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| EX-4 - FORM OF WARRANT ISSUED ON JANUARY 12, 2021, BY VISIUM TECHNOLOGIES, INC. - VISIUM TECHNOLOGIES, INC. | warrantlabrysvism2021-011.htm |
| 8-K - PRIMARY DOCUMENT - VISIUM TECHNOLOGIES, INC. | visiumtechnologiesinc-8kl.htm |
THIS
INSTRUMENT CONTAINS AN AFFIDAVIT OF CONFESSION OF JUDGMENT
PROVISION WHICH CONSTITUTES A WAIVER OF IMPORTANT RIGHTS BORROWER
MAY HAVE AND ALLOWS THE HOLDER TO OBTAIN A JUDGMENT AGAINST
BORROWER WITHOUT ANY FURTHER NOTICE.
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH MAY BE THE LEGAL
COUNSEL OPINION (AS DEFINED IN THE PURCHASE AGREEMENT)), IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A OR
REGULATION S UNDER SAID ACT OR OTHER APPLICABLE EXEMPTION.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
|
Principal
Amount: $200,000.00
|
Issue
Date: January 12, 2021
|
|
Actual
Amount of Purchase Price: $190,000.00
|
|
SELF-AMORTIZATION PROMISSORY NOTE
FOR VALUE RECEIVED, VISIUM TECHNOLOGIES, INC., a Florida
corporation (hereinafter called the “Borrower” or the
“Company”) (Trading Symbol: VISM), hereby promises to
pay to the order of LABRYS FUND,
LP, a Delaware limited partnership, or registered assigns
(the “Holder”), in the form of lawful money of the
United States of America, the principal sum of $200,000.00, which
amount is the $190,000.00 actual amount of the purchase price (the
“Consideration”) hereof plus an original issue discount
in the amount of $10,000.00 (the “OID”) (subject to
adjustment herein) (the “Principal Amount”) and to pay
interest on the unpaid Principal Amount hereof at the rate of eight
(8%) (the “Interest Rate”) per annum (with the
understanding that the first twelve months of interest (equal to
$16,000.00) shall be guaranteed) from the date hereof (the
“Issue Date”) until the same becomes due and payable,
whether at maturity or upon acceleration or by prepayment or
otherwise, as further provided herein. The maturity date shall be
twelve (12) months from the Issue Date (the “Maturity
Date”), and is the date upon which the principal sum, the
OID, as well as any accrued and unpaid interest and other fees,
shall be due and payable.
This
Note may not be prepaid or repaid in whole or in part except as
otherwise explicitly set forth herein.
Interest shall
commence accruing on the date that the Note is fully funded and
shall be computed on the basis of a 365-day year and the actual
number of days elapsed. Any Principal Amount or interest on this
Note which is not paid when due shall bear interest at the rate of
the lesser of (i) sixteen percent (16%) per annum and (ii) the
maximum amount permitted by law from the due date thereof until the
same is paid (“Default Interest”).
All
payments due hereunder (to the extent not converted into shares of
common stock, $0.0001 par value per share, of the Borrower (the
“Common Stock”) in accordance with the terms hereof)
shall be made in lawful money of the United States of America. All
payments shall be made at such address as the Holder shall
hereafter give to the Borrower by written notice made in accordance
with the provisions of this Note. Whenever any amount expressed to
be due by the terms of this Note is due on any day which is not a
business day, the same shall instead be due on the next succeeding
day which is a business day and, in the case of any interest
payment date which is not the date on which this Note is paid in
full, the extension of the due date thereof shall not be taken into
account for purposes of determining the amount of interest due on
such date.
Each
capitalized term used herein, and not otherwise defined, shall have
the meaning ascribed thereto in that certain Securities Purchase
Agreement, dated as of the Issue Date, pursuant to which this Note
was originally issued (the “Purchase Agreement”). As
used in this Note, the term “business day” shall mean
any day other than a Saturday, Sunday or a day on which commercial
banks in the city of New York, New York are authorized or required
by law or executive order to remain closed. As used herein, the
term “Trading Day” means any day that shares of Common
Stock are listed for trading or quotation on the Principal Market
(as defined in the Purchase Agreement), any tier of
the OTC
Markets, NASDAQ Stock Market, the New York Stock Exchange, or the
NYSE American.
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 Borrower and
will not impose personal liability upon the holder
thereof.
The
following terms shall also apply to this Note:
ARTICLE I. CONVERSION RIGHTS
1.1
Conversion Rights.
The Holder shall have the right, at any time on or following the
Issue Date, to convert all or any portion of the then outstanding
and unpaid Principal Amount and interest (including any Default
Interest) into fully paid and non-assessable shares of Common
Stock, as such Common Stock exists on the Issue Date, or any shares
of capital stock or other securities of the Borrower into which
such Common Stock shall hereafter be changed or reclassified, at
the Conversion Price (as defined below) determined as provided
herein (a “Conversion”); provided, however, that notwithstanding
anything to the contrary contained herein, the a Holder shall not
have the right to convert any portion of this Note, pursuant to
Section 1 or otherwise, to the extent that after giving effect to
such issuance after conversion as set forth on the applicable
Notice of Conversion, the Holder (together with the Holder’s
affiliates (the “Affiliates”), and any other Persons
(as defined below) acting as a group together with the Holder or
any of the Holder’s Affiliates (such Persons,
“Attribution Parties”)), would beneficially own in
excess of the Beneficial Ownership Limitation (as defined below).
For purposes of the foregoing sentence, the number of shares of
Common Stock beneficially owned by the Holder and Attribution
Parties shall include the number of shares of Common Stock issuable
upon conversion of this Note with respect to which such
determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (i) conversion of the
remaining, nonconverted portion of this Note beneficially owned by
the Holder or any of its Affiliates or Attribution Parties
and
(ii)
exercise or conversion of the unexercised or nonconverted portion
of any other securities of the Company subject to a limitation on
conversion or exercise analogous to the limitation contained herein
beneficially owned by the Holder or any of its Affiliates or
Attribution Parties. Except as set forth in the preceding sentence,
for purposes of this Section 1.1, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Holder is solely responsible
for any schedules required to be filed in accordance therewith. In
addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 1.1, in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the
Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Trading Days
confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Note, by the Holder or its Affiliates or Attribution
Parties since the date as of which such number of outstanding
shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 4.99% of the number of shares
of the Common Stock outstanding at the time of the respective
calculation hereunder. “Person” and
“Persons” means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and any governmental
entity or any department or agency thereof. The limitations
contained in this paragraph shall apply to a successor holder of
this Note. The number of Conversion Shares to be issued upon each
conversion of this Note shall be determined by dividing the
Conversion Amount (as defined below) by the applicable Conversion
Price then in effect on the date specified in the notice of
conversion, in the form attached hereto as Exhibit A (the “Notice of
Conversion”), delivered to the Borrower or Borrower’s
transfer agent by the Holder in accordance with
Section
1.4
below; provided that the Notice of Conversion is submitted by
facsimile or e-mail (or by other means resulting in, or reasonably
expected to result in, notice) to the Borrower or Borrower’s
transfer agent before 11:59 p.m., New York, New York time on such
conversion date (the “Conversion Date”). The term
“Conversion Amount” means, with respect to any
conversion of this Note, the sum of (1) the Principal Amount of
this Note to be converted in such conversion plus (2) at the Holder’s
option, accrued and unpaid interest, if any, on such Principal
Amount at the Interest Rate to the Conversion Date, plus (3) at the Holder’s
option, Default Interest, if any, on the amounts referred to in the
immediately preceding clauses (1) and/or (2).
1.2
Conversion Price.
(a) Calculation of Conversion
Price. The per share conversion price into which Principal
Amount and interest (including any Default Interest) under this
Note shall be convertible into shares of Common Stock hereunder
(the “Conversion Price”) shall equal $0.005. If at any
time the Conversion Price as determined hereunder for any
conversion would be less than the par value of the Common Stock,
then at the sole discretion of the Holder, the Conversion Price
hereunder may equal such par value for such conversion and the
Conversion Amount for such conversion may be increased to include
Additional Principal, where “Additional Principal”
means such additional amount to be added to the Conversion Amount
to the extent necessary to cause the number of conversion shares
issuable upon such conversion to equal the same number of
conversion shares as would have been issued had the Conversion
Price not been adjusted by the Holder to the par value price. The
Conversion Price is subject to equitable adjustments for stock
splits, stock dividends or rights offerings by the Borrower
relating to the Borrower’s securities or the securities of
any subsidiary of the Borrower, combinations, recapitalization,
reclassifications, extraordinary distributions and similar events.
Holder shall be entitled to deduct $750.00 from the conversion
amount in each Notice of Conversion to cover Holder’s fees
associated with each Notice of Conversion.
1.3 Authorized and Reserved Shares.
The Borrower covenants that at all times until the Note is
satisfied in full, the Borrower will reserve from its authorized
and unissued Common Stock a sufficient number of shares, free from
preemptive rights, to provide for the issuance of a number of
Conversion Shares equal to the greater of: (a) 60,000,000 shares of
Common Stock or (b) the sum of (i) the number of Conversion Shares
issuable upon the full conversion of this Note (assuming no payment
of Principal Amount or interest, and assuming that an Event of
Default has occurred regardless of whether an Event of Default has
actually occurred under this Note) as of any issue date (taking
into consideration any adjustments to the Conversion Price pursuant
to Section 2 hereof or otherwise) multiplied by (ii) one and a
half (1.5) (the “Reserved Amount”). The Borrower
represents that upon issuance, the Conversion Shares will be duly
and validly issued, fully paid and non-assessable. The Borrower (i)
acknowledges that it has irrevocably instructed its transfer agent
to issue certificates for the Conversion Shares or instructions to
have the Conversion Shares issued as contemplated by Section 1.4(f)
hereof, and (ii) agrees that its issuance of this Note shall
constitute full authority to its officers and agents who are
charged with the duty of executing stock certificates or cause the
Company to electronically issue shares of Common Stock to execute
and issue the necessary certificates for the Conversion Shares or
cause the Conversion Shares to be issued as contemplated by Section
1.4(f) hereof in accordance with the terms and conditions of this
Note.
If, at
any time the Borrower does not maintain the Reserved Amount it will
be considered an Event of Default under this Note.
1.4
Method of Conversion.
(a) Mechanics of Conversion. This
Note may be converted by the Holder in whole or in part, on any
Trading Day, at any time on or following the Issue Date, by
submitting to the Borrower or Borrower’s transfer agent a
Notice of Conversion (by facsimile, e-mail or other reasonable
means of communication dispatched on the Conversion Date prior to
11:59 p.m., New York, New York time). Any Notice of Conversion
submitted after 11:59 p.m., New York, New York time, shall be
deemed to have been delivered and received on the next Trading
Day.
(b) Surrender of Note Upon
Conversion. Notwithstanding anything to the contrary set
forth herein, upon conversion of this Note in accordance with the
terms hereof, the Holder shall not be required to physically
surrender this Note to the Borrower unless the entire unpaid
Principal Amount is so converted. The Holder and the Borrower shall
maintain records showing the Principal Amount so converted and the
dates of such conversions or shall use such other method,
reasonably satisfactory to the Holder and the Borrower, so as not
to require physical surrender of this Note upon each such
conversion. In the event of any dispute or discrepancy, such
records of the Borrower shall, prima facie, be controlling and
determinative in the absence of manifest error. Notwithstanding the
foregoing, if any portion of this Note is converted as aforesaid,
the Holder may not transfer this Note unless the Holder first
physically surrenders this Note to the Borrower, whereupon the
Borrower will forthwith issue and deliver upon the order of the
Holder a new Note of like tenor, registered as the Holder (upon
payment by the Holder of any applicable transfer taxes) may
request, representing in the aggregate the remaining unpaid
Principal Amount of this Note. The Holder and any assignee, by
acceptance of this Note, acknowledge and agree that, by reason of
the provisions of this paragraph, following conversion of a portion
of this Note, the unpaid and unconverted Principal Amount of this
Note represented by this Note may be less than the amount stated on
the face hereof.
(c) Payment of Taxes. The Borrower
shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of
shares of Common Stock or other securities or
property on
conversion of this Note in a name other than that of the Holder (or
in street name), and the Borrower shall not be required to issue or
deliver any such shares or other securities or property unless and
until the person or persons (other than the Holder or the custodian
in whose street name such shares are to be held for the
Holder’s account) requesting the issuance thereof shall have
paid to the Borrower the amount of any such tax or shall have
established to the satisfaction of the Borrower that such tax has
been paid.
(d) Delivery of Common Stock Upon
Conversion. Upon receipt by the Borrower from the Holder of
a facsimile transmission or e-mail (or other reasonable means of
communication) of a Notice of Conversion meeting the requirements
for conversion as provided in this Section 1.4, the Borrower shall
issue and deliver or cause to be issued and delivered to or upon
the order of the Holder certificates for the Conversion Shares (or
cause the electronic delivery of the Conversion Shares as
contemplated by Section 1.4(f) hereof) within one (1) Trading Day
after such receipt (the “Deadline”) (and, solely in the
case of conversion of the entire unpaid Principal Amount and
interest (including any Default Interest) under this Note,
surrender of this Note). If the Company shall fail for any reason
or for no reason to issue to the Holder on or prior to the Deadline
a certificate for the number of Conversion Shares or to which the
Holder is entitled hereunder and register such Conversion Shares on
the Company’s share register or to credit the Holder’s
balance account with DTC (as defined below) for such number of
Conversion Shares to which the Holder is entitled upon the
Holder’s conversion of this Note (a “Conversion
Failure”), then, in addition to all other remedies available
to the Holder, (i) the Company shall pay in cash to the Holder on
each day after the Deadline and during such Conversion Failure an
amount equal to 2.0% of the product of (A) the sum of the number of
Conversion Shares not issued to the Holder on or prior to the
Deadline and to which the Holder is entitled and (B) the closing
sale price of the Common Stock on the Trading Day immediately
preceding the last possible date which the Company could have
issued such Conversion Shares to the Holder without violating this
Section 1.4(d); and (ii) the Holder, upon written notice to the
Company, may void its Notice of Conversion with respect to, and
retain or have returned, as the case may be, any portion of this
Note that has not been converted pursuant to such Notice of
Conversion; provided that the voiding of an Notice of Conversion
shall not affect the Company’s obligations to make any
payments which have accrued prior to the date of such notice. In
addition to the foregoing, if on or prior to the Deadline the
Company shall fail to issue and deliver a certificate to the Holder
and register such Conversion Shares on the Company’s share
register or credit the Holder’s balance account with DTC for
the number of Conversion Shares to which the Holder is entitled
upon the Holder’s exercise hereunder or pursuant to the
Company’s obligation pursuant to clause (ii) below, and if on
or after such Trading Day the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of shares of Common Stock
issuable upon such exercise that the Holder anticipated receiving
from the Company, then the Company shall, within two (2) Trading
Days after the Holder’s request and in the Holder’s
discretion, either (i) pay cash to the Holder in an amount equal to
the Holder’s total purchase price (including brokerage
commissions and other reasonable and customary out-of-pocket
expenses, if any) for the shares of Common Stock so purchased (the
“Buy-In Price”), at which point the Company’s
obligation to deliver such certificate (and to issue such
Conversion Shares) or credit such Holder’s balance account
with DTC for such Conversion Shares shall terminate, or (ii)
promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such Conversion Shares or
credit such Holder’s balance account with DTC and pay cash to
the Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of shares of Common
Stock, times (B) the closing sales price of the Common Stock on the
date of exercise. Nothing shall limit the Holder’s right to
pursue any other remedies available to it hereunder, at law or in
equity, including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company’s failure to timely deliver certificates representing
the Conversion Shares (or to electronically deliver such Conversion
Shares) upon the conversion of this Note as required pursuant to
the terms hereof.
(e) Obligation of Borrower to Deliver
Common Stock. At the time that the Holder submits the Notice
of Conversion to the Borrower or Borrower’s transfer agent,
the Holder shall be deemed to be the holder of record of the
Conversion Shares issuable upon such conversion, the outstanding
Principal Amount and the amount of accrued and unpaid interest
(including any Default Interest) under this Note shall be reduced
to reflect such conversion, and, unless the Borrower defaults on
its obligations under this Article I, all rights with respect to
the portion of this Note being so converted shall forthwith
terminate except the right to receive the Common Stock or other
securities, cash or other assets, as herein provided, on such
conversion. If the Holder shall have given a Notice of Conversion
as provided herein, the Borrower’s obligation to issue and
deliver the certificates for the Conversion Shares (or cause the
electronic delivery of the Conversion Shares as contemplated by
Section 1.4(f) hereof) shall be absolute and unconditional,
irrespective of the absence of any action by the Holder to enforce
the same, any waiver or consent with respect to any provision
thereof, the recovery of any judgment against any person or any
action to enforce the same, any failure or delay in the enforcement
of any other obligation of the Borrower to the holder of record, or
any setoff, counterclaim, recoupment, limitation or termination, or
any breach or alleged breach by the Holder of any
obligation to the
Borrower, and irrespective of any other circumstance which might
otherwise limit such obligation of the Borrower to the Holder in
connection with such conversion. The Conversion Date specified in
the Notice of Conversion shall be the Conversion Date so long as
the Notice of Conversion is sent to the Borrower or
Borrower’s transfer agent before 11:59 p.m., New York, New
York time, on such date.
(f) Delivery of Conversion Shares by
Electronic Transfer. In lieu of delivering physical
certificates representing the Conversion Shares issuable upon
conversion hereof, provided the Borrower is participating in the
Depository Trust Company (“DTC”) Fast Automated
Securities Transfer or Deposit/Withdrawal at Custodian programs,
upon request of the Holder and its compliance with the provisions
contained in Section 1.1 and in this Section 1.4, the Borrower
shall use its best efforts to cause its transfer agent to
electronically transmit the Conversion Shares issuable upon
conversion hereof to the Holder by crediting the account of
Holder’s Prime Broker with DTC through its Deposit Withdrawal
Agent Commission system.
1.5 Concerning the Shares. The
Conversion Shares issuable upon conversion of this Note may not be
sold or transferred unless (i) such shares are sold pursuant to an
effective registration statement under the 1933 Act or (ii) the
Borrower or its transfer agent shall have been furnished with an
opinion of counsel (which opinion shall be the Legal Counsel
Opinion (as defined in the Purchase Agreement)) to the effect that
the shares to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration or (iii) such
shares are sold or transferred pursuant to Rule 144, Rule 144A,
Regulation S, or other applicable exemption, or (iv) such shares
are transferred to an “affiliate” (as defined in Rule
144) of the Borrower who agrees to sell or otherwise transfer the
shares only in accordance with this Section 1.5 and who is an
Accredited Investor (as defined in the Purchase Agreement). Except
as otherwise provided in the Purchase Agreement (and subject to the
removal provisions set forth below), until such time as the
Conversion Shares have been registered under the 1933 Act or
otherwise may be sold pursuant to Rule 144, Rule 144A, Regulation
S, or other applicable exemption without any restriction as to the
number of securities as of a particular date that can then be
immediately sold, each certificate for the Conversion Shares that
has not been so included in an effective registration statement or
that has not been sold pursuant to an effective registration
statement or an exemption that permits removal of the legend, shall
bear a legend substantially in the following form, as
appropriate:
“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN
OPINION OF COUNSEL (WHICH MAY BE THE LEGAL COUNSEL OPINION (AS
DEFINED IN THE PURCHASE AGREEMENT)), IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II)
UNLESS SOLD PURSUANT TO RULE 144, RULE 144A, REGULATION S UNDER
SAID ACT, OR OTHER APPLICABLE EXEMPTION. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.”
The
legend set forth above shall be removed and the Company shall issue
to the Holder a certificate for the applicable Conversion Shares
without such legend upon which it is stamped or (as requested by
the Holder) issue the applicable Conversion Shares by electronic
delivery by crediting the account of such holder’s broker
with DTC, if, unless otherwise required by applicable state
securities laws: (a) such Conversion Shares are registered for sale
under an effective registration statement filed under the 1933 Act
or otherwise may be sold pursuant to Rule 144, Rule 144A,
Regulation S, or other applicable exemption without any restriction
as to the number of securities as of a particular date that can
then be immediately sold, or (b) the Company or the Holder provides
the Legal Counsel Opinion (as contemplated by and in accordance
with Section 4(m) of the Purchase Agreement) to the effect that a
public sale or transfer of such Conversion Shares may be made
without registration under the 1933 Act, which opinion shall be
accepted by the Company so that the sale or transfer is effected.
The Company shall be responsible for the fees of its transfer agent
and all DTC fees associated with any such issuance. The Holder
agrees to sell all Conversion Shares, including those represented
by a certificate(s) from which the legend has been removed, in
compliance with applicable prospectus delivery requirements, if
any. In the event that the Company does not accept the opinion of
counsel
provided by the
Holder with respect to the transfer of Conversion Shares pursuant
to an exemption from registration, such as Rule 144, Rule 144A,
Regulation S, or other applicable exemption, at the Deadline,
notwithstanding that the conditions of Rule 144, Rule 144A,
Regulation S, or other applicable exemption, as applicable, have
been met, it will be considered an Event of Default under this
Note.
1.6
Effect of Certain Events.
(a) Effect of Merger, Consolidation,
Etc. At the option of the Holder, the sale, conveyance or
disposition of all or substantially all of the assets of the
Borrower, or the consolidation, merger or other business
combination of the Borrower with or into any other Person (as
defined below) or Persons when the Borrower is not the survivor
shall either: (i) be deemed to be an Event of Default pursuant to
which the Borrower shall be required to pay to the Holder upon the
consummation of and as a condition to such transaction an amount
equal to the Default Amount (defined in Section 3.21) or (ii) be
treated pursuant to Section 1.6(b) hereof. “Person”
shall mean any individual, corporation, limited liability company,
partnership, association, trust or other entity or
organization.
(b) Adjustment Due to Merger,
Consolidation, Etc. If, at any time when this Note is issued
and outstanding and prior to conversion of all of this Note, there
shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a
result of which shares of Common Stock of the Borrower shall be
changed into the same or a different number of shares of another
class or classes of stock or securities of the Borrower or another
entity, or in case of any sale or conveyance of all or
substantially all of the assets of the Borrower other than in
connection with a plan of complete liquidation of the Borrower,
then the Holder of this Note shall thereafter have the right to
receive upon conversion of this Note, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of
Common Stock immediately theretofore issuable upon conversion, such
stock, securities or assets which the Holder would have been
entitled to receive in such transaction had this Note been
converted in full immediately prior to such transaction (without
regard to any limitations on conversion set forth herein), and in
any such case appropriate provisions shall be made with respect to
the rights and interests of the Holder of this Note to the end that
the provisions hereof (including, without limitation, provisions
for adjustment of the Conversion Price and of the number of shares
issuable upon conversion of the Note) shall thereafter be
applicable, as nearly as may be practicable in relation to any
securities or assets thereafter deliverable upon the conversion
hereof. The Borrower shall not effectuate any transaction described
in this Section 1.6(b) unless (a) it first gives, to the extent
practicable, at least thirty (30) days prior written notice (but in
any event at least fifteen (15) days prior written notice) of the
record date of the special meeting of shareholders to approve, or
if there is no such record date, the consummation of, such merger,
consolidation, exchange of shares, recapitalization, reorganization
or other similar event or sale of assets (during which time the
Holder shall be entitled to convert this Note) and (b) the
resulting successor or acquiring entity (if not the Borrower)
assumes by written instrument the obligations of this Section
1.6(b). The above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers or share
exchanges.
(c) Adjustment Due to Distribution.
If the Borrower shall declare or make any distribution of its
assets (or rights to acquire its assets) to holders of Common Stock
as a dividend, stock repurchase, by way of return of capital or
otherwise (including any dividend or distribution to the
Borrower’s shareholders in cash or shares (or rights to
acquire shares) of capital stock of a subsidiary (i.e., a
spin-off)) (a “Distribution”), then the Holder of this
Note shall be entitled, upon any conversion of this Note after the
date of record for determining shareholders entitled to such
Distribution, to receive the amount of such assets which would have
been payable to the Holder with respect to the shares of Common
Stock issuable upon such conversion had such Holder been the holder
of such shares of Common Stock on the record date for the
determination of shareholders entitled to such
Distribution.
(d) Purchase Rights. If, at any
time when all or any portion of this Note is issued and
outstanding, the Borrower issues any convertible securities or
rights to purchase stock, warrants, securities or other property
(the “Purchase Rights”) pro rata to the record holders
of any class of Common Stock, then the Holder of this Note will be
entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which such Holder could have
acquired if such Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Note (without
regard to any limitations on conversion contained herein)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such
record is taken, the date as of which the record holders of Common
Stock are to be determined for the grant, issue or sale of such
Purchase Rights.
(e) Dilutive Issuance. If the
Borrower, at any time while this Note or any amounts due hereunder
are outstanding, issues, sells or grants (or has issued, sold or
granted as of the Issue Date, as the case may
be) any
option to purchase, or sells or grants any right to reprice, or
otherwise disposes of, or issues (or has sold or issued, as the
case may be, or announces any sale, grant or any option to purchase
or other disposition), any Common Stock or other securities
convertible into, exercisable for, or otherwise entitle any person
or entity the right to acquire, shares of Common Stock (including,
without limitation, upon conversion of this Note, and any
convertible notes or warrants outstanding as of or following the
Issue Date), in each or any case at an effective price per share
that is lower than the then Conversion Price (such lower price, the
“Base Conversion Price” and such issuances,
collectively, a “Dilutive Issuance”) (it being agreed
that if the holder of the Common Stock or other securities so
issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or
exchange prices or otherwise, or due to warrants, options or rights
per share which are issued in connection with such issuance, be
entitled to receive shares of Common Stock at an effective price
per share that is lower than the Conversion Price, such issuance
shall be deemed to have occurred for less than the Conversion Price
on such date of the Dilutive Issuance), then the Conversion Price
shall be reduced, at the option of the Holder, to a price equal to
the Base Conversion Price. Such adjustment shall be made whenever
such Common Stock or other securities are issued. By way of
example, and for the avoidance of doubt, if the Company issues a
convertible promissory note (including but not limited to a
Variable Rate Transaction), and the holder of such convertible
promissory note has the right to convert it into Common Stock at an
effective price per share that is lower than the then Conversion
Price (including but not limited to a conversion price with a
discount that varies with the trading prices of or quotations for
the Common Stock), then the Holder has the right to reduce the
Conversion Price to such Base Conversion Price (including but not
limited to a conversion price with a discount that varies with the
trading prices of or quotations for the Common Stock) in perpetuity
regardless of whether the holder of such convertible promissory
note ever effectuated a conversion at the Base Conversion Price.
Notwithstanding the foregoing, no adjustment will be made under
this Section 1.6(e) in respect of an Exempt Issuance. In the event
of an issuance of securities involving multiple tranches or
closings, any adjustment pursuant to this Section 1.6(e) shall be
calculated as if all such securities were issued at the initial
closing.
An
“Exempt Issuance” shall mean the issuance of (a) shares
of Common Stock or other securities to officers or directors of the
Company pursuant to any stock or option or similar equity incentive
plan duly adopted for such purpose, by a majority of the
non-employee members of the Company’s Board of Directors or a
majority of the members of a committee of non-employee directors
established for such purpose in a manner which is consistent with
the Company’s prior business practices; (b) securities issued
pursuant to a merger, consolidation, acquisition or similar
business combination approved by a majority of the disinterested
directors of the Company, provided that any such issuance shall
only be to a Person (or to the equity holders of a Person) which
is, itself or through its subsidiaries, an operating company or an
owner of an asset in a business synergistic with the business of
the Company and shall provide to the Company additional benefits in
addition to the investment of funds, but shall not include a
transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary
business is investing in securities; (c) securities issued pursuant
to any equipment loan or leasing arrangement, real property leasing
arrangement or debt financing from a bank or similar financial
institution approved by a majority of the disinterested directors
of the Company; or (d) securities issued with respect to which the
Holder waives its rights in writing under this Section
1.6(e).
(f) Notice of Adjustments. Upon the
occurrence of each adjustment or readjustment of the Conversion
Price as a result of the events described in this Section 1.6, the
Borrower, at its expense, shall promptly compute such adjustment or
readjustment and prepare and furnish to the Holder a certificate
setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The
Borrower shall, upon the written request at any time of the Holder,
furnish to such Holder a like certificate setting forth (i) such
adjustment or readjustment, (ii) the Conversion Price at the time
in effect and (iii) the number of shares of Common Stock and the
amount, if any, of other securities or property which at the time
would be received upon conversion of the Note.
1.7
[Intentionally
Omitted].
1.8 Status as Shareholder. Upon
submission of a Notice of Conversion by a Holder, (i) the
Conversion Shares covered thereby (other than the Conversion
Shares, if any, which cannot be issued because their issuance would
exceed such Holder’s allocated portion of the Reserved Amount
or Maximum Share Amount) shall be deemed converted into shares of
Common Stock and (ii) the Holder’s rights as a Holder of such
converted portion of this Note shall cease and terminate, excepting
only the right to receive certificates for such shares of Common
Stock and to any remedies provided herein or otherwise available at
law or in equity to such Holder because of a failure by the
Borrower to comply with the terms of this Note. Notwithstanding the
foregoing, if a Holder has not received certificates for all shares
of Common Stock prior to the tenth (10th) business day after the
expiration of the
Deadline with
respect to a conversion of any portion of this Note for any reason,
then (unless the Holder otherwise elects to retain its status as a
holder of Common Stock by so notifying the Borrower) the Holder
shall regain the rights of a Holder of this Note with respect to
such unconverted portions of this Note and the Borrower shall, as
soon as practicable, return such unconverted Note to the Holder or,
if the Note has not been surrendered, adjust its records to reflect
that such portion of this Note has not been converted. In all
cases, the Holder shall retain all of its rights and remedies for
the Borrower’s failure to convert this Note.
1.9 Prepayment. At any time prior
to the date that an Event of Default occurs under this Note (the
“Prepayment Period”), the Borrower shall have the
right, exercisable on one (1) Trading Day prior written notice to
the Holder of the Note, to prepay the outstanding Principal Amount
and interest then due under this Note in accordance with this
Section 1.9. Any notice of prepayment hereunder (an “Optional
Prepayment Notice”) shall be delivered to the Holder of the
Note at its registered addresses and shall state: (1) that the
Borrower is exercising its right to prepay the Note, and (2) the
date of prepayment which shall be one (1) Trading Day from the date
of the Optional Prepayment Notice. On the date fixed for prepayment
(the “Optional Prepayment Date”), the Borrower shall
make payment of the amounts designated below to or upon the order
of the Holder as specified by the Holder in writing to the
Borrower. If the Borrower exercises its right to prepay the Note in
accordance with this Section 1.9, the Borrower shall make payment
to the Holder of an amount in cash equal to the sum of: (w) 100%
multiplied by the Principal Amount then outstanding plus (x) accrued and unpaid
interest on the Principal Amount to the Optional Prepayment
Date.
If the
Borrower delivers an Optional Prepayment Notice and fails to pay
the applicable prepayment amount due to the Holder of the Note as
provided in this Section 1.9, then the Borrower shall forever
forfeit its right to prepay any part of the Note pursuant to this
Section 1.9.
ARTICLE II. RANKING AND CERTAIN COVENANTS
2.1 Ranking and Security. The
obligations of the Borrower under this Note shall rank senior with
respect to any and all unsecured Indebtedness incurred following
the Issue Date.
2.2 Other Indebtedness. So long as
the Borrower shall have any obligation under this Note, the
Borrower shall not (directly or indirectly through any Subsidiary
or affiliate) incur or suffer to exist or guarantee any unsecured
Indebtedness that is senior to or pari passu with (in priority of
payment and performance) the Borrower’s obligations
hereunder. As used in this Section 2.2, the term
“Borrower” means the Borrower and any Subsidiary of the
Borrower. As used herein, the term “Indebtedness” means
(a) all indebtedness of the Borrower for borrowed money or for the
deferred purchase price of property or services, including any type
of letters of credit, but not including deferred purchase price
obligations in place as of the Issue Date and as disclosed in the
SEC Documents or obligations to trade creditors incurred in the
ordinary course of business, (b) all obligations of the Borrower
evidenced by notes, bonds, debentures or other similar instruments,
(c) purchase money indebtedness hereafter incurred by the Borrower
to finance the purchase of fixed or capital assets, including all
capital lease obligations of the Borrower which do not exceed the
purchase price of the assets funded, (d) all guarantee obligations
of the Borrower in respect of obligations of the kind referred to
in clauses (a) through (c) above that the Borrower would not be
permitted to incur or enter into, and (e) all obligations of the
kind referred to in clauses (a) through (d) above that the Borrower
is not permitted to incur or enter into that are secured and/or
unsecured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured and/or
unsecured by) any lien or encumbrance on property (including
accounts and contract rights) owned by the Borrower, whether or not
the Borrower has assumed or become liable for the payment of such
obligation.
2.3 Distributions on Capital Stock.
So long as the Borrower shall have any obligation under this Note,
the Borrower shall not without the Holder’s written consent
(a) pay, declare or set apart for such payment, any dividend or
other distribution (whether in cash, property or other securities)
on shares of capital stock other than dividends on shares of Common
Stock solely in the form of additional shares of Common Stock or
(b) directly or indirectly or through any subsidiary make any other
payment or distribution in respect of its capital stock except for
distributions pursuant to any shareholders’ rights plan which
is approved by a majority of the Borrower’s disinterested
directors.
2.4 Restriction on Stock Repurchases and
Debt Repayments. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not without the
Holder’s written consent redeem, repurchase or otherwise
acquire (whether for cash or in exchange for property or other
securities or otherwise) in any one transaction
or
series of related transactions any shares of capital stock of the
Borrower or any warrants, rights or options to purchase or acquire
any such shares, or repay any pari passu or subordinated
indebtedness of Borrower.
2.5 Sale of Assets. So long as the
Borrower shall have any obligation under this Note, the Borrower
shall not, without the Holder’s written consent, sell, lease
or otherwise dispose of any significant portion of its assets
outside the ordinary course of business. Any consent to the
disposition of any assets may be conditioned on a specified use of
the proceeds of disposition.
2.6 Advances and Loans; Affiliate
Transactions. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not, without the
Holder’s written consent, lend money, give credit, make
advances to or enter into any transaction with any person, firm,
joint venture or corporation, including, without limitation,
officers, directors, employees, subsidiaries and affiliates of the
Borrower, except loans, credits or advances (a) in existence or
committed on the Issue Date and which the Borrower has informed
Holder in writing prior to the Issue Date, (b) in regard to
transactions with unaffiliated third parties, made in the ordinary
course of business or (c) in regard to transactions with
unaffiliated third parties, not in excess of $100,000. So long as
the Borrower shall have any obligation under this Note, the
Borrower shall not, without the Holder’s written consent,
repay any affiliate (as defined in Rule 144) of the Borrower in
connection with any indebtedness or accrued amounts owed to any
such party.
2.7 Section 3(a)(9) or 3(a)(10)
Transaction. So long as this Note is outstanding, the
Borrower shall not enter into any transaction or arrangement
structured in accordance with, based upon, or related or pursuant
to, in whole or in part, either Section 3(a)(9) of the Securities
Act (a “3(a)(9) Transaction”) or Section 3(a)(10) of
the Securities Act (a “3(a)(10) Transaction”). In the
event that the Borrower does enter into, or makes any issuance of
Common Stock related to a 3(a)(9) Transaction or a 3(a)(10)
Transaction while this note is outstanding, a liquidated damages
charge of 25% of the outstanding principal balance of this Note,
but not less than $25,000, will be assessed and will become
immediately due and payable to the Holder at its election in the
form of a cash payment or added to the balance of this Note (under
Holder's and Borrower's expectation that this amount will tack back
to the Issue Date).
2.8 Preservation of Business and
Existence, etc. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not, without the
Holder’s written consent, (a) change the nature of its
business;
(b) sell, divest,
change the structure of any material assets other than in the
ordinary course of business; or (c) enter into any variable rate
transactions or Merchant Cash Advance transactions. In addition, so
long as the Borrower shall have any obligation under this Note, the
Borrower shall maintain and preserve, and cause each of its
Subsidiaries to maintain and preserve, its existence, rights and
privileges, and become or remain, and cause each of its
Subsidiaries (other than dormant Subsidiaries that have no or
minimum assets) to become or remain, duly qualified and in good
standing in each jurisdiction in which the character of the
properties owned or leased by it or in which the transaction of its
business makes such qualification necessary.
2.9 Noncircumvention. The Company
hereby covenants and agrees that the Company will not, by amendment
of its Certificate or Articles of Incorporation or Bylaws, or
through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, 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, and
will at all times in good faith carry out all the provisions of
this Note and take all action as may be required to protect the
rights of the Holder.
2.10 Lost,
Stolen or Mutilated Note. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and, in the case of loss,
theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary form and, in the case of
mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new
Note.
ARTICLE III. EVENTS OF DEFAULT
It
shall be considered an event of default if any of the following
events listed in this Article III (each, an “Event of
Default”) shall occur:
3.1 Failure to Pay Principal or
Interest. The Borrower fails to pay the Principal Amount
hereof or interest thereon when due on this Note, whether at
maturity, upon acceleration or otherwise, or fails to fully comply
with Section 1.10 of this Note.
3.2 Conversion and the Shares. The
Borrower (i) fails to issue Conversion Shares to the Holder (or
announces or threatens in writing that it will not honor its
obligation to do so) upon exercise by the Holder of the conversion
rights of the Holder in accordance with the terms of this Note,
(ii) fails to transfer or cause its transfer agent to transfer
(issue) (electronically or in certificated form) any certificate
for the Conversion Shares issuable to the Holder upon conversion of
or otherwise pursuant to this Note as and when required by this
Note, (iii) fails to reserve the Reserved Amount at all times, or
(iii) the Borrower directs its transfer agent not to transfer or
delays, impairs, and/or hinders its transfer agent in transferring
(or issuing) (electronically or in certificated form) any
certificate for the Conversion Shares issuable to the Holder upon
conversion of or otherwise pursuant to this Note as and when
required by this Note, or fails to remove (or directs its transfer
agent not to remove or impairs, delays, and/or hinders its transfer
agent from removing) any restrictive legend (or to withdraw any
stop transfer instructions in respect thereof) on any certificate
for any Conversion Shares issued to the Holder upon conversion of
or otherwise pursuant to this Note as and when required by this
Note (or makes any written announcement, statement or threat that
it does not intend to honor the obligations described in this
paragraph) and any such failure shall continue uncured (or any
written announcement, statement or threat not to honor its
obligations shall not be rescinded in writing) for two (2) Trading
Days after the Holder shall have delivered a Notice of Conversion.
It is an obligation of the Borrower to remain current in its
obligations to its transfer agent. It shall be an Event of Default
of this Note, if a conversion of this Note is delayed, hindered or
frustrated due to a balance owed by the Borrower to its transfer
agent. If at the option of the Holder, the Holder advances any
funds to the Borrower’s transfer agent in order to process a
conversion, such advanced funds shall be paid by the Borrower to
the Holder within forty eight (48) hours of a demand from the
Holder.
3.3 Breach of Agreements and
Covenants. The Borrower breaches any material agreement,
covenant or other material term or condition contained in the
Purchase Agreement, this Note, Irrevocable Transfer Agent
Instructions or in any agreement, statement or certificate given in
writing pursuant hereto or in connection herewith or
therewith.
3.4 Breach of Representations and
Warranties. Any representation or warranty of the Borrower
made in the Purchase Agreement, this Note, the Irrevocable Transfer
Agent Instructions or in any agreement, statement or certificate
given in writing pursuant hereto or in connection herewith or
therewith shall be false or misleading in any material respect when
made and the breach of which has (or with the passage of time will
have) a material adverse effect on the rights of the Holder with
respect to this Note or the Purchase Agreement.
3.5 Receiver or Trustee. The
Borrower or any subsidiary of the Borrower shall make an assignment
for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial
part of its property or business, or such a receiver or trustee
shall otherwise be appointed.
3.6 Judgments. Any money judgment,
writ or similar process shall be entered or filed against the
Borrower or any subsidiary of the Borrower or any of its property
or other assets for more than $500,000, and shall remain unvacated,
unbonded or unstayed for a period of twenty (20) days unless
otherwise consented to by the Holder, which consent will not be
unreasonably withheld.
3.7 Bankruptcy. Bankruptcy,
insolvency, reorganization or liquidation proceedings or other
proceedings, voluntary or involuntary, for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Borrower or any subsidiary of the
Borrower.
3.8 Failure to Comply with the 1934
Act. At any time after the Issue Date, the Borrower shall
fail to comply with the reporting requirements of the 1934 Act
and/or the Borrower shall cease to be subject to the reporting
requirements of the 1934 Act. It shall be an Event of Default under
this Section 3.8 if the Borrower shall file any Notification of
Late Filing on Form 12b-25 with the SEC.
3.9
Liquidation. Any dissolution,
liquidation, or winding up of Borrower or any substantial
portion
of its
business.
3.10 Cessation
of Operations. Any cessation of operations by Borrower or
Borrower admits it is otherwise generally unable to pay its debts
as such debts become due, provided, however, that any disclosure of
the Borrower’s ability to continue as a “going
concern” shall not be an admission that the Borrower cannot
pay its debts as they become due.
3.11 Maintenance
of Assets. The failure by Borrower to maintain any material
intellectual property rights, personal, real property or other
assets which are necessary to conduct its business (whether now or
in the future).
3.12 Financial
Statement Restatement. The restatement of any financial
statements filed by the Borrower with the SEC for any date or
period from two years prior to the Issue Date of this Note and
until this Note is no longer outstanding, if the result of such
restatement would, by comparison to the unrestated financial
statement, have constituted a material adverse effect on the rights
of the Holder with respect to this Note or the Purchase
Agreement.
3.13 Replacement
of Transfer Agent. In the event that the Borrower proposes
to replace its transfer agent, the Borrower fails to provide, prior
to the effective date of such replacement, a fully executed
Irrevocable Transfer Agent Instructions in a form as initially
delivered pursuant to the Purchase Agreement (including but not
limited to the provision to irrevocably reserve shares of Common
Stock in the Reserved Amount) signed by the successor transfer
agent to Borrower and the Borrower.
3.14 Cross-Default.
The declaration of an event of default by any lender or other
extender of credit to the Company under any notes, loans,
agreements or other instruments of the Company evidencing any
Indebtedness of the Company (including those filed as exhibits to
or described in the Company’s filings with the SEC), after
the passage of all applicable notice and cure or grace
periods.
3.15 Variable
Rate Transactions. The Borrower consummates a Variable Rate
Transaction at any time on or after the Issue Date (excluding this
Note).
3.16 Inside
Information. Any attempt by the Borrower or its officers,
directors, and/or affiliates to transmit, convey, disclose, or any
actual transmittal, conveyance, or disclosure by the Borrower or
its officers, directors, and/or affiliates of, material non-public
information concerning the Borrower, to the Holder or its
successors and assigns, which is not immediately cured by
Borrower’s filing of a Form 8-K pursuant to Regulation FD on
that same date
3.17 Unavailability
of Rule 144. If, at any time on or after the date that is
six (6) calendar months after the Issue Date, the Holder is unable
to (i) obtain a standard “144 legal opinion letter”
from an attorney reasonably acceptable to the Holder, the
Holder’s brokerage firm (and respective clearing firm), and
the Borrower’s transfer agent in order to facilitate the
Holder’s conversion of any portion of the Note into free
trading shares of the Borrower’s Common Stock pursuant to
Rule 144, and/or (ii) thereupon deposit such shares into the
Holder’s brokerage account.
3.18 Delisting
or Suspension of Trading of Common Stock. If, at any time on
or after the Issue Date, the Borrower’s Common Stock (i) is
suspended from trading, (ii) halted from trading, and/or (iii)
fails to be quoted or listed (as applicable) on any level of the
OTC Markets, any tier of the NASDAQ Stock Market, the New York
Stock Exchange, or the NYSE American.
3.19 Failure
to Pay the Interim Payment. The Borrower fails to pay the
Interim Payment (as defined in this Note) when due as provided in
Section 4.16 of this Note.
3.20 Penny
Stock. The Borrower’s Common Stock is deemed to be a
“penny stock” as defined in SEC Rule 240.3a51-1 at any
time after the Issue Date.
3.21 Rights
and Remedies Upon an Event of Default. Upon the occurrence
of any Event of Default specified in this Article III, this Note
shall become immediately due and payable, and the Borrower shall
pay to the Holder, in full satisfaction of its obligations
hereunder, an amount equal to the Principal Amount then outstanding
plus accrued interest (including any Default Interest) through the
date of full repayment multiplied by 125% (collectively the
“Default Amount”), as well as all costs, including,
without limitation, legal fees and expenses, of collection, all
without demand, presentment or notice, all of which hereby are
expressly waived by the Borrower. Holder may, in its sole
discretion, determine to accept payment part in Common Stock and
part in cash. For purposes of payments in Common Stock, the
conversion formula set forth in Section 1.2 shall apply as well as
all other provisions of this Note. The Holder shall be entitled to
exercise all other rights and remedies available at law or in
equity.
Upon
the occurrence of any Event of Default, and in addition to any
other right or remedy of the Holder hereunder, under the related
transaction documents, or otherwise at law or in equity, the
Borrower hereby irrevocably authorizes
and
empowers Holder or its legal counsel, each as the Borrower’s
attorney-in-fact, to appear ex parte and with notice to the
Borrower to confess judgment against the Borrower for the unpaid
amount of this Note. The judgment shall set forth the amount then
due hereunder, plus attorney’s fees and cost of suit, and to
release all errors, and waive all rights of appeal. The Borrower
waives the right to contest Holder’s rights under this
section, including without limitation the right to any stay of
execution and the benefit of all exemption laws now or hereafter in
effect. No single exercise of the foregoing right and power to
confess judgment will be deemed to exhaust such power, whether or
not any such exercise shall be held by any court to be invalid,
voidable, or void, and such power shall continue undiminished and
may be exercised from time to time as the Holder may elect until
all amounts owing on this Note have been paid in full. The Borrower
shall provide a signed and notarized copy of the affidavit of
confession of judgment attached hereto as Exhibit “B”
on or before the Closing Date.
ARTICLE IV. MISCELLANEOUS
4.1 Failure or Indulgence Not
Waiver. No failure or delay on the part of the Holder in the
exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privileges. All
rights and remedies of the Holder existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise
available.
4.2 Notices. All notices, demands,
requests, consents, approvals, and other communications required or
permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service
with charges prepaid, or (iv) transmitted by hand delivery,
telegram, e-mail or facsimile, addressed as set forth below or to
such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon
hand delivery or delivery by e-mail or facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at
the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be
received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business
day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such
communications shall be:
If to
the Borrower, to:
VISIUM
TECHNOLOGIES, INC.
4094
Majestic Lane, Suite 360
Fairfax, VA 22033
Attention: Mark Lucky
e-mail: mlucky@visiumtechnologies.com
If to
the Holder:
LABRYS
FUND, LP
48
Parker Road
Wellesley,
MA 02482
e-mail:
admin@equiluxgroup.com
4.3 Amendments. This Note and any
provision hereof may only be amended by an instrument in writing
signed by the Borrower and the Holder. The term “Note”
and all reference thereto, as used throughout this instrument,
shall mean this instrument as originally executed, or if later
amended or supplemented, then as so amended or
supplemented.
4.4 Assignability. This Note shall
be binding upon the Borrower and its successors and assigns, and
shall inure to be the benefit of the Holder and its successors and
assigns. Neither the Borrower nor the Holder shall assign this Note
or any rights or obligations hereunder without the prior written
consent of the other. Notwithstanding the foregoing, the Holder may
assign its rights hereunder to any “accredited
investor” (as defined in Rule 501(a) of the 1933 Act) in a
private transaction from the Holder or to any of its
“affiliates”, as that term is defined under
the
1934
Act, without the consent of the Borrower. Notwithstanding anything
in this Note to the contrary, this Note may be pledged as
collateral in connection with a bona fide margin account or other
lending arrangement. The Holder and any assignee, by acceptance of
this Note, acknowledge and agree that following conversion of a
portion of this Note, the unpaid and unconverted principal amount
of this Note represented by this Note may be less than the amount
stated on the face hereof.
4.5 Cost of Collection. If default
is made in the payment of this Note, the Borrower shall pay the
Holder hereof costs of collection, including reasonable
attorneys’ fees.
4.6 Governing Law; Venue; Attorney’s
Fees. This Note shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to
principles of conflicts of laws. Any action brought by either party
against the other concerning the transactions contemplated by this
Note or any other agreement, certificate, instrument or document
contemplated hereby shall be brought only in the state courts
located in the Commonwealth of Massachusetts or federal courts
located in the Commonwealth of Massachusetts. The Borrower hereby
irrevocably waives any objection to jurisdiction and venue of any
action instituted hereunder and shall not assert any defense based
on lack of jurisdiction or venue or based upon forum non conveniens. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS NOTE OR ANY TRANSACTIONS CONTEMPLATED
HEREBY. Each party hereby irrevocably waives personal
service of process and consents to process being served in any
suit, action or proceeding in connection with this Note or any
other agreement, certificate, instrument or document contemplated
hereby or thereby by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to
such party at the address in effect for notices to it under this
Note and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any other manner permitted by law. The prevailing party
in any action or dispute brought in connection with this the Note
or any other agreement, certificate, instrument or document
contemplated hereby or thereby shall be entitled to recover from
the other party its reasonable attorney’s fees and
costs.
4.7 Certain Amounts. Whenever
pursuant to this Note the Borrower is required to pay an amount in
excess of the outstanding Principal Amount (or the portion thereof
required to be paid at that time) plus accrued and unpaid interest
plus Default Interest on such interest, the Borrower and the Holder
agree that the actual damages to the Holder from the receipt of
cash payment on this Note may be difficult to determine and the
amount to be so paid by the Borrower represents stipulated damages
and not a penalty and is intended to compensate the Holder in part
for loss of the opportunity to convert this Note and to earn a
return from the sale of shares of Common Stock acquired upon
conversion of this Note at a price in excess of the price paid for
such shares pursuant to this Note. The Borrower and the Holder
hereby agree that such amount of stipulated damages is not plainly
disproportionate to the possible loss to the Holder from the
receipt of a cash payment without the opportunity to convert this
Note into shares of Common Stock.
4.8 Purchase Agreement. The Company
and the Holder shall be bound by the applicable terms of the
Purchase Agreement and the documents entered into in connection
herewith and therewith.
4.9 Notice of Corporate Events.
Except as otherwise provided below, the Holder of this Note shall
have no rights as a Holder of Common Stock unless and only to the
extent that it converts this Note into Common Stock. The Borrower
shall provide the Holder with prior notification of any meeting of
the Borrower’s shareholders (and copies of proxy materials
and other information sent to shareholders). In the event of any
taking by the Borrower of a record of its shareholders for the
purpose of determining shareholders who are entitled to receive
payment of any dividend or other distribution, any right to
subscribe for, purchase or otherwise acquire (including by way of
merger, consolidation, reclassification or recapitalization) any
share of any class or any other securities or property, or to
receive any other right, or for the purpose of determining
shareholders who are entitled to vote in connection with any Change
in Control or any proposed liquidation, dissolution or winding up
of the Borrower, the Borrower shall mail a notice to the Holder, at
least twenty (20) days prior to the record date specified therein
(or thirty (30) days prior to the consummation of the transaction
or event, whichever is earlier), of the date on which any such
record is to be taken for the purpose of such dividend,
distribution, right or other event, and a brief statement regarding
the amount and character of such dividend, distribution, right or
other event to the extent known at such time. The Borrower shall
make a public announcement of any event requiring notification to
the Holder hereunder substantially simultaneously with the
notification to the Holder in accordance with the terms of this
Section 4.9.
4.10 Remedies.
The Borrower acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder, by vitiating
the intent and purpose of the transaction contemplated hereby.
Accordingly, the Borrower acknowledges that the remedy at law for a
breach of its obligations under this Note will be inadequate and
agrees, in the event of a breach or threatened breach by the
Borrower of the provisions of this Note, that the Holder shall be
entitled, in addition to all other available remedies at law or in
equity, and in addition to the penalties assessable herein, to an
injunction or injunctions restraining, preventing or curing any
breach of this Note and to enforce specifically the terms and
provisions thereof, without the necessity of showing economic loss
and without any bond or other security being required.
4.11 Construction;
Headings. This Note shall be deemed to be jointly drafted by
the Company and all the Holder and shall not be construed against
any person as the drafter hereof. The headings of this Note are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Note.
4.12 Usury.
To the extent it may lawfully do so, the Company hereby agrees not
to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or
advantage of, usury laws wherever enacted, now or at any time
hereafter in force, in connection with any action or proceeding
that may be brought by the Holder in order to enforce any right or
remedy under this Note. Notwithstanding any provision to the
contrary contained in this Note, it is expressly agreed and
provided that the total liability of the Company under this Note
for payments which under the applicable law are in the nature of
interest shall not exceed the maximum lawful rate authorized under
applicable law (the “Maximum Rate”), and, without
limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other
sums which under the applicable law in the nature of interest that
the Company may be obligated to pay under this Note exceed such
Maximum Rate. It is agreed that if the maximum contract rate of
interest allowed by applicable law and applicable to this Note is
increased or decreased by statute or any official governmental
action subsequent to the Issue Date, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to
this Note from the effective date thereof forward, unless such
application is precluded by applicable law. If under any
circumstances whatsoever, interest in excess of the Maximum Rate is
paid by the Company to the Holder with respect to indebtedness
evidenced by this the Note, such excess shall be applied by the
Holder to the unpaid principal balance of any such indebtedness or
be refunded to the Company, the manner of handling such excess to
be at the Holder’s election.
4.13 Severability.
In the event that any provision of this Note is invalid or
unenforceable under any applicable statute or rule of law
(including any judicial ruling), then such provision shall be
deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of
any other provision of this Note.
4.14 Terms
of Future Financings. So long as this Note is outstanding,
upon any issuance by the Borrower or any of its subsidiaries of any
security, or amendment to a security that was originally issued
before the Issue Date, with any term that the Holder reasonably
believes is more favorable to the holder of such security or with a
term in favor of the holder of such security that the Holder
reasonably believes was not similarly provided to the Holder in
this Note, then (i) the Borrower shall notify the Holder of such
additional or more favorable term within one
(1) business day of the
issuance and/or amendment (as applicable) of the respective
security, and (ii) such term, at Holder’s option, shall
become a part of the transaction documents with the Holder
(regardless of whether the Borrower complied with the notification
provision of this Section 4.14). The types of terms contained in
another security that may be more favorable to the holder of such
security include, but are not limited to, terms addressing
conversion discounts, prepayment rate, conversion lookback periods,
interest rates, and original issue discounts.
4.15 Dispute
Resolution. In the case of a dispute as to the determination
of the Conversion Price, Conversion Amount, any prepayment amount
or Default Amount, Issue, Closing or Maturity Date, the closing bid
price, or fair market value (as the case may be) or the arithmetic
calculation of the Conversion Price or the applicable prepayment
amount(s) (as the case may be), the Borrower or the Holder shall
submit the disputed determinations or arithmetic calculations via
facsimile (i) within one (1) Trading Day after receipt of the
applicable notice giving rise to such dispute to the Borrower or
the Holder or (ii) if no notice gave rise to such dispute, at any
time after the Holder learned of the circumstances giving rise to
such dispute. If the Holder and the Borrower are unable to agree
upon such determination or calculation within one (1) Trading Day
of such disputed determination or arithmetic calculation (as the
case may be) being submitted to the Borrower or the Holder, then
the Borrower shall, within one (1) Trading Day, submit (a) the
disputed determination of the Conversion Price, the closing bid
price, the or fair market value (as the case may be) to an
independent, reputable investment bank selected by the Borrower and
approved by the Holder or
(b) the disputed
arithmetic calculation of the Conversion Price, Conversion Amount,
any prepayment amount or Default Amount, to an independent, outside
accountant selected by the Holder that is reasonably acceptable to
the Borrower. The Borrower shall cause at its expense the
investment bank or the accountant to perform the determinations or
calculations and notify the Borrower and the Holder of the results
no later than one (1) Trading Day from the time it receives such
disputed determinations or calculations. Such investment
bank’s or accountant’s determination or calculation
shall be binding upon all parties absent demonstrable
error.
4.16
Interim Payment. In addition to
all other obligations under this Note, the Borrower shall
pay
$26,000.00 in cash
to the Holder on or before July 12, 2021 (the "Interim
Payment”) for the repayment of the OID (equal to $10,000.00)
and the guaranteed interest (equal to $16,000.00) under the
Note.
4.17 Right
of First Refusal. If at any time while this Note is
outstanding, the Borrower has a bona fide offer of capital or
financing from any 3rd party, that the Borrower intends to act
upon, then the Borrower must first offer such opportunity to the
Holder to provide such capital or financing to the Borrower on the
same terms as each respective 3rd party’s terms. Should the
Holder be unwilling or unable to provide such capital or financing
to the Borrower within 5 trading days from Holder’s receipt
of written notice of the offer (the “Offer Notice”)
from the Borrower, then the Borrower may obtain such capital or
financing from that respective 3rd party upon the exact same terms
and conditions offered by the Borrower to the Holder, which
transaction must be completed within 30 days after the date of the
Offer Notice. If the Borrower does not receive the capital or
financing from the respective 3rd party within 30 days after the
date of the respective Offer Notice, then the Borrower must again
offer the capital or financing opportunity to the Holder as
described above, and the process detailed above shall be repeated.
The Offer Notice must be sent via electronic mail to
Admin@EquiluxGroup.com.
[signature
page follows]
IN WITNESS WHEREOF, Borrower has caused
this Note to be signed in its name by its duly authorized officer
on January 12, 2021.
VISIUM
TECHNOLOGIES, INC.
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By: /s/
Mark Lucky
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Name:
Mark Lucky
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Title:
Chief Executive Officer
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