THE OFFER AND SALE OF THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
BOOMER NATURALS, INC. CONVERTIBLE PROMISSORY NOTE
$60,000October 7,2019
shallequal the outstanding principal amount hereof, together with interest from the date of this Convertible Promissory Note (this “Note”) on the unpaid principal balance at arate equal to1.25% per month simple interest on the principal balance. All unpaid principal, together with any then unpaid and accrued interest and other amounts payable hereunder, shall be due and payable on the earlier of (i)October 6, 2020 (the “Maturity Date”), or (ii)when, upon the occurrence and during the continuance of an Event of Default, such amounts are declared due and payable by Investor or made automatically due and payable, ineach case, inaccordance with the terms hereof.
The followingis astatement of the rights of Investor and the conditions towhich this Note issubject, and towhich Investor, by the acceptance of this Note, agrees:
| 1. | Payments/Share Grant. |
(a) Interest. Accrued interest on this Note shall be paidon the Maturity Date.
(b) Prepayment. This Note may be not be prepaid without consent of Investor. If Lender agrees to prepayment, Investor shall receive the benefit of the terms hereunder as if the Loan remained outstanding for One Hundred Twenty (120) days. Company shall repay loan within Sixty (60) Days if it completes its Series A financing by that time.
(c) Share Grant. Investor shall receive One (1) share of Company Common Stock for every One Dollar ($1.00) of principal loaned hereunder.
(d) Taxes. On or before April 15. 2020, Company shall reimburse Investor for all tax liabilities arising from committing an early withdrawal from Investor’s retirement fund.
2. Events of Default. The occurrence of any of the following shall constitute an “Event of Default” under this Note:
(a) Failure toPay. The Company shall fail topay (i)when due any principal payment on the due date hereunder or (ii)any interest payment or other payment required under the terms of this Note on the date due and such payment shall not have been made within Five (5) Business Days of the Company’s receipt of written notice tothe Company of such failure topay; or
(b) Breaches of Covenants. The Company shall fail toobserve or perform any other covenant, obligation, condition or agreement contained inthis Note (other than those specified inSection 2(a)) and such failure shall continue for ten (10) business days after the Company’s receipt of written notice tothe Company of such failure; or
(c) Representations and Warranties. Any representation, warranty, certificate, or other statement (financial or otherwise) made or furnished by or on behalf of the Company toInvestorinwriting inconnection with this Note or as an inducement toInvestor toenter into this Note shall be false, incorrect, incomplete or misleading inany material respect when made or furnished; or
(d) Voluntary Bankruptcy or Insolvency Proceedings. The Company shall (i)apply for or consent tothe appointment ofareceiver, trustee, liquidator or custodian of itself or of all or asubstantial part of itsproperty, (ii)admit inwritingitsinability topayitsdebts generally as they mature, (iii)makeageneral assignment for the benefit of itsor any of itscreditors, (iv) be dissolved or liquidated, (v) commence avoluntary case or other proceeding seeking liquidation, reorganization or other relief with respect toitself or itsdebts under any bankruptcy, insolvency or other similar law now or hereafterineffect or consent toany such relief or tothe appointment of or taking possession of itsproperty by any official inan involuntary case or other proceeding commenced against it,or (vi) take any action for the purpose of effecting any of the foregoing; or
(e) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of areceiver, trustee, liquidator or custodian of the Company, or of all or asubstantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect tothe Company oritssubsidiaries, ifany, or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter ineffect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within 45 days of commencement.
3. Rights of Investor upon Default. Upon the occurrence of any Event of Default (other than an Event of Default describedinSections 2(d) or 2(e)) and at any time thereafter during the continuance of such Event of Default, Investor may, by written notice tothe Company, declare all outstanding Obligations payable by the Company hereunder tobe immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein tothe contrary notwithstanding. Upon the occurrence of any Event of Default described inSections 2(d) and 2(e), immediately and without notice, all outstanding Obligations payable by the Company hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein tothe contrary notwithstanding. Inaddition tothe foregoing remedies, upon the occurrence and during the continuance of any Event of Default, Investor may exercise any other right power or remedy permitted by law, either by suitinequity or by action at law, or both.
| 4. | Conversion. |
(a) Conversion. At any time prior tothe Maturity Date of this Note, unless prepaid pursuant toSection 1(b) of this Note, all or aportion of the outstanding principal amount of this Note and all or aportion of accrued and unpaid interest on this Noteand all taxes to be reimbursedshall be convertible at the option of Investor into fully paid and nonassessable shares of the Company’s Common Stock (the “Common Stock”) at aprice per share equal tothe Conversion Price ifsaid election ismade within the four month anniversary of execution of this Note or the Adjusted Conversion Price ifsaid election ismade followingthe four month anniversary ofexecution of this Note; unless the Company has failed to become public, in which case the option to convert at the Conversion Price shall be extended until the Company becomes publicly traded.
(b)Conversion PursuanttoSection 4(a). Before Investor shall be entitled toconvert this Note into shares of Common Stock,itshall surrender this Note (or anoticetothe effect that the original Note has been lost, stolen or destroyed and an agreement acceptable tothe Company whereby the holder agrees toindemnify the Company from any loss incurred by it inconnection with this Note) and give written notice tothe Company at itsprincipal corporate office of the election toconvert the same pursuant toSection 4(a), and shall state therein the amount of the unpaid principal amount of this Note tobe converted. Upon such conversion of this Note, Investor hereby agrees toexecute and deliver tothe Company apurchase agreement and other ancillary agreements, with customary representations and warranties and transfer restrictions (including, without limitation,a180-day lock-up agreement inconnection with an initial public offering). The Company shall, as soon as practicable thereafter, issue and deliver tosuch Investor acertificate or certificates for the number of shares towhich Investor shall be entitled upon such conversion. Any conversion of this Note pursuant shall be deemed tohave been made upon the satisfaction of all of the conditions set forth inthis Section 4(b) and on and after such date the Persons entitled toreceive the shares issuable upon such conversion shall be treated for all purposes as the record holder of such shares.
| (c) | Notices of Record Date.Inthe event of: |
(i) Any taking by Company of arecord of the holders of any class of securities of Company for the purpose of determining the holders thereof who are entitled toreceive any dividend or other distribution or any right tosubscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or toreceive any other right; or
(ii) Any capital reorganization of Company, any reclassification or recapitalization of the capital stock of Company or any transfer of all or substantially all of the assets of Company toany other Person or any consolidation or merger involving Company; or
Company,
| (iii) | Any voluntary or involuntary dissolution, liquidation or winding-up of |
Company will mailtoInvestor at least ten (10) days prior tothe earliest date specified therein, anotice specifying (A) the date on which any such record is tobe taken for the purpose of such dividend, distribution or right and the amount and character of such dividend, distribution or right; and (B) the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding-up isexpected tobecome effective and the record date for determining stockholders entitled tovote thereon.
5. Guarantors.The obligations under this Note shall be jointly and severally guaranteed by Whale Sports Inc., a Nevada corporation (collectively, the “Guarantors”). In the event Company fails to pay all principal and interest by the Maturity Date, the Guarantors shall be liable for all amounts due hereunder within sixty (60) days of the Maturity Date.
Definitions. As usedinthis Note, the following capitalized terms have the following meanings: “Adjusted Conversion Price” shall mean Two Dollars ($2.00) per share. “Conversion Price” shall mean One Dollar ($1.00) per share.
“Equity Securities” shall mean shares of the Company’s Common Stock;provided,however, that the following shall not be deemedtobe Equity Securities: (i)Common Stock or options topurchase Common Stock issued, sold or granted pursuant tothe Company’s incentive plans or otherwise provided as compensation toservice providers; (ii)securities issued inthe Company’s initial public offering;
(iii)securities issued tobanks pursuant to acommercial loan transaction; and (iv) securities issued pursuant tothe acquisition of another corporation by the Company or ajoint venture transaction approved by the Board
of Directors.
“Event of Default” has the meaning giveninSection2hereof.
“Investor” shall mean the Person specifiedinthe introductory paragraph of this Note or any Person who shall at the time be the registered holder of this Note.
“Lien” shall mean, with respecttoany property, any security interest, mortgage, pledge, lien, claim, charge or other encumbrance.
“New Securities” shall mean Equity Securities and notes convertible into Equity Securities issuedinany Non-Qualified Financing.
“Non-Qualified Financing”isany transaction or series of transactions following the date of the Purchase Agreement but prior to aQualified Financing (and which do not constitute any part of such Qualified Financing), pursuant towhich the Company issues and sells, with the principal purpose of raising capital (a) shares of itsEquity Securities for aggregate gross proceeds of less than $20,000,000 (excluding all proceeds from the incurrence of indebtedness thatisconverted into such Equity Securities or otherwise cancelled inconsideration for the issuance of such Equity Securities); or (b) notes convertible into Equity Securities (excluding notes issued inconsideration for the cancellation of indebtedness).
“Obligations” shall mean and include all loans, advances, debts, liabilities and obligations, howsoever arising, owed by the CompanytoInvestor of every kind and description, now existing or hereafter arising under or pursuant tothe terms of this Note, including, all interest, fees, charges, expenses, attorneys’ fees and costs and accountants’ fees and costs chargeable toand payable by the Company hereunder and thereunder, ineach case, whether direct or indirect, absolute or contingent, due or tobecome due, and whether or not arising after the commencement of aproceeding under Title 11 of the United States Code (11 U. S. C. Section 101et seq.), as amended from time totime (including post-petition interest) and whether or not allowed or allowable as aclaiminany such proceeding.
“Person” shall mean and include an individual,apartnership,acorporation (including abusiness trust), ajoint stock company, alimited liability company, an unincorporated association, ajoint venture or other entity or agovernmental authority.
“Qualified Financing”is atransaction or series of transactions pursuant towhich the Company issues and sells shares ofitsEquity Securities for aggregate gross proceeds of at least $20,000,000 (excluding all proceeds from the incurrence of indebtedness that isconverted into such Equity Securities or otherwise cancelled inconsideration for the issuance of such Equity Securities) with the principal purpose of raising capital.
“Securities Act” shall mean the Securities Act of 1933, as amended.
| 6. | Miscellaneous. |
(a) Successors and Assigns; Transfer of this Note or Securities Issuable on Conversion Hereof; No Transfers toBad Actors; Notice of Bad Actor Status.
(i) Subject tothe restrictions on transfer describedinSection 6(e) and (f) of the Purchase Agreement, the rights and obligations of the Company and Investor shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.
(ii) With respect toany offer, sale or other disposition of this Note or securities into which such Note may be converted, Investor will give written notice tothe Company prior thereto, describing briefly the manner thereof, together with awritten opinion of Investor’s counsel, or other evidence ifreasonably satisfactorytothe Company, tothe effect that such offer, sale or other distribution may be effected without registration or qualification (under any federal or state law then ineffect). Upon receiving such written notice and reasonably satisfactory opinion, ifso requested, or other evidence, the Company, as promptly as practicable, shall notify Investor that Investor may sell or otherwise dispose of this Note or such securities, all inaccordance with the terms of the notice delivered tothe Company. If adetermination has been made pursuant toSection 6(e) and (f) of the Purchase Agreementthat the opinion of counsel for Investor, or other evidence, isnot reasonably satisfactorytothe Company, the Company shall so notify Investor promptly after such determination has been made. Each Note thus transferred and each certificate representing the securities thus transferred shall bearalegend as tothe applicable restrictions on transferability inordertoensure compliance with the Securities Act, unless inthe opinion of counsel for the Company such legend isnot required inordertoensure compliance with the Securities Act. The Company may issue stop transfer instructions to itstransfer agent inconnection with such restrictions. Subject tothe foregoing, transfers of this Note shall be registered upon registration books maintained for such purpose by or on behalf of the Company as provided inthe Purchase Agreement. Prior topresentation of this Note for registration of transfer, the Company shall treat the registered holder hereof as the owner and holder of this Note for the purpose of receiving all payments of principal and interest hereon and for all other purposes whatsoever, whether or not this Note shall be overdue, and the Company shall not be affected by notice tothe contrary.
(iii) Neither this Note nor any of the rights, interests or obligations hereunder may be assigned, by operation of law or otherwise, inwhole or inpart, by the Company without the prior written consent of Investor.
(iv) Investor agrees not tosell, assign, transfer, pledge or otherwise dispose of any securities of the Company, or any beneficial interest therein, toany person (other than the Company) unless and until the proposed transferee confirms tothe reasonable satisfaction of the Company that neither the proposed transferee nor any of itsdirectors, executive officers, other officers that may serve as adirector or officer of any company inwhich itinvests, general partners or managing members nor any person that would be deemed abeneficial owner of those securities (inaccordance with Rule 506(d) of the Securities Act) issubject toany of the “bad actor” disqualifications described inRule 506(d)(1)(i) through (viii) under the Securities Act, except as set forth inRule 506(d)(2)(ii) or (iii)or (d)(3) under the Securities Act and disclosed, reasonably inadvance of the transfer,inwriting inreasonable detail tothe Company. Investor will promptly notify the Company inwritingifInvestor or, toInvestor’s knowledge, any person specified inRule 506(d)(1) under the Securities Act becomes subject toany of the “bad actor” disqualifications described inRule 506(d)(1)(i) through (viii) under the Securities Act.
(b) Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of the Company and Investor.
(c) Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be inwriting and faxed, mailed or deliveredtoeach party at the respective addresses of the parties as set forth inthe Purchase Agreement, or at such other address or facsimile number as the Company shall have furnished toInvestorinwriting. All such notices and communications will be deemed effectively given the earlier of (i)when received, (ii)when delivered personally, (iii)one business day after being delivered by facsimile (with receipt of appropriate confirmation),
| (i) | one business day after being deposited with an overnight courier service of recognized standing or |
| (ii) | four days after being depositedinthe U.S. mail, first class with postage prepaid. |
(d) Payment. Unless converted into the Company’s equity securities pursuanttothe terms hereof, payment shall be made inlawful tender of the United States.
(e) Usury. Inthe event any interestispaid on this Note which isdeemedtobe inexcess of the then legal maximum rate, then that portion of the interest payment representing an amount inexcess of the then legal maximum rate shall be deemed apayment of principal and applied against the principal of this Note.
(f) Waivers. The Company hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative tothis instrument.
(g) Governing Law. This Note and all actions arising out of or inconnection with this Note shall be governed by and construed inaccordance with the laws of the State of Nevada, without regard tothe conflicts of law provisions of the State of Nevada, or of any other state.
(h) Waiver of Jury Trial. By acceptance of this Note, Investor hereby agrees and the Company hereby agrees towaive their respective rights to ajury trial of any claim or cause of action based upon or arising out of this Note.
The Company has caused this Notetobe issued as of the date first written above.
Boomer Naturals Inc.
aNevada corporation
________________________
By: Daniel Capri
Title: President
GUARANTORS:
Whale Sports Inc.
aNevada corporation
/s/ Daniel Capri
By: Daniel Capri
Title: President
