NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”) OR ANY STATE SECURITIES LAWS AND NEITHER THIS NOTE NOR ANY
INTEREST THEREIN NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE
MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND
SUCH LAWS.
CONVERTIBLE PROMISSORY NOTE
Principal Amount: $500,000.00
Issue Date: March 15, 2016
Maturity Date: March 15, 2017
For good and valuable consideration, HempAmericana, Inc. a Delaware corporation (“Maker”),
hereby makes and delivers this Promissory Note (this “Note”) in favor of Blackbridge Capital,
LLC, or its assigns (“Holder”), and hereby agrees as follows:
ARTICLE I.
PRINCIPAL AND INTEREST
Section 1.1 For value received, Maker promises to pay to Holder at such place as Holder or its
assigns may designate in writing, in currently available funds of the United States, the principal
sum of Five Hundred Thousand, Dollars. Maker’s obligation under this Note shall accrue interest
at the rate of Five percent (5.0%) per annum from the date hereof until paid in full. Interest
shall be computed on the basis of a 365-day year or 366-day year, as applicable, and actual days
lapsed. Accrual of interest shall commence on the first business day to occur after the Issue
Date and continue until payment in full of the principal sum has been made or duly provided for.
Section 1.2
a.
All payments shall be applied first to interest, then to principal and shall be
credited to the Maker's account on the date that such payment is physically received by the Holder.
b.
All principal and accrued interest then outstanding shall be due and payable
by the Maker to the Holder on or before March 15, 2017 (the “Maturity Date”).
c.
Maker shall have no right to prepay all or any part of the principal under
this Note.
d.
This Note is free from all taxes, liens, claims and encumbrances with respect
to the issue thereof and shall not be subject to preemptive rights or other similar rights of
shareholders of the Maker and will not impose personal liability upon the holder thereof.
e.
In the event the Company is unable to pay back the Note in cash, the Holder
may elect to convert the note into shares pursuant to its right under Section 2.1
Section 1.3
This Note is issued as the Commitment Fee pursuant to Section 1. f of Securities
Purchase Agreement dated March 15, 2016, and attached below.
ARTICLE II.
CONVERSION RIGHTS; CONVERSION PRICE
Section 2.1
Conversion. The Holder or its assigns shall have the right, from time to time,
commencing on the Issuance Date of this Note, to convert any part of the outstanding interest or
Principal Amount of this Note into fully paid and non-assessable shares of Class A Common Stock
of the Maker (the “Conversion Stock”) at the Conversion Price determined as provided herein.
Promptly after delivery to Maker of a Notice of Conversion of Convertible Note in the form
attached hereto as Exhibit 1, properly completed and duly executed by the Holder or its assigns
(a “Conversion Notice”), the Maker shall issue and deliver to or upon the order of the Holder that
number of shares of C l a s s A Common Stock for the that portion of this Note to be converted
as shall be determined in accordance herewith.
No fraction of a share or scrip representing a fraction of a share will be issued on conversion, but
the number of shares issuable shall be rounded to the nearest whole share. The date on which
Notice of Conversion is given (the “Conversion Date”) shall be deemed to be the date on which
the Holder faxes or emails the Notice of Conversion duly executed to the Maker. Certificates
representing C l a s s A Common Stock upon conversion will be delivered to the Holder within
two (2) trading days from the date the Notice of Conversion is delivered to the Maker. Delivery
of shares upon conversion shall be made to the address specified by the Holder or its assigns in
the Notice of Conversion.
Section 2.2. Conversion Price. Upon any conversion of this Note, the Conversion Price shall equal
to Eighty Percent (80%) of the lowest Trading Price (defined below) during the Valuation Period
(defined below), and the Conversion Amount shall be the amount of principal or interest electively
converted in the Conversion Notice. The total number of shares due under any conversion notice
(“Notice Shares”) will be equal to the Conversion Amount divided by the Conversion Price.
On the date that a Conversion Notice is delivered to Holder, the Company shall deliver an
estimated number of shares (“Estimated Shares”) to Holder’s brokerage account equal to the
Conversion Amount divided by the product of (i) Eighty Percent (80%) and (ii) the lowest trading
price in the twenty trading days prior to the day the Holder requests conversion.
The “Valuation Period” shall mean twenty (20) Trading Days, commencing on the first Trading
Day following delivery and clearing of the Notice Shares in Holder’s brokerage account, as
reported by Holder (“Valuation Start Date”). If at any time, one or multiple times, during the
Valuation Period the sum of Estimated Shares and Additional Shares already delivered to Holder
is less than the Notice Shares, the company must immediately deliver enough shares equal to the
difference (“Additional Shares”). A Conversion Amount will not be considered fully converted
until the end of the Valuation Period for that Conversion Amount, as decreases in the Conversion
Price would require the issuance of more Additional Shares, and thereby the issuance of more
Notice Shares.
“Trading Price” means, for any security as of any date, any trading price on the OTC Bulletin
Board, or other applicable trading market (the “OTCBB”) as reported by a reliable reporting
service (“Reporting Service”) mutually acceptable to Maker and Holder (i.e. Bloomberg) or, if the
OTCBB is not the principal trading market for such security, the price of such security on the
principal securities exchange or trading market where such security is listed or traded. “Trading
Day” shall mean any day on which the Class A Common Stock is tradable for any period on the
OTCBB, or on the principal securities exchange or other securities market on which the Class A
Common Stock is then being traded.
Section 2.3.
Reorganization, Reclassification, Merger, Consolidation or Disposition of
Assets. In case the Maker shall reorganize its capital, reclassify its capital stock, consolidate or
merge with or into another corporation (where the Maker is not the surviving corporation or where
there is a change in or distribution with respect to the Class A Common Stock of the Maker), or sell,
transfer or otherwise dispose of all or substantially all its property, assets or business to another
corporation and, pursuant to the terms of such reorganization, reclassification, merger,
consolidation or disposition of assets, shares of Class A Common Stock of the successor or
acquiring corporation, or any cash, shares of stock or other securities or property of any nature
whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of
Class A Common Stock of the successor or acquiring corporation (“Other Property”), are to be
received by or distributed to the holders of C l a s s A Common Stock of the Maker, then
Holder shall have the right thereafter to receive, upon conversion of this Note, the number of
shares of common stock of the successor or acquiring corporation or of the Maker, if it is the
surviving corporation, and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of the number of
shares of C l a s s A Common Stock into which this Note is convertible immediately prior
to such event. In case of any such reorganization, reclassification, merger, consolidation or
disposition of assets, the successor or acquiring corporation (if other than the Maker) shall
expressly assume the due and punctual observance and performance of each and every covenant
and condition of this Note to be performed and observed by the Maker and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined
in good faith by resolution of the Board of Directors of the Maker) in order to provide for
adjustments of the number of shares of Class A Common Stock into which this Note is
convertible which shall be as nearly equivalent as practicable to the adjustments provided for in
this Section 2.3(a). For purposes of this Section 2.3(a), “common stock of the successor or
acquiring corporation” shall include stock of such corporation of any class which is not preferred
as to dividends or assets over any other class of stock of such corporation and which is not subject
to redemption and shall also include any evidences of indebtedness, shares of stock or other
securities which are convertible into or exchangeable for any such stock, either immediately or
upon the arrival of a specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 2.3(a)
shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or
disposition of assets.
Section 2.4. Restrictions on Securities. This Note has been issued by the Maker pursuant to the
exemption from registration under the Securities Act of 1933, as amended (the “Act”). None of
this Note or the shares of Class A Common Stock issuable upon conversion of this Note may be
offered, sold or otherwise transferred unless (i) they first shall have been registered under the
Act and applicable state securities laws or (ii) the Maker shall have been furnished with an opinion
of legal counsel (in form, substance and scope reasonably acceptable to Maker) to the effect that
such sale or transfer is exempt from the registration requirements of the Act. Each certificate for
shares of Class A Common Stock issuable upon conversion of this Note that have not been so
registered and that have not been sold pursuant to an exemption that permits removal of the
applicable legend, shall bear a legend substantially in the following form, as appropriate:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”). THE
SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH
OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THOSE LAWS.
Upon the request of a holder of a certificate representing any shares of Class A Common Stock
issuable upon conversion of this Note, the Maker shall remove the foregoing legend from the
certificate or issue to such Holder a new certificate free of any transfer legend, if (a) with such
request, the Maker shall have received an opinion of counsel, reasonably satisfactory to the
Maker in form, substance and scope, to the effect that any such legend may be removed from
such certificate or
(b) a registration statement under the Act covering such securities is in effect.
Section 2.5. Reservation of Common Stock.
(a) The Maker covenants that during the period the Note is outstanding, it will
reserve from its authorized and unissued Class A Common Stock a sufficient number of
shares to provide for the issuance of Class A Common Stock of the Maker upon the
Conversion of the Note. The Maker further covenants that its issuance of this Note shall
constitute full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of Class A Common
Stock of the Maker issuable upon the conversion of this Note. The Maker will take all such
reasonable action as may be necessary to assure that such shares of Class A Common Stock
may be issued as provided herein without violation of any applicable law or regulation, or of
any requirements of the OTC
Bulletin Board (or such other principal market upon
which the Class A Common Stock of the Maker may be listed or quoted).
(b) The Maker shall not by any action, including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Note, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all such actions as
may be necessary or appropriate to protect the rights of Holder against impairment.
Without limiting the generality of the foregoing, the Maker will (a) not increase the par
value of any shares of Class A Common Stock issuable upon the conversion of this Note
above the amount payable therefor upon such conversion immediately prior to such
increase in par value, (b) take all such action as may be necessary or appropriate in order
that the Maker may validly and legally issue fully paid and non-assessable shares of Class A
Common Stock upon the conversion of this Note, and (c) use its best efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Maker to perform its obligations under this Note.
(c) Upon the request of Holder, the Maker will at any time during the period this
Note is outstanding acknowledge in writing, in form reasonably satisfactory to Holder, the
continuing validity of this Note and the obligations of the Maker hereunder.
(d) Before taking any action which would cause an adjustment reducing the current
Conversion Price below the then par value, if any, of the shares of Class A Common Stock
issuable upon conversion of the Notes, the Maker shall take any corporate action which may
be necessary in order that the Maker may validly and legally issue fully paid and non-
assessable shares of such Class A Common Stock at such adjusted Conversion Price.
(e) Before taking any action which would result in an adjustment in the number of
shares of Class A Common Stock into which this Note is convertible or in the Conversion
Price, the Maker shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having jurisdiction
thereof.
(f) If at any time the Maker does not have a sufficient number of authorized and
available shares of Class A Common Stock for issuance upon conversion of the Note, then
the Maker shall call and hold a special meeting of its stockholders within forty-five (45)
days of that time for the sole purpose of increasing the number of authorized shares of Class
A Common Stock.
Section 2.6. Maximum Conversion.
The Holder shall not be entitled to convert on a Conversion Date that amount of the Notes in
connection with that number of shares of Class A Common Stock which would be in excess of the
sum of
(i) the number of shares of Class A Common Stock beneficially owned by the Holder and its
affiliates on Conversation Date, and (ii) the number of shares of Class A Common Stock issuable
upon the conversion of the Notes with respect to which the determination of this provision
is being made on a Conversion Date, which would result in beneficial ownership by the Holder
and its Affiliates of more than 9.99% of the outstanding shares of Class A Common Stock of the
Company on such Conversion Date. For the purposes of the provision to the immediately
preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.
Section 2.7. Exchange for Qualified Offering Shares.
If, at any time during the term of this Note, Borrower chooses to file an offering under Form 1-A
with the Commission (“Reg A Offering”) and such is qualified by the Commission, Holder may
exchange the Note as subscription payment toward purchase of those shares offered for resale per
the Reg A Offering. In the event that Holder elects to exchange the note for purchase of shares
from the Reg A Offering, said shares shall be issued free of restrictive legend and will be deemed
qualified shares.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.1. The Holder represents and warrants to the Maker:
(a)
The Holder of this Note, by acceptance hereof, agrees that this Note is being
acquired for investment and that such Holder will not offer, sell or otherwise dispose of this Note
or the Class A Common Stock issuable upon conversion hereof except under circumstances that
will not result in a violation of the Act or any application state securities laws or similar laws
relating to the sale of securities;
(b)
That Holder understands that none of this Note or the Class A Common Stock issuable
upon conversion hereof have been registered under the Securities Act of 1933, as amended (the
“Act”), in reliance upon the exemptions from the registration provisions of the Act and any
continued reliance on such exemption is predicated on the representations of the Holder set forth
herein;
(c)
Holder (i) has adequate means of providing for his current needs and possible
contingencies, (ii) has no need for liquidity in this investment, (iii) is able to bear the substantial
economic risks of an investment in this Note for an indefinite period, (iv) at the present time, can
afford a complete loss of such investment, and (v) does not have an overall commitment to
investments which are not readily marketable that is disproportionate to Holder’s net worth, and
Holder’s investment in this Note will not cause such overall commitment to become excessive;
(d)
Holder is an “accredited investor” (as defined in Regulation D promulgated under
the Act) and the Holder’s total investment in this Note does not exceed 10% of the Holder’s net
worth; and
(e)
Holder recognizes that an investment in the Maker involves significant risks and
only investors who can afford the loss of their entire investment should consider investing in the
Maker and this Note.
Section 3.2
The Maker represents and warrants to Holder:
Organization and Qualification. The Maker and each of its Subsidiaries (as defined below),
if any, is a corporation duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own,
lease, use and operate its properties and to carry on its business as and where now owned, leased,
used, operated and conducted. The Maker and each of its Subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction in which its
ownership or use of property or the nature of the business conducted by it makes such qualification
necessary except where the failure to be so qualified or in good standing would not have a Material
Adverse Effect. “Material Adverse Effect” means any material adverse effect on the business,
operations, assets, financial condition or prospects of the Maker or its Subsidiaries, if any, taken
as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be
entered into in connection herewith. “Subsidiaries” means any corporation or other organization,
whether incorporated or unincorporated, in which the Maker owns, directly or indirectly, any
equity or other ownership interest.
Authorization; Enforcement. (i) The Maker has all requisite corporate power and authority
to enter into and perform this Note and to consummate the transactions contemplated hereby and
thereby and to issue the Class A Common Stock, in accordance with the terms hereof, (ii) the
execution and delivery of this Note by the Maker and the consummation by it of the transactions
contemplated hereby and thereby (including without limitation, the issuance of the Note and the
issuance and reservation for issuance of the Class A Common Stock issuable upon conversion or
exercise hereof) have been duly authorized by the Maker’s Board of Directors and no further
consent or authorization of the Maker, its Board of Directors, or its shareholders is required, (iii)
this Note has been duly executed and delivered by the Maker by its authorized representative,
and such authorized representative is the true and official representative with authority to sign this
Note and the other documents executed in connection herewith and bind the Maker accordingly,
and (iv) this Note constitutes, a legal, valid and binding obligation of the Maker enforceable
against the Maker in accordance with its terms.
Issuance of Shares. The Conversion Shares are duly authorized and reserved for issuance
and, upon conversion of the Note in accordance with its respective terms, will be validly issued,
fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect
to the issue thereof and shall not be subject to preemptive rights or other similar rights of
shareholders of the Maker and will not impose personal liability upon the holder thereof.
Acknowledgment of Dilution. The Maker understands and acknowledges the potentially
dilutive effect to the Class A Common Stock upon the issuance of the Conversion Shares upon
conversion of this Note. The Maker further acknowledges that its obligation to issue Conversion
Shares upon conversion of this Note is absolute and unconditional regardless of the dilutive
effect that such issuance may have on the ownership interests of other shareholders of the Maker.
ARTICLE IV.
EVENTS OF DEFAULT
Section 4.1. Default. The following events shall be defaults under this Note: (“Events
of Default”):
(a)
default in the due and punctual payment of all or any part of any payment of
interest or the Principal Amount as and when such amount or such part thereof shall become due
and payable hereunder; or
(b)
failure on the part of the Maker duly to observe or perform in all material respects
any of the covenants or agreements on the part of the Maker contained herein (other than those
covered by clause (a) above) for a period of 5 business days after the date on which written
notice specifying such failure, stating that such notice is a “Notice of Default” hereunder and
demanding that the Maker remedy the same, shall have been given by the Holder by registered or
certified mail, return receipt requested, to the Maker; or
(c)
any representation, warranty or statement of fact made by the Maker herein when
made or deemed to have been made, false or misleading in any material respect; provided,
however, that such failure shall not result in an Event of Default to the extent it is corrected by
the Maker within a period of 5 business days after the date on which written notice specifying
such failure, stating that such notice is a “Notice of Default” hereunder and demanding that the
Maker remedy same, shall have been given by the Holder by registered or certified mail, return
receipt requested; or
Section 4.5. Waiver of Past Defaults. The Holder may waive any past default or Event of
Default hereunder and its consequences but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
Section 4.6. Waiver of Presentment etc. The Maker hereby waives presentment, demand, notice,
protest and all other demands and notices in connection with the delivery, acceptance, performance
and enforcement of this Note, except as specifically provided herein.
ARTICLE V.
MISCELLANEOUS
Section 5.1. Notices. Any notice herein required or permitted to be given shall be in writing and
may be personally served or delivered by courier or sent by United States mail and shall be deemed
to have been given upon receipt if personally served (which shall include telephone line facsimile
transmission) or sent by courier or three (3) days after being deposited in the United States mail,
certified, with postage pre-paid and properly addressed, if sent by mail. For the purposes hereof,
the address of the Holder shall be 450 7th Ave. Suite 609, New York, NY 10123; and the address
of the Maker shall be 78 Reade St, Suite 4FW, New York, NY, 10007. Both the Holder or its
assigns and the Maker may change the address for service by delivery of written notice to the other
as herein provided.
Section 5.2. Amendment. This Note and any provision hereof may be amended only by an
instrument in writing signed by the Maker and the Holder.
Section 5.3. Assignability. This Note shall be binding upon the Maker and its successors and
assigns and shall inure to be the benefit of the Holder and its successors and assigns; provided,
however, that so long as no Event of Default has occurred, this Note shall only be transferable in
whole subject to the restrictions contained in the restrictive legend on the first page of this Note.
Section 5.4. Governing Law. This Note shall be governed by the internal laws of the State of New
York, without regard to conflicts of laws principles.
Section 5.5. Replacement of Note. The Maker covenants that upon receipt by the Maker of
evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Note, and
in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which
shall not include the posting of any bond), and upon surrender and cancellation of such Note, if
mutilated, the Maker will make and deliver a new Note of like tenor.
Section 5.6. This Note shall not entitle the Holder to any of the rights of a stockholder of the Maker,
including without limitation, the right to vote, to receive dividends and other distributions, or to
receive any notice of, or to attend, meetings of stockholder or any other proceedings of the Maker,
unless and to the extent converted into shares of C l a s s A Common Stock in accordance with
the terms hereof.
Section 5.7. Severability. In case any provision of this Note is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible,
and the validity and enforceability of the remaining provisions of this Note will not in any way be
affected or impaired thereby.
Section 5.8. Headings. The headings of the sections of this Note are inserted for convenience only
and do not affect the meaning of such section.
Section 5.9. Counterparts. This Note may be executed in multiple counterparts, each of which
shall be an original, but all of which shall be deemed to constitute one instrument.
IN WITNESS WHEREOF, with the intent to be legally bound hereby, the Maker as executed
this Note as of the date first written above.
HempAmericana, Inc.
By: Salvador Rosillo
Its: CEO
Acknowledged and Agreed:
Blackbridge Capital, LLC.
By: Alexander Dillon
Its: Managing Partner
EXHIBIT 1
CONVERSION NOTICE
(To be executed by the Holder in order to Convert the Note)
TO:
The undersigned hereby irrevocably elects to convert US$
of the Principal Amount of
the above Note into Shares of C l a s s A Common Stock of HempAmericana, Inc., according to
the conditions stated therein, as of the Conversion Date written below. If shares are to be issued
in the name of a person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and opinions as
reasonably requested by the Maker in accordance therewith. No fee will be charged to the
Holder for any conversion, except for such transfer taxes, if any.
Conversion Date:
Applicable Conversion Price: $
Signature:
Name:
Address:
Tax I.D. or Soc. Sec. No:
Principal Amount to be converted:
US$
Amount of Note unconverted:
US$
Number of shares of Class A Common Stock to be issued: