NEITHER THE ISSUANCE NOR SALE OFTHESECURITIESREPRESENTEDBYTHISCERTIFICATE NOR THE SECURITIES INTOWHICHTHESE SECURITIESARECONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIESACTOF 1933,ASAMENDED, ORAPPLICABLE STATE SECURITIES LAWS. THESECURITIES MAYNOTBEOFFERED FORSALE, SOLD,TRANSFERREDORASSIGNED (I) INTHEABSENCE OF (A) AN EFFECTIVEREGISTRATIONSTATEMENTFORTHESECURITIESUNDERTHE SECURITIESACT OF 1933,ASAMENDED, OR (B)AN OPINION OFCOUNSEL (WHICHCOUNSELSHALLBESELECTED BYTHEHOLDER),IN AGENERALLY ACCEPTABLE FORM,THAT REGISTRATIONISNOT REQUIRED UNDERSAIDACTOR(II) UNLESS SOLDPURSUANTTORULE 144 ORRULE144AUNDERSAIDACT.NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGEDINCONNECTIONWITH ABONA FIDEMARGINACCOUNTOROTHERLOAN ORFINANCINGARRANGEMENTSECURED BY THE SECURITIES.
GROW SOLUTIONSHOLDINGS,INC.
$12,500NOTE
TWELVEPERCENT(12%)CONVERTIBLENOTE DATED MARCH29, 2019
THISNOTE (the “Note”)is aduly authorized Convertible Note ofGROWSOLUTIONSHOLDINGS,INC.aNevada corporation (the“Company”).
FOR VALUE RECEIVED,theCompany promises to payOSCALETA PARTNERS LLC (the“Holder”),theprincipal sum ofTwelve Thousand Five Hundred Dollars and noCents ($12,500.00) pursuant tothe redemption schedule outlined in Section 9below (the “Principal Amount”) for a cashloanofeven date in theamount of TenThousand Three Hundred Eighty ThreeDollars and no Cents($10,383.00)(the“Loan”) onSeptember 29, 2019(the “MaturityDate”),and to payinterest on theOutstanding Principal Amount (“Interest”) in alump sum on theMaturity Date, atthe rate oftwelvepercent (12%) per Annum (the“Rate”) from thedateofissuance.
| 1) | AccrualofInterest shall commence onthe date ofthisNote at theRate,andcontinue until theCompany repays infull theoutstanding Principal Amount plus all accrued but unpaid Interest.UponanEventofDefault, theRate shall beadjusted asset forth inSection 8. Theoutstanding Principal Amount ofthisNoteispayable onthe Maturity Date in suchcoin orcurrencyof theUnitedStates as at thetime ofpaymentislegal tender for payment ofpublicandprivate debts, at theaddress last appearing on theNote Register of theCompany asdesignatedin writing by theHolder fromtimetotime. The Company will pay theoutstanding Principal Amount ofthisNote on theMaturity Date, free of anywithholding ordeductionof anykind to theHolder as ofthe Maturity Date andaddressed to theHolder atthe address appearing onthe NoteRegister. |
This Noteissubjectto thefollowing additional provisions:
| 2) | All paymentsonaccountoftheoutstanding Principal AmountofthisNote andall other amounts payable under this Note (whether made bythe Company or anyother person) to orfor theaccountof theHolder hereunder shall bemade free and clear ofand without reduction byreasonof anypresent andfuture income, stamp, registration and other taxes, levies, duties, cost, and charges whatsoever imposed, assessed, levied orcollected bytheUnitedStates or anypolitical subdivisionortaxing authority thereofortherein, together with interest thereon and penalties with respect thereto, ifany,on or inrespectofthisNote(such taxes, levies, duties, costs and chargesbeing herein collectively called “Taxes”). |
| 3) | TheHolder ofthis Note isentitled, at itsoption,atany time afterthe issuance ofthis Note, to convertall or anylesserportion ofthe outstanding Principal Amount plus accrued butunpaid Interest intoCommon Stockataconversion price per share equal tothe lesserof(a)$0.01, or(b) fifty percent (50%) (“Discount”)ofthelowest closing bidprice for theCompany’s common stock during thethirty |
(30)trading days immediately preceding thedateofdelivery byHolder toCompanyof theConversion Notice (the “Conversion Price”). TheCommonstock intowhich the Note is converted shall bereferredtoin this agreement as“Conversion Shares”). Should the Company’sCommon stockbecome chilled for deposit atDTC at anypointwhilethis Note remains outstanding, theDiscount associated with theConversion Price shallbeadjusted toforty percent (40%), andthe conversion dollar amount per conversion shallbereduced by aflat feeof$1,500.00 shall becharged tothe Company tocover costs associated with the depositofchilled stocks for each conversion.TheHolder may convert this Note intoCommonStockbydelivering a conversionnotice, the form ofconversion notice attachedto theNote asExhibit B(“Conversion Notice”), executed by theHolderoftheNoteevidencing suchHolder’s intention to convert theNote. TheCompanyshallbear any andall miscellaneous expenses thatmay arise as aresult ofconversion anddelivery ofsharesofcommon stock inrespectofthe Note, including but arenot limitedto thecostof theissuanceof aRule 144 legal opinion, transfer agent fees, equity issuance and deposit fees, etc.AtHolder’s option, anyaccrued costs paid byHoldermay besubtracted from thedollar amount ofany conversion ofthe Note.
ShareIssuance. Solong as thisNoteisoutstanding,andpriortothecomplete conversion or paymentofthis Note,if theCompany shall issueanyCommonStock forconsideration per sharethat islessthantheConversion Pricethatwould be ineffectatthe time ofsuchissuance,then, andthereafter successively uponeach suchissuance,theConversion Price shall bereduced to suchother lower issuance price.Forpurposes of this adjustment,theissuance of anysecurity or debt instrument of theCompanycarrying the right toconvertsuchsecurity or debt instrument into Common Stock, or ofanywarrant, right or option topurchaseCommonStockshall resultinanadjustmentto theConversionPrice upontheissuance ofthe abovedescribed security, debt instrument, warrant, right or option,andagain upon the issuance of shares of Common Stock uponexercise ofsuch conversion orpurchase
right ifsuchissuanceisataprice lower than the then applicable Conversion Price. Thereductionof theConversion Price described inthis paragraph is inaddition to all other rights of theHolder of thisNote.
TheCompany will not issue fractional shares orscript representing fractionsofshares ofCommon Stock onconversion, but the Companywillround thenumber ofsharesofCommon Stockissuable up to thenearest whole share. Thedate onwhich aNotice ofConversionisgivenshall be deemed tobethedate onwhich theHoldernotifies theCompany ofits intention to soconvert bydelivery,byfacsimile transmission, email, orotherwise,of a copy of theNoticeofConversion. NoticeofConversionmaybe sentbyemail to the Company, Attn:ChiefExecutive Officer.Atthe Maturity Date, subject toSection13below, the Company will pay anyunconverted outstanding Principal Amount andaccrued Interest thereon, at theoptionof theHolder, ineither (a) cash or (b)Common Stockvalued ataprice equal tothe Conversion Price determined as if theNote was converted in accordance with itstermsintoCommon Stock on theMaturity Date.
Withoutin anyway limiting theHolder’s right to pursueother remedies, including actual damages and/or equitable relief,theparties agree that if delivery of theCommon StockissuableuponconversionofthisNoteis notdeliveredbythe Deadline (3Trading days) the Borrower shall paytotheHolder $1,000per dayin cash,for eachdaybeyond theDeadline that theBorrower fails todeliver suchCommonStock.Such cashamount shall bepaid toHolder by thefifth day ofthe month following the monthinwhich ithas accrued or, at the optionof theHolder (by written notice to theBorrowerby thefirst day of themonth followingthe month inwhich ithas accrued), shall beadded to theprincipal amountofthis Note, inwhich event interest shall accrue thereon inaccordancewiththeterms ofthis Note and suchadditional principal amount shallbeconvertibleintoCommonStock inaccordance with theterms of thisNote. TheBorroweragrees that the right toconvertis avaluable right to theHolder. Thedamagesresulting from afailure, attempt tofrustrate, interfere with such conversion right are difficult if notimpossible toqualify. Accordingly theparties acknowledge that theliquidated damages provision contained inthis Section are justified.
If,bytherelevantDeliveryDate,theCompany fails, unlesssuch failureisdue tocauses beyond theCompany’s reasonable control orthat ofitsTransfer Agent, for any reason todeliver the Shares to beissued upon conversion of theNoteandafter such Delivery Date, the Holderofthe Note purchases, in anarm’s-lengthopenmarket transaction orotherwise, shares ofCommonStock(the“Covering Shares”)inorder tomakedeliveryinsatisfaction of asaleofCommon Stock by suchHolder (the “Sold Shares”), which delivery suchHolderanticipatedtomakeusing theSharestobeissued upon suchconversion(a“Buy-In”), theHolder shallhavethe right, torequire the Company to pay tothe Holder, inadditionto andnot inlieuofthe amounts duehereunder (but in additiontoall other amounts contemplated inother provisionsofthe Transaction Agreements, and notin lieuof any suchother amounts), the Buy-In Adjustment Amount (asdefined below). The “Buy-In Adjustment Amount” is theamount equal to theexcess,ifany, of (x)the Holder's total purchase price (including
brokerage commissions,ifany)fortheCovering Sharesover (y) thenet proceeds (after brokerage commissions, if any) receivedbytheHolderfromthe sale of the Sold Shares. The Company shall pay theBuy-InAdjustmentAmountto the Company in immediately available funds immediately upon demandbythe Holder. By way of illustration and not in limitation of the foregoing, if theHolderpurchases shares ofCommonStock having a total purchase price (including brokeragecommissions) of $11,000to cover a Buy-Inwith respect to shares ofCommonStock it sold for net proceeds of $10,000, the Buy-In AdjustmentAmount which Companywill be required topayto the ConvertingHolder will be $1,000.
| 4) | No provisionofthisNoteshall alter orimpair the obligationoftheCompany, which isabsoluteandunconditional,to thepaymentof theoutstanding Principal Amount ofthis Note atthe Maturity Date, and inthe coin orcurrency herein prescribed. ThisNoteisadirectobligationofthe Company.Intheeventofany liquidation, reorganization, windingupordissolution, repayment ofthisNoteshall not besubordinate in anyrespect to anyother indebtedness of theCompany outstandingas ofthe dateofthisNote orhereafter incurred by theCompany. |
Suchnon-subordination shall extend without limiting thegeneralityof theforegoing, toallindebtedness of the Company tobanks, financial institutions; other secured lenders, equipment lessors andequipment finance companies, but shall exclude trade debts. Any warrants, optionsorother securities convertible into stock ofthe Company issued before thedate hereof shall rankpari passu with theNoteinall respects.
| 5) | Ifat anytimeor fromtimetotimeafter the dateof thisNote,theCommonStockissuableupon theconversionoftheNoteischanged into thesameordifferent numbers ofsharesofanyclassorclassesofstock, whether byrecapitalizationorotherwise,thenineachsucheventtheHolder shall have the right thereaftertoconverttheNoteintothekindofsecurity receivable insuch recapitalization, reclassificationorother changebyholdersofCommon Stock, allsubjecttofurther adjustment asprovided herein.Insuchevent,theformulae set forth herein for conversionandredemption shallbeequitably adjusted toreflectsuchchangeinnumberofsharesor,if sharesofanewclassofstockareissued,toreflect the market priceoftheclassorclassesofstock issued inconnection with theabove described transaction. |
| 6) | ThisNoteshallbegovernedby andconstrued in accordance with thelaws ofthe StateofConnecticut. Eachof theparties consents tothe exclusive jurisdictionofthe state orFederal courtsoftheState ofConnecticut residinginFairfield Countyinconnection with anydispute arisingunderthis Note, andhereby waives, to themaximumextentpermitted by law, any objection,including anyobjection basedonforum non coveniens, tothe bringing of any suchproceedinginsuch jurisdictions. Each ofthe parties hereby waives theright to atrialby jury inconnection with any disputearising underthis Note. |
| 7) | Thefollowing shall constitute an "Event ofDefault": |
| a. | TheCompany shall default inthe payment ofprincipal andinterestonthisNoteandsame shall continue for aperiodoffive (5)days;or |
| b. | Anyof therepresentationsorwarranties made by theCompanyherein, in any certificateorfinancialorother written statements heretofore orhereafter furnished bythe Company inconnection with the executionanddelivery ofthis Note shall befalse ormisleadingin anymaterial respect at thetime made; or |
| c. | TheCompany shallfail to perform orobserve, inany material respect, anyother covenant, term, provision, condition, agreement orobligationof anyNote and suchfailureshallcontinue uncured for aperiod ofthirty(30)days after written notice from theHolder ofsuch failure; or |
| d. | TheCompany fails toauthorizeor tocause its Transfer Agent toissue shares ofCommon Stock uponexerciseby theHolder ofthe conversion rights ofthe Holder inaccordance with thetermsofthis Note, fails totransferor tocause its Transfer Agent totransfer any certificate forsharesof Common Stockissuedtothe Holder upon conversionofthisNoteandwhen required bythis Note, and suchtransfer isotherwise lawful, orfails toremoveanyrestrictive legend on anycertificateorfails to causeits Transfer Agent toremove suchrestricted legend, ineach casewheresuch removal islawful, as and when required bythis Note, the Agreement,and any suchfailure shall continue uncuredforfive (5) business days;or |
| e. | TheCompany shallmakeanassignment forthe benefit ofcreditors orcommence proceedings for itsdissolution; orshall apply for orconsentto theappointment of atrustee, liquidator orreceiver foritsorfor asubstantial partofits property orbusiness;or |
| f. | Atrustee, liquidatororreceiver shall beappointedforthe Company or for asubstantial part ofits propertyorbusiness without its consent and shall notbedischarged within sixty (60) days aftersuchappointment;or |
| g. | Any governmental agencyorany courtofcompetentjurisdiction atthe instanceofanygovernmental agency shall assume custodyorcontrolof thewholeoranysubstantial portion of thepropertiesorassets of theCompanyandshall not bedismissedwithinsixty(60)daysthereafter;or |
| h. | Any money judgment, writorwarrantofattachment,orsimilar process in excess ofOneHundred Thousand ($100,000) Dollars inthe aggregate shall beenteredorfiled against the Company or any of itspropertiesorother assets andshall remain unpaid, unvacated, |
unbondedorunstayed for aperiodofsixty (60) days or in anyevent later thanfive(5)daysprior to the date of anyproposed sale thereunder; or
| i. | Bankruptcy, reorganization, insolvencyorliquidation proceedingsorother proceedings for relief underanybankruptcylaw or anylaw for thereliefofdebtors shallbeinstitutedby oragainsttheCompanyand, ifinstituted against theCompany,shallnotbedismissed within sixty (60)days after such institutionorthe Company shall by anyaction oranswer approve of,consent to, oracquiescein anysuch proceedings oradmit the material allegations of, ordefaultinanswering apetition filed in any suchproceeding; or |
| j. | TheCompany shallhaveitsCommonStocksuspended ordelisted from anexchange or over-the-counter market from trading for inexcess offive trading days, orshall fail toremain current with its financial filings. |
| k. | TheCompany effects, orattemptstoeffect, areorganization similar in structure tothatprovidedinSection 251(g) ofthe Delaware General Corporation Law. |
Then,oratanytimethereafter, and ineach andeverysuchcase, unless such EventofDefault shall havebeenwaived inwritingby theHolder (whichwaivershall not bedeemedto be awaiver of anysubsequent default) at theoptionoftheHolderand in theHolder's sole discretion, the Holdermayconsider all obligations under thisNoteimmediatelydue andpayable within five (5)daysofnotice, without presentment, demand, protest ornoticeof anykinds, all ofwhich are herebyexpresslywaived, anything hereinorin any noteor other instruments contained to thecontrary notwithstanding, andthe Holdermayimmediately enforce any andall of theHolder'srights andremedies provided hereinor anyother rightsorremedies afforded by law.
| 8) | Ifone ormoreofthe“EventsofDefault” as described above shall occur, then(a)theRate shall increase toeighteen percent (18%),and (b)the Company agreestopayallcosts and expenses, including reasonable attorney’s fees, which theHoldermayincur incollecting any amount dueunder, orenforcinganyterms of,this Note. |
| 9) | Redemption. Atanytime whiletheNote remains outstanding, upon three(3)business days’ written notice(the“Redemption Notice”)to theHolder, the Company mayredeemthisNotebymaking payment bywire transfertoHolderasfollows:(i) ifredemption paymentismadewithin 60 calendar daysfromthedateofthe loan,then130%oftheentire outstanding Principal Amount oftheNote plus anyaccrued but unpaid Interest; (ii)ifredemption payment ismade within120calendar daysfromthedateoftheloan,then135% oftheentire outstanding Principal Amount of theNote plus anyaccruedbutunpaid Interest; if redemption paymentismade after 120calendar days from thedate ofthe loan, then140% of theentire outstanding Principal Amount ofthe Noteplusany accrued but unpaid Interest.If theCompany delivers awritten Redemption Notice, theHoldershall have theright toconvert principal and interest on theNote intoConversion Shares for aperiodofthree(3)business days from thedateof theRedemption Notice. |
| 10) | TheCompany covenants that until all amounts dueunder this Note arepaidinfull, by conversion orotherwise, unless waived by theHolderorsubsequent Holder inwriting,theCompanyshall: |
| · | giveprompt written noticeto theHolderof anyEventofDefaultor of anyother matterwhichhasresulted in, orcould reasonably beexpected to result in amaterially adverse changeinits financial conditionoroperations; |
| · | giveprompt noticetothe Holderofanyclaim, action orproceeding which, in theeventofanyunfavorableoutcome,wouldorcould reasonably beexpectedtohave aMaterial Adverse Effect (as defined in theNote Purchase Agreement) onthe financial condition ofthe Company; |
| · | atalltimesreserve andkeep available out of itsauthorized butunissuedCommonStock, for thepurposeofeffecting the conversion ofthis Note intoCommonStock,suchnumber ofitsdulyauthorized sharesof Common Stock asshall from time totime besufficient to effect theconversionofthethree (3) times outstanding Principal Amount ofthis Note plusaccrued interest intoCommonStockat theConversion Price. |
| 11) | Upon receiptby theCompanyofevidencefrom theHolder reasonably satisfactorytothe Company of theloss, theft, destruction ormutilationofthis Note, |
| a. | inthe case of loss,theftordestruction,uponprovision ofindemnity reasonably satisfactory to itand/or itstransfer agent, or |
| b. | (ii)in thecaseofmutilation,uponsurrenderandcancellationofthis Note, then the Company at itsexpense will execute anddeliverto the Holder a newNote, dated thedate of thelost,stolen, destroyed ormutilated Note, and evidencing theoutstanding andunpaidprincipalamount ofthe lost, stolen, destroyed ormutilated Note. |
| 12) | Reservationof Shares.Companyshall instruct itstransfer agenttoreserveatleast fortyfive million (45,000,000) sharesof itsCommonStock for issuancetoHolderinconnection with conversionof thisNote,and shallprovide Holderwithacopy of suchinstruction letter. |
| 13) | TheHolder may not convert this Note to the extent such conversionwould result intheHolder, togetherwith any affiliate thereof, beneficially owning (as determined in accordancewithSection 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 9.99% of the then issued and outstanding shares ofCommonStock heldby such Holder after application of this |
Section. Since the Holderwill not be obligated to report to the Companythenumber of shares ofCommon Stock it may hold atthetime of a conversion hereunder, unlessthe conversion at issuewouldresult in theissuance of shares ofCommonStock in excess of 9.99% of the then outstanding shares of Common Stockwithout regard to any other shares which may be beneficially ownedby theHolderor an affiliate thereof, the Holder shall have the authority and obligation to determinewhetherthe restriction contained in this Sectionwill limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination ofwhich portion of theprincipal amount ofNote are convertible shall be the responsibility and obligation oftheHolder. If the Holder has delivered a ConversionNoticefor a principal amount ofNote that would resultin the issuance of in excess of thepermittedamount hereunder,without regard to any other shares thattheHolder or its affiliatesmay beneficially own, the Company shall notify the Holder of this fact and shall honor the conversion forthe maximum principal amount permitted to be converted onsuch Conversion Date and,atthe option of theHolder, either retain any principal amount tendered for conversionin excess of thepermitted amount hereunder for future conversions or return such excess principal amount to the Holder. The provisions of this Section may be waivedby a Holder (but onlyas to itself and not to any otherHolder) upon not less than 65 days prior notice to the Company.
| 14) | Maximum Rate.Allprovisions hereinmade areexpressly limitedsothatin noevent whatsoever, whetherbyreasonofadvancementofproceeds hereof, accelerationofmaturityoftheunpaid balance hereoforotherwise, shalltheamountpaidoragreedto bepaidtoHolderfor the useofthe moneyadvanced hereunder exceedthemaximum rateofinterestallowedto bechargedunder applicablelaw (the“Maximum Rate”),regardlessofwhetherornottherehasbeenanaccelerationofthepaymentofprincipalasset forth herein.If,fromanycircumstanceswhatsoever,thefulfillmentof anyprovisionofthisNoteor anyother agreementorinstrumentnoworhereafter evidencing, securingor in any wayrelatingtotheindebtedness evidencedherebyshall involvethepaymentofinterestinexcessoftheMaximum Rate, then,ipsofacto,theobligationto payinterest hereunder shallbereducedtotheMaximum Rate;andiffromanycircumstance whatsoever, Holder shall ever receive interest,theamountofwhichwould exceedtheamountcollectibleattheMaximum Rate,suchamountaswouldbeexcessive interest shallbeappliedtothereductionoftheprincipal balance remaining unpaid hereunderand nottothepaymentofinterest.Thisprovision shall controleveryother provisionin anyand allotheragreementsandinstruments existingorhereafterarising betweentheCompanyandHolderwithrespecttotheindebtedness evidenced hereby. |
IN WITNESS WHEREOF,theCompanyhascaused this instrument to beduly executed by anofficer thereunto duly authorized, as of thedate firstwrittenabove.
Date: March29,2019
ExhibitB.
NOTICE OFCONVERSION
Theundersigned hereby elects toconvert $____________principal amount (plus accrued interest)ofthis Note into Shares ofCommon Stock ofGROW SOLUTIONSHOLDINGS,INC.,(the“Company”),asofthedate written below. Nofeewillbecharged tothe HolderorHolder’s Custodian foranyconversion, except for transfer taxes, ifany.
Box Checkedas toapplicable instructions:
[ ]TheBorrower shall electronically transmittheCommon Stock issuable pursuant tothis Notice of Conversiontothe account oftheundersigned or its nominee with DTC through itsDeposit Withdrawal Agent Commission system (“DWAC Transfer”).
NameofDTCPrimeBroker:___________________
Account Number:_____________________
[ ] Theundersigned hereby requests that theBorrower issue acertificateorcertificates for thenumber ofshares ofCommonStock set forthbelow (which numbers are based onthe Holder’s calculation attached hereto) inthe name(s) specified immediately below:
Date of Conversion:______________________
ConversionPrice:______________________
SharestoBe Delivered:______________________
Outstanding Shares:______________________
IsthisConversion Below 9.99%: Yes / No
Remaining Principal Balance Due:______________________
Signature:______________________
Print Name:______________________
