Exhibit 6.11.1
THIS SECURED CONVERTIBLE PROMISSORY NOTE (THIS "NOTE") HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED , PLEDGED OR HYPOTHECATED, UNLESS IT HAS BEEN REGISTERED UNDER THE ACT AND APPLICABLE STATE OR FOREIGN SECURITIES LAWS OR UNLESS AN EXEMPTION THEREFROM IS AVAILABLE.
SECURED CONVERTIBLE PROMISSORY NOTE
No. 2017-01
FOR VALUE RECEIVED, and intending to be legally bound, VirtualArmour International Inc., a Colorado corporation ("Company"), promises to pay to Christopher T. Blisard, an individual ("Holder"), the principal sum of up to Ninety Thousand Dollars and no/100 ($90,000.00) (the "Principal Amount"), together with interest in arrears on the unpaid principal balance at a rate equal to 7.0% per annum (the "Rate") in the manner provided below.
This Secured Convertible Promissory Note (this "Note") is one of an authorized issue of the Company's convertible promissory notes issued in similar denominations, numbered consecutively and limited to the aggregate principal amount of $90,000 (the "Notes"). Borrower's obligations under the Notes are secured by a subordinated second priority lien on all of the assets of Borrower, as set forth in that certain security agreement of even date herewith between Borrower and Holder(s) (the "Security Agreement").
| (a) | Principal and Interest. |
| (i) | The unpaid Principal Amount, together with all unpaid and accrued interest thereon, shall be due and payable upon the award of the I) days following the date hereof (the "Maturity Date"), subject to the conversion of this Note into membership units of the Company (the "Membership Units") pursuant to Section 4 below and the other terms contained herein. |
| (ii) | All amounts due under this Note shall accrue interest at the Rate, calculated on the outstanding amount at 5:00pm Mountain time on each day from the date that funds are first extended under this Note through the date this Note is repaid in full, and all accrued and unpaid interest shall be due and payable on the Maturity Date. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to this Note, together with all fees, charges and other amounts which are treated as interest on this Note under applicable law (collectively, the "Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for, charged, taken, received or reserved by Holder in accordance with applicable law, the rate of interest payable in respect of this Note, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate. Any Charges in excess of the Maximum Rate shall be added to the principal of this Note and the interest due hereunder shall be adjusted accordingly. |
| (b) | Manner of Payment. All payments of the unpaid Principal Amount and accrued and unpaid interest on this Note shall be made by wire transfer of i1m11ediately available funds in lawful U.S. Dollars to an account designated by Holder or such other place as Holder may designate in writing to Company for such purpose from time to time. If any payment of principal or interest on this Note is due on a day that is not a Business Day, such payment shall be due on the next succeeding Business Day, and such extension of time shall be included in the period of time used for purposes of calculating the amount of interest payable under this Note. "Business Day" means any day other than a Saturday, Sunday or legal holiday in Littleton, Colorado. |
| 2. | Prepayment. Company may, without premium or penalty, at any time and from time to time, upon two (2) days written notice, prepay all or any portion of the outstanding Principal Amount due under this Note without the prior written consent of Holder; provided, that each such prepayment shall be accompanied by accrued interest on the amount of the Principal Amount prepaid, calculated as of the date of such prepayment. |
| 3. | Security. This Note and Company's obligations hereunder are secured by a subordinated, second priority lien on all of the assets of the Company, including all intellectual property (collectively, the "Collateral") pursuant to the terms and conditions of the Security Agreement. Holder recognizes that the Company has granted a first priority lien in favor of LSQ Funding Group, L.C. for purposes of securing a line of credit, as described in the Security Agreement. |
| (a) | Conversion. The Holder may, upon prior written consent of the Company, elect to convert all or a portion of the unpaid principal and interest hereunder into Membership Units at $1.00 per Membership Unit. Holder shall exercise this right by: (i) providing written notice to Company which states the amount of outstanding principal and interest to be converted into Membership Units; and (ii) surrendering this Note at the offices of Company or such other location mutually determined by Company and Holder against delivery of that number of Membership Units equal to the quotient of (x) the outstanding principal balance and interest being converted as stated in such written notice, divided by (y) the Conversion Rate. The Company may refuse to accept such conversion in its sole and absolute discretion. At such time as such Conversion has been effected, the rights of the holder of this Note in any indebtedness so converted will cease and this Note shall be null and void to the extent of such indebtedness. In the event any indebtedness remains unpaid, the Company shall issue a new convertible promissory note with the same terms and condition s as contained herein in the amount of any such unpaid indebtedness. |
| (b) | No Fractional Shares. No fractional Membership Units shall be issued upon the conversion of this Note. In lieu of issuing any fractional units, Company shall pay to the Holder in cash any remainder resulting after the number of whole Membership Units is determined as a result of the conversion. |
| 5. | Further Assurances. Company agrees that from time to time, at the expense of Company, that it shall promptly execute and deliver all further instruments and documents, and take all further action that Holder may request, in order to create and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or to enable Holder to exercise and enforce its rights and remedies hereunder with respect to the Collateral. Company hereby authorizes Holder to file a record or records , including, without limitation , financing statements, and amendments thereto, in all jurisdictions and with all filing offices as Holder may determine , in its sole discretion , are necessary or advisable to perfect the security interest granted to Holder herein. |
| 6. | Recourse. Holder shall have full recourse against Company for the payment of the Principal Amount and all interest due under this Note. |
| 7. | Representations and Warranties of Company. Company hereby represents and warrants that: |
| (a) | it is a Corporation duly organized, validly existing and in good standing under the laws of the State of Colorado; |
| (b) | it is qualified to do business and is in good standing in all jurisdictions where necessary in light of the business it conducts; |
| (c) | it has the full power, authority and legal right to execute, deliver and perform its obligations under this Note; |
| (d) | the execution, delivery and performance by Company of this Note have been duly authorized by all necessary corporate action and this Note constitutes the legal, valid and binding obligation of Company, enforceable in accordance with its terms; |
| (e) | the execution, delivery and performance by Company of this Note do not (i) require any consent or approval of the investors of Company or of any other person or entity that has not been obtained and each such consent and approval that has been obtained is in full force and effect, (ii) violate any provision of any law, rule, regulation, order, writ, judgment or decree applicable to Company or any provision of the articles of organization of Company, or (iii) result in a breach of or constitute a default under any agreement (oral or written) to which Company is a party or by which its assets are affected; |
| (f) | Company is not in violation of any law, rule, regulation, order, writ, judgment or decree applicable to Company or any provision of the certificate of incorporation or by-laws of Company or any agreement to which Company is a party or by which its assets are affected; and |
| (g) | no authorization, approval or other action by any governmental authority or regulatory body is required for either (i) the pledge or grant by Company of the Collateral in favor of Holder hereunder or (ii) the exercise by Holder of any rights or remedies in respect of the Collateral. |
| (a) | Events of Default. The occurrence of any one or more of the following events shall constitute an event of default hereunder ("Event of Default"): |
| (i) | If Company shall fail to pay the unpaid Principal Amount and all unpaid and accrued interest thereon on the Maturity Date; |
| (ii) | If , pursuant to or within the meaning of the United States Bankruptcy Code or any other federal, state or foreign law relating to insolvency or relief of debtors (a "Bankruptcy Law"), Company shall (i) commence a voluntary case or proceeding; (ii) consent to the entry of an order for relief against Company, in an involuntary case; (iii) consent to the appointment of a trustee, receiver, assignee, liquidator or similar official; (iv) make an assignment for the benefit of Company's creditors; or (v) admit in writing Company' s inability to pay its debts as they become due; |
| (iii) | If a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against Company in an involuntary case, (ii) appoints a trustee , receiver, assignee, liquidator or similar official for Company or a substantial portion of Company's properties, or (iii) orders the liquidation of Company, and in each case the order or decree is not dismissed within 60 days; |
| (iv) | If any representation or warranty made by Company in this Note proves to have been false or incorrect in any material respect on the date as of which it is made; or |
| (v) | If the Company defaults under any other Note as contemplated in the Security Agreement , any of its obligations under the Security Agreement or any other obligations under any other agreement between the parties. |
| (b) | Remedies. Upon the occurrence of an Event of Default specified in Section 8(a) hereof, the unpaid Principal Amount of this Note, together with all unpaid and accrued interest and all other amounts payable hereunder, shall become due and payable forthwith, without presentment, demand, notice, protest or other requirement of any kind, all of which are expressly waived by Company. Upon the occurrence and during the continuance of any Event of Default, Holder may |
exercise any and all rights and remedies available to it under applicable law, including, without limitation, the right to collect from Company all sums due under this Note or to exercise in respect of the Collateral all the rights and remedies of Holder on default under the Uniform Commercial Code as in effect from time to time in the State of Colorado (except as may be limited by applicable Bankruptcy Law). Company shall pay all reasonable costs and expenses of collection incurred by or on behalf of Holder as a result of an Event of Default including, without limitation, reasonable attorneys' fees and court costs.
| (a) | Waiver. The rights and remedies of Holder under this Note shall be cumulative and not alternative. No waiver by Holder of any right or remedy under this Note shall be effective unless in a writing signed by Holder. No failure to exercise, delay in exercising, or single or partial exercise of any right or remedy by Holder, and no course of dealing between Company and Holder, shall constitute a waiver of, or shall preclude any other or further exercise of the same right or remedy. Company hereby waives presentment, demand, protest and notice of dishonor and protest. |
| (b) | Notices. Any notice required or permitted to be given hereunder shall be given in accordance with Section 8 of the Security Agreement. |
| (c) | Severability. If any provision in this Note is construed to be invalid, illegal or unenforceable, then the remaining provisions shall not in any way be affected thereby and shall be enforced without regard thereto. |
| (d) | Governing Law; Forum. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF COLORADO AS APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF COLORADO. ANY SUIT OR DISPUTE HEREUNDER SHALL BE ADJUDICATED BY A FEDERAL OR STATE COURT OF PROPER JURISDICTION IN BOULDER COUNTY, COLORADO. |
| (e) | Assignment. This Note shall be binding upon and inure to the benefit of Company and Holder and their respective successors and assigns, except that neither party may assign or transfer (including transfer by operation of law) ai1y of its rights or obligations under this Note without the prior written consent of the other party. |
| (f) | Priority. All rights and priorities of the authorized Holder of this Note and the indebtedness evidenced hereby shall rank pari passu in all respects with the rights and priorities accorded the other authorized Holders of the Notes. |
| (g) | Section Headings. The section and subsection headings in this Note are for convenience of reference only, do not constitute a part of this Note, and shall not affect its interpretation. |
| (h) | References. All words used in this Note shall be construed to be of such number and gender as the context requires or permits. Unless a particular context clearly provides otherwise, the words "hereof' and "hereunder" and similar references refer to this Note in its entirety and not to any specific section or subsection hereof. |
[Signature Page Follows]
IN WITNESS WHEREOF, Company has executed this Note as of the date first stated above.
| VirtualArmour International Inc /s/ Todd Kannegieter Name: Todd Kannegieter Title: Chief Executive Officer |
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