CDIX 8-K
Cardiff Lexington Corp (CDIX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
| (Exact name of registrant as specified in its charter) |
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
| (Registrant’s telephone number, including area code) |
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 | Entry into a Material Definitive Agreement. |
As previously disclosed, on November 19, 2019, Cardiff Lexington Corporation (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”) with GHS Investments, LLC (“GHS”), pursuant to which GHS purchased 165 shares of the Company’s series R convertible preferred stock (the “Shares”). In addition, on November 8, 2019, the Company issued an 8% Convertible Secured Redeemable Note Due November 8, 2020 to GHS and on September 3, 2020, the Company issued a Senior Secured Convertible Promissory Note to GHS (the “Notes,” and together with the Purchase Agreement, the “Transaction Agreements”).
On June 11, 2024, the Company entered into a settlement agreement and release of claims (the “Settlement Agreement”) with GHS, pursuant to which GHS agreed to terminate the Transaction Agreements and cancel the Shares and the Notes in exchange for a new Fixed Amount Settlement Promissory Note in the principal amount of $535,000 (the “New Note”). The Settlement Agreement contains customary representations and warranties for a transaction of this type, as well as a customary mutual release of claims by the Company and GHS.
The New Note does not bear interest and requires fixed payments as follows: (i) if the Company raises at least $5 million but less than $6 million in its planned underwritten public offering (the “Offering”), then it must pay $250,000 on the closing date of the Offering, with payments of $125,000, $125,000 and $35,000 to follow on the 90th, 180th, and 240th days following the closing of the Offering, respectively; (ii) if the Company raises at least $6 million but less than $7 million in the Offering, then it must pay $390,000 on the closing date of the Offering and $145,000 on the 90th day following the closing of the Offering; and (iii) if the Company raises at least $7 million in the Offering, then it must repay the entire principal amount on the closing date of the Offering. If the Offering is not completed by August 15, 2024, then the Company is required to pay $25,000 on such date and to continue making payments of $25,000 on each monthly anniversary thereof until the entire principal amount is repaid in full. If the Offering is completed after August 15, 2024, then the Company is required to make payments as described in the schedule above. Notwithstanding the foregoing, if the Company abandons the Offering and conducts a new public offering thereafter, then the Company is required to make a payment of $100,000 on the closing date of such other public offering, a second payment of $100,000 on the 90th day following the closing of such offering and $35,000 each month thereafter until the entire principal amount is repaid in full. If any portion of the principal amount remains unpaid on the second (2nd) anniversary of the date of the New Note, it shall become immediately due and payable on such date. The Company may prepay the entire principal amount at any time without penalty. The New Note is unsecured and contains customary events of default for a loan of this type. Upon an event of default, interest shall automatically begin to accrue at a simple interest rate of ten percent (10%) per annum.
The foregoing description of the Settlement Agreement and the New Note does not purport to be complete and is qualified in its entirety by reference to the full text of those documents filed as Exhibits 10.1 and 10.2, respectively, to this report, which are incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. | Description of Exhibit | |
| 10.1 | Settlement Agreement and Release of Claims, dated June 11, 2024, between Cardiff Lexington Corporation and GHS Investments, LLC | |
| 10.2 | Fixed Amount Settlement Promissory Note issued by Cardiff Lexington Corporation to GHS Investments, LLC on June 11, 2024 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: June 11, 2024 | CARDIFF LEXINGTON CORPORATION |
| /s/ Alex Cunningham | |
| Name: Alex Cunningham | |
| Title: Chief Executive Officer |
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Exhibit 10.1
SETTLEMENT AGREEMENT,
RELEASE OF CLAIMS
THIS SETTLEMENT AGREEMENTAND RELEASE OF CLAIMS (the “Settlement Agreement”) is made and entered into as of June 11, 2024 (the “Effective Date”) by and between Cardiff Lexington Corporation, a corporation organized under the laws of the State of Nevada with a place of business at 3753 Howard Hughes Pkwy., Suite 200, Las Vegas, NV 89169 (“Cardiff”) and GHS Investments, LLC, a limited liability organized under the laws of the State of Nevada with a place of business at 420 Jericho Turnpike, Suite 102, Jericho, NY 11753 (“GHS”). Cardiff and GHS, are each referred to herein as a “Party” and are collectively referred to herein as the “Parties.”
Recitals:
A.WHEREAS, the Parties previously entered into: (1) a Securities Purchase Agreement dated November 20, 2019 (the “SRA”), pursuant to which, inter alia, Cardiff agreed to sell to GHS a certain number of shares of Cardiff’s Series R preferred stock (the “Series R Stock”), being all of the Series R Stock now held by GHS, on terms more fully described in that agreement and the related certificate of designation for the Series R Stock; (2) a Senior Secured Convertible Promissory Note dated September 3, 2020 (the “Convertible Note”) pursuant to which inter alia, Cardiff promised to pay GHS a certain sum, plus interest on terms more fully described in that instrument; and (3) and 8% Secured Redeemable Note Due November 8, 2020 (the “Redeemable Note”) pursuant to which, inter alia, Cardiff promised to pay GHS a certain sum, plus interest on terms more fully described in that instrument. The Convertible Note, the Redeemable Note and the Series R Stock are referred to herein as the “GHS Securities” and the SRA, the transaction agreements relating to the issuance of the Convertible Note and the Redeemable Note along with the GHS Securities are from time to time referred to collectively herein as the “Transaction Agreements” and each individually as a “Transaction Agreement”; and
B.WHEREAS, the Parties are entering into this Settlement Agreement to settle the outstanding amounts under the GHS Securities and to provide for mutual general release of claims, all on the terms described more fully herein below.
NOW THEREFORE, in consideration of the mutual promises, covenants, and representations contained herein, and other good and valuable consideration, the receipt, adequacy, and sufficiency of which is hereby acknowledged by each Party, and with each Party intending to be legally bound hereby, the Parties agree as follows:
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Agreed Terms:
1.Cardiff will execute and deliver to GHS a promissory note substantially in the form attached hereto as Exhibit 1 (the “Settlement Note”) no later than 5:00 P.M. U.S. Pacific time on the first business day following the later of either the Effective Date or the date the last Party signs and delivers this Settlement Agreement to the other Party.
2.As of the Effective Date, each of the Transaction Agreements, including, without limitation, all of the GHS Securities, are hereby forever and irrevocably cancelled, all amount, either in cash, securities, or in kind, that may be owed by Cardiff under the Transaction Agreements and all obligations, if any, of Cardiff under the Transaction Agreements are forever discharged. GHS represents and warrants to Cardiff that GHS owns the GHS Securities beneficially and of record, free and clear of all claims. GHS has never transferred or agreed to transfer the GHS Securities, other than pursuant to this Agreement. There is no restriction affecting the ability of GHS to transfer the legal and beneficial title and ownership of the GHS Securities to Cardiff for cancellation.
3.General Releases of Claims.
(a) General Release of Claims By GHS. GHS, for itself and the other GHS Releasors (as that term is defined below) hereby release, waive and forever discharge each of the Cardiff Releasees (as that term is defined below) from all actions, claims, causes of action (whether in tort or contract), demands, invoices, warranties, damages, penalties, objections, promises, liabilities, suits, debts, dues, costs, expenses, accounts, covenants, reckonings, bills, controversies, agreements, injunctive relief, fees, variances, liens, extents, executions, obligations, rights to subrogation, rights to contribution, claims for attorney’s fees, interest, expenses and costs, judgments and executions of any kind, in law, admiralty or equity, in any kind of forum, and compensations of any nature whatsoever, and liabilities of any kind whatsoever, whether known or unknown, accrued, liquidated or unliquidated, suspected or unsuspected, contingent or otherwise that the GHS Releasors, whether individually or collectively, or any of them, ever had, now has or have, or hereafter may have against each of the Cardiff Releasees, whether individually or collectively, or any of them, from the beginning of time up to and including the Effective Date (collectively, the “GHS Released Claims” and each a “GHS Released Claim”), including but not limited to any claims arising out of or related to the Transaction Agreements.
(i)Without limiting the generality of the foregoing, GHS, for itself and the other GHS Releasors, hereby release, waive, and forever discharge each of the Cardiff Releasees from: (1) any and all claims related to the Transaction Agreements; (2) any and all claims for slander, libel, defamation, negligent or intentional infliction of emotional distress, personal injury, prima facie tort, negligence, compensatory or punitive damages, or any other claim for damages or injury of any kind whatsoever; and (3) any and all claims for monetary recovery, including, without limitation, monetary recovery or awards as may be provided by statute, attorneys’ fees, experts’ fees, medical fees or expenses, costs and disbursements and the like.
(ii)By entering into this Settlement Agreement, GHS represents and agrees that the failure of this Section 3(a) to specifically identify or enumerate above any statute, ordinance, or common law theory under which the GHS Releasors release claims is not intended by the Parties to limit, diminish or impair in any way the GHS Releasors’ intended and actual release of all claims, demands, causes of action, and liabilities of any kind whatsoever against the Cardiff Releasees.
(iii)It is understood and agreed that the release of claims set forth in this Section 3(a) does not serve to waive any claims, actions, or rights arising under or to enforce the terms of this Settlement Agreement, the Settlement Note, or any claims, actions, or rights that, pursuant to law, cannot be waived or subject to a release of this kind or the right to file a charge with an administrative agency or participate in an agency investigation, provided, however, that the GHS Releasors hereby waive their rights if any to recover any money in connection with a charge or investigation before or by an administrative agency, except as provided in Section 17 below.
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(b)Covenant Not to Sue by GHS. GHS, for itself and the other GHS Releasors, hereby agree not to file or cause to be filed any lawsuit, claim, or action against Cardiff or any of the other Cardiff Releasees that is based on any of the GHS Released Claims.
(c)General Release of Claims By Cardiff. Cardiff, for itself and the other Cardiff Releasors (as that term is defined below) hereby release, waive and forever discharge each of the GHS Releasees (as that term is defined below) from all actions, claims, causes of action (whether in tort or contract), demands, invoices, warranties, damages, penalties, objections, promises, liabilities, suits, debts, dues, costs, expenses, accounts, covenants, reckonings, bills, controversies, agreements, injunctive relief, fees, variances, liens, extents, executions, obligations, rights to subrogation, rights to contribution, claims for attorney’s fees, interest, expenses and costs, judgments and executions of any kind, in law, admiralty or equity, in any kind of forum, and compensations of any nature whatsoever, and liabilities of any kind whatsoever, whether known or unknown, accrued, liquidated or unliquidated, suspected or unsuspected, contingent or otherwise that the Cardiff Releasors, whether individually or collectively, or any of them, ever had, now has or have, or hereafter may have against each of the GHS Releasees, whether individually or collectively, or any of them, from the beginning of time up to and including the Effective Date (collectively, the “Cardiff Released Claims” and each a “Cardiff Released Claim”), including but not limited to any claims arising out of or related to the Transaction Agreements.
(i)Without limiting the generality of the foregoing, Cardiff, for itself and the other Cardiff Releasors, hereby release, waive, and forever discharge each of the GHS Releasees from: (1) any and all claims related to the Transaction Agreements; (2) any and all claims for slander, libel, defamation, negligent or intentional infliction of emotional distress, personal injury, prima facie tort, negligence, compensatory or punitive damages, or any other claim for damages or injury of any kind whatsoever; and (3) any and all claims for monetary recovery, including, without limitation, monetary recovery or awards as may be provided by statute, attorneys’ fees, experts’ fees, medical fees or expenses, costs and disbursements and the like.
(ii)By entering into this Settlement Agreement, Cardiff represents and agrees that the failure of this Section 3(c) to specifically identify or enumerate above any statute, ordinance, or common law theory under which the Cardiff Releasors release claims is not intended by the Parties to limit, diminish or impair in any way the Cardiff Releasors’ intended and actual release of all claims, demands, causes of action, and liabilities of any kind whatsoever against the GHS Releasees.
(iii)It is understood and agreed that the release of claims set forth in this Section 3(c) does not serve to waive any claims, actions, or rights arising under or to enforce the terms of this Settlement Agreement, the Settlement Note, or any claims, actions, or rights that, pursuant to law, cannot be waived or subject to a release of this kind or the right to file a charge with an administrative agency or participate in an agency investigation, provided, however, that the Cardiff Releasors hereby waive their rights if any to recover any money in connection with a charge or investigation before or by an administrative agency, except as provided in Section 17 below.
(d)Covenant Not to Sue by Cardiff. Cardiff, for itself and the other Cardiff Releasors, hereby agree not to file or cause to be filed any lawsuit, claim, or action against GHS or any of the other GHS Releasees that is based on any of the Cardiff Released Claims.
Section 17 below also contains important limitations on the provisions in this Section 2.
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4.Certain Definitions. As used in this Settlement Agreement:
(a)The terms “Cardiff Releasors” and “Cardiff Releasees” mean: (i) Cardiff and its predecessors, parent companies, affiliated companies (including, without limitation, subsidiaries), successors, and assigns, and (ii) all of the past, present and future directors, officers, members, managers, employees, attorneys, representatives, agents, contractors, consultants, and insurers of each of the entities listed in clause (i) of this sentence.
(b)The terms “GHS Releasors” and “GHS Releasees” mean: (i) GHS and its predecessors, parent companies, affiliated companies (including, without limitation, subsidiaries), successors, and assigns, and (ii) all of the past, present and future directors, officers, members, managers, employees, attorneys, representatives, agents, contractors, consultants, and insurers of each of the entities listed in clause (i) of this sentence.
5.Confidentiality. Neither Party may disclose the existence of this Settlement Agreement or its contents to anyone, except: (a) to its attorneys, accountants, or licensed tax advisors, provided they agree to keep it confidential, (b) to government authorities, but only to the extent necessary or required, (c) as part of a filing or filings with a foreign, federal, or state securities regulatory agency, but only to the extent necessary or required, or (d) to its shareholders, but only to the extent necessary or required. Section 17 below also contains important limitations on the provisions in this Section 5.
6.Representations and Warranties.
(a)GHS represents, acknowledges, and warrants that, as of the date it has signed this Settlement Agreement: (i) there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims released in Section 3(a) of this Settlement Agreement and no authorization of a third-party is needed to release any of the claims released in Section 3(a); (ii) none of the GHS Releasors has assigned, hypothecated, conveyed, transferred, or otherwise granted or given any interest in the claims, demands, damages, rights, actions, causes of action, suits, contracts, agreements, obligations, accounts, defenses, offsets and liabilities released under Section 3(a) of this Settlement Agreement; (iii) GHS’s undersigned representative has the authority to act on its behalf, execute this Settlement Agreement on its behalf, and legally bind it and all who may claim through it to the terms and conditions of this Settlement Agreement; (iv) GHS, through an authorized representative, has read this Settlement Agreement and had the opportunity to consult with legal counsel of GHS’s own choosing before executing it; and (v) GHS understands the provisions of this Settlement Agreement, including those in Section 3(a)-(b) regarding its release of claims and covenant not to sue.
(b)Cardiff represents, acknowledges, and warrants that, as of the date it has signed this Settlement Agreement: (i) there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims released in Section 3(c) of this Settlement Agreement and no authorization of a third-party is needed to release any of the claims released in Section 3(c); (ii) none of the Cardiff Releasors has assigned, hypothecated, conveyed, transferred, or otherwise granted or given any interest in the claims, demands, damages, rights, actions, causes of action, suits, contracts, agreements, obligations, accounts, defenses, offsets and liabilities released under Section 3(c) of this Settlement Agreement; (iii) Cardiff’s undersigned representative has the authority to act on its behalf, execute this Settlement Agreement on its behalf, and legally bind it and all who may claim through it to the terms and conditions of this Settlement Agreement; (iv) Cardiff, through an authorized representative, has read this Settlement Agreement and had the opportunity to consult with legal counsel of Cardiff’s own choosing before executing it; and (v) Cardiff understands the provisions of this Settlement Agreement, including those in Section 3(c)-(d) regarding its release of claims and covenant not to sue.
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(c)GHS represents, acknowledges, and warrants to Cardiff that neither Cardiff nor any agent or attorney of Cardiff has made any representation, promise, or warranty whatsoever, express or implied, written or oral, not contained in this Settlement Agreement concerning the subject matter hereof to induce GHS to execute this Settlement Agreement, and GHS represents, acknowledges, and warrants that it has not executed this Settlement Agreement in reliance on any representation, promise, or warranty not contained herein.
(d) Cardiff represents, acknowledges, and warrants to GHS that neither GHS nor any agent or attorney of GHS has made any representation, promise, or warranty whatsoever, express or implied, written or oral, not contained in this Settlement Agreement concerning the subject matter hereof to induce Cardiff to execute this Settlement Agreement, and Cardiff represents, acknowledges, and warrants that it has not executed this Settlement Agreement in reliance on any representation, promise, or warranty not contained herein.
7.Notices. All notices required under this Settlement Agreement shall be in writing, and shall be deemed sufficiently given if delivered to the addressees in person, by FedEx or similar receipted delivery, or by email, as follows: If to Cardiff: Cardiff Lexington Corporation, 3753 Howard Hughes Pkwy., Suite 200, Las Vegas, NV 89169, Attention: Alex Cunningham, CEO, ______, with a copy (which shall not constitute notice) to: Louis A. Bevilacqua, Esq., Bevilacqua PLLC, 1050 Connecticut Ave., N.W., Suite 500, Washington, DC 20036, ___________; If to GHS: GHS Investments, LLC, 420 Jericho Turnpike, Suite 102, Jericho, NY 11753, Attention: Sarfraz Hajee, ________, with a copy (which shall not constitute notice) to: Pryor Cashman LLP, 7 Times Square, New York, New York 10036, Attention: M. Ali Panjwani, ___________; or to such other address as either of the Parties by notice to the other Party may designate from time to time.
8.Governing Law. This Settlement Agreement shall be deemed to have been made and delivered in the State of Nevada and shall be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of Nevada without regard to principles of conflicts of law thereof.
9.Forum Selection. (a) Unless otherwise provided in this Settlement Agreement, the exclusive forum and venue for the resolution of any Controversy (as defined below) shall be the state or federal courts whose jurisdictional territory includes Las Vegas, Nevada. Each Party consents to personal jurisdiction and venue in those courts for litigation of a Controversy, and each Party waives any forum non conveniens objection to litigating a Controversy in those courts. As used in this Settlement Agreement, “Controversy” means a controversy or claim between the Parties arising out of or relating to this Settlement Agreement or the Settlement Note.
(b)In any legal action concerning a Controversy, the prevailing party shall be entitled to recover its reasonable costs and attorneys’ fees.
10.Severability. If at any time after the date of the full execution of this Settlement Agreement any provision of it shall be held by any court of competent jurisdiction to be illegal, void, or unenforceable, such provision shall be of no force and effect. The illegality, voidness, or unenforceability of such provision shall have no effect upon, and shall not impair the enforceability of, any other provision of this Settlement Agreement; provided, however, that if:
(a) Section 3(a) or (b) is held to be illegal, void, or unenforceable in whole or in part, GHS agrees to promptly execute a legal, valid, and enforceable general release and waiver of claims and covenant not to sue in favor of Cardiff and the other Cardiff Releasees equal in scope to the general release and waiver of claims and covenant not to sue provided in Sections 3(a) and (b) and, in the event that such a legal, valid, and enforceable general release and waiver of claims and covenant to sue cannot be or is not obtained, then GHS shall be deemed to have assigned, transferred, and conveyed the GHS Released Claims as described in Section 3(a) to Cardiff; or,
(a) Section 3(c) or (d) is held to be illegal, void, or unenforceable in whole or in part, Cardiff agrees to promptly execute a legal, valid, and enforceable general release and waiver of claims and covenant not to sue in favor of GHS and the other GHS Releasees equal in scope to the general release and waiver of claims and covenant not to sue provided in Sections 3(c) and (d) and, in the event that such a legal, valid, and enforceable general release and waiver of claims and covenant to sue cannot be or is not obtained, then Cardiff shall be deemed to have assigned, transferred, and conveyed the Cardiff Released Claims as described in Section 3(c) to GHS.
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11.No Admission of Wrongdoing. The Parties have entered into this Settlement Agreement as a compromise and final settlement of matters relating to the Dispute, and, therefore, this Settlement Agreement is not intended, and thus it shall not be construed, as an admission by any Party as to liability or wrongdoing of any kind whether related to the Dispute or other otherwise.
12.Further Assurances. The Parties agree to take all actions and to make, deliver, and sign any other documents and instruments that are necessary to carry out the terms, provisions, purpose, and intent of this Settlement Agreement.
13.Successors and Assigns. The Parties intend that this Settlement Agreement be legally binding upon and shall inure to the benefit of each of them and their respective successors and assigns.
14.Entire Agreement; No Modifications Unless In Writing and Executed by All Parties. This Settlement Agreement constitutes the entire agreement and understanding of the Parties and supersedes all prior negotiations and/or agreements, proposed or otherwise, written or oral, concerning the subject matter of this Settlement Agreement. No modification of this Settlement Agreement shall be binding unless in writing and signed by all of the Parties hereto.
15.Construction. Each Party acknowledges that it has shared equally in the drafting of this Settlement Agreement. Therefore, should any provision of this Settlement Agreement require interpretation or construction, the court, judge, tribunal or other person or body interpreting or construing this Settlement Agreement shall not apply a presumption against one Party over the other Party by reason of the rule of construction that a document is to be construed more strictly against the party who prepared the document. The section headings and subheadings used in this Settlement Agreement are inserted for convenience only and shall be disregarded in construing this Settlement Agreement.
16.No Waiver for Failure to Enforce. The failure of any Party to this Settlement Agreement at any time to enforce any provision of this Settlement Agreement will in no way constitute or be construed as a waiver of such provision or of any other provision hereof, or in any way affect the validity of, or the right thereafter to enforce, each and every provision of this Settlement Agreement.
17.IMPORTANT. Notwithstanding anything to the contrary in this Settlement Agreement (including, without limitation, anything in its Sections 3 or 5), nothing in this Settlement Agreement prohibits, restricts, or limits, or is intended to prohibit, restrict, or limit the right or ability of a Party (the “Reporting Party”) to: (a) report to, or communicate with, the appropriate federal or state law enforcement authorities or regulatory agencies about any possible unlawful conduct, regardless of when it occurred, by the other Party, its affiliated companies, or any of its successors, assigns, officers, directors, members, managers, consultants, contractors, or employees (including any employment harassment, assault, or discrimination), or speak with the Reporting Party’s own attorney about any such possible unlawful conduct; (b) report to or communicate with the United States Securities and Exchange Commission (“SEC”) or any state securities regulator about any possible violation of a federal or state securities law (including, without limitation, such violation by either Cardiff or GHS), regardless of when such possible violation occurred, or speak with the Reporting Party’s own attorney about such possible violation, or (c) apply for or receive an award from the SEC under the federal Securities Whistleblower Incentives program or from a state securities regulatory agency under a substantially similar state incentive program in connection with reporting a possible violation of a federal or state securities law.
18.Execution In Counterparts and Electronically Permitted. This Settlement Agreement may be executed by the Parties in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The Parties agree that signatures by PDF or other electronic signatures (e.g., those via DocuSign) to this Agreement are authentic and have the same force and effect as original, manual signatures.
EACH PARTY SHOULD CONSULT WITH AN ATTORNEY AND
READ
THIS SETTLEMENT AGREEMENT, RELEASE OF CLAIMS, AND COVENANT NOT TO SUE
CAREFULLY BEFORE SIGNING IT. BY SIGNING THIS DOCUMENT, EACH PARTY IS
GIVING UP IMPORTANT LEGAL RIGHTS.
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IN WITNESS WHEREOF, and intending to be legally bound, the Parties hereto have caused this Settlement Agreement, Release of Claims, and Covenant Not to Sue to be executed as of the date under his, her, or its respective signature below.
| CARDIFF LEXINGTON CORPORATION | GHS INVESTMENTS, LLC | |||
| By: | /s/ Alex Cunningham | By: /s/ Mark Grober | ||
| Name: Alex Cunningham | Name: Mark Grober | |||
| Title: CEO | Title: Member | |||
| Date signed: June 10, 2024 | Date signed: June 11, 2024 | |||
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Exhibit 10.2
THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE DISTRIBUTION THEREOF AND MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES AND SUCH DISPOSITION IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION OR (II) THERE IS AN OPINION OF COUNSEL OR OTHER EVIDENCE, IN EITHER CASE, SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION THEREFROM IS AVAILABLE AND THAT SUCH DISPOSITION IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
DATE OF ISSUANCE: June 11, 2024
$535,000.00
Cardiff Lexington Corporation
FIXED AMOUNT SETTLEMENT PROMISSORY NOTE
This Fixed Amount Settlement Promissory Note (the “Note”) is issued by Cardiff Lexington Corporation, a Nevada corporation (the “Borrower”) pursuant to that certain Settlement Agreement dated on or about the date hereof (the “Settlement Agreement”), between the Borrower and the Lender (as defined below) in favor of GHS Investments, LLC, a Nevada limited liability company (the “Lender”) in the principal amount of Five Hundred Thirty Five Thousand Dollars and 00/100 ($535,000.00) (the “Principal Amount”). Capitalized terms used but not defined in this Note have the meanings ascribed to them in the Settlement Agreement.
1. Payment Obligation.
(a) For value received, the Borrower promises to pay to the Lender or its permitted successors and assigns (collectively, the “Holder”), the Principal Amount in accordance with the following payment schedule:
If the gross proceeds raised by the Borrower in its public offering of common stock pursuant to its registration statement on Form S-1 (Registration No. 333-273324) (the “Public Offering”) are at least $5,000,000, but less than $6,000,000, then payments will commence as follows:
| Payment Amount |
Date of Payment
|
| $250,000 |
The closing date of Public Offering (the “Closing Date”).
|
| $125,000 |
On the ninetieth (90th) day following the Closing Date.
|
| $125,000 |
On the one hundred and eightieth day (180th) day following the Closing Date.
|
| $35,000 | On the two hundred and fortieth day (240th) day following the Closing Date. |
| · | Any reference to day(s) contained in this Settlement Agreement shall mean to calendar days. If any payment due herein comes due on a weekend or a holiday, the payment shall be made on the first business day that immediately precedes the relevant payment date. Business day shall be defined as any day on which Federal Banks are open for business in the State of Nevada. |
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If the gross proceeds raised by the Borrower are at least $6,000,000, but less than $7,000,000, in its Public Offering, then payments will commence as follows:
| Payment Amount |
Date of Payment
|
| $390,000 |
The Closing Date.
|
| $145,000 |
On the ninetieth (90th) day following the Closing Date.
|
If the gross proceeds raised by the Borrower are at least $7,000,000 in its Public Offering, then the entire Principal Amount will be paid on the Closing Date.
If the Public Offering is not consummated by August 15, 2024 (the “Outside Date”), then the Borrower shall make a payment of $25,000 on the Outside Date and continue making payments of $25,000 (or portion thereof for the last payment) on each monthly anniversary thereof until the entire Principal Amount is paid in full. Such payment schedule that is not triggered by a Public Offering is referred to as the “Alternative Payment Schedule.”
If the Borrower’s Public Offering is consummated after the Outside Date, then the tiered scheduled payments triggered by the Public Offering as described above shall apply, but the Borrower shall be given credit toward the first and subsequent payments for any amounts already paid under the Alternative Payment Schedule.
Notwithstanding the foregoing, if the Borrower abandons the Public Offering and conducts a new public offering thereafter, then the Borrower shall be required to make a payment of $100,000 on the date of the closing of such other public offering, a second payment of $100,000 on the 90th day following the closing of such other public offering and $35,000 (or a portion thereof with respect to the final payment) each month thereafter until the entire Principal Amount is paid in full. The Borrower shall be given credit toward these payments for any amounts already paid under the Alternative Payment Schedule.
(b) If any portion of the Principal Amount remains unpaid on the second (2nd) anniversary of the date of this Note, it shall become immediately due and payable on the second (2nd) anniversary of the date of this Note (the “Maturity Date”).
(c) This is a fixed amount settlement promissory note and no interest shall accrue on this Note other than default interest as provided for in Section 7 below.
(d) The Borrower may prepay all or any portion of the outstanding principal amount of this Note at any time upon one (1) day prior written notice to the Holder.
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2. Provisions as to Payment.
(a) Payments on this Note are payable to the Holder in whose name this Note (or one or more successor Notes) is registered on the records of the Borrower regarding registration and transfer of this Note (the “Note Register”). The Borrower shall provide the Holder with a copy of such Note Register upon request and in any instance where any change is made to such Note Register and such change shall not be valid unless the Holder is notified of such change.
(b) Payments on this Note are payable in immediately available funds in currency of the United States of America at the address last appearing on the Note Register of the Borrower as designated in writing by the Holder hereof from time-to-time. The Borrower shall pay the outstanding principal amount due upon this Note on in accordance with Section 1(a) and 1(b) of this Note, less any amounts required by law to be deducted or withheld, to the Holder of this Note appearing of record as of the fifth business day prior to the date of payment and addressed to such Holder at the last address appearing on the Note Register. The payment of such funds shall constitute full payment of the amount funded and shall satisfy and discharge the liability for applicable portion of the Principal Amount to the extent of the sum represented by such payment plus any amounts so deducted or withheld. Unless otherwise expressly provided herein, all payments on this Note shall be credited first to reimburse the Holder for any cost or expense reimbursable hereunder, then to the payment of the Principal Amount.
3. Transfer of Note; Restrictions.
(a) The Holder understands and acknowledges by its acceptance hereof that (i) this Note has not been, and is not being, registered under the Securities Act of 1933, as amended (the “1933 Act”) or any state securities laws, and may not be offered for sale, sold, assigned or transferred except in compliance with applicable federal and state securities laws; and (ii) neither the Borrower nor any other person is under any obligation to register this Note under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.
(b) Prior to presentment of this Note for transfer, the Borrower and any agent of the Borrower may treat the person in whose name this Note is duly registered on the Note Register as the Holder hereof for the purpose of receiving payments as herein provided and for all other purposes, whether or not this Note be overdue, and neither the Borrower nor any such agent shall be affected or bound by notice to the contrary.
4. Obligations of the Borrower Herein Are Unconditional. The Borrower’s obligations to repay this Note at the time, place and in the currency hereinabove stated are absolute and unconditional. This Note and all other instruments now or hereafter issued in replacement of this Note on the same or similar terms are direct obligations of the Borrower.
5. Waiver of Demand, Presentment, etc. To the extent permitted by law, the Borrower hereby expressly waives demand and presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, bringing of suit and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereunder, regardless of and without any notice, diligence, act or omission as or with respect to the collection of any amount called for herein. No delay or omission of the Holder hereof in exercising any right or remedy hereunder shall constitute a waiver of any such right or remedy. A waiver on one occasion shall not operate as a bar to, or waiver of, any such right or remedy on any future occasions.
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6. Attorneys’ Fees; Reimbursable Expenses. In the event it should become necessary for the Holder to employ counsel to enforce this Note or any other document entered into by the Borrower in connection herewith, the Borrower agrees to pay the reasonable and documented attorneys’ fees and costs of the Holder, irrespective of whether suit is brought, including, without limitation, any and all pre-judgment and post-judgment attorneys’ fees and costs incurred (including, without limitation, fees and costs reasonably incurred in connection with any matter arising under Title 11 of the United States Code). In addition, the Borrower agrees to pay for all of the Holder’s other reasonable and documented out-of-pocket costs incurred in connection with the enforcement of this Note or any other document entered into by the Borrower in connection herewith, including, without limitation, all of the Holder’s consultants’ fees, appraisers’ fees, accountants’ fees, and trustee’s fees.
7. Events of Default. If one or more of the following described “Events of Default” shall occur:
(a) the Borrower shall fail to make timely payment of any amount then due and owing under this Note and does not cure such failure within three days;
(b) the Borrower or any of its subsidiaries shall (i) become insolvent, (ii) admit in writing its inability to pay its debts generally or as they become due, (iii) make an assignment for the benefit of creditors or commence proceedings for its dissolution or (iv) apply for, or consent to the appointment of, a trustee, liquidator, or receiver for all or a substantial part of its property or business;
(c) a trustee, liquidator or receiver shall be appointed for the Borrower or any of its subsidiaries, or for a substantial part of its property or business, without its consent and such appointment is not discharged within sixty (60) days after such appointment;
(d) bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any of its subsidiaries and, if instituted against the Borrower, shall not be dismissed within sixty (60) days after such institution, or the Borrower or any of its subsidiaries shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in, any such proceeding;
then, or at any time thereafter, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver in one instance shall not be deemed to be a waiver in another instance or for any other prior or subsequent Event of Default), at the option of the Holder and in the Holder’s sole discretion, the Holder may immediately accelerate the maturity hereof, whereupon all principal and accrued, but unpaid interest, hereunder shall be immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrower (anything herein or in any other instrument to the contrary notwithstanding), and the Holder may immediately enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law or equity. Upon the occurrence and during the continuance of an Event of Default, interest shall automatically begin to accrue from and after the date of the Event of Default at a simple interest rate of ten percent (10.0%) per annum.
8. Enforceability.
(a) In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note shall not in any way be affected or impaired thereby.
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(b) Notwithstanding anything to the contrary contained in this Note, the Borrower shall not be obligated to pay, and the Holder shall not be entitled to charge, collect, receive, reserve or take interest (“interest” being defined, for purposes of this paragraph, as the aggregate of all charges which constitute interest under applicable law that are contracted for, charged, reserved, received or paid under this Note) in excess of the maximum rate allowed by applicable law (the “Maximum Lawful Rate”). During any period of time in which the interest rate exceeds such Maximum Lawful Rate, interest shall accrue and be payable only at such Maximum Lawful Rate; provided, however, that if at any time thereafter the interest rate is less than the Maximum Lawful Rate, the Borrower shall, to the extent permitted by law, continue to pay interest to the account of the Holder at the Maximum Lawful Rate until such time as the total interest received by the Holder is equal to the total interest which the Holder would have received had the interest rate been (but for the operation of this provision) the interest rate payable. Thereafter, the interest rate payable for the account of the Holder shall be the specified interest rate unless and until the specified interest rate again would exceed the Maximum Lawful Rate, in which event this provision shall again apply. In no event shall the total interest received by the Holder exceed the amount which the Holder could lawfully have received had the interest been calculated for the term during which the Holder actually received interest from the Borrower at the Maximum Lawful Rate. If the Holder has received interest hereunder in excess of the Maximum Lawful Rate, such excess amount shall be applied to the reduction of the principal balance hereof or to other amounts (other than interest) payable hereunder to the Holder, and if no such principal or other amounts are then outstanding, such excess or part thereof remaining shall be repaid by the Holder to the Borrower. For purposes of this Note, the term “applicable law” shall mean that law in effect from time-to-time and applicable to the transaction between the Borrower and the Holder which lawfully permits the charging and collection of the highest permissible rate of interest on such transaction and this Note, including the laws of the state of Nevada, and to the extent controlling, laws of the United States of America. Notwithstanding anything to the contrary in the foregoing, in no event shall this paragraph be interpreted to provide for any greater amount of interest payable to the Holder under this Note (including any default interest) than would be provided for under this Note in the absence of this paragraph. The Company hereby convenants and agrees that it will not make a claim that the terms of this Note, as presently drafted, are usurious or unenforceable.
9. Entire Agreement. This Note constitutes the full and entire understanding between the Borrower and the Holder with respect to the subject matter hereof and thereof and supersede all prior negotiations, agreements and understandings, written or oral, with respect to such subject matter. No provision of this Note shall be amended, waived, discharged or terminated other than by a written instrument signed by the Borrower and the Holder.
10. Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada without giving effect to applicable principles of conflict of law. Any disputes, controversies or claims between the parties arising out of or in connection with this Note (including its existence, validity or termination) which cannot be amicably resolved shall be sujbect to the exclusive jurisdiction of the courts (State and Federal) located in Las Vegas, Nevada.
11. Headings. The headings in this Note are for convenience only, and shall not be used in the construction of this Note.
12. Successors. Any provision of this Note to the contrary notwithstanding, the Borrower shall not assign any of its rights or obligations hereunder and any such assignment shall be absolutely void. Subject to the transfer restrictions arising under applicable law, the Holder may assign and/or participate any of its interest in this Note to any individual or entity. Each reference herein to powers or rights of the Holder shall also be deemed a reference to the same power or right of such assignees, to the extent of the interest assigned to them. All the covenants, agreements, representations and warranties contained in this Note shall bind the Borrower and the Holder and their respective administrators, distributees, successors and permitted assigns, including any person or entity to whom the Holder has granted a participation interest in this Note.
13. No Strict Construction. The Borrower agrees that it has had sufficient opportunity to review and comment on the provisions of this Note. As a result, any uncertainty or ambiguity existing herein shall not be interpreted against the Borrower or the Holder.
14. Waiver of Jury Trial. THE BORROWER AND THE HOLDER EACH WAIVE, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS NOTE.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed by its authorized persons on the Date of Issuance.
The Borrower:
Cardiff Lexington Corporation
By:/s/ Alex Cunningham
Name: Alex Cunningham
Title: Chief Executive Officer
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