Exhibit 10.48
NEITHER THEISSUANCEAND SALE OFTHE SECURITIES REPRESENTEDBYTHIS CERTIFICATE NOR THE SECURITIESINTOWHICH THESE SECURITIESARE CONVERTIBLE HAVE BEEN REGISTERED UNDERTHE SECURITIESACTOF 1933, AS AMENDED, ORAPPLICABLE STATESECURITIES LAWS.THESECURITIES MAYNOT BE OFFERED FORSALE, SOLD, TRANSFERREDORASSIGNED (I)IN THE ABSENCE OF (A)ANEFFECTIVE REGISTRATIONSTATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933,ASAMENDED, OR(B)AN OPINION OF COUNSEL(WHICHCOUNSEL SHALLBESELECTEDBYTHE HOLDER),IN A GENERALLY ACCEPTABLE FORM, THATREGISTRATION IS NOT REQUIRED UNDER SAID ACT OR(II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE144A UNDERSAIDACT ACCOMPANIED BY ALEGAL OPINION.NOTWITHSTANDING THE FOREGOING,THE SECURITIES MAY BEPLEDGEDIN CONNECTION WITH ABONAFIDEMARGINACCOUNT OROTHER LOAN ORFINANCING ARRANGEMENTSECURED BYTHE SECURITIES.
Principal Amount:$14,000.00 | IssueDate: November 15, 2016 |
PurchasePrice:$14,000.00 |
CONVERTIBLEPROMISSORYNOTE
FORVALUERECEIVED,JAMMINJAVA CORP., aNevadacorporation (hereinafter called the “Borrower”),herebypromisestopaytothe orderVIS VIRESGROUP,INC.,aNew Yorkcorporation, orregistered assigns (the“Holder”)the sum of $14,000.00 togetherwithany interest as setforthherein, on August 15, 2017(the “Maturity Date”),andtopay interest ontheunpaidprincipal balancehereof atthe rateof eight percent (8%) (the “InterestRate”) perannumfromthe datehereof(the“Issue Date”)untilthesame becomes due andpayable, whether atmaturity oruponaccelerationorby prepayment orotherwise. ThisNotemay notbeprepaidinwholeorin partexcept as otherwise explicitly setforth herein. Any amountof principal orinterest onthis Notewhich is notpaidwhen dueshall bearinterestat the rateof twentytwopercent(22%)per annum fromthe due datethereof until the sameispaid(“Default Interest”). Interestshallcommence accruing on the date thatthe Noteisfully paidandshall becomputed onthe basis of a365-dayyearandthe actual number of days elapsed. Allpayments due hereunder (tothe extent not converted intocommonstock,$0.001 parvalue pershare(the“Common Stock”)inaccordance withthe termshereof) shallbe made in lawfulmoney ofthe United Statesof America.Allpaymentsshall bemade atsuchaddressas theHolder shall hereafter givetothe Borrowerbywrittennoticemade in accordance with theprovisions ofthis Note.Whenever any amountexpressedtobeduebythetermsof this Noteis due onany day which is not abusiness day, thesame shall instead be due onthe next succeedingdaywhichisabusiness day and,inthecase of anyinterest payment datewhichis notthe date on
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whichthisNoteispaidin full,theextensionofthe due datethereofshallnotbetaken into accountforpurposesof determining the amountof interest due onsuch date.As usedin this Note,the term “business day” shallmean any day otherthan aSaturday, Sundayor adayonwhichcommercial banks inthecity ofNew York,New York areauthorizedorrequiredbylaw orexecutiveordertoremainclosed.Eachcapitalized term usedherein, andnot otherwisedefined,shall havethe meaning ascribed theretoin thatcertain Securities Purchase Agreement datedthedatehereof, pursuanttowhichthis Notewasoriginally issued (the“PurchaseAgreement”).
ThisNoteisfree fromall taxes,liens, claims and encumbrances with respecttothe issuethereofandshall notbe subjecttopreemptive rights or othersimilar rightsof shareholders ofthe Borrowerandwill notimposepersonal liability uponthe holder thereof.
Thefollowing terms shall applytothisNote:
ARTICLEI.CONVERSIONRIGHTS
1.1 Conversion Right.TheHoldershallhave the rightfromtimetotime, andatany timeduring the periodbeginningonthedatewhichis one hundred eighty(180) daysfollowing the dateof thisNoteandending onthelaterof: (i)the Maturity Dateand(ii) the dateof payment of the Default Amount(as definedinArticle III)pursuanttoSection 1.6(a)orArticleIII,each in respectof the remaining outstandingprincipal (and accrued interest) amountofthis Noteto convertallorany partof theoutstanding and unpaidprincipal amountof thisNote intofullypaid andnon-assessable shares of Common Stock,assuchCommonStockexists ontheIssueDate,oranyshares of capital stock or othersecurities oftheBorrower intowhichsuchCommonStockshallhereafterbechanged orreclassifiedatthe conversion price(the“ConversionPrice”)determined asprovided herein (a“Conversion”);provided,however, thatin noevent shall the Holderbeentitledtoconvertanyportionof thisNoteinexcess of that portionof thisNoteuponconversionofwhich the sum of (1)the number of shares ofCommonStockbeneficiallyownedbythe Holderand its affiliates (otherthan shares ofCommonStockwhichmay bedeemed beneficially owned throughthe ownership oftheunconvertedportion oftheNotesorthe unexercisedorunconverted portion ofany othersecurity of theBorrowersubject to alimitationonconversionorexercise analogoustothe limitations containedherein)and (2)thenumber of shares of Common Stockissuable uponthe conversionofthe portion of this Notewith respecttowhichthe determination ofthis provisois beingmade,would resultinbeneficialownershipbytheHolderand its affiliates of morethan 9.99% of the outstandingshares ofCommonStock.Forpurposes of the provisototheimmediately preceding sentence, beneficial ownership shallbe determinedinaccordance withSection 13(d)of the Securities ExchangeActof1934, asamended (the“Exchange Act”), and Regulations13D-G thereunder, except asotherwiseprovidedin clause (1) of suchproviso,provided,further,however,thatthe limitations onconversionmay bewaivedbythe Holder upon,atthe election ofthe Holder, notless than61days’ priornoticetothe Borrower,andthe provisions of the conversion limitation shallcontinue
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toapplyuntil such 61stday(orsuchlater date,as determinedby the Holder, asmaybe specifiedinsuch notice ofwaiver). Thenumber of shares of Common Stocktobe issuedupon eachconversion ofthisNoteshallbedeterminedbydividing the ConversionAmount(as definedbelow)bythe applicable Conversion Price thenineffect onthe datespecified inthe notice ofconversion,intheform attached heretoas Exhibit A (the“Notice of Conversion”),deliveredtothe Borrowerbythe HolderinaccordancewithSection 1.4below; provided thatthe NoticeofConversionis submittedbyfacsimileore-mail(orby othermeans resultingin,orreasonably expectedtoresultin,notice)tothe Borrower before 6:00p.m., New York,New Yorktimeonsuch conversiondate(the “Conversion Date”).The term“Conversion Amount” means, with respecttoanyconversion ofthisNote,thesumof(1)the principal amountof thisNote tobe convertedinsuchconversionplus (2)atthe Holder’s option,accrued and unpaidinterest,ifany, onsuchprincipal amountatthe interest ratesprovidedinthisNote tothe ConversionDate,plus
(3)at the Holder’s option,Default Interest,if any, onthe amounts referredtoin the immediatelypreceding clauses (1) and/or (2)plus (4)atthe Holder’s option,any amounts owedtothe HolderpursuanttoSection 1.4(g)hereof.
1.2 | Conversion Price. |
(a) Calculation ofConversionPrice. Theconversionprice (the“Conversion Price”)shallequal the greaterof(a)$0.00009 pershare;and (b) the VariableConversion Price (as defined herein) (subject toequitableadjustmentsfor stock splits, stockdividendsorrights offeringsbythe Borrowerrelatingtothe Borrower’s securitiesorthe securities of any subsidiary ofthe Borrower,combinations,recapitalization, reclassifications,extraordinary distributions and similar events).The"Variable Conversion Price"shall mean65%multiplied bythe MarketPrice (asdefined herein)(representing a discount rateof35%). “MarketPrice” means theaverageofthe lowestfive (5)TradingPrices(as definedbelow)forthe Common Stock during theten (10)Trading Day periodending onthe latest complete TradingDay priorto theConversion Date.“Trading Price” means, for anysecurity asof any date,theclosingbidprice onthe OTCQBmarket, Pink Sheetselectronic quotation systemorapplicable trading market (the “OTC”) as reported by a reliablereporting service (“Reporting Service”) designatedby theHolder(i.e. Bloomberg) or,if theOTC is notthe principal trading marketfor such security, the closingbidprice ofsuch security onthe principal securities exchange ortradingmarketwheresuch security is listedor traded or,if noclosingbid priceofsuchsecurityis availableinanyof theforegoing manners,theaverage ofthe closing bid prices ofanymarketmakersfor suchsecuritythat arelisted inthe “pink sheets”.Ifthe Trading Price cannot becalculated for suchsecurity onsuchdate in themanner provided above,the Trading Priceshallbe thefairmarketvalue asmutually determinedby the Borrowerandthe holders of amajority ininterest ofthe Notesbeing convertedforwhich thecalculation ofthe Trading Priceis required in ordertodeterminethe Conversion Priceof such Notes.“Trading Day” shallmean anyday onwhichthe Common Stock is tradablefor anyperiod onthe OTC,or onthe principal securitiesexchange or othersecuritiesmarket onwhichthe Common Stock isthenbeing traded.
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(b) Conversion PriceDuring MajorAnnouncements. NotwithstandinganythingcontainedinSection 1.2(a)tothe contrary,intheeventthe Borrower(i)makesa public announcement thatit intendstoconsolidateormergewithany othercorporation(otherthan amergerinwhich the Borroweristhe surviving orcontinuing corporation anditscapital stockis unchanged)orsellortransferallor substantiallyallofthe assets ofthe Borroweror(ii)any person, grouporentity (includingthe Borrower)publicly announces a tender offertopurchase50%ormore oftheBorrower’sCommon Stock (oranyother takeover scheme) (the date ofthe announcementreferredtoinclause(i)or(ii)is hereinafter referredtoas the“AnnouncementDate”),then theConversion Priceshall, effective uponthe AnnouncementDateand continuing throughthe AdjustedConversionPrice Termination Date(asdefined below),beequaltothe lower of(x) the Conversion Pricewhich wouldhavebeen applicable for a Conversion occurring on theAnnouncement Dateand(y)the Conversion Price thatwould otherwise bein effect.Fromandafterthe AdjustedConversion PriceTermination Date,the Conversion Price shallbedetermined as setforth in thisSection 1.2(a). For purposeshereof,“AdjustedConversionPriceTerminationDate” shall mean, with respecttoany proposedtransactionortenderoffer(or takeoverscheme) forwhich a public announcementas contemplatedbythis Section 1.2(b) hasbeenmade, the dateupon whichthe Borrower(inthecaseof clause(i) above)orthe person, grouporentity(in the caseof clause(ii)above) consummatesorpublicly announcestheterminationorabandonment of the proposedtransactionor tenderoffer(ortakeover scheme)which causedthisSection 1.2(b) to becomeoperative.
1.3 Authorized Shares.TheBorrowercovenants thatduringtheperiodthe conversion rightexists, the Borrowerwill reservefrom itsauthorized and unissued Common Stock asufficient number of shares,freefrom preemptive rights,toprovidefor the issuanceofCommon Stockuponthefullconversion of thisNoteissued pursuanttothe Purchase Agreement.The Borroweris requiredatalltimestohaveauthorizedand reserved eight times the number ofsharesthatisactually issuable uponfullconversion of the Note(basedonthe ConversionPriceof the Notesin effectfrom timetotime)(the “ReservedAmount”).TheReserved Amountshallbeincreasedfromtimetotimeinaccordancewiththe Borrower’sobligations hereunder. The Borrowerrepresentsthatuponissuance, such shareswillbedulyand validly issued,fullypaidandnon-assessable. Inaddition, if the Borrowershallissue any securitiesormakeany changetoitscapitalstructurewhichwould change the numberof shares ofCommon Stock intowhichthe Notesshallbe convertibleatthethen currentConversion Price, the Borrowershallatthesametimemake properprovisionso that thereafter thereshall be a sufficientnumber of sharesofCommon Stockauthorized and reserved,freefrom preemptive rights,for conversion oftheoutstandingNotes.The Borrower(i)acknowledgesthatithasirrevocablyinstructedits transferagent toissue certificatesfor the Common Stockissuable uponconversion of this Note,and
(ii) agreesthatitsissuance ofthisNoteshall constitutefullauthoritytoitsofficers and agentswho arechargedwith theduty of executing stockcertificatestoexecuteandissue the necessarycertificates for shares of Common Stockin accordance with the terms and conditions of this Note.
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If,atanytimetheBorrowerdoes notmaintainthe Reserved Amountitwillbeconsideredan Eventof Default under Section 3.2of the Note. ,providedthatthe Borrowershall have 10BusinessDaystobegintocurethedefault (during which time,if anauthorized shareincrease isrequired, the BorrowerwillattheminimumfilethenecessarypaperworkwiththeSECtostarttheprocesstoincreaseitsauthorizedshares,andwhichiftimely completed,willnotconstituteanEvent ofDefault),provided thatsuchdefault doesnotoccurafterthe onehundred eighty dayfromthedateof thenote, whereupontherewouldbe nocureallowed.
1.4 | MethodofConversion. |
(a) MechanicsofConversion.SubjecttoSection 1.1,thisNotemaybe convertedbythe Holderinwholeorin partatanytimefromtime totime afterthe Issue Date, by
(A) submittingtotheBorrower aNotice ofConversion (byfacsimile,e-mailor other reasonablemeans of communication dispatched onthe Conversion Datepriorto 6:00p.m.,New York, New Yorktime)and (B) subjecttoSection 1.4(b),surrendering thisNoteat the principal officeofthe Borrower.
(b) SurrenderofNoteUpon Conversion.Notwithstandinganythingtothe contrary setforth herein, uponconversion of this Noteinaccordance withthe termshereof,theHolder shall notberequiredtophysicallysurrenderthisNote totheBorrowerunless theentireunpaid principal amount of thisNoteis so converted.The Holderand the Borrower shallmaintain recordsshowingthe principal amount so convertedandthedatesof such conversions orshall usesuch othermethod, reasonably satisfactorytothe Holder and the Borrower,so as not torequire physical surrenderof this Noteupon eachsuchconversion.In the eventofanydisputeordiscrepancy, such recordsof the Borrower shall,prima facie,becontrolling and determinative inthe absence ofmanifest error.Notwithstanding theforegoing,if any portionofthisNote is convertedas aforesaid, the Holdermay nottransfer this Noteunlessthe Holder first physicallysurrenders thisNote totheBorrower,whereupon the Borrowerwillforthwith issue and deliver upontheorderof theHolder anewNoteofliketenor,registered as the Holder (uponpaymentbythe Holder ofany applicable transfertaxes)may request,representinginthe aggregatethe remaining unpaid principal amountof this Note.TheHolderandany assignee,byacceptance ofthisNote,acknowledge and agree that,byreason of the provisions ofthis paragraph,following conversion of a portionof thisNote,the unpaid and unconvertedprincipal amountof this NoterepresentedbythisNotemaybelessthan the amountstated on thefacehereof.
(c) PaymentofTaxes and Fees.The Borrowershallnotberequiredtopayanytaxwhich maybe payableinrespectofany transferinvolved inthe issue and delivery ofshares ofCommon Stockor othersecuritiesorpropertyonconversion of thisNoteinaname otherthan thatof the Holder(orin streetname), and the Borrowershall notbe required toissueor deliveranysuch sharesor othersecuritiesorproperty unlessand until the personorpersons (otherthan the Holderorthecustodianin whosestreet name such sharesare tobe heldfor the Holder’s
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account)requesting the issuance thereofshall havepaidtotheBorrowerthe amountof any suchtax orshallhaveestablishedtothe satisfaction ofthe Borrower thatsuchtaxhas beenpaid. The Holder shall however pay all costs charged by the Borrower’s Transfer Agent in connection with the conversion of this Note or the issuance of Common Stock in connection herewith.
(d) DeliveryofCommonStockUpon Conversion.Upon receiptbytheBorrowerfromthe Holderofafacsimile transmissionore-mail(or otherreasonable means ofcommunication) of aNotice ofConversionmeetingthe requirements for conversion as providedinthis Section 1.4,the Borrowershallissue and deliverorcausetobe issuedand deliveredto or upontheorderof the Holder certificatesfor the Common Stockissuable upon such conversionwithinthree (3)business days aftersuch receipt (the“Deadline”) (and, solely inthecase ofconversion ofthe entire unpaid principal amounthereof, surrender of this Note)inaccordancewiththe termshereofand the PurchaseAgreement.
(e) Obligationof BorrowertoDeliverCommonStock. Upon receipt bythe Borrowerof aNotice ofConversion, the Holdershall bedeemedtobethe holder of record ofthe Common Stockissuable uponsuch conversion,the outstanding principal amountandthe amountof accrued and unpaid interest onthisNoteshallbe reducedtoreflectsuch conversion,and, unlessthe Borrowerdefaults onitsobligations underthisArticleI,all rights with respect tothe portion ofthisNotebeingso convertedshall forthwith terminate exceptthe righttoreceive the Common Stockor othersecurities, cashorotherassets, as hereinprovided, on suchconversion.IftheHoldershallhavegivenaNotice ofConversion as provided herein,the Borrower’sobligationtoissueanddeliverthe certificatesfor CommonStockshallbe absoluteand unconditional, irrespective ofthe absence ofanyactionby the Holdertoenforce the same,any waiverorconsentwith respecttoany provision thereof,the recovery ofany judgment againstany personoranyactiontoenforce the same, any failureordelay inthe enforcement ofanyotherobligation ofthe Borrowertothe holder of record, oranysetoff, counterclaim, recoupment,limitationortermination,oranybreachorallegedbreachbythe Holderofanyobligationtothe Borrower,andirrespective of any othercircumstance which mightotherwiselimit such obligation of the Borrower totheHolderinconnection withsuchconversion. TheConversion Datespecifiedinthe Notice ofConversion shallbethe Conversion Date solongastheNotice ofConversionisreceivedbythe Borrowerbefore6:00p.m., New York,New York time,onsuch date.
(f) Delivery ofCommonStockby ElectronicTransfer.Inlieuofdelivering physical certificatesrepresenting theCommonStockissuable upon conversion,provided the Borroweris participatingin theDepositoryTrust Company(“DTC”)FastAutomated Securities Transfer(“FAST”)program, upon requestof the Holder anditscompliance withthe provisions containedinSection 1.1andin thisSection 1.4,theBorrowershall useitsbesteffortstocauseitstransferagent toelectronically transmitthe CommonStockissuableuponconversion tothe Holderbycrediting the accountof Holder’s Prime Broker withDTC throughitsDepositWithdrawal Agent Commission(“DWAC”)system.
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(g) FailuretoDeliverCommonStockPriortoDeadline.Withoutinanywaylimiting the Holder’s right topursue other remedies, including actual damagesand/orequitablerelief,the parties agree that if deliveryoftheCommon Stockissuable upon conversionof thisNoteisnotdelivered by theDeadline, unless such failure is the result of the actions or inactions of the Holder, the Borrowershallpaytothe Holder $2,000 perdayincash, foreachday beyond the Deadline thatthe Borrowerfailstodeliversuch Common Stock.Such cash amountshall bepaidtoHolder bythefifthday of the month following themonth inwhichithasaccrued or,at the option of the Holder(by writtennoticetothe Borrowerbythe firstday ofthemonthfollowing the monthinwhichithas accrued),shall beaddedtotheprincipal amountofthis Note,inwhich eventinterestshallaccrue thereoninaccordance withthe terms ofthisNoteandsuch additional principal amountshallbe convertible intoCommonStockinaccordancewiththe termsof this Note.TheBorroweragrees thatthe right to convertis avaluable righttothe Holder.Thedamagesresultingfrom a failure, attempttofrustrate, interferencewithsuch conversion right are difficult if notimpossibletoqualify.Accordingly theparties acknowledge thatthe liquidated damages provision containedinthis Section 1.4(g) arejustified.
1.5 Concerning theShares. Theshares of CommonStockissuableuponconversion of thisNotemay notbesoldortransferred unless (i)such shares aresold pursuanttoaneffective registration statementunder theActor(ii)theBorrowerorits transfer agent shallhavebeenfurnishedwithan opinionof counsel (which opinionshall beinform, substanceand scopecustomary for opinionsof counselincomparable transactions)tothe effect thatthesharestobe soldortransferredmaybe soldor transferred pursuanttoanexemption from suchregistrationor(iii)such shares aresoldor transferredpursuant toRule 144under the Act (or a successorrule) (“Rule 144”)or(iv)such shares aretransferredtoan“affiliate”(as defined inRule 144)of the Borrowerwho agreestosellorotherwisetransferthe shares onlyin accordancewith thisSection 1.5and whoisanAccredited Investor(as definedin the PurchaseAgreement). Exceptas otherwise providedinthePurchaseAgreement(and subjecttotheremovalprovisions setforthbelow),until such time asthe shares ofCommon Stockissuable upon conversionofthisNotehavebeen registeredunder the Actorotherwisemaybesold pursuanttoRule 144 withoutany restrictionastothe number of securities as of a particular date thatcanthenbe immediatelysold, each certificateforsharesof Common Stockissuable uponconversion of this Note thathas notbeen soincludedinaneffective registration statementor thathasnotbeensold pursuanttoan effectiveregistration statement oran exemption thatpermitsremovalofthe legend,shallbearalegendsubstantiallyinthe following form, as appropriate:
“NEITHER THEISSUANCEANDSALEOF THESECURITIES REPRESENTED BY THISCERTIFICATE NOR THESECURITIESINTO WHICHTHESE SECURITIES AREEXERCISABLE HAVEBEENREGISTERED UNDER THESECURITIESACT OF 1933, ASAMENDED, ORAPPLICABLE STATESECURITIESLAWS.THESECURITIESMAYNOTBE OFFEREDFOR SALE, SOLD,TRANSFERRED ORASSIGNED (I) IN THE ABSENCEOF (A) ANEFFECTIVE REGISTRATIONSTATEMENTFOR THE
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SECURITIESUNDER THE SECURITIES ACTOF 1933, ASAMENDED,OR(B)AN OPINIONOFCOUNSEL (WHICH COUNSEL SHALL BE SELECTEDBYTHEHOLDER), IN AGENERALLY ACCEPTABLE FORM, THAT REGISTRATION ISNOT REQUIRED UNDER SAIDACT OR(II) UNLESS SOLDPURSUANT TO RULE144 OR RULE144A UNDER SAID ACT.NOTWITHSTANDING THE FOREGOING, THE SECURITIESMAYBE PLEDGED IN CONNECTION WITH ABONAFIDE MARGIN ACCOUNT OROTHERLOAN ORFINANCING ARRANGEMENT SECURED BYTHE SECURITIES.”
The legendsetforthabove shall beremovedandthe Borrowershall issuetotheHolder anewcertificate thereforefree ofany transferlegendif (i)theBorrowerorits transferagent shallhave receivedan opinionof counsel, inform, substance and scopecustomary for opinions ofcounsel incomparable transactions, tothe effect that apublic saleortransfer of suchCommon Stock maybe made withoutregistration under the Act,whichopinion shallbe acceptedbythe Borrower so thatthe saleor transferis effected or(ii) inthecase ofthe CommonStockissuableuponconversion of this Note, suchsecurityis registeredfor sale bytheHolder underan effective registration statementfiledunder the Act orotherwisemaybe sold pursuanttoRule144 without any restrictionastothe number of securities as of aparticulardate thatcan thenbeimmediately sold. In the event thatthe Borrower does not acceptthe opinion of counselprovidedbythe Holderwith respecttothetransferof Securities pursuanttoanexemption from registration, suchas Rule 144or Regulation S,attheDeadline, itwillbe considered an Event ofDefault pursuant toSection 3.2of theNote.
1.6 | EffectofCertain Events. |
(a) Effectof Merger,Consolidation,Etc.At the optionof the Holder,thesale, conveyanceordispositionofallorsubstantially all ofthe assets of the Borrower,the effectuationbythe Borrowerof atransactionor seriesof relatedtransactionsinwhich morethan 50%of the voting powerof the Borroweris disposedof,ortheconsolidation,mergeror otherbusinesscombination of the Borrowerwithor intoany otherPerson (as definedbelow)orPersons when the Borrowerisnotthe survivor shall either:(i) be deemedtobeanEvent ofDefault (as definedinArticle III)pursuanttowhich the Borrowershallbe requiredtopaytotheHolder uponthe consummation of and as a conditionto suchtransactionan amountequaltothe Default Amount(as definedin Article III)or(ii)be treatedpursuanttoSection1.6(b)hereof.“Person”shallmeanany individual, corporation,limitedliability company, partnership,association, trust or otherentityororganization.
(b) Adjustment Dueto Merger,Consolidation, Etc.If,atany timewhenthisNoteis issuedand outstanding and priortoconversion of allof the Notes, thereshallbeany merger,consolidation, exchange ofshares, recapitalization,reorganization,or othersimilar event,asaresult ofwhichshares of Common Stockof the Borrower shallbechanged intothesameoradifferent number ofshares of anotherclassorclassesof stock orsecurities ofthe
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Borroweroranother entity,orin caseof any sale orconveyanceofallorsubstantiallyall oftheassets oftheBorrower otherthanin connection with a plan of completeliquidation ofthe Borrower,thenthe Holder ofthisNoteshall thereafterhavethe righttoreceiveupon conversionof this Note,uponthe basis and uponthe terms andconditions specifiedhereinandinlieuoftheshares of Common Stockimmediately theretoforeissuable upon conversion, such stock,securitiesorassets which the Holderwouldhave been entitledtoreceivein suchtransactionhadthisNotebeenconvertedinfullimmediatelypriortosuchtransaction(without regard toany limitations onconversionsetforthherein), and inanysuch case appropriateprovisions shall bemade with respecttotherightsand interests ofthe Holder ofthisNote tothe end thatthe provisions hereof (including,withoutlimitation, provisions for adjustment of the ConversionPriceandofthe number of shares issuableuponconversion of the Note)shall thereafterbe applicable, asnearly asmaybepracticablein relationtoanysecurities orassets thereafterdeliverableuponthe conversionhereof. The Borrowershall notaffectanytransaction describedin thisSection1.6(b) unless (a)it firstgives, tothe extent practicable,thirty (30) dayspriorwritten notice (butinany eventatleastfifteen(15)daysprior writtennotice) oftherecord dateof thespecialmeeting of shareholderstoapprove,orif thereis nosuchrecorddate,theconsummation of, such merger, consolidation,exchange of shares, recapitalization,reorganizationor other similar eventorsaleof assets (duringwhich timethe Holdershallbeentitledto convertthisNote)and(b)the resulting successororacquiring entity(if nottheBorrower)assumesby written instrumenttheobligations ofthis Section 1.6(b). Theaboveprovisions shall similarly applytosuccessiveconsolidations, mergers, sales, transfersorshare exchanges.
(c) Adjustment DuetoDistribution.If the Borrowershalldeclareormakeanydistribution ofits assets(orrightstoacquireits assets)toholdersofCommon Stockas adividend,stockrepurchase,bywayof returnof capitalorotherwise (includingany dividend ordistributiontothe Borrower’s shareholdersin cashorshares (orrights toacquireshares) ofcapital stockof a subsidiary (i.e., aspin-off)) (a“Distribution”),then the Holderof this Noteshall be entitled, uponanyconversion of thisNoteafter the date of recordfordetermining shareholders entitledtosuchDistribution,toreceivethe amountof such assetswhichwould havebeenpayabletothe Holderwithrespecttothe shares ofCommonStockissuable upon suchconversionhadsuch Holderbeenthe holder of such shares ofCommonStock onthe recorddatefor the determination of shareholders entitledtosuchDistribution.
(d) Adjustment DuetoDilutiveIssuance. If,atanytime whenanyNotes areissuedandoutstanding,the Borrowerissuesorsells,orinaccordance withthis Section 1.6(d)hereofis deemedtohaveissuedorsold, anyshares of CommonStockfor noconsiderationorfor aconsiderationpershare (before deductionof reasonableexpensesorcommissionsorunderwriting discounts orallowancesin connectiontherewith)orforconsideration pershare whichis less than the Conversion Priceineffect onthe dateof such issuance(or deemedissuance) of such shares of Common Stock(a“DilutiveIssuance”),thenimmediatelyupontheDilutive Issuance,the Conversion Price willbereducedtothe amountof the considerationper
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share receivedbytheBorrowerinsuchDilutive Issuance. Provided that noadjustmentshallberequiredormadeinconnectionwiththeissuanceofsharesofCommon Stock orsecurities (a)upon conversion and/orexerciseof the Borrower’scurrentlyoutstandingconvertible promissorynotes,convertiblesecurities, warrantsand options;(b)toofficers, employees,directors orconsultantsinconnection with issuancespursuantto astockplanapprovedbythe Board ofDirectors of the Borrower; or (c)topersonsorentitieswithwhomthe Borroweris indiscussionsregarding aninvestmentinthe Borrower as of the dateoftheBorrower’s entryintothis Note(orinconnectionwiththeissuanceorgrant of anysecuritiesof the Borrower tosuchentities), regardlessineach caseof theconversionprice ordeemed issuanceprice ofsuchshares andsecurities.
TheBorrowershallbe deemedtohaveissuedorsold shares of Common Stockifthe Borrowerinany mannerissuesorgrantsanywarrants,rights oroptions (notincluding employee stockoption plans),whetheror notimmediatelyexercisable,tosubscribeforor topurchase Common Stockorothersecurities convertible intoorexchangeable for Common Stock(“ConvertibleSecurities”) (such warrants,rightsandoptionstopurchaseCommonStock orConvertible Securities are hereinafterreferredtoas“Options”)and the price pershare for which CommonStockisissuable upontheexercise ofsuch Optionsislessthan the ConversionPricethenin effect,thenthe Conversion Priceshall beequaltosuchpricepershare. For purposesof the precedingsentence,the “price pershare forwhichCommon Stockisissuable uponthe exercise of suchOptions” is determinedby dividing(i) the total amount,ifany,receivedorreceivablebythe Borroweras consideration for theissuanceorgranting of all suchOptions, plus theminimumaggregate amountof additional consideration, if any,payableto the Borroweruponthe exercise of allsuch Options,plus,inthe caseof Convertible Securitiesissuable uponthe exercise ofsuch Options,theminimum aggregate amountof additionalconsideration payable uponthe conversionorexchange thereofatthe time such ConvertibleSecuritiesfirstbecome convertibleor exchangeable,by(ii) the maximum totalnumber of shares of Common Stockissuable upon the exercise ofallsuchOptions (assumingfullconversionofConvertible Securities,if applicable).Nofurther adjustmenttothe Conversion Price willbemadeupontheactualissuance of such Common Stockuponthe exercise of such Options or uponthe conversionorexchangeof Convertible Securitiesissuableuponexercise of such Options.
Additionally, theBorrowershallbe deemedtohaveissuedorsoldsharesof Common StockiftheBorrowerinany mannerissuesorsellsany Convertible Securities,whetheror notimmediately convertible (otherthanwhere the same areissuable upontheexercise of Options),and the price pershare for which Common Stockis issuable uponsuchconversionorexchange islessthan the Conversion Pricethenin effect,thenthe ConversionPrice shall be equaltosuch price pershare. Forthe purposes of thepreceding sentence, the“price per sharefor which Common Stockis issuable uponsuchconversionor exchange”is determinedby dividing(i) the total amount,if any,receivedorreceivablebytheBorrowerasconsideration for theissuanceorsaleof allsuch Convertible Securities, plustheminimum aggregateamount of additional consideration,ifany, payabletotheBorroweruponthe
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conversionorexchange thereofatthe time such Convertible Securities firstbecomeconvertibleorexchangeable,by(ii) the maximum total numberof shares ofCommonStockissuableuponthe conversionorexchange of allsuch Convertible Securities.Nofurther adjustmenttothe Conversion Price willbe made uponthe actual issuance of such CommonStock upon conversion orexchange of such Convertible Securities.
(e) Purchase Rights. If,atanytime whenany Notes areissuedandoutstanding, the Borrowerissuesany convertible securitiesorrightstopurchasestock,warrants, securitiesor otherproperty (the“Purchase Rights”)pro ratatotherecordholders ofany class ofCommonStock,thenthe Holder of thisNotewillbeentitledtoacquire, upon the termsapplicableto suchPurchaseRights,the aggregatePurchase Rights which such Holdercouldhaveacquired if such Holderhadheld thenumberofsharesofCommonStockacquirableuponcomplete conversion ofthisNote(without regardto anylimitations onconversioncontainedherein) immediately before the date onwhicha record is takenfor the grant, issuanceorsale ofsuch Purchase Rightsor,if nosuchrecordis taken,thedateas ofwhich the recordholdersofCommon Stockaretobedetermined for the grant, issueor saleof suchPurchase Rights.
(f) Notice ofAdjustments.Upon the occurrence ofeachadjustmentorreadjustment ofthe Conversion Price as a resultof the eventsdescribedin thisSection 1.6,theBorrower,atits expense,shall promptly computesuch adjustmentorreadjustmentand prepareand furnishtothe Holder a certificatesetting forth such adjustmentorreadjustmentand showingindetailthefacts upon which such adjustment orreadjustmentisbased. The Borrowershall,uponthe written requestatanytimeofthe Holder,furnishto such Holder a like certificatesetting forth (i) such adjustment or readjustment,(ii)theConversionPriceatthe timeineffectand(iii)the number ofshares ofCommon Stockand the amount,ifany, of othersecurities orproperty whichatthe timewould bereceived uponconversion of the Note.
1.7 TradingMarketLimitations.Unless permittedbythe applicablerulesandregulations of the principal securities market onwhichthe Common Stockis thenlisted or traded,in noevent shall the Borrowerissue upon conversion oforotherwisepursuantto this Noteand the otherNotesissued pursuant tothe Purchase Agreement morethanthe maximumnumber of shares of Common Stock thattheBorrowercan issuepursuant to any ruleoftheprincipal United Statessecurities market onwhichthe Common Stock isthen traded(the“Maximum Share Amount”), whichshallbe9.99% of the total shares outstanding onthe Closing Date(asdefined inthe Purchase Agreement),subject toequitable adjustment from timeto timefor stocksplits,stockdividends, combinations,capital reorganizations and similar events relating tothe Common Stockoccurringafterthe datehereof.OncetheMaximum Share Amounthas beenissued, ifthe Borrowerfailstoeliminate any prohibitions underapplicable laworthe rulesorregulations of any stockexchange, interdealer quotation systemor otherself-regulatoryorganization withjurisdiction overthe Borrower oranyofitssecurities ontheBorrower’s abilityto issueshares of Common Stock inexcess of the Maximum Share Amount, inlieuofany
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further righttoconvert thisNote,thiswillbeconsideredanEventof Default underSection3.3of the Note.
1.8 StatusasShareholder. Upon submission of aNotice of Conversionby aHolder, (i) the shares covered thereby (otherthanthe shares,ifany, which cannotbeissued because theirissuance wouldexceedsuch Holder’s allocatedportionofthe Reserved Amount orMaximum Share Amount)shallbe deemed converted intoshares ofCommon Stockand(ii)theHolder’s rightsas a Holderof such convertedportion of this Noteshallcease and terminate,exceptingonlytherighttoreceive certificates for suchshares ofCommon Stockandtoanyremediesprovidedhereinorotherwise available atlawor in equity to such Holderbecause of afailurebythe Borrowertocomplywiththe termsof thisNote.Notwithstanding the foregoing,if a Holderhas notreceived certificatesforallsharesof Common Stockpriortothetenth(10th)business day afterthe expiration ofthe Deadlinewithrespectto aconversion ofanyportion ofthisNoteforany reason,then(unless the Holderotherwise electstoretain its statusas aholder of Common Stock by sonotifyingthe Borrower)theHoldershall regainthe rights of a Holder ofthisNote with respectto such unconvertedportions ofthisNoteand the Borrowershall,assoonas practicable, return such unconvertedNotetothe Holder or, ifthe Notehas notbeensurrendered, adjustitsrecordstoreflect that suchportion of thisNotehas not been converted. Inall cases,the Holdershallretain all ofits rightsand remediesforthe Borrower’sfailureto convertthis Note.
1.9 Prepayment. Notwithstandinganythingtothe contrary containedinthisNote,atany time duringthe periods set forth on the tableimmediately following thisparagraph(the “Prepayment Periods”),the Borrower shallhave the right,exercisableon notlessthanthree
(3)Trading Days priorwrittennoticetothe Holder of the Note toprepaythe outstanding Note(principal and accrued interest),infull,inaccordance withthis Section 1.9.Anynotice ofprepayment hereunder (an“Optional PrepaymentNotice”) shall be delivered tothe Holder of the Noteatits registeredaddresses and shall state:(1) thatthe Borrowerisexercisingits right toprepay theNote,and (2)thedateof prepaymentwhichshallbe notmorethanthree (3) TradingDays from thedateof theOptional PrepaymentNotice. On the datefixed for prepayment(the“Optional Prepayment Date”),theBorrowershallmake paymentoftheOptional Prepayment Amount(as definedbelow) toHolder,orupon the orderof the Holder as specifiedbythe Holderinwriting tothe Borrower,at leastone (1)business day priortothe Optional Prepayment Date.Ifthe Borrowerexercises its righttoprepaythe Note,theBorrowershallmakepayment totheHolder ofanamountin cash (the“OptionalPrepayment Amount”)equal tothepercentage (“PrepaymentPercentage”)assetforthin thetableimmediately following this paragraphopposite the applicable Prepayment Period,multiplied by thesumof: (w)the then outstandingprincipalamountof this Noteplus (x)accruedandunpaid interest onthe unpaid principal amountofthisNote totheOptional Prepayment Dateplus(y) Default Interest, if any, ontheamounts referred toin clauses (w)and(x)plus(z)any amounts owedtothe Holder pursuant toSection1.4(g)hereof.If the Borrowerdelivers an OptionalPrepayment Noticeand fails topaytheOptional PrepaymentAmount duetothe Holderof the Notewithin two (2)business days
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following the OptionalPrepayment Date,theBorrowershallforeverforfeit its righttoprepaytheNotepursuanttothisSection 1.9.
Prepayment Period | Prepayment Percentage |
1.Theperiod beginningonthe Issue Dateandending onthe datewhichisthirty(30)daysfollowing the Issue Date. | 108% |
2.Theperiodbeginning on the date whichis thirty-one(31) days followingtheIssueDateandending on the date whichis sixty (60)daysfollowingtheIssueDate | 113% |
3. Theperiodbeginningon thedatewhichissixty-one (61)daysfollowing the IssueDate and ending onthedatewhich isninety (90)daysfollowing the Issue Date | 118% |
4. Theperiodbeginning on the date thatisninety-one (91)day fromthe IssueDate and ending onehundred twenty (120)daysfollowingtheIssueDate | 123% |
5.Theperiodbeginningon the date thatisone hundred twenty-one(121)day fromthe IssueDateand endingone hundred fifty(150)daysfollowingtheIssue Date | 128% |
6.Theperiodbeginningon the date thatisone hundred fifty-one(151) dayfrom theIssueDateandending one hundredeighty (180)daysfollowingthe Issue Date | 133% |
After the expiration of one hundred eighty(180)days following the Issue Date,the Borrowershallhavenoright of prepayment.
ARTICLE II. CERTAIN COVENANTS
2.1 DistributionsonCapital Stock. Solongas the Borrowershallhaveanyobligation under this Note,the Borrowershall not withouttheHolder’s written consent(a) pay, declareor set apartforsuchpayment,any dividendor otherdistribution (whetherin cash,propertyor othersecurities) onshares of capital stock otherthandividendsonshares of Common
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Stocksolely intheformofadditional shares of Common Stockor(b)directlyorindirectlyor throughanysubsidiarymakeanyotherpaymentordistribution in respectofitscapitalstock exceptfor distributions pursuant toanyshareholders’ rightsplan which is approvedby amajority of the Borrower’s disinterested directors.
2.2 RestrictiononStockRepurchases.SolongastheBorrowershallhaveanyobligation underthisNote,the Borrowershall not withoutthe Holder’s written consent redeem,repurchaseorotherwise acquire (whetherfor cashor inexchange for propertyor other securities orotherwise)inany one transactionorseriesof relatedtransactionsanyshares ofcapital stock oftheBorrower orany warrants,rights oroptionstopurchaseoracquireanysuchshares.
2.3 Borrowings.Solongas theBorrowershallhaveanyobligation underthis Note,the Borrowershall not, withoutthe Holder’swritten consent, (a)create, incur, assume guarantee, endorse,contingentlyagreetopurchaseorotherwisebecomeliable uponthe obligation ofany other person,firm, partnership,jointventure orcorporation, exceptbytheendorsement of negotiable instruments for deposit orcollection, or(b)suffertoexist any liabilityfor borrowedmoney,exceptineachcasefor any borrowings that does notrender the Borrower a"Shell"company as definedinRule12b-2under the Securities Exchange Act of 1934.
2.4 Sale of Assets.Solongas the Borrowershallhaveany obligation under this Note,theBorrowershall not, withoutthe Holder’swritten consent,sell, leaseor otherwisedispose of any significantportion ofits assetsoutside the ordinary courseof business.Any consent tothe disposition ofany assetsmaybeconditioned on aspecified useof theproceeds ofdisposition.
2.5 Advances and Loans.Solongas the Borrowershall have any obligationunder this Note,the Borrowershallnot, withouttheHolder’s written consent,lend money, give creditormakeadvancestoany person,firm,joint venture orcorporation, including,withoutlimitation, officers, directors,employees, subsidiaries and affiliates of the Borrower,except loans,creditsoradvances (a)inexistenceorcommitted onthedatehereofand which the Borrowerhas informed Holderinwritingpriortothe datehereof, (b)made inthe ordinary courseof business or(c) not inexcessof$100,000.
ARTICLEIII. EVENTSOF DEFAULT
If anyofthe following events of default (each,an “Eventof Default”)shall occur:
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3.1 FailuretoPayPrincipalorInterest. TheBorrowerfailstopaytheprincipalhereoforinterestthereonwhendue on this Note,whetheratmaturity,uponaccelerationorotherwise.
3.2 Conversion and the Shares.TheBorrowerfailstoissuesharesof Common Stocktothe Holder(orannouncesorthreatensin writingthatitwill not honoritsobligationtodoso)uponexercisebytheHolderof the conversionrights of theHolder in accordancewiththetermsofthis Note,fails totransferorcauseitstransfer agenttotransfer (issue) (electronically orin certificatedform)any certificatefor shares ofCommon Stockissued tothe Holderuponconversion oforotherwise pursuanttothisNoteas and when requiredby this Note, through willful hindrances on the partof the Borrower,theBorrowerdirectsitstransferagent not totransferordelays,impairs, and/orhinders its transferagent in transferring(orissuing) (electronicallyor in certificatedform)anycertificateforshares ofCommonStocktobe issued totheHolder upon conversion oforotherwisepursuanttothisNoteas and when requiredby this Note,or fails toremove(ordirectsits transferagentnottoremoveorimpairs,delays,and/orhindersitstransfer agentfromremoving)anyrestrictive legend (ortowithdraw any stop transferinstructions in respectthereof) onany certificatefor anyshares of Common Stockissuedtothe Holder uponconversion oforotherwise pursuanttothis Noteas and when requiredbythis Note (ormakesany written announcement,statementor threat thatit does notintendto honorthe obligations described inthisparagraph)and any suchfailure shall continue uncured(oranywritten announcement, statement or threatnottohonoritsobligations shall notberescinded inwriting) for three(3) business days aftertheHolder shallhave delivered aNotice of Conversion. Itisan obligation of the Borrowertoremaincurrent initsobligations toitstransfer agent. Itshallbean eventof defaultof thisNote, if a conversionof thisNote is delayed,hinderedorfrustrated dueto abalanceowedbythe Borrower toitstransfer agent.Ifatthe option ofthe Holder,theHolder advances any funds tothe Borrower’s transfer agent in ordertoprocess a conversion;such advancedfunds shall bepaidby the BorrowertotheHolder withinforty eight (48)hoursof ademand fromtheHolder.
3.3 BreachofCovenants.TheBorrowerbreachesanymaterialcovenant or othermaterial termorcondition containedinthisNoteandanycollateral documentsincluding butnotlimitedtothe Purchase Agreementandsuch breach continuesfor a periodof ten (10)daysafterwritten notice thereoftothe Borrower fromthe Holder.
3.4 BreachofRepresentations andWarranties. AnyrepresentationorwarrantyoftheBorrowermadehereinorinany agreement,statementorcertificategiveninwriting pursuant hereto orinconnection herewith (including, withoutlimitation, the Purchase Agreement),shall be falseormisleading inany material respectwhen madeand the breach ofwhichhas(orwiththepassageoftimewillhave) amaterialadverse effect onthe rights of the Holderwithrespect tothisNoteorthe Purchase Agreement.
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3.5 ReceiverorTrustee.TheBorrower oranysubsidiary of the Borrowershall make an assignmentfor the benefitofcreditors, orapply foror consent tothe appointmentof areceiveror trusteefor itorfor asubstantial part ofitspropertyorbusiness,orsuch a receiveror trustee shallotherwisebeappointed.
3.6 Judgments.Anymoneyjudgment,writorsimilar processshall be entered orfiled againstthe Borrower oranysubsidiary of the Borroweroranyofits propertyor otherassets for morethan$100,000,and shallremain unvacated,unbonded orunstayedfor aperiodoftwenty (20) days unless otherwise consented toby the Holder,which consentwill notbe unreasonably withheld.
3.7 Bankruptcy.Bankruptcy,insolvency,reorganizationorliquidation proceedingsor otherproceedings, voluntaryorinvoluntary, forrelief underanybankruptcy lawor anylawfor therelief of debtorsshall be instituted byoragainst the Borroweroranysubsidiaryofthe Borrower.
3.8 DelistingofCommon Stock.The Borrowershallfailtomaintainthe listing ofthe Common Stock onatleast one of the OTC(which specifically includes thePinkSheetselectronic quotationsystem)oran equivalentreplacement exchange, the Nasdaq National Market, theNasdaq SmallCap Market,the New York StockExchange, ortheNYSE MKT.
3.9 FailuretoComplywiththeExchangeAct.The Borrowershall failtocomplywith the reportingrequirementsof the ExchangeAct; and/orthe Borrowershallceasetobe subject tothe reportingrequirementsof the Exchange Act, provided that the Company’s failure to timely file the Company’s quarterly report on Form 10-Q for the period ended July 31, 2016 as long as it is filed by December 14, 2016, shall not be deemed an Event of Default hereunder.
3.10 Liquidation. Anydissolution,liquidation,orwinding up of Borroweror anysubstantial portionofitsbusiness.
3.11 CessationofOperations. Anycessation ofoperationsbyBorrower or Borroweradmits it is otherwisegenerallyunabletopayitsdebts as such debtsbecomedue,provided, however, that any disclosureof theBorrower’s abilitytocontinueas a“going concern”shallnotbe anadmission thattheBorrowercannotpay itsdebts asthey becomedue.
3.12 Maintenanceof Assets. ThefailurebyBorrowertomaintainanymaterialintellectualproperty rights,personal,real propertyor otherassetswhich arenecessarytoconductitsbusiness (whether now orinthe future).
3.13 FinancialStatementRestatement. The restatementof any financialstatementsfiledby the Borrowerwiththe SECforanydate orperiod from twoyearspriortotheIssueDate of thisNoteand until thisNoteis nolongeroutstanding,if the result ofsuch restatementwould,bycomparisontothe unrestatedfinancialstatement,have constituted a
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materialadverseeffect onthe rights of the Holderwith respecttothisNoteorthe PurchaseAgreement.
3.14 ReverseSplits. TheBorrowereffectuatesareversesplit ofits Common Stockwithout twenty (20)dayspriorwritten notice tothe Holder.
3.15 ReplacementofTransferAgent.In the event thatthe Borrowerproposes toreplaceitstransfer agent,the Borrowerfails toprovide, priortothe effective dateofsuch replacement, afully executedIrrevocable Transfer Agent Instructionsin aform as initiallydelivered pursuanttothe Purchase Agreement (including but notlimited tothe provision toirrevocably reserve shares ofCommonStockinthe Reserved Amount)signed by the successortransfer agent toBorrowerandtheBorrower.
3.16 Cross-Default. Notwithstandinganythingtothe contrary containedinthisNote orthe otherrelated orcompanion documents, abreach ordefault bythe Borrowerofanycovenant or othertermorcondition contained inany of the OtherAgreements, after the passage ofall applicablenotice andcure orgraceperiods,shall,atthe option of the Holder,beconsidered adefault underthisNoteandtheOther Agreements, in which eventthe Holdershallbe entitled (but in noevent required)toapply all rightsand remediesof the Holderunder the terms of this Noteandthe OtherAgreementsby reason of a default undersaid OtherAgreement orhereunder. “Other Agreements” means, collectively, all agreementsand instruments between, amongorby: (1)theBorrower,and, orfor the benefitof, (2)the Holder and any affiliateof theHolder, including, withoutlimitation, promissory notes; provided, however,the term “OtherAgreements”shall notincludethe related orcompanion documents tothisNote.Eachof the loan transactions willbe cross-defaulted with each other loan transaction and with allotherexisting and futuredebt of Borrowertothe Holder. Forthe avoidance of doubtitisonlyconsidered a CrossDefault and thereforean Event ofDefaultinthe event thatthe Borrower is Indefaultof theNote orany other agreements with the Holder and does notrefertoagreementsthe Borrowerhas withthird parties.
Upon theoccurrence ofanyEvent ofDefault specifiedin Section 3.1(solely with respecttofailuretopay the principal hereoforinterest thereonwhen dueatthe Maturity Date),the Holder shall havethe right, with written (e-mail is acceptable) notice to Borrower, to declare the Noteshall becomeimmediately dueand payableand the Borroweruponreceipt ofsuch notice, the Borrowershallpaytothe Holder,in fullsatisfaction ofits obligations hereunder,anamountequaltothe Default Sum (as definedherein). UPON THEOCCURRENCEOFANY EVENTOFDEFAULTSPECIFIED IN SECTION 3.2,WITH NOTICEFROM BORROWER,THE NOTESHALL BECOMEIMMEDIATELYDUEAND PAYABLEAND
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THEBORROWER SHALLPAY TO THE HOLDER, INFULL SATISFACTION OFITSOBLIGATIONSHEREUNDER,ANAMOUNTEQUALTO: (Y) THEDEFAULT SUM(ASDEFINEDHEREIN); MULTIPLIED BY(Z) TWO (2).Uponthe occurrence ofany Event ofDefault, otherthanSection3.2,exercisable throughthe deliveryof writtennotice to the Borrower bysuchHolders (the“Default Notice”),theNote shallbecome immediately due andpayableand the Borrower shallpay tothe Holder,in full satisfactionofitsobligations hereunder,an amountequal tothe greaterof(i) 150%timesthesum of (w)thethenoutstanding principal amount ofthisNoteplus (x)accrued and unpaidinterest onthe unpaid principal amountof this Note tothe dateofpayment (the“Mandatory Prepayment Date”)plus(y) Default Interest,if any, onthe amounts referred to inclauses (w) and/or(x)plus (z)any amounts owed tothe Holderpursuant toSection1.4(g)hereof (thethenoutstanding principal amountofthis Note tothe date of paymentplustheamountsreferred to in clauses (x),(y) and (z)shallcollectivelybeknownasthe “Default Sum”) or(ii)the“parityvalue” of the DefaultSumtobeprepaid, where parity valuemeans (a)the highestnumber of shares ofCommon Stockissuable uponconversion oforotherwise pursuant to suchDefaultSum in accordancewithArticleI,treating the Trading Dayimmediatelyprecedingthe Mandatory Prepayment Dateas the “Conversion Date”for purposesof determining the lowestapplicable ConversionPrice,unless theDefault Eventarisesas a resultof abreachinrespectof aspecific Conversion Date in which casesuch Conversion Dateshallbethe Conversion Date),multipliedby(b) the highestClosingPrice for the Common Stockduringthe periodbeginning on the dateoffirstoccurrence ofthe Eventof Defaultand endingoneday prior tothe Mandatory Prepayment Date(the “Default Amount”)and all otheramountspayablehereunder shall immediately become due and payable, all withoutdemand,presentment ornotice, all ofwhich hereby are expressly waived, togetherwith all costs,including,withoutlimitation, legalfeesand expenses,of collection,andthe Holder shallbeentitledtoexercise all otherrightsandremedies available at law or inequity.
IftheBorrowerfailstopaythe Default Amountwithinfive(5)business days of writtennoticethatsuch amountisdue and payable,thenthe Holdershallhave the rightatanytime,solong andtothe extent that there aresufficient authorized shares, torequire the Borrower,uponwritten notice,toconvertthe Default Amount intosharesofCommon Stockof the Borrowerpursuant toSection 1.1hereof.
ARTICLEIV.MISCELLANEOUS
4.1 FailureorIndulgenceNotWaiver.Nofailure ordelayonthe partof the Holderinthe exercise of any power,right orprivilege hereundershall operateas awaiver thereof, norshallanysingleorpartial exerciseofanysuch power,right orprivilegepreclude otherorfurther exercise thereoforof anyotherright, powerorprivileges.Allrightsandremedies existing hereunderarecumulativeto,andnotexclusive of, any rightsorremedies otherwise available.
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4.2 Notices.Allnotices, demands,requests,consents, approvals, and othercommunications requiredorpermitted hereundershall bein writing and, unless otherwisespecified herein,shallbe (i) personally served, (ii) depositedinthemail, registered orcertified,return receipt requested,postage prepaid, (iii) deliveredbyreputable air courierservice withcharges prepaid,or(iv) transmittedbyhand delivery, telegram,orfacsimile,addressed as setforthbelowor tosuch otheraddress as such partyshall havespecified mostrecently by writtennotice.Anynoticeor othercommunication requiredorpermittedtobegiven hereunder shallbedeemed effective (a) uponhand deliveryordelivery byfacsimile,with accurate confirmationgeneratedby the transmittingfacsimilemachine,atthe addressornumber designatedbelow (ifdeliveredon abusiness day duringnormalbusiness hourswheresuch noticeistobereceived), orthe first business day following such delivery (if delivered otherthan on abusinessday duringnormal business hours wheresuchnoticeis tobereceived)or(b) on the secondbusinessdayfollowing the dateof mailingbyexpresscourierservice,fully prepaid,addressed tosuch address,oruponactual receiptof such mailing, whichever shall first occur.Theaddressesforsuch communicationsshall be:
IftotheBorrower,to:
JAMMINJAVA CORP.
730TejonSt.
Denver, Colorado 80211
Attn:ANH TRAN,President
facsimile:
Withacopybyfax onlyto(whichcopyshallnotconstitutenotice):
The Loev Law Firm, PC
Attn: David M. Loev, Esq. 6300 West Loop South
Suite 280
Bellaire, Texas 77401
Facsimile (713) 524-4122
IftotheHolder:
VIS VIRESGROUP,INC.
111Great Neck Road –Suite 216, GreatNeck,NY 11021
Attn:CurtKramer, President
e-mail:info@visviresgroup.com
Withacopybyfax onlyto(whichcopyshallnotconstitutenotice):Naidich WurmanLLP
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111 Great Neck Road – Suite 214
Great Neck, NY 11021
facsimile: 516-466-3555
4.3 Amendments.ThisNoteandany provisionhereofmay onlybe amended byaninstrumentin writing signedbythe BorrowerandtheHolder.The term “Note”andallreference thereto,as used throughoutthis instrument,shall meanthis instrument(andtheother Notesissued pursuanttothe Purchase Agreement)as originallyexecuted,or if lateramended or supplemented,thenas soamendedorsupplemented.
4.4 Assignability.ThisNoteshallbe binding upontheBorrowerandits successors and assigns, andshall inuretobethe benefit ofthe Holder anditssuccessorsandassigns.Each transferee of thisNotemustbe an “accredited investor”(asdefined inRule501(a)of the 1933 Act).Notwithstanding anythingin thisNote tothecontrary,thisNote maybepledged as collateralinconnectionwith abonafidemargin account or otherlending arrangement.
4.5 CostofCollection.Ifdefaultismade inthe payment of thisNote,the Borrowershallpay the Holderhereofcostsof collection, including reasonable attorneys’fees.
4.6 GoverningLaw.ThisNoteshallbe governedby andconstruedin accordancewiththelawsofthe Stateof New York withoutregardtoprinciplesof conflicts of laws. Any action broughtbyeither party againstthe other concerning the transactions contemplatedby this Noteshall be broughtonlyin the statecourts of New Yorkorinthe federal courtslocatedin the stateandcountyofNassau.ThepartiestothisNoteherebyirrevocably waive any objectiontojurisdiction and venue of any actioninstitutedhereunderand shall not assertany defense based onlack ofjurisdictionorvenueorbased uponforum nonconveniens. The Borrowerand Holderwaivetrialbyjury.Theprevailing partyshallbe entitledto recoverfromtheotherpartyitsreasonable attorney'sfeesand costs.In the eventthatanyprovisionof thisNoteoranyotheragreement deliveredinconnection herewithisinvalidorunenforceable underanyapplicable statute orrule oflaw, thensuch provisionshall be deemed inoperativetothe extent that itmay conflicttherewith andshallbe deemed modifiedtoconform withsuchstatute orruleof law.Anysuch provisionwhichmayproveinvalidorunenforceableunderanylawshallnotaffectthevalidityorenforceability ofanyotherprovision ofanyagreement.Eachparty herebyirrevocably waives personalservice of process andconsentstoprocessbeingservedinanysuit,actionorproceedinginconnectionwiththis AgreementoranyotherTransaction Document bymailingacopythereofviaregistered orcertifiedmailor overnightdelivery (withevidenceofdelivery)tosuchpartyatthe addressineffectfornoticestoit under thisAgreement andagreesthatsuchservice shall constitute goodand sufficientservice of processand notice thereof.Nothing contained herein shallbe deemedto limitinany way any righttoserveprocessinany othermannerpermittedbylaw.
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4.7 Certain Amounts. Wheneverpursuanttothis Notethe Borrowerisrequiredtopayan amountinexcess of the outstanding principalamount (orthe portion thereof requiredtobe paidat thattime) plusaccrued and unpaid interestplusDefault Interest on such interest,the Borrowerandthe Holder agree thatthe actual damagestothe Holderfromthe receipt ofcashpaymentonthis Notemay bedifficulttodetermine and the amounttobe sopaidbythe Borrowerrepresents stipulateddamagesand not apenaltyandis intendedtocompensate the Holderin partforloss ofthe opportunitytoconvertthisNoteandtoearn a returnfromthe saleof shares ofCommonStockacquired uponconversion of thisNoteat apriceinexcess oftheprice paid forsuchsharespursuanttothis Note.TheBorrowerandthe Holderhereby agreethatsuch amountofstipulateddamagesis notplainlydisproportionateto thepossible losstothe Holderfromthe receipt of acash paymentwithout the opportunityto convertthisNoteinto shares of CommonStock.
4.8 Purchase Agreement.Byitsacceptance of thisNote,eachparty agreestobeboundbythe applicable termsof thePurchaseAgreement.
4.9 Noticeof CorporateEvents.Exceptas otherwise provided below, the HolderofthisNoteshallhave norights as aHolder of Common Stockunlessandonlytothe extent thatitconvertsthisNoteintoCommon Stock.The Borrowershallprovidethe Holderwithpriornotification ofany meeting of the Borrower’sshareholders (andcopiesofproxy materialsand otherinformationsenttoshareholders). In the event ofany takingbytheBorrowerof a recordofitsshareholders for the purposeof determining shareholders who are entitledtoreceive payment of any dividendor otherdistribution, any righttosubscribe for,purchaseorotherwise acquire (includingbyway of merger,consolidation, reclassificationorrecapitalization)anyshareofanyclassoranyothersecuritiesorproperty,or toreceive any other right, orfor the purpose ofdetermining shareholders who areentitledtovotein connection withany proposedsale,leaseorconveyance of allorsubstantiallyall ofthe assetsof the Borrower orany proposed liquidation,dissolutionorwinding upof the Borrower,the Borrowershallmail anoticetothe Holder, at leasttwenty (20)days priortotherecorddatespecifiedtherein(orthirty (30)dayspriortothe consummation ofthetransactionorevent,whichever is earlier),of the date onwhichanysuchrecordistobetaken for the purpose of such dividend, distribution, right or other event,and abrief statementregarding the amountand characterof such dividend,distribution, right or othereventtothe extentknownatsuchtime.TheBorrowershallmakeapublic announcementofanyevent requiring notificationtothe Holderhereunder substantially simultaneouslywiththenotificationtothe Holderinaccordancewiththe terms of thisSection 4.9.
4.10 Remedies. TheBorroweracknowledgesthat abreachbyitofits obligations hereunder will causeirreparable harm tothe Holder,byvitiatingthe intentand purposeof thetransaction contemplatedhereby.Accordingly, the Borroweracknowledgesthatthe remedyat lawforabreach ofitsobligationsunderthisNote willbeinadequateand agrees, inthe event of abreachorthreatened breachbythe Borrowerof the provisions of this Note, thatthe Holder shall be entitled,inadditiontoall otheravailableremedies atlaworinequity,and in
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additiontothepenalties assessableherein,toaninjunctionorinjunctionsrestraining, preventing orcuringany breach of thisNoteand toenforce specifically the termsand provisions thereof, withoutthe necessityofshowing economic lossandwithoutany bondor othersecurity being required.
IN WITNESSWHEREOF, BorrowerhascausedthisNote tobesignedinits namebyitsdulyauthorized officer this November 15,2016.
JAMMIN JAVA CORP.
By: /s/ Anh Tran | |
ANH TRAN |
President
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EXHIBIT A--NOTICE OFCONVERSION
Theundersigned herebyelectstoconvert$principalamountoftheNote (defined below) into thatnumber of shares of Common Stock to be issued pursuanttotheconversionof the Note(“CommonStock”) assetforth below,ofJAMMINJAVACORP., a Nevadacorporation (the “Borrower”) according to theconditions of the convertiblenoteof the Borrower datedasof November 15, 2016(the “Note”), asof thedatewritten below.No fee will becharged to the Holderforanyconversion,exceptfortransfer taxes,if any.
BoxCheckedasto applicable instructions:
[ ]TheBorrower shallelectronically transmit the Common Stockissuable pursuanttothisNoticeof Conversion totheaccountof the undersignedor its nominee with DTCthrough its Deposit WithdrawalAgentCommissionsystem(“DWAC Transfer”).
NameofDTCPrimeBroker: AccountNumber:
[ ]Theundersigned hereby requests thattheBorrower issue acertificate or certificates forthenumberofsharesofCommon Stock set forthbelow(which numbers arebased on theHolder’s calculation attached hereto) inthename(s)specifiedimmediately below or,if additionalspaceis necessary, onan attachment hereto:
VISVIRES GROUP,INC.
111Great Neck Road –Suite 216,
GreatNeck, NY11021Attention: CertificateDelivery
e-mail:info@visviresgroup.com
Date ofConversion:
Applicable ConversionPrice:$
NumberofSharesofCommon Stock to beIssued
Pursuant to Conversion oftheNotes:
Amount ofPrincipalBalance Dueremaining
Under the Noteafter this conversion:
VISVIRESGROUP,INC.
By: __________________
Name:CurtKramer
Title:President
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