GWTI 8-K
Greenway Technologies, Inc. & Subsidiaries (GWTI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of the earliest event reported): January 28, 2020 (January 24, 2020)
GREENWAY TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
| TEXAS | 000-55030 | 90-0893594 | ||
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
1521 North Cooper Street, Suite 205
Arlington, Texas 76011
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: 800-289-2515
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:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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. |
On January 24, 2020, Greenway Technologies, Inc., a Delaware corporation (the “Company”), entered into that certain Securities Purchase Agreement (the “Purchase Agreement”), by and between the Company and PowerUp Lending Group, Ltd., a Virginia corporation (“PowerUp”), whereby PowerUp purchased, and the Company sold, that certain Convertible Promissory Note, dated January 24, 2020, by and between the Company and PowerUp (the “Note”), in exchange for a purchase price of $118,000.00. The Purchase Agreement contains customary representations and warranties, covenants, and conditions to closing.
The material terms of the Note are as follows:
| ● | The unpaid principal balance of the Note shall bear interest at the rate of 10% per year; | |
| ● | Any amount of principal or interest due under the Note that is not paid when due shall bear interest at the rate of 22% per year from the date it was due until such outstanding amount is paid; | |
| ● | The Note matures on January 24, 2021; | |
| ● | PowerUp may elect to convert all or any part of the outstanding and unpaid amount of the Note into shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) from time to time, during the period that is 180 days following the issue date of the Note; | |
| ● | The Company must reserve up to five times the number of shares of Common Stock that would be issuable upon full conversion of the Note, and instruct the Company’s transfer agent, Transfer Online, Inc., to that effect; | |
| ● | The Company may prepay the Note, but must pay a prepayment percentage to PowerUp depending on the time that the Note is prepaid; | |
| ● | So long as the Note remains outstanding, the Company may not sell, lease, or otherwise dispose of any significant portion of its assets outside the ordinary course of business without PowerUp’s written consent; and | |
| ● | Certain events qualify as events of default under the Note including, but not limited to: (a) the Company’s breach of a material term of the Note or the Purchase Agreement; (b) the Company’s failure to pay the amount of principal or interest due to PowerUp under the Note by the Company, (c) the Company’s failure to comply with its reporting obligations under the Securities Exchange Act of 1934, as amended, and (d) the Company’s assignment for the benefit of creditors. |
The foregoing descriptions of the Purchase Agreement and the Note do not purport to be complete and are qualified in their entirety by reference to the full text of the Purchase Agreement and the Note, which are filed herewith as Exhibit 10.1 and Exhibit 10.2, respectively, and incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The disclosure in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits | |
| (d) | Exhibits |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| GREENWAY TECHNOLOGIES, INC. | ||
| Date: January 28, 2020 | ||
| By: | /s/ Raymond Wright | |
| Raymond Wright | ||
| Chairman of the Board | ||
Exhibit 10.1
EXECUTION VERSION
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of January 24, 2020, is by and between GREENWAY TECHNOLOGIES, INC., a Texas corporation, with its address at 1521 North Cooper Street, Suite 205, Arlington, Texas 76011 (the “Company”), and POWER UP LENDING GROUP LTD., a Virginia corporation, with its address at 111 Great Neck Road, Suite 216, Great Neck, NY 11021 (“Buyer”).
WHEREAS:
A. The Company and Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”); and
B. Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement a convertible note of the Company, in substantially the form attached hereto as Exhibit A, in the aggregate principal amount of $118,000.00 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), convertible into shares of common stock, $0.0001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note.
NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1. Purchase and Sale of Note.
a. Purchase of Note. On the Closing Date (as defined herein), the Company shall issue and sell to Buyer and Buyer agrees to purchase from the Company such principal amount of Note as is set forth immediately below Buyer’s name on the signature pages hereto.
b. Form of Payment. On the Closing Date, (i) Buyer shall pay the purchase price for the Note (the “Purchase Price”) to be issued and sold to Buyer at the Closing (as defined below), by wire transfer of immediately available funds to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Note in the principal amount equal to the Purchase Price as is set forth immediately below Buyer’s name on the signature pages hereto, and (ii) the Company shall deliver the duly-executed Note to Buyer, against delivery of such Purchase Price.
c. Closing Date. Subject to the satisfaction (or written waiver) of the conditions set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be 12:00 noon, Eastern Standard Time on January 24, 2020, or such other mutually-agreed upon time. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.
2. Buyer’s Representations and Warranties. Buyer represents and warrants to the Company that:
a. Organization and Qualification. Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the state of Virginia. Buyer has full corporate power and authority to enter into this Agreement and the other transaction documents to which Buyer is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.
b. No Conflicts; Consents. The execution, delivery, and performance by Buyer of this Agreement and the other transaction documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not (i) conflict with or result in a violation or breach of, or default under any provision of the certificate of incorporation, by-laws, or other organizational documents of Buyer, (ii) conflict with or result in a violation or breach of any provision of any law or governmental order applicable to Buyer, or (iii) require the consent, notice or other action by any person under any contract to which Buyer is a party. No consent, approval, permit, governmental order, declaration or filing with or notice to any governmental authority is required by or with respect to Buyer in connection with the execution and delivery of this Agreement and the other transaction documents to which it is a party.
c. Investment Purpose. As of the date hereof, Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (such transaction, the “Conversion”, and such shares of Common Stock the “Conversion Shares” which, collectively with the Note are referred to as the “Securities”) for Buyer’s own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act.
d. Accredited Investor Status. Buyer is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D promulgated under the 1933 Act.
e. Reliance on Exemptions. Buyer understands that the Securities are being offered and sold to Buyer in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Buyer set forth herein to determine the availability of such exemptions and the eligibility of Buyer to acquire the Securities.
f. Information. The Company has not disclosed to Buyer any material nonpublic information and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to Buyer.
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g. Legends. Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the 1933 Act or may be sold pursuant to an applicable exemption from registration, any instrument representing the Note or the Conversion Shares shall bear a restrictive legend (the “Legend”) in substantially the following form:
“THE OFFER AND SALE OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (2) THE ISSUER OF SUCH SECURITIES RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, IN FORM ATTACHED AS EXHIBIT A TO THAT CERTAIN SECURITIES PURCHASE AGREEMENT, DATED JANUARY 24, 2020, OR IN FORM SATISFACTORY TO THE ISSUER AND ISSUER’S TRANSFER AGENT, THAT SUCH SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.”
The Legend will be removed and the Company shall issue or cause to be issued a certificate without the Legend to Buyer if, unless otherwise required by applicable federal and state securities laws, (a) the offer and sale of such Security is registered under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to an exemption from registration under the 1933 Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) Buyer provides the Company with an opinion of counsel, in the form attached hereto as Exhibit A, or in form substance and scope satisfactory to the Company and to its transfer agent, (1) at the time of the Conversion of such shares of Common Stock; and (2) at the time of the sale of the underlying Common Stock issued upon a Conversion, if such Conversion occurs less than one year after the Closing Date; and: (i) the due date of a quarterly or annual filing of the Company with the SEC pursuant to the Exchange Act (each a “Filing Date”) occurs following such Conversion, and the sale of shares of Common Stock underlying such Conversion occurs on or following such Filing Date; or (ii) the Company filed a Form 15 with the SEC; to the effect that the shares of Common Stock to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinion shall be accepted by the Company. Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the Legend has been removed, in compliance with applicable prospectus delivery requirements, if any, and applicable federal and state securities laws.
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h. Authorization; Enforcement. This Agreement has been duly and validly authorized by all requisite corporate action on the part of Buyer. This Agreement has been duly executed and delivered on behalf of Buyer, and this Agreement constitutes a valid and binding agreement of Buyer enforceable in accordance with its terms.
i. Sufficiency of Funds. Buyer has sufficient cash on hand or other sources of immediately available funds to enable it to make payment of the Purchase Price and consummate the transactions contemplated by this Agreement.
j. No Brokers. No broker, finder, or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or the Note, based upon arrangement made by or on behalf of Buyer.
3. Representations and Warranties of the Company. The Company represents and warrants to Buyer that:
a. Organization and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted. “Subsidiaries” means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership interest.
b. Authorization; Enforcement. The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof. The Company’s execution and delivery of this Agreement and the Note and the consummation of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance and reservation for issuance of the Conversion Shares issuable upon Conversion or exercise thereof) have been duly authorized by the Company’s board of directors (the “Board of Directors”) and no further consent or authorization of the Company, the Board of Directors, or its shareholders of the Company (the “Shareholders”) is required to enter into this Agreement. This Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true and official representative with authority to sign this Agreement and the other documents executed in connection herewith and to bind the Company accordingly. This Agreement constitutes, and upon execution and delivery by the Company of the Note, each of the Agreement and the Note (assuming due authorization, execution and delivery by each other party thereto) will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.
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c. Capitalization. As of the date hereof, the authorized Common Stock of the Company consists of 500,000,000 authorized shares of Common Stock, $0.0001 par value per share, of which 296,815,547 shares are issued and outstanding. All of such outstanding shares of Common Stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable.
d. Issuance of Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon Conversion of the Note in accordance with its terms, will be validly issued, fully-paid, non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issuance thereof. The Conversion Shares shall not be subject to preemptive rights or other similar rights of the Shareholders and will not impose personal liability upon the holder of the Conversion Shares.
e. No Conflicts. The Company’s execution, delivery and performance of this Agreement and the Note and the consummation of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares) will not:
(i) conflict with or result in a violation of any provision of the certificate of formation of the Company or the bylaws of the Company,
(ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party; or
(iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect. “Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith.
f. Compliance with Laws. The Company and each of its Subsidiaries are and have been in material compliance with all laws, ordinances, or regulations of any governmental entity that are applicable to the Company or any of its Subsidiaries, or by which the Company or any of its Subsidiaries or any of their respective businesses or properties is bound.
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g. SEC Documents; Financial Statements. The Company is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”).
(i) The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “SEC Documents”). True, correct, and complete copies of all the SEC Documents are publicly available in the Electronic Data Gathering, Analysis, and Retrieval database of the SEC (“EDGAR”). To the extent that any SEC Documents available on EDGAR contains redactions pursuant to a request for confidential treatment or otherwise, the Company will make available to Buyer, upon Buyer’s written request, the full text of such SEC Documents that it has so filed or furnished with the SEC.
(ii) As of their respective dates or if amended, as of the dates of the amendments, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements that have been amended or updated in subsequent filings prior the date hereof).
(iii) As of their respective dates or if amended, as of the dates of the amendments, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present, in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
h. Absence of Certain Changes. Since September 30, 2019, and except as set forth in the SEC Documents, there has been no event, condition, change, or effect that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
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i. Absence of Litigation. Except as set forth in the SEC Documents, there is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could reasonably be expected to have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances that might give rise to any of the foregoing.
j. No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on behalf of the Company or its affiliates, has directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the offer and sale of the Securities to Buyer. The offer and sale of the Securities to Buyer will not integrate with any other issuance of the Company’s securities (past, current or future) for purposes of any Shareholder approval provisions applicable to the Company or its securities.
k. No Brokers. No broker, finder, or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or the Note, based upon arrangement made by or on behalf of the Company.
l. No Investment Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment Company”). The Company is not controlled by an Investment Company.
m. Breach of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties set forth in this Section 3, and in addition to any other remedies available to Buyer pursuant to this Agreement, it will be considered an Event of Default (as defined in the Note) under Section 3.4 of the Note.
4. COVENANTS.
a. Best Efforts. The Company shall use its best efforts to satisfy timely each of the conditions described in Section 7 of this Agreement.
b. Form D; Blue Sky Laws. The Company agrees to timely make any filings required by federal and state laws as a result of the closing of the transactions contemplated by this Agreement.
c. Use of Proceeds. The Company shall use the proceeds for general working capital purposes.
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d. Conduct of Business. So long as Buyer owns any of the Securities, the Company and its Subsidiaries shall comply in all material respects with all laws, ordinances, or regulations of any governmental entity that are applicable to the Company or any of its Subsidiaries, or by which the Company or any of its Subsidiaries or any of their respective businesses or properties is bound.
e. Expenses. At the Closing, the Company shall pay Buyer’s expenses, not to exceed $3,000.00, incurred in connection with negotiating this Agreement.
f. Corporate Existence. So long as Buyer beneficially owns the Note, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company’s assets without the prior written consent of Buyer.
g. Breach of Covenants. If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other remedies available to Buyer pursuant to this Agreement, it will be considered an Event of Default (as defined in the Note) under Section 3.4 of the Note.
h. Failure to Comply with the 1934 Act. So long as Buyer beneficially owns the Note, the Company shall: (i) remain subject to the reporting requirements of the 1934 Act, and (ii) comply with the reporting requirements of the 1934 Act.
i. Trading Activities. Neither Buyer nor its affiliates has an open short position in the Common Stock of the Company and Buyer agrees that it shall not, and that it will cause its affiliates not to, engage in any short sales of or hedging transactions (collectively, the “Prohibited Transactions”) with respect to the Common Stock. Buyer acknowledges that a breach by Buyer of its obligations hereunder will cause irreparable harm to the Company. Accordingly, Buyer acknowledges that the remedy at law for a breach of its obligations under this Section 4.i may be inadequate and agrees, in the event of a breach or threatened breach by Buyer of the provisions of this Section 4.i, that the Company shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate cessation of any Prohibited Transaction, without the necessity of showing economic loss and without any bond or other security being required.
5. Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent to issue certificates, registered in the name of Buyer or its nominee, for the Conversion Shares in such amounts as specified from time to time by Buyer to the Company upon Conversion of the Note in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”).
a. Change in Transfer Agent. In the event that the Company proposes to change its transfer agent, the Company shall provide to Buyer, prior to the effective date of such change, fully-executed Irrevocable Transfer Agent Instructions in the form substantially similar to the Irrevocable Transfer Agent Instructions delivered pursuant to this Agreement (including but not limited to the provision to that the Company will cause its transfer agent to reserve shares of Common Stock in the Reserved Amount (as defined in the Note)) signed by the successor transfer agent to Company and the Company.
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b. Restrictive Legend. Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to an exemption from registration, all such certificates shall bear the Legend specified in Section 2.g of this Agreement.
c. No Other Instructions. The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Note; (ii) the Company will not (1) direct its transfer agent to not transfer or (2) delay, impair, or hinder its transfer agent in transferring (or issuing)(electronically or in certificated form) any certificate for Conversion Shares to be issued to Buyer upon Conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; and (iii) the Company will not (1) fail to remove, (2) direct its transfer agent not to remove, or (3) impair, delay, or hinder its transfer agent from removing a restrictive legend, if permitted by applicable securities laws, (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to Buyer upon Conversion of or otherwise pursuant to the Note as and when required by the Note or this Agreement. If Buyer provides the Company with an opinion of counsel, in the form attached hereto as Exhibit A, or in form substance and scope satisfactory to the Company and to its transfer agent (x) at the time of the Conversion of such shares of Common Stock; and (y) at the time of the sale of the underlying Common Stock issued upon a Conversion, if such Conversion occurs less than one year after the Closing Date; and: (A) the Filing Date occurs following such Conversion, and the sale of share underlying such Conversion occurs on or following such Filing Date; or (B) the Company filed a Form 15 with the SEC; to the effect that the shares of Common Stock to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, then the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by Buyer. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to Buyer, by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that Buyer shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.
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6. Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Note to Buyer at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:
a. Buyer shall have executed this Agreement and delivered the same to the Company.
b. Buyer shall have delivered the Purchase Price in accordance with Section 1.b above.
c. Buyer shall have acknowledged in writing the Irrevocable Transfer Agent Instructions delivered to Company’s transfer agent.
d. The representations and warranties of Buyer contained in Section 2 shall be true and correct either in all respects (in the case of any representation or warranty qualified by materiality) or in all material respects(in the case of any representation or warranty not qualified by materiality) on and as of the date when made and as of the Closing Date as though made at such date (except for representations and warranties that are as of a specific date), and Buyer shall have performed, satisfied and complied with, in all material respects the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by Buyer at or prior to the Closing Date (provided that, with respect to agreements, covenants, and conditions that are qualified by materiality, Buyer shall have performed such agreements, covenants, and conditions as so qualified, in all respects).
e. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby that prohibits the consummation of any of the transactions contemplated by this Agreement.
7. Conditions to The Buyer’s Obligation to Purchase. The obligation of Buyer hereunder to purchase the Note at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for Buyer’s sole benefit and may be waived by Buyer at any time in its sole discretion:
a. The Company shall have executed this Agreement and delivered the same to Buyer.
b. The Company shall have delivered to Buyer the duly executed Note (in such denominations as Buyer shall request) in accordance with Section 1.b above.
c. The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to Buyer, shall have been delivered to and acknowledged in writing by the Company’s transfer agent.
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d. The representations and warranties of Company contained in Section 3 shall be true and correct either in all respects (in the case of any representation or warranty qualified by materiality) or in all material respects(in the case of any representation or warranty not qualified by materiality) on and as of the date when made and as of the Closing Date as though made at such date (except for representations and warranties that are as of a specific date), and the Company shall have performed, satisfied and complied with, in all material respects the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date (provided that, with respect to agreements, covenants, and conditions that are qualified by materiality, the Company shall have performed such agreements, covenants, and conditions as so qualified, in all respects).
e. The Buyer shall have received a certificate or certificates, executed by an officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by Buyer including, but not limited to certificates with respect to the resolutions of Board of Directors relating to the transactions contemplated hereby.
f. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby that prohibits the consummation of any of the transactions contemplated by this Agreement.
g. No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not limited to a change in the 1934 Act reporting status of the Company or the failure of the Company to comply with its 1934 Act reporting obligations.
8. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
a. This Agreement shall be governed by and construed in accordance with the laws of the State of Virginia without regard to principles of conflicts of laws.
b. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the Eastern District of New York. The parties to this Agreement hereby irrevocably waive 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.
c. 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 Agreement, the Note or any related document or agreement 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 Agreement 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.
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d. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT OR THE NOTE IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.d.
9. Miscellaneous.
a. Attorneys’ Fees. The prevailing party in any action shall be entitled to recover from the other party its reasonable attorney’s fees and costs.
b. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.
c. Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.
d. Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, 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 provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.
e. Entire Agreement; Amendments. This Agreement and the instruments referenced herein, including the Note, contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the Company and a majority-in-interest of Buyer.
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f. 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, email 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 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 as set forth in the heading of this Agreement with copy by fax only to (which copy shall not constitute notice) to Naidich Wurman LLP, 111 Great Neck Road, Suite 214, Great Neck, NY 11021, Attn: Allison Naidich, facsimile: 516-466-3555, e-mail: [email protected]. Each party shall provide notice to the other party of any change in address.
g. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Neither the Company nor Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction from Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, upon written notice to the Company, with such written notice including the name and contact information for such assignee.
h. Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the Closing, for so long as Buyer holds the Securities.
i. Indemnification.
(i) The Company agrees to indemnify and hold harmless Buyer and its officers, directors, employees and agents for loss or damage (“Losses”) arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement; provided, however, that the aggregate amount of all Losses for which the Company shall be liable pursuant to this Section 9.i shall not exceed the Purchase Price.
(ii) Buyer agrees to indemnify and hold harmless the Company and its officers, directors, employees and agents for Losses arising as a result of or related to any breach or alleged breach by Buyer of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement; provided, however, that the aggregate amount of all Losses for which Buyer shall be liable pursuant to this Section 9.i shall not exceed the Purchase Price.
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j. Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
k. No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
l. Remedies. The parties acknowledge that a breach by either party of its respective obligations hereunder will cause irreparable harm to the other party by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, each of the parties acknowledges that the remedy at law for a breach of such party’s obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by such party of the provisions of this Agreement, that the other party 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 Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.
| GREENWAY TECHNOLOGIES, INC. | ||
| By: | /s/ Ransom B. Jones | |
| Ransom B. Jones | ||
| Chief Financial Officer | ||
| POWER UP LENDING GROUP LTD. | ||
| By: | /s/ Curt Kramer | |
| Name: | Curt Kramer | |
| Title: | Chief Executive Officer | |
111 Great Neck Road, Suite 216
Great Neck, NY 11021
| AGGREGATE SUBSCRIPTION AMOUNT: | ||||
| Aggregate Principal Amount of Note: | $ | 118,000.00 | ||
| Aggregate Purchase Price: | $ | 118,000.00 | ||
[Signature Page to Securities Purchase Agreement]
EXHIBIT A
LEGAL OPINION
NAIDICH WURMAN LLP
Attorneys at Law
111 Great Neck Road, Suite 214
Great Neck, New York 11021
Telephone (516) 498-2900
Facsimile (516) 466-3555
| Richard S. Naidich | ||
| Kenneth H. Wurman | Bernard S. Feldman | |
| Robert P. Johnson | ||
| _________ | Of Counsel |
[*], 20[*]
TRANSFER ONLINE, INC.
512 E Salmon Street
Portland, OR 97214
Re: XYZ CORP.
Ladies and Gentlemen:
We have acted as special counsel to POWER UP LENDING GROUP LTD. (“Seller”). We have been asked to provide an opinion in connection with the issuance (the “Issuance”) without restrictive legend of XXX,XXX shares (the “Shares”) of the common stock, $0.0001 par value per share, of Greenway Technologies, Inc., a Texas corporation (the “Company”), pursuant to Rule 144 of the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”) with respect to the conversion of a certain convertible note dated January 24, 2020, by the Company in favor of Seller (the “Note”) and the conversion notice delivered pursuant to the Note dated the date hereof (the “Conversion Notice”).
Specifically, we have been asked to opine whether shares of the Company’s common stock to be issued in conversion of the Note pursuant to the Conversion Notice are “restricted securities” as that term is defined in Rule 144 (“Rule 144”) promulgated by the Commission under the Securities Act.
The opinion expressed in this letter is limited solely to this issue of the Shares, premised upon the federal securities laws of the United States as of the date of this letter, and based upon the facts as presented to us contained within the instruments we have examined. We have conducted an independent investigation into the underlying facts presented to us recited below and contained in the documents listed below.
| A-1 |
In connection with preparing this letter, we have prepared and re-examined and relied upon: (a) the Note, dated January 24, 2020, executed by the Company; (b) the Securities Purchase Agreement by and between the Company and the Seller dated January 24, 2020 (the “Purchase Agreement” and collectively with the Note and any ancillary documents in connection with the Note, the “Transaction Documents); (c) the Conversion Notice from the Seller dated the date hereof; (d) a representation letter executed by the Seller dated the date hereof; and (e) a limited review of the most recent filing of the Company with the Commission pursuant to the Securities Act of 1934, as amended (the “Exchange Act”).
Facts
We have received a representation letter from the Seller that, among other things, represent to us the following facts, which we have assumed, and conducted an independent investigation and determined that such representations, are true, correct and complete: (i) on January 24, 2020, the Company issued the Note to the Seller in the amount of $118,000.00; (ii) on January 24, 2020 (the “Closing Date”), the Seller advanced the funds to the Company with respect to the Note and the Note was fully paid as of such date; (iii) the Seller is not an “affiliate” of the Company as defined in Rule 144(a)(1); and (iv) the Seller does not know of any material adverse information about the Company or its prospects which has not been publicly disclosed. Furthermore, a limited review of the Company’s most recent filings with the Commission pursuant to the Exchange Act indicate that: (i) the Company is a fully-reporting company under the Exchange Act; and (ii) the Company has filed all reports (our review is specifically limited to quarterly and annual reports) required under the Exchange Act with the Commission for the preceding twelve months.
Discussion
Based on the facts presented to us, the Seller’s holding period for the Note as determined by Rule 144(d) began when the Seller provided full consideration for the Note. In this instance, the Seller has represented to us that the Note was fully paid on or before January 24, 2020.
In order for the Seller to convert the Note into the Shares free of restrictions under Rule 144, the Issuance must meet the requirements of Rule 144(b)(1), which determines the requirements for restrictions on securities for non-affiliates. Specifically, under Rule 144(b)(1), the issuance of the Shares to the Seller without restriction must either meet or be exempt from the requirements of Rule 144(c) and 144(d). Based on a limited review of the Company’s most recent filings with the Commission, the Company meets the current public information requirements of Rule 144(c).
Pursuant to Rule 144(d)(3)(ii), the holding period for securities issued in conversion of other securities of the same Company is deemed to have begun at the same time as the securities surrendered for conversion. Therefore, the Seller’s holding period is deemed to begin on the date that the Note was fully paid which was on or before January 24, 2020.
| A-2 |
Conclusion
Therefore, based upon the foregoing discussion, the Shares issued to the Seller pursuant to the Conversion Notice are not “restricted securities” as defined in Rule 144 and should be issued to the Seller without any restrictive legend.
The opinions expressed in this letter are premised upon the facts and circumstances as represented to us by the Seller and as made in the documents referred to above, on which we have relied, without investigation. We also assume that the Seller will not become an “affiliate” of the Company at any time that the Seller owns any of the Shares.
We are members of the bar of the State of New York and are not licensed or admitted to practice law in any other jurisdiction. Accordingly, we express no opinion with respect to the laws of any jurisdiction other than the laws of the State of New York and the federal laws of the United States. Furthermore, we express no opinion regarding any federal or state law not specified expressly in this letter.
We assume no obligation to advise you of any changes to this opinion which may come to our attention after the date hereof. This opinion may not be relied upon or furnished to any other person except the addressee hereof without the express written consent of this firm.
| Very truly yours, | ||
| NAIDICH WURMAN LLP | ||
| BY | ||
| BERNARD S. FELDMAN, Of Counsel | ||
| A-3 |
Exhibit 10.2
EXECUTION VERSION
NEITHER THE OFFER 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 (“THE 1933 ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN THE FORM ATTACHED AS EXHIBIT A TO THAT CERTAIN SECURITIES PURCHASE AGREEMENT, DATED AS OF JANUARY 24, 2020, OR SATISFACTORY TO ISSUER AND ISSUER’S TRANSFER AGENT, THAT REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT. 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: $118,000.00 Issue Date: January 24, 2020
Purchase Price: $118,000.00
CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, GREENWAY TECHNOLOGIES, INC., a Texas corporation (hereinafter called “Borrower”), hereby promises to pay to the order of POWER UP LENDING GROUP LTD., a Virginia corporation, or its registered assigns (the “Holder”) the sum of $118,000.00 together with any interest as set forth herein, on January 24, 2021 (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of ten percent (10%) per annum (the “Interest Rate”) 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. This Convertible Promissory Note (as amended or supplemented, this “Note”) may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note that is not paid when due shall bear interest at the rate of twenty-two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest Rate”). Interest shall be computed on the basis of a 365-day year and the actual number of days elapsed. Interest shall commence accruing on the Issue Date but shall not be payable until the Note becomes payable (whether at Maturity Date or upon acceleration or by prepayment). All payments due hereunder (to the extent not converted into common stock, $0.0001 par value per share, of 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 Borrower by written notice made in accordance with the provisions of this Note. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated of even date herewith, pursuant to which this Note was originally issued (the “Purchase Agreement”).
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 Borrower and will not impose personal liability upon the holder thereof.
The following terms shall apply to this Note:
ARTICLE I. CONVERSION RIGHTS
1.1 Conversion Right.
(a) Subject to Section 1.1(b), the Holder shall have the right (the “Conversion Right”) from time to time, and at any time during the period beginning on the date that is one hundred eighty (180) days following the date of this Note and ending on the later of (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III) (such period, the “Conversion Period”), to convert all or any part of the outstanding and unpaid amount of this Note 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 Borrower into which such Common Stock shall hereafter be changed or reclassified) at the conversion price (the “Conversion Price”), determined as provided herein (a “Conversion”).
(b) In no event shall the Holder be entitled to convert any portion of this Note if, upon Conversion of such portion of this Note, the sum of (i) the number of shares of Common Stock beneficially-owned by the Holder and its affiliates (other than shares of Common Stock that may be deemed beneficially owned through the ownership of the unconverted portion of the Note or the unexercised or unconverted portion of any other security of Borrower subject to a limitation on Conversion or exercise analogous to the limitations contained herein) and (ii) the number of shares of Common Stock issuable upon the Conversion of such portion of this Note, would equal an amount that results in the Holder and its affiliates beneficially owning more than 4.99% of the outstanding shares of Common Stock at such time.
(c) For purposes of this Note, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-13G promulgated thereunder, except as otherwise provided in Section 1.1(b)(i). The Holder may not waive the beneficial ownership limitations on Conversion set forth in this Section 1.1.
(d) The number of shares of Common Stock 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 (the “Conversion Date”), in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to Borrower by the Holder in accordance with Section 1.4 below; provided that if 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 Borrower before 6:00 p.m., New York, New York time on such Conversion Date; however, if the Notice of Conversion is sent after 6:00pm, New York, New York time, the Conversion Date shall be the next business day.
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(e) For purposes of this Note, “Conversion Amount” means, with respect to any Conversion of this Note, the sum of (i) the principal amount of this Note to be converted in such Conversion, plus (ii) at the Holder’s option, accrued and unpaid interest as of the Conversion Date, if any, on such principal amount of this Note at the Interest Rate, plus (iii) at the Holder’s option, any amounts referred to in Section 1.1(e)(i) and Section 1.1(e)(ii), at the Default Interest Rate, pursuant to the terms of this Note, plus (iv) at the Holder’s option, any amounts owed to the Holder pursuant to Section 1.4 hereof.
1.2 Conversion Price. The Conversion Price shall be equal to the Variable Conversion Price (as defined herein), subject to equitable adjustments for stock splits, stock dividends or rights offerings by Borrower relating to Borrower’s securities or the securities of any subsidiary of Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar transactions (such transactions, each, a “Recapitalization”).
(a) “Market Price” shall mean the average of the lowest two VWAPs (as defined below) for the Common Stock during the 10-Trading Day period ending on the latest complete Trading Day prior to the Conversion Date.
(b) “Principal Market” shall mean the OTCBB or such other principal market, exchange or electronic quotation system on which the Common Stock is then listed for trading.
(c) “Trading Day” shall mean a day on which there is trading on the Principal Market.
(d) “Variable Conversion Price” shall be an amount that is equal to: 0.65 multiplied by the Market Price (as defined herein) (representing a discount rate of 35%).
(e) “VWAP” shall mean the daily dollar volume-weighted average sale price for the Common Stock on the Principal Market on any particular Trading Day during the period beginning at 9:30 a.m., New York City Time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York City Time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg through its “Volume at Price” functions or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the Principal Market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York City Time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York City Time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the OTCBB or by the OTC Markets Group. If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the board of directors of Borrower and the Holder. All such determinations of VWAP shall to be appropriately and equitably adjusted in accordance with any Recapitalization occurring during any period used to determine the Market Price (or other period utilizing VWAPs).
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1.3 Authorized Shares. Borrower covenants that for so long as the Holder has the Conversion Right, Borrower will reserve, from its authorized but unissued shares of Common Stock, a sufficient number of shares of Common Stock, free from preemptive rights, to provide for the issuance of Common Stock upon the Conversion of this Note.
(a) Borrower is required at all times to have authorized and reserved five times the number of shares that would be issuable upon full Conversion of the Note (assuming that the 4.99% limitation set forth in Section 1.1 is not in effect)(based on the respective Conversion Price of the Note (as defined in Section 1.2) in effect from time to time)(the “Reserved Amount”). The Reserved Amount shall be increased (or decreased) by the Holder, subject to the written consent of the Borrower, which shall not be unreasonably withheld, and further, which shall be waived if such affirmative consent, or withheld consent, is not communicated to Holder within forty-eight (48) hours of receipt of such written request, from time to time and in accordance with the Borrower’s obligations hereunder.
(b) Borrower represents that upon issuance, such shares of Common Stock will be duly and validly issued, fully paid and non-assessable. If Borrower issues any securities or effects any Recapitalization, Borrower shall make proper provision so that immediately after such issuance or Recapitalization there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for Conversion of the outstanding amount of the Note.
(c) Borrower acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon Conversion of this Note, with appropriate restrictive legends, as applicable, and agrees that Borrower’s issuance of this Note shall constitute full authority to Borrower’s officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates, with appropriate restrictive legends, as applicable, for shares of Common Stock in accordance with the terms and conditions of this Note.
(d) If, at any time Borrower does not maintain the Reserved Amount it will be considered an Event of Default (as defined herein) under Section 3.2 of the Note.
1.4 Method of Conversion.
(a) Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time during the Conversion Period, this Note may be converted by the Holder in whole or in part, by (A) submitting to Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note to Borrower at the principal office of Borrower (upon payment in full of any amounts owed hereunder).
| -4- |
(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 Borrower unless the entire unpaid principal amount of this Note is converted. The Holder and Borrower shall maintain records showing the principal amount converted and the dates of such Conversions or shall use such other method, reasonably satisfactory to the parties, so as not to require physical surrender of this Note upon each such Conversion.
(c) Delivery of Common Stock upon Conversion. Within 24 hours of receipt by 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, Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such Conversion within three (3) business days of the Conversion Date (the “Deadline”) (and, solely in the case of Conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Purchase Agreement. Upon receipt by Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such Conversion, and the outstanding principal amount due under this Note and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such Conversion. Unless Borrower defaults on Borrower’s obligations hereunder, all rights with respect to the portion of this Note converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, upon such Conversion. If the Holder shall have properly given a Notice of Conversion, with an agreed upon Conversion Amount to be converted into shares of Common Stock, Borrower’s obligation to issue and deliver the certificates for Common Stock, with appropriate restrictive legends, as applicable, 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 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 Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of Borrower to the Holder in connection with such Conversion.
(d) Delivery of Common Stock by Electronic Transfer. If Borrower participates in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, Holder may request that in lieu of Borrower delivering physical certificates to Holder representing the Common Stock issuable upon Conversion, Borrower use its best efforts to cause the Common Stock issuable upon Conversion to be electronically transmitted and credited to the Holder’s primary broker with DTC through its Deposit Withdrawal Agent Commission system; provided, that the Holder shall make any such request in writing to Borrower.
| -5- |
(e) Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including actual damages or equitable relief, the parties agree that if delivery of the Common Stock issuable upon Conversion is not delivered by the Deadline due to action or inaction of Borrower, Borrower shall pay to the Holder $500.00 per day in cash, for each day beyond the Deadline that Borrower fails to deliver such Common Stock (the “Fee”); provided; however that the Fee shall not be due if the failure to deliver such Common Stock is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of Borrower to effect delivery of such Common Stock. The Fee shall paid to Holder by the fifth day of the month following the month in which it accrues. Borrower agrees that the Conversion Right is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, or interference with the Conversion Right are difficult if not impossible to qualify. Accordingly, the parties acknowledge that the liquidated damages provision contained in this Section 1.4(e) are justified.
(f) Obligations to Transfer Agent. Borrower shall remain current in all amounts owed to its transfer agent and in good standing with its transfer agent. In the event that Borrower is not current in all amounts owed to its transfer agent, then at the option of the Holder, the Holder may advance any funds to Borrower’s transfer agent so that transfer agent will process the requested Conversion. Such advanced funds shall be paid by Borrower to the Holder within 48 hours of a written demand from the Holder.
1.5 Concerning the Shares.
(a) The shares of Common Stock issuable upon Conversion may not be sold or transferred unless: (i) such shares of Common Stock are sold pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “1933 Act”) or (ii) Borrower or its transfer agent shall have been furnished with an opinion of counsel, in the form attached as Exhibit A to the Purchase Agreement, or in form, substance and scope satisfactory to Borrower and its transfer agent (1) at the time of the Conversion of such shares of Common Stock; and (2) at the time of the sale of the underlying Common Stock issued upon a Conversion, if such Conversion occurs less than one year after the Issue Date; and: (i) the due date of a quarterly or annual filing of Borrower with the SEC pursuant to the Exchange Act (each a “Filing Date”) occurs following such Conversion, and the sale of shares of Common Stock underlying such Conversion occurs on or following such Filing Date; or (ii) Borrower filed a Form 15 with the SEC; to the effect that the shares of Common Stock to be sold or transferred may be sold or transferred pursuant to an exemption from such registration (such as Rule 144 promulgated under the 1933 Act, or a successor rule (“Rule 144”)).
(b) Any restrictive legend on certificates representing shares of Common Stock issuable upon Conversion of this Note shall be removed and Borrower shall issue or cause to be issued to the Holder a new certificate therefore free of any transfer legend if: (i) Borrower and its transfer agent shall have received an opinion of counsel, in the form attached hereto as Exhibit A to the Purchase Agreement, or in form, substance and scope satisfactory to Holder and its transfer agent, (1) at the time of the Conversion of such shares of Common Stock; and (2) at the time of the sale of the underlying Common Stock issued upon a Conversion, if such Conversion occurs less than one year after the Issue Date; and: (A) the Filing Date occurs following such Conversion, and the sale of shares of Common Stock underlying such Conversion occurs on or following such Filing Date; or (ii) Borrower filed a Form 15 with the SEC; to the effect that the shares of Common Stock to be sold or transferred may be sold or transferred pursuant to an exemption from such registration under the 1933 Act in accordance with Rule 144 (or such other exemption from registration); or (ii), the offer and sale of such Common Stock issuable upon Conversion of this Note is registered under an effective registration statement filed under the 1933 Act.
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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 Borrower, the effectuation by Borrower of a transaction or series of related transactions in which more than 50% of the voting power of Borrower is disposed of, or the consolidation, merger or other business combination of Borrower with or into any other Person (as defined below) or Persons when Borrower is not the survivor shall be deemed to be an Event of Default (as defined in Article III) pursuant to which 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 (as defined in Article III). “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
(b) Adjustment Due to Merger, Consolidation, Etc. At any time when this Note is issued and outstanding and prior to Conversion of the entire Note, if there shall be any (i) merger, (ii) Recapitalization or (iii) in case of any sale or conveyance of all or substantially all of the assets of Borrower other than in connection with a plan of complete liquidation of Borrower, and as a result of such transaction, the shares of Common Stock of Borrower shall be changed into the same or a different number of shares of another class or classes of stock or securities of Borrower or other entity, then in lieu of the shares of Common Stock immediately issuable upon Conversion, the Borrower shall cause the Holder of this Note to have the right to receive, upon Conversion of this Note and in accordance with the basis, terms and conditions specified in this Note, such stock, securities or assets that 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). 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. Borrower shall not effect any transaction described in this Section 1.6(b) unless (a) Borrower gives, to the extent practicable, ten (10) days prior written notice (but in any event at least five (5) 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, Recapitalization, or sale or conveyance of substantially all of the assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not Borrower) assumes by written instrument the obligations of this Note. The above provisions shall similarly apply to successive mergers, Recapitalizations or sale or conveyance of substantially all of the assets of Borrower.
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1.7 Prepayment. At any time during the periods set forth on the table immediately following this paragraph (the “Prepayment Periods”), Borrower shall have the right but not the obligation, to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.7; provided that Borrower provides Holder with not more than three Trading Days’ prior written notice of such prepayment. After the expiration of 180 days following the Issue Date, Borrower shall have no right of prepayment.
(a) Any notice of prepayment (an “Optional Prepayment Notice”) shall be delivered to the Holder at its registered addresses and shall state: (i) that Borrower is exercising its right to prepay the Note, and (ii) the date of prepayment which shall be not more than three Trading Days from the date of the Optional Prepayment Notice.
(b) On the date fixed for prepayment (the “Optional Prepayment Date”), Borrower shall make payment of the Optional Prepayment Amount (as defined below) to Holder, or upon the written direction of the Holder (which direction shall be sent to Borrower by the Holder at least one (1) Trading Day prior to the Optional Prepayment Date).
(c) If Borrower exercises its right to prepay the Note, Borrower shall make payment to the Holder of an amount in cash equal to the percentage (“Prepayment Percentage”) as set forth in the table immediately following this paragraph opposite the applicable Prepayment Period, multiplied by the sum of: (i) the then outstanding principal amount of this Note, plus (ii) accrued and unpaid interest on the unpaid principal amount of this Note at the Interest Rate to the Optional Prepayment Date plus (iii) if applicable, any amounts referred to in Section 1.7(c)(i) and 1.7(c)(ii), at the Default Interest Rate to the Optional Prepayment Date; plus (iv) any amounts owed to the Holder pursuant to Section 1.4 hereof (the “Optional Prepayment Amount”).
| Prepayment Period | Prepayment Percentage |
| 1. The period beginning on the Issue Date and ending on the date which is 60 days following the Issue Date. | 120% |
| 2. The period beginning on the date that is 61 days following the Issue Date and ending 120 days following the Issue Date. | 125% |
| 3. The period beginning on the date that is 121 days following the Issue Date and ending 180 days following the Issue Date. | 135% |
ARTICLE II. CERTAIN COVENANTS
2.1 Sale of Assets. So long as any portion of this Note remains outstanding, Borrower shall not sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business without the Holder’s written consent, which consent shall not be unreasonably withheld, conditioned, or delayed.
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ARTICLE III. EVENTS OF DEFAULT
3.1 Events of Default. Each of the following shall be an event of default (each, an “Event of Default”) under this Note:
(a) If Borrower fails to pay the principal or interest due under this Note when due, whether at maturity or upon acceleration and such breach continues for a period of five days after written notice from the Holder;
(b) If Borrower fails to (i) issue shares of Common Stock to the Holder (or announces or threatens in writing that Borrower will not honor its obligation to do so) upon Conversion in accordance with the terms of this Note, (ii) transfer or cause its transfer agent to transfer or issue, electronically or in certificated form, any certificate for shares of Common Stock, with appropriate restrictive legends, as applicable, to the Holder upon Conversion or otherwise pursuant to this Note in accordance with its terms;
(c) If Borrower directs its transfer agent not to transfer or Borrower delays, impairs, or hinders its transfer agent in transferring or issuing, electronically or in certificated form, any certificate for shares of Common Stock to be issued to the Holder upon Conversion or otherwise pursuant to this Note in accordance with its terms;
(d) If Borrower fails to remove or directs its transfer agent not to remove or impairs, delays, 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 shares of Common Stock issued to the Holder upon Conversion of or otherwise pursuant to this Note in accordance with its terms;
(e) If Borrower makes any written announcement, statement or threat that Borrower does not intend to honor the obligations under this Note 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 three business days after the Holder shall have delivered a Notice of Conversion;
(f) If Borrower breaches any material covenant or other material term or condition contained in this Note or the Purchase Agreement and such material breach continues for a period of 20 days after written notice to Borrower of such material breach from the Holder;
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(g) If any representation or warranty of Borrower made in this Note or the Purchase Agreement, shall be determined to be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) materially impairs the rights of the Holder under this Note or the Purchase Agreement;
(h) If 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;
(i) If any 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 Borrower or;
(j) If Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange;
(k) If Borrower fails to comply with the reporting requirements of the Exchange Act or ceases to be subject to the reporting requirements of the Exchange Act (the filing of a Form 15 with the SEC is an immediate Event of Default).
(l) If Borrower effects any dissolution, liquidation, or winding up of its business or any substantial portion of its business;
(m) If Borrower ceases operations or admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of Borrower’s ability to continue as a “going concern” shall not be an admission that Borrower cannot pay its debts as they become due;
(n) So long as this Note remains outstanding, if Borrower restates any financial statements filed by Borrower with the SEC at any time after 180 days after the Issue Date, and if the result of such restatement would, by comparison to the un-restated financial statement, materially impair the rights of the Holder under this Note or the Purchase Agreement;
(o) If Borrower proposes to replace its transfer agent and fails to provide, prior to the effective date of such replacement, a fully-executed Irrevocable Transfer Agent Instructions (as defined in the Purchase Agreement) 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 Borrower, and acknowledged by the Holder in writing; and
(p) If Borrower breaches or defaults on any covenant, term, or condition contained in the Purchase Agreement, then after the passage of all applicable notice and cure or grace periods, the Borrower shall, at the option of the Holder, be considered at default under this Note, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note by reason of a default under the Purchase Agreement.
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3.2 Effect of Events of Default.
(a) Upon the occurrence and during the continuation of any Event of Default specified in Section 3.1(a) (solely with respect to failure to pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable and Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Amount (as defined herein).
(b) UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.1(b), THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (I) THE DEFAULT AMOUNT (AS DEFINED HEREIN); MULTIPLIED BY (II) TWO.
(c) Upon the occurrence and during the continuation of any Event of Default specified in Sections 3.1(a) (solely with respect to failure to pay the principal hereof or interest thereon when due on this Note pursuant to Section 1.7 or upon acceleration), and 3.1(c) – 3.1(p), the Holder shall deliver to Borrower written notice of default, and the Note shall become immediately due and payable and Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to 150% times the sum of (i) the then outstanding principal amount of this Note plus (ii) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment, plus (iii) the Default Interest Rate for any amounts in 3.2(c)(i) and 3.2(c)(ii), plus (iv) any amounts owed to the Holder pursuant to Section 1.3 and Section 1.4 hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in Section 3.2(c)(ii), Section 3.2(c)(iii) and Section 3.2(c)(iv) shall collectively be known as the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, together with all costs, including, without limitation, legal fees and expenses incurred by Holder directly related to such Event of Default, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity.
3.3 Failure to Pay Default Amount. If Borrower fails to pay to Holder the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any time, so long as Borrower remains in default (and so long and to the extent that there are sufficient authorized shares), to require Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock, with appropriate restrictive legends, equal to the Default Amount divided by the Conversion Price then in effect.
ARTICLE IV. MISCELLANEOUS
4.1 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 future exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
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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, facsimile or email, 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 facsimile or email, with accurate confirmation generated by the electronic transmission, 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 Borrower, to:
GREENWAY TECHNOLOGIES, INC.
1521 North Cooper Street, Suite 205
Arlington, Texas 76011
Attn: Ransom B. Jones, Chief Financial Officer
Email: [email protected]
If to the Holder:
POWER UP LENDING GROUP LTD.
111 Great Neck Road, Suite 214
Great Neck, NY 11021
Attn: Curt Kramer, Chief Executive Officer
E-mail: [email protected]
With a copy by fax only (which shall not constitute notice) to:
Naidich Wurman LLP
111 Great Neck Road, Suite 216
Great Neck, NY 11021
Attn: Allison Naidich
Facsimile: 516-466-3555
E-mail: [email protected]
4.3 Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by both Borrower and the Holder.
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4.4 Assignability. This Note shall be binding upon Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) promulgated under the Securities Act of 1933, as amended, by the Securities and Exchange Commission). 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; and may be assigned by the Holder upon written notice to Borrower, with such written notice including the name and contact information for such assignee.
4.5 Cost of Collection. If default is made in the payment of this Note, Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.
4.6 Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform to such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.
4.7 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by and construed in accordance with the laws of the State of Virginia without regard to principles of conflicts of laws.
(b) Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the Eastern District of New York. The parties to this Agreement hereby irrevocably waive 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.
(c) 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 Agreement, the Note or any related document or agreement 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 Agreement 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.
(d) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT OR THE NOTE IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 4.7(d).
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4.8 Entire Agreement; Amendments. This Note and the Purchase Agreement, contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Borrower nor the Holder makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by Borrower and a majority-in-interest of the Holder.
4.9 Remedies. Each party acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the other party, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, each party 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 a party of the provisions of this Note, that the other party 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.
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IN WITNESS WHEREOF, Borrower has caused this Note to be signed its duly authorized officer as of the date first above written.
| GREENWAY TECHNOLOGIES, INC. | ||
| By: | /s/ Ransom B. Jones | |
| Name: | Ransom B. Jones | |
| Title: | Chief Financial Officer | |
[Signature Page to Convertible Promissory Note]
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EXHIBIT A — NOTICE OF CONVERSION
Reference is hereby made to that certain Convertible Promissory Note (the “Note”), dated January 24, 2020, by and between GREENWAY TECHNOLOGIES, INC., a Texas corporation ( “Borrower”) and POWER UP LENDING GROUP LTD., a Virginia corporation (the “Holder”). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Note.
Holder hereby elects to convert $ _________________ principal amount of the Note into that number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) issuable upon Conversion of the Note, in accordance with the terms and conditions of the Note. No fee will be charged to the Holder for any Conversion, except for transfer taxes, if any. Borrower shall have 24 hours from receipt of this Notice of Conversion to confirm the number of shares of Common Stock to be issued pursuant to Conversion of the principal amount listed in this paragraph.
| Date of Conversion: | |
| Applicable Conversion Price: | $ |
| Number of shares of Common Stock to be issued upon Conversion: | |
| Amount of Principal Balance of the Note outstanding as of the date of Conversion: |
Box checked as to applicable instructions:
| [ ] | Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the Holder or its nominee with DTC through its Deposit Withdrawal Agent At Custodian. | |
| Name of DTC Prime Broker: _______________________ | ||
| Account Number: ______________________________ | ||
| [ ] | The Holder requests that Borrower issue or cause to be issued a certificate or certificates, with appropriate restrictive legends, as applicable, for the number of shares of Common Stock issuable pursuant to this Notice of Conversion, in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto: |
| POWER UP LENDING GROUP LTD. | |||
| 111 Great Neck Road, Suite 214 | |||
| Great Neck, NY 11021 | |||
| Attention: Certificate Delivery | |||
| E-mail: [email protected] | |||
| POWER UP LENDING GROUP LTD. | |||
| By: | |||
| Name : | Curt Kramer | ||
| Title : | Chief Executive Officer | ||
| Date: | |||
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