the Collateral and may extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, any of the Collateral;
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(c) the Secured Parties shall have all of the rights and remedies with respect to the Collateral of a secured party under the UCC (whether or not said UCC is in effect in the jurisdiction where the rights and remedies are asserted) and such additional rights and remedies to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may be asserted, including, without limitation, the right, to the maximum extent permitted by law, to: (i) exercise all voting, consensual and other powers of ownership pertaining to the Collateral as if the Secured Parties were the sole and absolute owner thereof (and each Debtor agrees to take all such action as may be appropriate to give effect to such right) and (ii) the appointment of a receiver or receivers for all or any part of the Collateral or business of a Debtor, whether such receivership be incident to a proposed sale or sales of such Collateral or otherwise and without regard to the value of the Collateral or the solvency of any person or persons liable for the payment of the Obligations secured by such Collateral. Each Debtor hereby consents to the appointment of such receiver or receivers, waives any and all defenses to such appointment and agrees that such appointment shall in no manner impair, prejudice or otherwise affect the rights of Secured Parties under this Agreement;
(d) the Secured Parties or their Representative in its discretion may, in the name of the Secured Parties or in the name of a Debtor or otherwise, demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for any of the Collateral, but shall be under no obligation to do so;
(e) the Secured Parties may, upon reasonable notice (such reasonable notice to be determined by Collateral Agent in its sole and absolute discretion, which shall not be less than ten (10) days), with respect to the Collateral or any part thereof which shall then be or shall thereafter come into the possession, custody or control of the Secured Parties or their Representative, sell, lease, license, assign or otherwise dispose of all or any part of such Collateral, at such place or places as the Collateral Agent deems best, and for cash or for credit or for future delivery (without thereby assuming any credit risk), at public or private sale, without demand of performance or notice of intention to effect any such disposition or of the time or place thereof (except such notice as is required above or by applicable statute and cannot be waived), and the Secured Parties or anyone else may be the purchaser, lessee, licensee, assignee or recipient of any or all of the Collateral so disposed of at any public sale (or, to the extent permitted by law, at any private sale) and thereafter hold the same absolutely, free from any claim or right of whatsoever kind, including any right or equity of redemption (statutory or otherwise), of Debtors, any such demand, notice and right or equity being hereby expressly waived and released. The Secured Parties may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the sale may be so adjourned; and
(f) the rights, remedies and powers conferred by this Section 4.6 are in addition to, and not in substitution for, any other rights, remedies or powers that the Secured Parties may have under any Transaction Document, at law, in equity or by or under the UCC or any other statute or agreement. The Secured Parties may proceed by way of any action, suit or other proceeding at law or in equity and no right, remedy or power of the Secured Parties will be exclusive of or dependent on any other. The Secured Parties may exercise any of their rights, remedies or powers separately or in combination and at any time.
The proceeds of each collection, sale or other disposition under this Section 4.6 shall be applied in accordance with Section 4.8 hereof.
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4.6 Deficiency and Surplus. If the proceeds of sale, collection or other realization of or upon the Collateral are insufficient to cover the costs and expenses of such realization and the payment in full of the Obligations, Debtors shall remain jointly and severally liable for any deficiency. If the proceeds of sale, collection or other realization of or upon the Collateral exceed the costs and expenses of such realization and the payment in full of the Obligations, the Collateral Agent shall promptly remit any such surplus to the Debtors.
4.7 Private Sale. Each Debtor recognizes that the Secured Parties may be unable to effect a public sale of any or all of the Collateral consisting of securities by reason of certain prohibitions contained in the Securities Act of 1933, as amended (the “Act”), and applicable state securities laws, but may be compelled to resort to one or more private sales thereof to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such Collateral for their own account for investment and not with a view to the distribution or resale thereof. Each Debtor acknowledges and agrees that any such private sale may result in prices and other terms less favorable to the seller than if such sale were a public sale and each Debtor agrees that it is not commercially unreasonable for Secured Parties to engage in any such private sales or dispositions under such circumstances. Except as may be provided in the Existing Senior Indebtedness Documents or any intercreditor and subordination agreement required to be subsequently executed by the holder of Existing Senior Indebtedness, the Secured Parties shall be under no obligation to delay a sale of any of the Collateral to permit a Debtor to register such Collateral for public sale under the Act, or under applicable state securities laws, even if Debtors would agree to do so. The Secured Parties shall not incur any liability as a result of the sale of any such Collateral, or any part thereof, at any private sale provided for in this Agreement conducted in a commercially reasonable manner, and so long as Secured Parties conduct such sale in a commercially reasonable manner each Debtor hereby waives any claims against any Secured Party arising by reason of the fact that the price at which the Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if the Secured Parties accept the first offer received and does not offer the Collateral to more than one offeree.
Each Debtor further agrees to do or cause to be done all such other acts and things as may be necessary to make such sale or sales of any portion or all of any such Collateral valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales, all at such Debtor’s expense. Each Debtor further agrees that a breach of any of the covenants contained in this Section 4.8 will cause irreparable injury to the Secured Parties, that the Secured Parties has no adequate remedy at law in respect of such breach and, as a consequence, agrees that each and every covenant contained in this Section 4.8 shall be specifically enforceable against Debtors, and each Debtor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred and is continuing.
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4.8 Application of Proceeds. Except as may be provided in the Existing Senior Indebtedness Documents or any intercreditor and subordination agreement required to be subsequently executed by the holder of Existing Senior Indebtedness, the proceeds of any collection, sale or other realization of all or any part of the Collateral, and any other cash at the time held by the Secured Parties under this Agreement, shall be applied to the Obligations on based on the then outstanding Default Amount due under the Note or as otherwise detailed on Schedule 4.8.
4.9 Attorney-in-Fact. Each Debtor hereby irrevocably constitutes and appoints the Collateral Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Debtor and in the name of such Debtor or in its own name, from time to time in the discretion of the Collateral Agent, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute and deliver any and all documents and instruments which may be necessary or desirable to perfect or protect any security interest granted hereunder, to maintain the perfection or priority of any security interest granted hereunder, or to otherwise accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, hereby gives the Collateral Agent the power and right, on behalf of such Debtor, without notice to or assent by such Debtor (to the extent permitted by applicable law), to do the following, upon the occurrence and during the continuation of an Event of Default under the Note:
(a) to take any and all appropriate action and to execute and deliver any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement;
(b) to ask, demand, collect, receive and give acquittance and receipts for any and all moneys due and to become due under any Collateral and, in the name of such Debtor or its own name or otherwise, to take possession of and endorse and collect any checks, drafts, Note, acceptances or other Instruments for the payment of moneys due under any Collateral and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Secured Parties for the purpose of collecting any and all such moneys due under any Collateral whenever payable and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Secured Parties for the purpose of collecting any and all such moneys due under any Collateral whenever payable;
(c) to pay or discharge charges or liens levied or placed on or threatened against the Collateral, to effect any insurance called for by the terms of this Agreement and to pay all or any part of the premiums therefor;
(d) to direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due, and to become due thereunder, directly to the Secured Parties or as the Secured Parties shall direct, and to receive payment of and receipt for any and all moneys, claims and other amounts due, and to become due at any time, in respect of or arising out of any Collateral;
(e) to sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with accounts and other Documents constituting or relating to the Collateral;
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(f) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any part thereof and to enforce any other right in respect of any Collateral;
(g) to defend any suit, action or proceeding brought against a Debtor with respect to any Collateral;
(h) to settle, compromise or adjust any suit, action or proceeding described above and, in connection therewith, to give such discharges or releases as the Secured Parties may deem appropriate;
(i) to the extent that a Debtor’s authorization given in Section 4.1(a) of this Agreement is not sufficient to file such financing statements with respect to this Agreement, with or without such Debtor’s signature, or to file a photocopy of this Agreement in substitution for a financing statement, as the Secured Parties may deem appropriate and to execute in such Debtor’s name such financing statements and amendments thereto and continuation statements which may require such Debtor’s signature;
(j) generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Secured Parties were the absolute owners thereof for all purposes; and
(k) to do, at the Secured Parties option and at such Debtor’s expense, at any time, or from time to time, all acts and things which the Secured Parties reasonably deems necessary to protect or preserve or, upon the occurrence and during the continuation of an Event of Default, realize upon the Collateral and the Secured Parties’ lien therein, in order to effect the intent of this Agreement, all as fully and effectively as such Debtor might do.
Each Debtor hereby ratifies, to the extent permitted by law, all that such attorneys lawfully do or cause to be done by virtue hereof provided the same is performed in a commercially reasonable manner. The power of attorney granted hereunder is a power coupled with an interest and shall be irrevocable until the Obligations are indefeasibly paid in full in cash and this Agreement is terminated in accordance with Section 4.12 hereof.
Each Debtor also authorizes the Secured Parties, at any time from and after the occurrence and during the continuation of any Event of Default, (x) to communicate in its own name with any party to any Contract with regard to the assignment of the right, title and interest of such Debtor in and under the Contracts hereunder and other matters relating thereto and (y) to execute, in connection with any sale of Collateral provided for in Section 4.6 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral.
4.10 Perfection. Prior to or concurrently with the execution and delivery of this Agreement, each Debtor shall:
(a) file such financing statements, assignments for security and other documents in such offices as may be necessary or as the Secured Parties or their Representative may request to perfect the security interests granted by Section 3 of this Agreement;
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(b) at any Secured Party’s request, deliver to the Secured Parties or their Representative the originals of all Instruments together with, in the case of Instruments constituting promissory Note, allonges attached thereto showing such promissory Note to be payable to the order of a blank payee;
(c) deliver to the Secured Parties or their Representative the originals of all Motor Vehicle Titles, duly endorsed indicating the Secured Parties’ interest therein as a lienholder, together with such other documents as may be required consistent with Section 4.1(c) hereof to perfect the security interest granted by Section 3 in all such Motor Vehicles (if any).
(d) If the Debtor has not done so, the Collateral Agent may do so at any later time at the sole cost of the Debtors.
4.11 Termination; Partial Release of Collateral. This Agreement and the Liens and security interests granted hereunder shall not terminate until the full and complete performance and payment in full in cash of all such Obligations to Secured Parties, but excluding any inchoate and unasserted indemnity obligations) (i) in respect of the Transaction Documents, and (ii) with respect to which claims have been asserted by Collateral Agent and/or Lender, whereupon the Secured Parties shall forthwith cause to be assigned, transferred and delivered, against receipt but without any recourse, warranty or representation whatsoever, any remaining Collateral to or on the order of Debtors. The Secured Parties shall also execute and deliver to Debtors upon such termination and at Debtors’ expense such UCC termination statements, certificates for terminating the liens on the Motor Vehicles (if any) and such other documentation as shall be reasonably requested by Debtors to effect the termination and release of the Liens and security interests in favor of the Secured Parties affecting the Collateral. Notwithstanding anything to the contrary in this Agreement, upon full and complete satisfaction of the Note, Debtors obligations under this Agreement shall terminate and any Liens shall thereupon be void.
4.12 Further Assurances. At any time and from time to time, upon the written request of the Secured Parties or their Representative, and at the sole expense of Debtors, Debtors will promptly and duly execute and deliver any and all such further instruments, documents and agreements and take such further actions as the Secured Parties or their Representative may reasonably require in order for the Secured Parties to obtain the full benefits of this Agreement and of the rights and powers herein granted in favor of the Secured Parties, including, without limitation, using Debtors’ commercially reasonable efforts to secure all consents and approvals necessary or appropriate for the assignment to the Secured Parties of any Collateral held by Debtors or in which a Debtor has any rights not heretofore assigned, the filing of any financing or continuation statements under the UCC with respect to the liens and security interests granted hereby, transferring Collateral to the Secured Parties’ possession, (if a security interest in such Collateral can be perfected by possession), placing the interest of the Secured Parties as lienholder on the certificate of title of any Motor Vehicle, and obtaining waivers of liens from landlords and mortgagees. Each Debtor also hereby authorizes the Secured Parties and their Representative to file any such financing or continuation statement without the signature of such Debtor to the extent permitted by applicable law.
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4.13 Limitation on Duty of Secured Parties and Collateral Agent. The powers conferred on the Secured Parties and/or Collateral Agent under this Agreement are solely to protect the Secured Parties’ interest on behalf of themselves in the Collateral and shall not impose any duty upon Secured Parties or the and/or Collateral Agent it to exercise any such powers. The Secured Parties and and/or Collateral Agent shall be accountable only for amounts that they actually receive as a result of the exercise of such powers and neither the Secured Parties, their Representative, the Collateral Agent nor any of their respective officers, directors, employees or agents shall be responsible to Debtors for any act or failure to act, except for gross negligence or willful misconduct. Without limiting the foregoing, the Secured Parties, and/or Collateral Agent and any Representative shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in their possession if such Collateral is accorded treatment substantially equivalent to that which the relevant Person, in its individual capacity, accords its own property consisting of the type of Collateral involved, it being understood and agreed that neither the Secured Party, the Collateral Agent nor any Representative shall have any responsibility for taking any necessary steps (other than steps taken in accordance with the standard of care set forth above) to preserve rights against any Person with respect to any Collateral.
Also without limiting the generality of the foregoing, neither the Secured Party, the Lender and/or Collateral Agent nor any Representative shall have any obligation or liability under any Contract or license by reason of or arising out of this Agreement or the granting to the Secured Parties of a security interest therein or assignment thereof or the receipt by the Secured Parties, the and/or Collateral Agent or any Representative of any payment relating to any Contract or license pursuant hereto, nor shall the Secured Parties, the and/or Collateral Agent nor any Representative be required or obligated in any manner to perform or fulfill any of the obligations of Debtors under or pursuant to any Contract or license, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any Contract or license, or to present or file any claim, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.
Section 5. Miscellaneous.
5.1 No Waiver. No failure on the part of any Secured Party, the Collateral Agent or any of its Representatives to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Secured Parties, the Collateral Agent or any Representative of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The rights and remedies hereunder provided are cumulative and may be exercised singly or concurrently and are not exclusive of any rights and remedies provided by law.
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5.2 Governing Law. 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 Utah, without regard to the principles of conflict of laws thereof. Each Debtor agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the federal and state courts sitting in the County of Salt Lake City, Utah (the “Utah Courts”). Each Debtor hereto hereby irrevocably submits to the exclusive jurisdiction of the Utah Courts 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 any 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 such Utah Courts, or such Utah Courts are improper or inconvenient venue for such proceeding. Each Debtor 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 other manner permitted by applicable law. Each Debtor hereby irrevocably waives, to the fullest extent permitted by applicable law, (a) any right to assert any claim of public policy of any state or jurisdiction to contest the actions of the Secured Party and (b) any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If any 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 in the investigation, preparation and prosecution of such Action or Proceeding.
5.3 Notices. All notices, approvals, requests, demands and other communications hereunder shall be delivered or made in the manner set forth in, and shall be effective in accordance with the terms of, the Loan Agreement. Debtors and Collateral Agent may change their respective notice addresses by written notice given to each other party five (5) days prior to the effectiveness of such change.
5.4 Amendments, Etc. The terms of this Agreement may be waived, altered or amended only by an instrument in writing duly executed by the Debtor sought to be charged or benefited thereby and each of the Lender. Any such amendment or waiver shall be binding upon the Secured Parties and the Debtor sought to be charged or benefited thereby and their respective successors and assigns.
5.5 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of each of the parties hereto, provided, that no Debtor shall assign or transfer its rights hereunder without the prior written consent of each of the Secured Parties. Any Secured Party, including the Collateral Agent in its capacity as Collateral Agent, may assign its rights hereunder without the consent of Debtors, in which event such assignee shall be deemed to be Secured Parties and/or Collateral Agent, as applicable, hereunder with respect to such assigned rights.
5.6 Counterparts; Headings. This Agreement may be authenticated in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may authenticate this Agreement by signing any such counterpart. This Agreement may be authenticated by manual signature or facsimile, .pdf or similar electronic signature, all of which shall be equally valid. The headings in this Agreement are for convenience of reference only and shall not alter or otherwise affect the meaning hereof.
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5.7 Severability. If any provision hereof is invalid and unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (a) the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in favor of the Secured Parties and their Representative in order to carry out the intentions of the parties hereto as nearly as may be possible and (b) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction.
5.8 WAIVER OF RIGHT TO TRIAL BY JURY. EACH DEBTOR AND SECURED PARTIES WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH DEBTOR AND SECURED PARTIES AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION 5.8 AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
5.9 Joint and Several. The obligations, covenants and agreements of Debtors hereunder shall be the joint and several obligations, covenants and agreements of each Debtor, whether or not specifically stated herein without preferences or distinction among them.
5.10 Collateral Agent and Secured Party Indemnification.
(a) Each Secured Party has pursuant to the Loan Agreement designated and appointed the Lender as Collateral Agent and as the administrative agent of such Secured Party under this Agreement and the related agreements.
(b) Except with regard to the priority rights of the Senior Lender in the Collateral and in any subsequent intercreditor or subordination agreement entered into between Senior Lender and the Lender, nothing in this Section 5.10 or elsewhere in this Agreement shall be deemed to limit or otherwise affect the rights of Secured Parties or Lender to exercise any remedy provided in this Agreement or any other Transaction Document.
(c) if pursuant to any related agreement Secured Parties are given the discretion to allocate proceeds received by Secured Parties pursuant to the exercise of remedies under the related agreements or at law or in equity (including without limitation with respect to any secured creditor remedies exercised against the Collateral and any other collateral security provided for under any related agreement), Secured Parties shall apply such proceeds to the then outstanding Obligations in the following order of priority (with amounts received being applied in the numerical order set forth below until exhausted prior to the application to the next succeeding category and each of the Lender or other Persons entitled to payment shall receive an amount equal to its pro rata share of amounts available to be applied pursuant to clauses second, third and fourth below):
first, to payment of fees, costs and expenses (including reasonable attorney’s fees) owing to the Secured Parties;
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second, to payment of all accrued unpaid interest and fees (other than fees owing to Collateral Agent) on the Obligations;
third, to payment of principal of the Obligations;
fourth, to payment of any other amounts owing constituting Obligations; and
fifth, any remainder shall be for the account of and paid to whoever may be lawfully entitled thereto.
5.11 No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
5.12 ENTIRE AGREEMENT; AMENDMENT. THIS AGREEMENT, TOGETHER WITH THE OTHER TRANSACTION DOCUMENTS, SUPERSEDES ALL OTHER PRIOR ORAL OR WRITTEN AGREEMENTS BETWEEN SECURED PARTIES, THE DEBTORS, THEIR AFFILIATES AND PERSONS ACTING ON THEIR BEHALF WITH RESPECT TO THE MATTERS DISCUSSED HEREIN, AND THIS AGREEMENT, TOGETHER WITH THE OTHER TRANSACTION DOCUMENTS AND THE OTHER INSTRUMENTS REFERENCED HEREIN AND THEREIN, CONTAIN THE ENTIRE UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE MATTERS COVERED HEREIN AND THEREIN AND, EXCEPT AS SPECIFICALLY SET FORTH HEREIN OR THEREIN, NEITHER THE SECURED PARTIES NOR ANY DEBTOR MAKES ANY REPRESENTATION, WARRANTY, COVENANT OR UNDERTAKING WITH RESPECT TO SUCH MATTERS. AS OF THE DATE OF THIS AGREEMENT, THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THE MATTERS DISCUSSED HEREIN. NO PROVISION OF THIS AGREEMENT MAY BE AMENDED, MODIFIED OR SUPPLEMENTED OTHER THAN BY AN INSTRUMENT IN WRITING SIGNED BY THE DEBTORS AND THE SECURED PARTIES.
Signature pages follow
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IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed and delivered as of the day and year first above written.
| DEBTORS: | ||
| PUREBASE CORPORATION | ||
| By: | ||
| Name: | Scott Dockter, | |
| Title: | Chief Executive Officer | |
| DOCKTER FARMS LLC | ||
| By: | ||
| Name: | Scott Dockter, | |
| Title: | Member and Manager | |
| LENDER AND COLLATERAL AGENT: | ||
| J.J. Astor & Co. | ||
| By: | ||
| Michael R. Pope, CEO | ||
EXHIBIT A
Form of Joinder
Joinder to Security Agreement
The undersigned, ______________________________, hereby joins in the execution of that certain Security Agreement dated as of July 31, 2025 (as amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”) by and by and among (a) Purebase Corporation, a Nevada corporation (“Purebase”) and Dockter Farms LLC, a California limited liability Borrowers (“Dockter” and together with Purebase, the “Borrowers”) and (b) any Person who becomes a party to this Agreement by execution of this joinder to security agreement and which shall include all other direct or indirect Subsidiaries of the Borrowers hereafter formed or acquired after the date hereof for so long as this Agreement remains in effect (the “Additional Subsidiaries” and together with the Borrowers each a “Debtor” and, collectively, as the “Debtors”) and (c) J.J. Astor & Co., as the “Lender” and in its capacity as Collateral Agent for the benefit of itself and any other Lender, on the other (each, together with its respective successors and assigns, a “Secured Party,” and collectively the “Secured Parties”). By executing this Joinder, the undersigned hereby agrees that it is an additional “Debtor under the Security Agreement agrees to be bound by all of the terms and provisions thereof. The undersigned represents and warrants that the representations and warranties set forth in the Security Agreement are, with respect to the undersigned, true and correct as of the date hereof.
The undersigned represents and warrants to Secured Parties that:
(a) all of the Equipment, Inventory and Goods owned by such Debtor is located at the places as specified on Schedule I and such Debtor conducts business in the jurisdiction set forth on Schedule I;
(b) except as disclosed on Schedule I, none of such Collateral is in the possession of any bailee, warehousemen, processor or consignee;
(c) the chief place of business, chief executive office and the office where such Debtor keeps its books and records are located at the place specified on Schedule I;
(d) such Debtor (including any Person acquired by such Debtor) does not do business or has not done business during the past five years under any tradename or fictitious business name, except as disclosed on Schedule II;
(e) all Copyrights, Patents and Trademarks owned or licensed by the undersigned are listed in Schedules III, IV and V, respectively;
(f) all Commercial Tort Claims of such Debtor are listed on Schedule VI;
(g) all Equipment (including Motor Vehicles) owned by such debtor are listed on Schedule VII.
| [ADDITIONAL DEBTOR] | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Loan Agreement]
SCHEDULE I
Jurisdictions and Debtor’s Information
| Debtor | Domicile |
SCHEDULE II
Trade Names
[Signature Page to Loan Agreement]
SCHEDULE III
Copyrights
[Signature Page to Loan Agreement]
SCHEDULE IV
Patents
[Signature Page to Loan Agreement]
SCHEDULE V
Trademarks
[Signature Page to Loan Agreement]
SCHEDULE VI
Commercial Tort Claim
[Signature Page to Loan Agreement]
SCHEDULE VII
Debtor’s Equipment
[Signature Page to Loan Agreement]