SDCO 8-K
SDR Drone, Inc. (SDCO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Form
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
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| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
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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) | |
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Securities registered pursuant to Section 12(b) of the Act:
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| OTC Markets |
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).
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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 MATERIAL DEFINITIVE AGREEMENT
On January 11, 2024, Hallmark Venture Group, Inc. (referred to herein as the “Company,” “we,” “us,” and “our”) has entered into a Change of Control Agreement (the “CoC Agreement”) by and between John D. Murphy, Jr., the Company’s Director and CEO and JMJ Associates, LLC , an entity controlled by John D. Murphy, Jr. (“Murphy”), and Paul Strickland, the Company’s Director and Secretary, and Selkirk Global Holdings, LLC, and Beartooth Asset Holdings, LLC, both entities controlled by Paul Stirckland (“Strickland”), and Steven Arenal and Aurum International Ltd., an entity controlled by Steven Arenal (“Aurum”) and, pursuant to which Murphy, Strickland, and their respective control entities will assign the Series A preferred shares controlled by each to Aurum. Strickland will transfer 98,259,679 in restricted common shares to Aurum. In exchange, Murphy and Strickland will each retain 5% equity in the Company, post-restructuring, and those shares will have an 18 month anti dilution provision as described in the Anti Dilution Agreement executed between the Parties. Murphy and Strickland will also cancel debts owed to each by the Company. Strickland will cancel $83,342.25 in debts. Murphy will cancel $74,501.00 in debts. Murphy will receive $70,000 from Aurum in exchange for partial debt cancellation. Aurum will receive a $77,000 10% convertible promissory note in exchange for partially paying the Company’s debt owed to Murphy. The Consideration outlined herein is subject to the provisions of the Escrow Agreement between the Parties. The Company has officially moved its place of business to 626 Wilshire Blvd., Suite 410, Los Angeles, California 90017.
Item 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AND OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT;
The information included in Item 1.01 of this Current Report on Form 8-K is also incorporated by reference into this Item 2.03 of this Current Report on Form 8-K
Item 5.01, Changes in Control of Registrant;
Pursuant to the Change of Control Agreement signed by and between the parties described in Item 1.01 above, the Series A preferred shares that represent 95% of the controlling vote of the Company have been pledged to Aurum subject to the Closing of the Change of Control Agreement.
Item 5.02, Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers;
On January 11, 2024, John D. Murphy, Jr. resigned as Director and Officer of the Company and all other positions he may hold with the Company.
On January 11, 2024, Paul Strickland resigned as Director and Officer of the Company and all other positions he may hold with the Company.
On January 11, 2024, Steven Arenal was elected as Director of the Company and appointed Chief Executive Officer, President, and Secretary of the Company.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
EXHIBIT INDEX
| Exhibit Number | Description | |
| 10.01 | Change of Control Agreement | |
| 10.02 | Form of $77,000, 0% convertible exchange note to Aurum dated January 11, 2024 | |
| 10.03 | Form of Anti Dilution Agreement | |
| 10.04 | Form of Debt Cancellation Agreement | |
| 10.05 | Form of Escrow Agreement | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: January 18, 2024
| Hallmark Venture Group, Inc. | ||
| By: | /s/ Steven Arenal | |
| Name: | Steven Arenal | |
| Title: | President and Chief Executive Officer | |
| 3 |
Exhibit 10.01
CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT (this Agreement) made and entered to on the date last written below, by and between Hallmark Venture Group, Inc. (the “Company” or “HLLK”) and John D. Murphy, Jr. and JMJ Associates, LLC (collectively, “Murphy”), Paul Strickland, Selkirk Global Holdings, LLC, and Beartooth Asset Holdings, LLC, (collectively, “Strickland”) Aurum International Ltd. and Steven Arenal (Collectively, “AURUM”) and concerns the change of control of the Company from Murphy and Strickland to AURUM, and each shall be referred to individually as a Party and collectively the Parties.
WITNESSETH:
WHEREAS, Murphy and Strickland jointly control the Company through the holding of securities as outlined in Schedule “A” (the Murphy and Strickland securities, respectively) and;
WHEREAS, Murphy and Strickland (collectively, “Transferees”) desire to transfer control of the Company to AURUM, and;
WHEREAS, Transferees are creditors of the Company through the holding of certain debt obligations and;
WHEREAS, AURUM desires to take control of the Company in exchange for the consideration as outlined in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the Parties agree as follows:
RECITALS.
The above recitals are true and correct and are incorporated by reference herein.
DESCRIPTION OF TRANSACTION/CONSIDERATION.
Asset Exchange For Stock and other promises. Upon the terms and subject to the conditions set forth in this Agreement, on the “Transfer Date” as defined herein, all of the outstanding equity securities held by Transferees shall be delivered to the Escrow Agent and be subject to the provisions of the Escrow Agreement by and between the Parties to this Agreement (see Attachment A).
Closing. Subject to the conditions set forth herein, the Closing of this transaction shall occur when; a) Preferred shares held by Transferees are transferred to AURUM (see Schedule “A”), b) restricted common shares held by Strickland are transferred to AURUM (see Schedule “A”), c) the Cash Consideration is delivered to Murphy, occurring no later than 6 weeks from the date of this Agreement, unless mutually extended by written consent of the Parties, and d) Transferees are issued the Stock Consideration as defined herein.
Issuance of Stock Consideration. Subject to any adjustments provided for herein, the aggregate consideration to be delivered, or caused to be delivered, by AURUM to Transferees, in full consideration for the transfer of control of the Company (the “Stock Consideration”) shall be 10% of HLLK common stock (the “Adjusted Common Stock Percentage”) after such time that AURUM restructures the Company through one or more of the following, to include, but not be limited to: merger, acquisition, reverse stock split, or other such transaction, and include an anti dilution agreement (the “Anti Dilution Agreement”) (Attachment B) to run concurrent with issuance date of the Stock Consideration.
Cash Consideration. Murphy shall receive Seventy Thousand Dollars ($70,000.00) in cash as partial consideration for the transfer of control of the Company, and as partial repayment of debts owed to Murphy by the Company (the “Cash Consideration”).
Cancellation of Debt. In exchange for the Stock Consideration and Cash Consideration, as defined herein, Transferees agree to cancel the debt obligations owed to them by the Company as outlined in Schedule “B” attached, and Debt Cancellation Agreement in Attachment C.
Issuance of Note to Aurum. In exchange for paying Murphy the Cash Consideration as partial repayment of debts owed to Murphy by the Company, Aurum shall be issued a $77,000.00 10% convertible promissory note (the “Aurum Note”) Attachment D herein.
Transfer Date. The Transfer Date shall be the date of Closing.
APPROVAL BY BOARD OF DIRECTORS AND SHAREHOLDERS OF THE COMPANY.
Transferees represent and warrant that this Agreement has been unanimously approved and adopted by the Board of Directors of the Company at a meeting called for the purpose of acting upon the approval and to adopt the provision of this Agreement and the schedules and attachments herein that require such meeting to be held, including, but not limited to; a) approve the resignations of Murphy and Strickland as directors and officers of the Company, b) nominate and appoint Steven Arenal as Sole Director and Officer, c) approve all the other agreements subject to this Agreement, d) seek shareholder approval for the foregoing board actions.
REPRESENTATIONS AND WARRANTIES OF TRANSFEREES AND SHAREHOLDERS.
Transferees, for the purpose of inducing AURUM to enter into and consummate this Agreement, represents and warrants to AURUM as follows:
Organization and Standing of Transferees. Transferees, as applicable, is and will be on the Closing Date a limited liability corporation duly organized, validly existing and in good standing under its respective jurisdictions. Further, Transferees has full power to own its assets and properties and to conduct its business under the laws of its respective jurisdictions, except as set forth herein. Transferees is not licensed or qualified as a foreign corporation in any jurisdiction and neither the nature of its properties nor the conduct of its business requires it to be so qualified. Transferees hereby warrants that should any of the proceeding be defective, the Parties desire that this Agreement shall serve as written authorization to cure all defects and effect the desired transfer.
Power and Authority. Transferee has the power and authority to execute, deliver and perform this Agreement and to execute, deliver and perform the change of control of the Company.
Authorization. The execution and delivery by Transferees of this Agreement and the execution and delivery of it on the Closing Date of the change of control of the Company and the performance by Transferees of its obligations hereunder and thereunder have been or will be prior to closing, duly and validly authorized by all requisite action of Transferees.
Binding Agreement. This Agreement has been duly executed and delivered by Transferees. This Agreement is, and when executed and delivered by it on the Closing Date, the change of control of the Company, will be the legal, valid and binding obligations of Transferees enforceable against it in accordance with their respective terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditor’s rights generally and to general principles of equity.
Consent. No license, consent or approval of any person is required in order to operate any assets herein, or is required for Transferees’s execution and delivery of this Agreement, or, that change of control of the Company or for the consummation by Transferees of the transactions contemplated hereby or thereby, except where the failure to obtain such consent would not have a Material Adverse Effect.
Business Regulatory Bodies. Except as disclosed herein, attached hereto and incorporated by reference herein, there are no disputes, claims, proceedings, arbitrations or investigations, by any Business Regulatory Bodies which regulate or accredit Transferees’ business or whose accreditation of Transferees materially affects Transferees’ business, pending or to the knowledge of Transferees, threatened or contemplated against or affecting Transferees’s business or Assets. Except as disclosed in this Agreement. Transferees are not aware of any state of facts or occurrence of any event that might reasonably form the basis of any such dispute, claim, action, proceeding, arbitration, or investigation which might materially adversely effect AURUM’s business, assets, properties or prospects or the consummation of the transaction contemplated by this Agreement.
Legal Proceedings. Transferees warrants that there are no disputes, claims, actions, suits or proceedings, arbitrations or investigations, either administrative or judicial, pending or, to the knowledge of the Transferees, threatened or contemplated against or affecting Transferees’s business or assets that would have a material adverse effect, at law or in equity otherwise before or by any court of government agency or body, domestic or foreign, or before an arbitrator of any kind. Except as disclosed in this Agreement, Transferees are not aware of any state of facts or occurrence of any event that might reasonably form the basis of any dispute, claim, action, suit or proceeding, arbitration or investigation against Transferees which might have a materially adverse effect on the operations, assets, properties or prospects of Transferees’s business of the consummations of the transaction contemplated by this Agreement.
Title to Property. Transferees warrants that it has good and marketable title to its property and assets, be they tangible and intangible personal property and good and marketable title of record to its real property, all of which are reflected in the Financial Reports or acquired since the date thereof and have not been disposed of in the ordinary course of its business, free and clear of any Encumbrances whatsoever, save and except for the same as described herein, which property and assets will be free and clear of all encumbrances on the Closing Date.
Schedule of Assets, Properties, Leases and Contracts. (Please see the schedules and attachments included herein).
Absence of Certain Events. Transferees has not: Sold, assigned, or transferred any of its assets or properties, except in the ordinary course of business consistent with past practice; Suffered any damage, destruction or loss, whether or not covered by insurance or suffered any repeated, recurring or prolonged shortage, cessation or interruption in the delivery of supplies, products, or utility service required to conduct their businesses or suffered any change in its financial condition or in the nature of its business or operations which had or might have an adverse affect on the operations, assets, properties or prospects of their businesses; Increased the salaries or other compensation of, or made any advances (excluding advances for ordinary or necessary business expenses) or loaned to, any or its shareholders, directors, officers or employees, or made any increase in, or any additions to, other benefits to which any of its shareholders, directors, officers or employees may be entitled other than salary increases to non-management level employees made in the ordinary course of business. Changed any of the accounting principles followed by them or the methods of applying such principles; Entered into any transactions other than in the ordinary course of business consistent with past practice;
Documentation. Neither Transferees nor its shareholders, directors, officers, or employees have made duplicate copies or removed any of the files or other records, active or inactive, relating to Transferees’ business or assets except copies of records (i) required or necessitated by law to be maintained or which will be used solely for the purposes of or as evidence of compliance with governmental laws or regulations; or, (ii) which are integral or useful to the record keeping and operations of them.
No Other Contracts to Sell. Transferees have entered into no contract to sell, mortgage, or otherwise convey or encumber the assets or any part thereof.
Nonencumbrance. Transferees has not as of the date of this Agreement and shall not hereafter transfer or further encumber the assets through the Closing Date, including the granting of any deeds, contracts encumbrances, easements or other right in the assets; no structures shall have been placed by Transferees on the real property portion of the assets from and after the date hereof through closing; and the title to the assets shall remain unchanged from and after the date hereof through the date and time of closing; excepting the transfer of title to assets in Transferees’s ordinary course of business.
AURUM’S REPRESENTATIONS AND WARRANTIES.
AURUM for the purpose of inducing Transferees to enter into and consummate this Agreement, hereby represents and warrants to Transferees, as follows:
Power and Authority. AURUM has the ability and authority to execute, deliver and perform under the provisions of this Agreement, the change of control of the Company and to deliver the consideration required at Closing.
Consents. No license, consent or approval of any person is required in connection with the execution and delivery by AURUM of this Agreement or the change of control of the Company for the consummation by AURUM of the transactions contemplated hereby or thereby.
Litigation. There is no pending, or, to the knowledge of AURUM, threatened suit, action or litigation, or administrative, arbitration, or other proceeding or governmental inquiry or investigation questioning the validity of this Agreement or the transactions contemplated hereby.
Disclosure. No representation or warranty by AURUM contained in this Agreement and nor any information in any statement, certificate, exhibit, schedule or other document furnished or to be furnished to Transferees and Shareholder pursuant hereto, or in connection with the transactions contemplated hereby, contains or will contain any untrue statement of a material fact, or omissions or will omit to state a material fact necessary to make the statements contained herein or therein not misleading.
INFORMATION AND RECORDS CONCERNING TRANSFEREES’ BUSINESS.
Access to Information and Records before Closing Date. AURUM and its authorized representatives, prior to the Closing Date, may make, or cause to be made, such reasonable investigation and physical inspections of the assets of the Transferees’ business and its financial and legal condition as it deems necessary and advisable. Transferees shall permit AURUM and their authorized representatives (including legal counsel and independent accountants) upon reasonable notice, to have full access to the assets and relevant books and records of its business at reasonable business hours and it shall furnish AURUM with such financial and operating data and other information and copies of documents with respect to the products, services, operations and properties of its business at AURUM shall from time to time reasonable request.
Confidentiality of Transferees’ Financial Information. In the event of the termination of this Agreement prior to the Closing Date, AURUM will deliver to Transferees all documents, work papers and other materials obtained from Transferees relating to it or the transaction contemplated hereby, whether obtained before or after the execution hereof, and AURUM will use its best efforts to keep confidential all such information, except that such restrictions shall not apply to any information (i) which is in or comes into the public domain other than through Transferees, (ii) which was in the possession of AURUM before the commencement of negotiations contemplated hereby, (iii) which at any time lawfully comes into the possession of AURUM from third parties who have a right to disclose such information otherwise that in connection with this Agreement.
OBLIGATIONS OF THE PARTIES PENDING CLOSING DATE
Conduct of Transferees’ Business Pending Closing Date. Between the date of the Agreement and the Closing Date, Transferees will conduct its business solely in the ordinary course of business consistent with past practices, maintain its inventory and supplies at normal levels by replenishing them as they are consumed, maintain its existence as a corporation, and agree to take no action outside the purview of conducting the day to day business in its ordinary course. By way of example and not limitation, Transferees shall not, without AURUM’s prior written consent, do any of the following relating to their businesses: (I) waive of commit to waive any right of substantial value; (ii) sell, lease, transfer, dispose of or encumber of commit to sell, lease, transfer, dispose of or encumber any of its business and assets; (iii) take any actions that impair the existing relationships between it and its employees and other persons and entitles having business relationships with them; (iv) take any action in the conduct of its business which would be contrary to, or in breach of, any term or representation or warranty contained in this Agreement; (v) declare or pay any dividend, or repurchase or redeem any of its equity securities or establish a sinking fund or other reserve for such purpose; (vi) issue, sell, or grant equity or debt securities including common or preferred stock, notes, debentures, bonds, options, warrants or rights; (vii) acquire an interest in any other business enterprise; (viii) amend or permit the adoption of any amendments to Transfereess Articles of Incorporation or ByLaws of effect or permit Transferees to become a party to any acquisition transaction, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction; (ix) form a subsidiary or acquire any equity interest in any other person; (x) other then in the ordinary course of business consistent with part practice acquire, lease or license any right or other asset to any Person or sell or otherwise dispose of, or lease or license, any right or other asset to any person; (xi) lend money to any person, or incur or guarantee any indebtedness, except that Transferees may make routine borrowings in the ordinary course of business under its respective existing line of credit; (xii) establish, adopt or amend any fringe benefit or retirement plan, pay any bonus or make any profit-sharing or similar payment to, or increase the amount of wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its directors, officers, employees, or hire any new employee whose aggregate annual compensations is expected to exceed $15,000.00; (xiii) change any of its methods of accounting or accounting practices in any respect; (xiv) commence or settle, whether or not commenced by Transferees, any legal proceeding; (xv) enter into any material transaction or take any other material outside the ordinary course of business or inconsistent with its past practices; (xvi) agree or commit to take any of the actions described in this paragraph, (xvii) incur any indebtedness for borrowed monies; or, (xviii) make any capital expenditures.
Affirmative Covenants. Between the date hereof and the closing date, Transferees will: Maintain the assets in the same repair, order and condition as they were at the time of execution of this agreement, ordinary wear and tear excepted; Maintain if full force and effect all tangible personal and real property; Maintain in full force and effect the insurance policies and binders and bonds currently in effect relating to their real and tangible properties, businesses and assets.
Use its best efforts to preserve intact its present business, assets, real and tangible properties, keep available the services of its present employees and agents (but this shall not require them to make any salary increases between the date hereof and the Closing Date), and maintain its relations and goodwill with its suppliers, customers, distributors, and any others having business relations with them; Maintain all the books and records in accordance with its past practices; Comply with all provisions of the contracts and agreements relating to or effecting its business and assets and comply with the provisions of all laws, rules and regulations applicable thereto;
No Negotiation. Prior to the Closing Date, Transferees shall not not directly or indirectly: Solicit or encourage the initiation of any inquiry, proposal or offer from a Person (other than AURUM) relating to a possible Acquisition Transaction; Participate in any discussions or negotiations or enter into any agreement with, or provide any non-public information to any person (other than AURUM) relating to or in connection with a possible Acquisition Transaction; or, Consider, entertain or accept any proposal or offer from any person (other than AURUM) relating to a possible Acquisition Transaction. Transferees shall promptly notify AURUM in writing of any inquiry, proposal or offer relating to a possible Acquisition Transaction that is received by Transferees prior to the Closing Date.
Contingencies/Guarantees. Transferees warrants that it will execute strict non-compete and non- disclosure agreements in favor of AURUM and Transferees on or about the date of closing. Transferees warrants that it maintains all proper documentation evidencing its right title and ownership to the assets listed in Exhibit A.
CONDITIONS PRECEDENT TO TRANSFEREES AND TRANSFEREES’ OBLIGATIONS
Representations and Warranties. The representation and warranties of Transferees contained in this Agreement or on any exhibit, schedule, list, certificate or document or in the documents delivered pursuant to the provisions hereof shall be true in all material respects at and as of the Closing Date as though such representations and warranties were made at an as of such time, except to the extent affected by the transactions contemplated hereby.
Performance of Covenants. Transferees shall have performed or complied in all material respects with each of their agreements and covenants required by this Agreement to be performed or complied with by then prior to or after the Closing Date.
Transfer of Shares. On the Transfer Date Transferee shall instruct the Company’s Transfer Agent and cause to transfer the securities as outlined in Schedule “A” attached. Transferee hereby warrants that its Transfer Agent is properly licensed by FINRA and the SEC.
Legal Matters. No suit, action, investigation, or legal or administrative proceeding shall have been brought or shall have been threatened by any person, (other than AURUM or an affiliate thereof), which questions the validity or the legality of the transactions contemplated hereby or seeks to prohibit or limit the exercise by AURUM of any material right pertaining to the ownership of Transferees’s assets after the Closing.
No Material Adverse Change. Transferees’s Business and Assets and the operations or prospects thereof shall not be materially adversely affected in any way by an Business Regulatory Body’s actions or as a result of disaster, accident, labor, dispute, claim, stoppage, cessation or interruption in the music manufacturing and distribution service business, or utility services, flood, fire or other casualty, drought, embargo, civil disturbance, uprising, activity of armed forces or act of God or pubic enemy.
CONDITIONS PRECEDENT TO AURUM’S OBLIGATIONS
Unless waived by Transferees, AURUM’s obligation to consummate the transactions contemplated by this Agreement is subject to the fulfillment prior to or at the Closing Date, of each of the following conditions:
Performance of Covenants. AURUM has performed or complied in all material respects with each of its agreement and covenants required by this Agreement to be performed or complied with by it prior to or at the Closing Date.
Cash Consideration. The Cash Consideration to be paid to Murphy at Closing shall be delivered to Murphy in standard electronic form by AURUM.
No Restraints. No temporary restraining order, preliminary or permanent injunction or other order preventing the consummation of this Agreement by AURUM shall have been issued by any court of competent jurisdiction and remain in effect, and there shall not be any legal requirement enacted or deemed applicable to this Agreement that makes consummation of this Agreement by Transferees and Transferees illegal.
CONDITIONS SUBSEQUENT
Transferees acknowledges that AURUM is exchanging Transferees’s selected assets, properties and liabilities as defined herein only. Accordingly, AURUM is entitled to enjoy the following Covenants of Non-Disclosure and Restrictions on Competition by Transferees:
NON-DISCLOSURE:
Transferees has acquired and developed certain trade secrets, methods of operations and proprietary information during the course of its operation of the Company. In consideration of this Agreement, AURUM shall not divulge, sell, lend, gift, lease reveal, relay, transfer, convey, nor hypothecate any of these proprietary secrets or methods to any party whatsoever, related or unrelated to the Company, for any reason whatsoever. AURUM acknowledges that so disclose said information to any party would negatively impact Transferees business. This non-disclosure shall remain in effect for (3) three years from the date of execution of this Agreement. Transferees further acknowledges and agrees that during the period of transition, assistance and consultation as defined herein, Transferees will acquire certain additional proprietary information, methods and trade secrets from Transferee’s interaction with AURUM and their businesses. Similarly, the non-disclosure restrictions and covenants contained in this section shall apply and restrict Transferees from any disclosure of any such information acquired from AURUM for the identical (3) three-year period.
NON-COMPETE/ RESTRICTION ON TRADE
Transferees agree that it owes a reasonable duty to not interfere with AURUM’s success of the on-going concern. The removal of competition from Transferees shall be considered reasonable assistance on the part of Transferees. Specifically, Transferees agrees to not; compete against AURUM, nor engage in, operate, purchase or assist with the operation, production, marketing or sales of any business, company, proprietorship, partnership, personal entity or association whatsoever, that engages AURUM’s business for a period of (3) three years from the date of execution of this Agreement. Transferees agrees that breach of this restriction on trade will immediately cause AURUM direct financial harm and damages and therefore, AURUM shall be entitled to immediate injunctive relief to cease any activities in conflict or competition with Transferees, prior and in addition to monetary damages.
INDEMNIFICATION.
Each Party hereto shall indemnify and hold harmless (such party is hereinafter referred to the “Indemnifying Party”), each other party against any and all losses, costs, expenses, claims, damages or other liabilities, including the amount of any settlement approved by such Indemnifying Party, expenses of enforcing this Agreement, which such other party (the “Indemnified Party”) may suffer, incur or become subject to, and to reimburse the Indemnified Party for any legal, audit or other expenses incurred by it in connection with investigating any claims and defending any actions,, in so far as such losses, costs, expenses, claims, damages, liabilities or actions arise out of or are based upon (i) false, misleading or untrue representations or a breach of any warranty made by the Indemnifying Party herein, or in any exhibit, schedule, written statement, list, certificate, or other instrument attached to this Agreement or delivered to the indemnified party pursuant hereto; or (ii) any breach or default in any performance by the Indemnifying Party of any of its covenants or agreements with the Indemnified Party; or, (iii) in cases where Transferees is the Indemnified Party and Shareholders are the Indemnifying Party, any liability or obligation of them which is not assumed by AURUM at the Closing Date pursuant to the provisions of this Agreement.
An Indemnified Party seeking indemnification hereunder shall promptly notify the Indemnifying Party of the assertion of any claim or the discovery of any facts upon which the Indemnified Party intends to base a claim for indemnification hereunder. With respect to any claim made by a third party against which an Indemnifying Party is seeking indemnification hereunder, the Indemnifying Party shall have the right, at its own expense, to participate in or assume control of the defense of such claim, and the Indemnified Party shall fully cooperate with the Indemnifying Party subject to reimbursement for actual out of pocket expenses incurred as a result of such request by the Indemnifying Party. If the Indemnifying Party either does not elect to assume control or otherwise participate in the defense of any third party claim, the Indemnifying Party shall be bound by the results.
TERMINATION.
This Agreement may be terminated at any time prior to Closing Date by: a) AURUM should Transferees fail to produce evidence of the transfer of Schedule “A” assets to AURUM; b) Transferees, if the Cash Consideration and the Stock Considerations set forth herein have not been satisfied by the Closing Date.
MISCELLANEOUS.
Survival of Representations and Warranties. All representations, warranties, covenants, indemnifications and agreements made by any Party in this Agreement, or in any Exhibit, schedule, certificate, the Documents, document or list delivered by any such Party pursuant hereto shall survive the Closing Date. Notwithstanding any investigation conducted before, on, or after the Closing Date, or the decision of any Party to complete the transactions contemplated by this Agreement, each party hereto shall be entitled to rely upon the representations and warranties of the other Party or Parties.
Best Efforts. The Parties shall use their respective best efforts with respect to matters within their control to cause the transactions contemplated by this Agreement to be consummated.
Further Assurances. Each party hereto shall execute and cause to be delivered to each other party hereto such instruments and other documents, and shall take such other actions, as such other party may reasonably request (prior to, at or after the Closing) for the purposes of carrying out or evidencing any of the transactions contemplated by this Agreement.
Costs and Expenses. Except as expressly otherwise provided in this Agreement, each party hereto shall bear its own costs and expenses in connection with this Agreement and the transaction contemplated hereby.
Performance. Should any party default in the performance of the terms and conditions of this Agreement or any other agreement referred to herein which results in the filing of a lawsuit for damages, specific performance or other remedy, the substantially prevailing party in such lawsuit shall be entitled to recover his, her or its reasonable attorney’s fees and court costs from the losing party or parties, including the same on appeal.
Benefit and Assignment. This Agreement shall be binding upon: Transferees and successors and assigns (if any); the Transferees and their respective personal representatives, executors, administrators, estate, heirs, successors and assigns (if any); and AURUM and its successors and assigns. This Agreement shall inure to the benefit of: Transferees, the Transferees, AURUM and the respective heirs, personal representatives, successors and assigns (if any) of the foregoing.
Effect and Construction of this Agreement. This Agreement and the exhibits and schedules hereto embody the entire Agreement and understanding between the parties and supersedes any and all prior agreements, arrangements, and understandings relating to matters provided for herein, The captions are for convenience only and will not control or affect the meaning or construction of the provisions of the Agreement. This Agreement may be executed in one or more counterparts and all such counterparts shall constitute one and the same instrument. The singular shall include the plural, the plural shall include the singular and one gender shall include all genders. The parties hereto agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction of interpretation of this Agreement. As used in this Agreement, the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation”. Except as otherwise indicated, all referenced in this Agreement to “Sections”, “Paragraphs”, Subparagraphs, “Exhibits”, and “Schedules” are intended to refer to Sections, Paragraphs, Subparagraphs, Exhibits and Schedules to this Agreement. All Schedules and Exhibits are integral parts of this Agreement and are incorporated into this Agreement by reference. Bold Faced headings in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be deemed to be a part of this Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement.
Notices. All notices required of permitted hereunder shall be in writing and shall be deemed to be properly given when (i) personally delivered to the party entitled to receive the notice, or (ii) when sent by certified or registered mail, postage prepaid and properly addressed to the party entitled to receive such notice, or (iii) when delivered (and receipted for) by an overnight delivery service, or (iv) when first sent by facsimile transmission, e-mail, or other means of instantaneous communication, provided such communication is promptly confirmed by personal delivery, mail or an overnight delivery service as provided for herein, addressed in each case as follows:
If to AURUM:
Aurum International LTD
1633 East Fourth Street Suite 148
Santa Ana CA 92701
If to Murphy:
5112 West Taft Road, Suite M,
Liverpool, NY 13088
If to Strickland:
120 State Ave NE, Suite 1014,
Olympia, WA 98501
If to Company:
Amendments, Waiver, Discharge, Etc. This Agreement may not be released, discharged, abandoned, changed or modified in any manner, except by an instrument in writing signed on behalf of each of the Parties hereto by their duly authorized officers or representatives. The failure of any party hereto to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision, not in any way to affect the validity of this Agreement or any part thereof of the right of any Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without reference to that state’s conflict of laws provision. Venue shall be Onondaga County, New York, only.
Time of the Essence. Time is of the essence of this Agreement.
Severability. In the event that provision of this Agreement, or the application of any such provision to any person or set of circumstances, shall be determined to be invalid, unlawful, void or unenforceable to any extent, the remainder of this Agreement, and the application of such provision to persons or circumstances other than those as to which it is determined to be invalid, unlawful, void or unenforceable shall not be impaired or otherwise affected and shall continue to be valid and enforceable to the fullest extent permitted by law.
Effect of Transaction. The parties acknowledge that this Agreement pertains to a sale transaction and nothing herein shall be construed to create any partnership, joint venture, agency or any other type of relationship whatsoever.
[Signature Page to Change of Control Agreement]
IN WITNESS WHEREFORE, each of the parties hereto have duly executed this Agreement as of the day and year below written.
| Date: | ||
| Hallmark Venture Group, Inc. | ||
| John D. Murphy, Jr. | ||
| (individually) | ||
| John D. Murphy, Jr. | ||
| Title:CEO | ||
| Title: | Title:Manager | |
| Date: | Date: | |
| JMJ Associates, LLC | Beartooth Asset Holdings, LLC | |
| John D. Murphy, Jr | Paul Strickland | |
| Title: Manager | Title: Manager | |
| Date: | Date: | |
| Paul Strickland | Aurum International Ltd. | |
| (individually) | ||
| Title: | Title:President | |
| Date: | Date: | |
| Steven Arenal | ||
| (individually) | ||
| Selkirk Global Holdings, LLC | ||
| Paul Strickland | Title: | |
| Date: |
SCHEDULE “A”
Securities Held to be Transferred Pursuant to this Agreement
● 75,000 Series A preferred shares held by JMJ Associates, LLC (controlled by John D. Murphy, Jr.), to be transferred to Aurum International Ltd.. (controlled by Steven Arenal)
● 25,000 Series A preferred shares held by Beartooth Asset Holdings, LLC (controlled by Paul Strickland) to be transferred to Aurum International Ltd. (controlled by Steven Arenal)
● 98,259,679 restricted common shares held by Beartooth Asset Holdings, LLC (controlled by Paul Strickland) to be transferred to Aurum International Ltd. (controlled by Steven Arenal)
SCHEDULE “B”
Debts to Be Canceled:
| ● | Murphy, and Murphy controlled entities, will discharge $74,501.00 in remaining debt balance of one Note. |
| ● | Strickland, and Strickland controlled entities, will discharge $83,342.25 in remaining balance of three separate Notes. |
Attachment A
Escrow Agreement
Attachment B
Anti Dilution Agreement
Attachment C
Debt Cancellation Agreements
Attachment D
Aurum Note
Exhibit 10.02
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THIS NOTE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE NOTE IN THE EVENT OF A PARTIAL REDEMPTION OR CONVERSION. AS A RESULT, FOLLOWING ANY REDEMPTION OR CONVERSION OF ANY PORTION OF THIS NOTE, THE OUTSTANDING PRINCIPAL SUM REPRESENTED BY THIS NOTE MAY BE LESS THAN THE PRINCIPAL SUM AND ACCRUED INTEREST SET FORTH BELOW.
10% CONVERTIBLE PROMISSORY NOTE
OF
Hallmark Venture Group, Inc.
Issuance Date: January 11, 2024
Total Face Value of Note: $77,000.00
Initial Consideration: $70,000.00
Initial Original Issue Discount: $7,000.00 (10%)
Initial Principal Amount: $77,000.00
Maturity Date: January 10, 2025
This Convertible Promissory Note is issued by Hallmark Venture Group, Inc., a corporation duly organized and existing under the laws of the State of Florida, designated as the Company’s 10% Convertible Promissory Note in the principal amount of $77,000.00. This Note will become effective upon its execution by authorized agents of the Company and the Holder and delivery of the Initial Consideration by the Holder to the Company.
Section 1. Definitions. The following terms shall have the meanings ascribed to them below:
| a. | “1933 Act” shall mean the Securities Act of 1933, as amended. | |
| b. | “1934 Act” shall mean the Exchange Act of 1934, as amended. | |
| c. | “Additional Consideration” shall mean additional consideration paid by the Holder to the Company in such amounts and at such date or dates as the Holder may choose at its sole discretion. | |
| d. | “Additional Consideration dates” shall mean such date or dates the Holder provides Additional Consideration to the Company. |
| e. | “Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of New York are authorized or required by law or executive order to remain closed. | |
| f. | “Common Stock” shall mean shares of the Company’s common stock $0.001 per share par value. | |
| g. | “Company” shall mean Hallmark Venture Group, Inc., a corporation duly organized and existing under the laws of the State of Florida. | |
| h. | “Conversion Date” shall mean the date upon which the Holder submits a Conversion Notice to the Company. | |
| i. | “Conversion Notice” shall mean a notice in the form annexed hereto as Exhibit A properly completed and executed by an authorized agent of the Holder. | |
| j. | “Conversion Price” shall be equal to 55% of the average closing price of the Company’s common stock during the 20 consecutive Trading Days prior to the date on which Holder elects to convert all or part of the Note. If the Company is placed on “chilled” status with the DTC, the Conversion Price shall be decreased by 10%, (i.e., from 55% to 45%), until such chill is remedied. If the Company is not DWAC eligible through their Transfer Agent and DTC’s Fast Automated Securities Transfer (FAST) system, the Conversion Price shall be decreased by 5% (i.e., from 55% to 50%). In the case of both occurrences, the Conversion Price adjustment shall be a cumulative (i.e., from 55% to 40%). Any default of this Note not remedied within the applicable cure period will result in a permanent additional 10% decrease to the Conversion Price (i.e., from 55% to 50%), in addition to any other discount, as provided above. | |
| k. | Default Rate shall mean the lesser of (a) 20% per annum and (b) the highest rate permitted by law. | |
| l. | “DTC” shall mean the Depository Trust Corporation. | |
| m. | “DWAC” shall mean Deposits and Withdrawal at Custodian. | |
| n. | “Effective Date” shall mean January 11, 2024. | |
| o. | “Event of Default” shall have the meaning ascribed to it in Section 6(a) below. | |
| p. | “Face Value” shall mean $77,000.00. | |
| q. | “Holder” shall mean Aurum International Ltd., its registered assigns or successors-in-interest. | |
| r. | “Initial Consideration” shall mean $70,000.00. | |
| s. | “Insolvency Event” shall mean if the Company institutes proceedings to be adjudicated as bankrupt or insolvent, consents to the institution of bankruptcy or insolvency proceedings against it, an involuntary bankruptcy petition is filed against the Company which is not dismissed within 30 days, files a petition or answer or consent seeking reorganization or relief under any applicable law in respect of bankruptcy or insolvency, consents to the filing of any petition of that kind or to the appointment of a receiver, liquidator, assignee, trustee, custodian or sequestrator (or other similar official) of it or any substantial part of its property or makes an assignment for the benefit of creditors, or if information becomes publicly available indicating that unsecured claims against the Company are not expected to be paid. |
| 2 |
| t. | “Interest” shall mean interest on the Principal Amount plus all other interest, fees, liquidated damages and/or items due to Holder under this Note at a rate of 10% per annum, compounded monthly. | |
| u. | “Mandatory Default Amount” shall mean 150% of the outstanding Principal Amount of this Note. | |
| v. | “Maturity Date” shall mean January 10, 2025. | |
| w. | “Note” shall mean this 10% Convertible Promissory Note. | |
| x. | “OID” shall mean an original issue discount of 10% of the Principal Amount, to be withheld by the Holder. | |
| y. | “Principal Amount” shall mean the amount of this Note outstanding at any given time. | |
| z. | “Principal Market” shall refer to the primary exchange on which the Company’s common stock is traded or quoted. | |
| aa. | “Required Reserve” shall have the meaning ascribed to it in Section 5 (e) below. | |
| bb. | “Rule 144” shall mean Rule 144 of the Securities Act of 1933, as amended. | |
| cc. | “Transfer Agent” shall mean the Company’s then current transfer agent. | |
| dd. | “Trading Day” shall mean a day on which there is trading or quoting for any security on the Principal Market. | |
| ee. | “SEC” shall mean the United States Securities and Exchange Commission. | |
| ff. | “Securities” shall mean this Note and the Common Shares into which it may be converted from time to time. | |
| gg. | “Underlying Shares” means the shares of common stock into which the Note is convertible (including interest, fees, liquidated damages and/or principal payments in common stock as set forth herein) in accordance with the terms hereof. | |
| hh. | “Use of Proceeds” means the use of the Proceeds set forth on Schedule 1 annexed hereto. |
| 3 |
Section 2. Payment Obligation.
For Value Received, the Company hereby promises to pay to the order of the Holder, the Principal Amount, Interest and all other interest, fees, liquidated damages and/or items due to Holder under this Note on the Maturity Date.
Section 3. Consideration.
| a. | Upon the execution of this Note, the Holder shall remit to the company the Initial Consideration and shall retain the OID for due diligence, legal fees and other fees and expenses incurred relating to this transaction. | |
| b. | The Company may only utilize the Initial Consideration in the manner set forth as the Use of Proceeds on Schedule 1, annexed hereto and shall promptly provide evidence thereof to Holder of such use in sufficient detail as reasonably requested by Holder. | |
| c. | The Holder may pay additional consideration to the Company in such amounts and at such dates as Holder may choose in its sole discretion. The Principal Amount shall be calculated based on the total Consideration paid by Holder plus OID and Interest, both which are prorated based on the Consideration paid, and all other interest or fees set forth in this Note. The Company shall not be required to repay any portion of the Note’s Face Value that has not been funded. |
Section 4. Prepayment
| a. | This Note may be prepaid by the Company, in whole or in part, according to the following schedule: |
| Days Since Effective Date | Prepayment Amount | |
| Under 90 | 100% of Principal Amount | |
| 91-180 | 150% of Principal Amount |
| b. | After 180 days from the Effective Date this Note may not be prepaid without written consent from Holder, which consent may be withheld, delayed or denied in Holder’s sole and absolute discretion. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day. |
| 4 |
Section 5. Conversion.
| a. | Conversion Right. Subject to the terms hereof and restrictions and limitations contained herein, the Holder shall have the right, at the Holder’s sole option, at any time and from time to time to convert in whole or in part the outstanding and unpaid Principal Amount under this Note into shares of Common Stock as per the Conversion Price, but not to exceed the conversion limitation set forth in Section 5(f) below. | |
| b. | Stock Certificates or DWAC. Upon the Holder submitting a Conversion Notice to the Company, the Company shall deliver to the Holder or Holder’s authorized designee, no later than 2 Trading Days after the Conversion Date, a certificate or certificates (which certificate(s) shall be free of restrictive legends and trading restrictions if the shares of Common Stock underlying the portion of the Note being converted are eligible under a resale exemption pursuant to Rule 144(b)(1)(ii) and Rule 144(d)(1)(ii) of the 1933 Act) representing the number of shares of Common Stock being acquired upon the conversion of this Note. In lieu of delivering physical certificates representing the shares of Common Stock issuable upon conversion of this Note, provided the Company’s transfer agent is participating in DTC’s FAST program, the Company shall instead use commercially reasonable efforts to cause its transfer agent to electronically transmit such shares issuable upon conversion to the Holder (or its designee), by crediting the account of the Holder’s (or such designee’s) broker with DTC through its DWAC program (provided that the same time periods herein as for stock certificates shall apply). | |
| c. | Charges and Expenses. Issuance of Common Stock to Holder, or any of its assignees, upon the conversion of this Note shall be made without charge by the Company to the Holder for any issuance fee, postage/mailing charge or any other expense with respect to the issuance of such Common Stock. Holder shall pay all Transfer Agent fees incurred from the issuance of the Common Stock to Holder, as well as any and all other fees and charges required by the Transfer Agent as a condition to effectuate such issuance. | |
| d. | Delivery Timeline. Provided the Holder submits Conversion Notice to the Company, if the Company fails to deliver to the Holder such certificate or certificates (or shares through the DWAC program) pursuant to this Section (free of any restrictions on transfer or legends, if eligible) prior to 3 Trading Days after the Conversion Date, the Company shall pay to the Holder as liquidated damages an amount equal to $2,000 per day, until such certificate or certificates are delivered. The Company acknowledges that it would be extremely difficult or impracticable to determine the Holder’s actual damages and costs resulting from a failure to deliver the Common Stock and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs. Such liquidated damages will be automatically added to the Principal Amount of the Note and tack back to the Effective Date for purposes of Rule 144. | |
| e. | Reservation of Underlying Securities. The Company covenants that it will at all times reserve and keep available for Holder, out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, five times the number of shares of Common Stock as shall be issuable (taking into account the adjustments under this Section 5, but without regard to any ownership limitations contained herein) upon the conversion of this Note (consisting of the Principal Amount) to Common Stock (the “Required Reserve”). The Company covenants that all shares of Common Stock that shall be issuable will, upon issue, be duly authorized, validly issued, fully-paid, non-assessable and freely-tradable (if eligible). If the amount of shares on reserve in Holder’s name at the Company’s transfer agent for this Note shall drop below the Required Reserve, the Company will, within 2 Trading Days of notification from Holder, instruct the transfer agent to increase the number of shares so that the Required Reserve is met. In the event that the Company does not instruct the transfer agent to increase the number of shares so that the Required Reserve is met, the Holder will be allowed, if applicable, to provide this instruction as per the terms of the Irrevocable Transfer Agent Instructions attached to this Note. |
| 5 |
| f. | Conversion Limitation. In the event the Holder submits a Conversion Notice to the Company that would, upon issuance of the requested shares, result in the Holder beneficially owning more than 9.99% of the then total outstanding shares of the Company, such Conversion Notice shall automatically be amended to reduce the number of requested shares such that that the issuance of amount of shares that would not result in the Holder beneficially owning more than 9.99% of the then total outstanding shares of the Company. | |
| g. | Conversion Delays. If the Company fails to deliver shares in accordance with the timeframe stated in Section 5(d) above, in addition to all other remedies available to the Holder, at any time prior to selling all of those shares, may rescind any portion of the particular conversion attributable to the unsold shares. The rescinded conversion amount will be returned to the Principal Sum with the rescinded conversion shares returned to the Company, under the expectation that any returned conversion amounts will tack back to the Effective Date. | |
| h. | Shorting and Hedging. Holder may not engage in any “shorting” or “hedging” transaction(s) in the Common Stock prior to conversion. | |
| i. | Conversion Right Unconditional. Upon the Holder providing the Company with a Conversion Notice, the Company’s obligations to deliver Common Stock as set forth in the Conversion Notice shall be absolute and unconditional, irrespective of any claim of setoff, counterclaim, recoupment, or alleged breach the Company may hold against the Holder. |
Section 6. Defaults and Remedies.
| a. | Events of Default. Each of the following shall, separately constitute an event of default (an “Event of Default”): |
| i. | a default in payment of any amount due hereunder which default continues for more than 5 Trading Days after the due date; | |
| ii. | a default in the timely issuance of underlying shares upon and in accordance with terms of Section 5 above, which default continues for 2 Trading Days after the Company has failed to issue shares or deliver stock certificates within the 3rd Trading Day following the Conversion Date; | |
| iii. | failure by the Company for 3 Trading Days after notice has been received by the Company to comply with any material provision of this Note; | |
| iv. | failure of the Company to remain compliant with DTC, thus incurring a “chilled” status with DTC; |
| 6 |
| v. | any default of any mortgage, indenture or instrument which may be issued, or by which there may be secured or evidenced any indebtedness, for money borrowed by the Company or for money borrowed the repayment of which is guaranteed by the Company, whether such indebtedness or guarantee now exists or shall be created hereafter; | |
| vi. | if the Company is subject to any Insolvency Event; | |
| vii. | any failure of the Company to satisfy its “filing” obligations under the 1934 Act and the rules and guidelines issued by the Company’s Principal Market; | |
| viii. | failure of the Company to remain in good standing with its state of domicile; | |
| ix. | any failure of the Company to provide the Holder with information related to its corporate structure including, but not limited to, the number of authorized and outstanding shares, public float, etc. within 1 Trading Day of request by Holder; | |
| x. | failure by the Company to maintain the Required Reserve; | |
| xi. | failure of Company’s Common Stock to maintain a closing bid price in its Principal Market for more than 3 consecutive Trading Days; | |
| xii. | any delisting from a Principal Market for any reason; | |
| xiii. | failure by Company to pay any of its Transfer Agent fees in excess of $2,000 or to maintain a Transfer Agent of record; | |
| xiv. | failure by Company to notify Holder of a change in Transfer Agent within 24 hours of such change; | |
| xv. | failure by the Company to provide the Holder with piggyback registration rights as set forth in Section 8.d below; | |
| xvi. | any trading suspension imposed by the SEC under Sections 12(j) or 12(k) of the 1934 Act; | |
| xvii. | failure by the Company to meet all requirements necessary to satisfy the availability of Rule 144 to the Holder or its assigns, including but not limited to the timely fulfillment of the current disclosure of the SEC and its Primary Market; | |
| xviii. | failure of the Company to abide by the Use of Proceeds or failure of the Company to inform the Holder of a change in the Use of Proceeds; or | |
| xix. | failure of the Company to abide by the terms of the right of first refusal as set forth in Section 8(e) below. |
| 7 |
| b. | Remedies. |
| i. | Upon the 5th Trading Day following the occurrence of any Event of Default, the outstanding Principal Amount of this Note owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount and tack back to the Effective Date for purposes of Rule 144. | |
| ii. | Upon the 5th Trading Day following the occurrence of any Event of Default that results in the eventual acceleration of this Note, the Principal Amount of this Note then due (including the Mandatory Default Amount) shall accrue interest at the Default Interest Rate. | |
| iii. | Upon the 5th Trading Day following the occurrence of any Event of Default that results in the eventual acceleration of this Note, an additional permanent 10% decrease to the Conversion Price set forth in Section 1.g above shall go into effect. |
| c. | In connection with all remedies described herein, the Holder need not provide, and the Issuer hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by the Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment of all amounts due under this Note. No such rescission or annulment shall affect any subsequent event of default or impair any right consequent thereon. Nothing herein shall limit the Holder’s right to pursue any other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Issuer’s failure to timely deliver certificates representing shares of Common Stock upon conversion of the Note as required pursuant to the terms hereof. |
Section 7. Representations and Warranties of Holder. Holder hereby represents and warrants to the Company that:
| a. | Holder is an “accredited investor,” as such term is defined in Regulation D of the 1933 Act and will acquire the Securities for its own account and not with a view to a sale or distribution thereof as that term is used in Section 2(a)(11) of the 1933 Act, in a manner which would require registration under the 1933 Act or any state securities laws. Holder has such knowledge and experience in financial and business matters that such Holder is capable of evaluating the merits and risks of the Securities. Holder can bear the economic risk of the Securities, has knowledge and experience in financial business matters and is capable of bearing and managing the risk of investment in the Securities. Holder recognizes that the Securities have not been registered under the 1933 Act, nor under the securities laws of any state and, therefore, cannot be resold unless the resale of the Securities is registered under the 1933 Act or unless an exemption from registration is available. Holder has carefully considered and has, to the extent Holder believes such discussion necessary, discussed with its professional, legal, tax and financial advisors, the suitability of an investment in the Securities for its particular tax and financial situation and its advisers, if such advisors were deemed necessary, and has determined that the Securities are a suitable investment for it. Holder has not been offered the Securities by any form of general solicitation or advertising, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or other similar media or television or radio broadcast or any seminar or meeting where, to Holders’ knowledge, those individuals that have attended have been invited by any such or similar means of general solicitation or advertising. Holder has had an opportunity to ask questions of and receive satisfactory answers from the Company, or any person or persons acting on behalf of the Company, concerning the terms and conditions of the Securities and the Company, and all such questions have been answered to the full satisfaction of Holder. The Company has not supplied Holder any information regarding the Securities or an investment in the Securities other than as contained in this Agreement, and Holder is relying on its own investigation and evaluation of the Company and the Securities and not on any other information. |
| 8 |
| b. | The Holder is duly organized, validly existing and in good standing under the laws of the state of its formation or incorporation and has all requisite corporate power and authority to carry on its business as now conducted. The Holder is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties. | |
| c. | All corporate action has been taken on the part of the Holder, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Note. The Holder has taken all corporate action required to make all of the obligations of the Holder reflected in the provisions of this Note, valid and enforceable obligations. | |
| d. | The Holder acknowledges that each certificate or instrument representing Securities will be endorsed with the following legend (or a substantially similar legend), unless or until registered under the 1933 Act or exempt from registration: |
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES WHICH IS REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
Section 8. General.
| a. | Payment of Expenses. The Company agrees to pay all reasonable charges and expenses, including attorneys’ fees and expenses, which may be incurred by the Holder in successfully enforcing this Note and/or collecting any amount due under this Note. |
| 9 |
| b. | Assignment, Etc. The Holder may assign or transfer this Note and any Common Shares into which it may be converted from time to time, to any transferee at its sole discretion. This Note shall be binding upon the Company and its successors and shall inure to the benefit of the Holder and its successors and permitted assigns. | |
| c. | Amendments. This Note may not be modified or amended, or any of the provisions of this Note waived, except by written agreement of the Company and the Holder. | |
| d. | Piggyback Registration Rights. The Company shall include on the next registration statement that the Company files with the SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of this Note. | |
| e. | Terms of Future Financings. So long as this Note is outstanding, upon any issuance by the Company or any of its subsidiaries of any convertible debt security (whether such debt begins with a convertible feature or such feature is added at a later date) with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the Holder in this Note, then the Company shall notify the Holder of such additional or more favorable term and such term, at the Holder’s option, shall become a part of this Note and its supporting documentation. The types of terms contained in the other security that may be more favorable to the holder of such security include, but are not limited to, terms addressing conversion discounts, conversion look back periods, interest rates, original issue discount percentages and warrant coverage. | |
| f. | Governing Law; Jurisdiction. |
| i. | Governing Law. This Note will be governed by, and construed and interpreted in accordance with, the laws of the state of New York without regard to any conflicts of laws or provisions thereof that would otherwise require the application of the law of any other jurisdiction. | |
| ii. | Jurisdiction and Venue. Any dispute, claim, suit, action or other legal proceeding arising out of or relating to this Note or the rights and obligations of each of the parties shall be brought only in the state and federal courts located in New York County, New York. |
| g. | No Jury Trial. The Company hereto knowingly and voluntarily waives any and all rights it may have to a trial by jury with respect to any litigation based on, or arising out of, under, or in connection with, this Note. | |
| h. | Delivery of Process by the Holder to the Company. In the event of an action or proceeding by the Holder against the Company, and only by the Holder against the Company, service of copies of summons and/or complaint and/or any other process that may be served in any such action or proceeding may be made by the Holder via U.S. Mail, overnight delivery service such as FedEx or UPS, email, fax, or process server, or by mailing or otherwise delivering a copy of such process to the Company at its last known attorney as set forth in its most recent SEC filing. |
| 10 |
| i. | Notices. Any notice required or permitted hereunder (including Conversion Notices) must be in writing and either personally served, sent by facsimile or email transmission, or sent by overnight courier. Notices will be deemed effectively delivered at the time of transmission if by facsimile or email, and if by overnight courier the business day after such notice is deposited with the courier service for delivery. | |
| j. | No Bad Actor. No officer or director of the Company would be disqualified under Rule 506(d) of the Securities Act of 1933, as amended, on the basis of being a “bad actor” as that term is established in the September 13, 2013 Small Entity Compliance Guide published by the SEC. | |
| k. | Usury. If it shall be found that any interest or other amount deemed interest due hereunder violates any applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it will not seek to claim or take advantage of any law that would prohibit or forgive the Company from paying all or a portion of the principal, fees, liquidated damages or interest on | |
| l. | Right of First Refusal. From and after the date of this Note and at all times hereafter while the Note is outstanding, the Parties agree that, in the event that the Company receives any written or oral proposal (the “Proposal”) containing one or more offers to provide additional capital or equity or debt financing (the “Financing Amount”), the Company agrees that it shall provide a copy of all documents received relating to the Proposal together with a complete and accurate description of the Proposal to the Holder and all amendments, revisions, and supplements thereto (the “Proposal Documents”) no later than 3 business days from the receipt of the Proposal Documents. Following receipt of the Proposal Documents from the Company, the Holder shall have the right (the “Right of First Refusal”), but not the obligation, for a period of 5 business days thereafter (the “Exercise Period”), to invest, at similar or better terms to the Company, an amount equal to or greater than the Financing Amount, upon written notice to the Company that the Holder is exercising the Right of First Refusal provided hereby. In furtherance of the Right of First Refusal, the Company agrees that it will cooperate and assist the Holder in conducting a due diligence investigation of the Company and its corporate and financial affairs and promptly provide the Holder with information and documents that the Holder may reasonably request so as to allow the Holder to make an informed investment decision. However, the Company and the Holder agree that the Holder shall have no more than 5 business days from and after the expiration of the Exercise Period to exercise its Right of First Refusal hereunder. This Right of First Refusal shall extend to all purchases of debt held by, or assigned to or from, current stockholders, vendors, or creditors, all transactions under Sections 3(a)9 and/or 3(a)10 or the Securities Act of 1933, as amended, and all equity line-of-credit transactions. |
[Signature Page to Follow.]
| 11 |
IN WITNESS WHEREOF, the Company has caused this 10% Convertible Promissory Note to be duly executed on the day and in the year first above written.
| Hallmark Venture Group, Inc. | ||
| By: | ||
| Name: | ||
| Title: | ||
| Email: | ||
| Address: | ||
This 10% Convertible Promissory Note of January 11, 2024, is accepted as of the date first written above by
Aurum International Ltd.
| By: | ||
| Steven Arenal | ||
| PRESIDENT |
| 12 |
EXHIBIT A
FORM OF CONVERSION NOTICE
To be executed by the Holder in order to convert all or part of that certain 10% Convertible Promissory Note identified as the Note1
| DATE: | ||
| FROM: | Aurum International Ltd. [or current Holder] (the “Holder”) | |
| Re: | 10% Convertible Promissory Note (this “Note”) originally issued by Hallmark Venture Group, Inc. to Aurum International Ltd. on January 11, 2024 |
The undersigned on behalf of the Holder, hereby elects to convert $_______________________ of the aggregate outstanding Principal Amount indicated below of this Note into shares of Common Stock as of the date written below. If shares are to be issued in the name of a person other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the Holder for any conversion, except for such transfer taxes, if any. The undersigned represents as of the date hereof that, after giving effect to the conversion of this Note pursuant to this Conversion Notice, the Holder will not beneficially own more than 9.99% of the total outstanding shares of the Company.
| Date to Effect Conversion: | |||
| Aggregate Principal Amount of Note Being Converted: | |||
| Aggregate Interest/Fees Being Converted: | |||
| Remaining Principal Balance: | |||
| Number of Shares of Common Stock to be Issued: | |||
| Applicable Conversion Price: |
| [Holder Company Name] | |||
| By: | |||
| Name: | |||
| Title: | |||
1 All capitalized terms not herein defined shall have the meaning ascribed to them in the Note.
EXHIBIT B
WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF
Hallmark Venture Group, Inc.
The undersigned, being directors of Hallmark Venture Group, Inc., a Florida corporation (the “Company”), acting pursuant to the Bylaws of the Corporation, do hereby consent to, approve and adopt the following preamble and resolutions:
Convertible Note with Aurum International Ltd.
The board of directors of the Company has reviewed and authorized the following documents relating to the issuance of the 10% Convertible Promissory Note to Aurum International Ltd.
The documents agreed to and dated January 11, 2024 are as follows:
10% Convertible Promissory Note of the Company
Notarized Certificate of Corporate Secretary
Company Capitalization Table
Schedule 1 – Use of Proceeds
The board of directors further agree to authorize and approve the issuance of shares to the Holder at Conversion prices that are below the Company’s then current par value.
IN WITNESS WHEREOF, the undersign member(s) of the board of the Company executed this unanimous written consent as of January 11, 2024.
| By: | ||
| Its: | Director | |
EXHIBIT C
NOTARIZED CERTIFICATE OF CORPORATE SECRETARY OF
Hallmark Venture Group, Inc.
(Two Pages)
The undersigned, _______________ am the duly appointed Corporate Secretary of Hallmark Venture Group, Inc., a Florida corporation (the “Company”).
I hereby warrant and represent that I have undertaken a complete and thorough review of the Company’s corporate and financial books and records, including, but not limited to, the Company’s records relating to the following:
| (A) | The issuance of that certain 10% Convertible Promissory Note dated January 11, 2024 (the “Note Issuance Date”) issued to Aurum International Ltd. (with any assignees or successors in interest, the “Holder”) in the stated original principal amount of $77,000.00 (the “Note”); | |
| (B) | The Company’s Board of Directors duly approved the issuance of the Note to the Holder; | |
| (C) | The Company has not received and does not contemplate receiving any new consideration from any persons in connection with any later conversion of the Note and the issuance of the Company’s Common Stock upon any said conversion; | |
| (D) | (E) Mark the appropriate selection: |
___ The Company represents that it is not a “shell company,” as that term is defined in Section 12b-2 of the Securities Exchange Act of 1934, as amended, and has never been a shell company, as so defined; or
___ The Company represents that (i) it was a “shell company,” as that term is defined in Section 12b-2 of the Securities Exchange Act of 1934, as amended, (ii) since ______, 20__, it has no longer been a shell company, as so defined, and (iii) on March 18, 2023, it provided Form 10-type information in a filing with the Securities and Exchange Commission.
| (F) | I understand the constraints imposed under Rule 144 on those persons who are or may be deemed to be “affiliates,” as that term is defined in Rule 144(a)(1) of the Securities Act of 1933, as amended. | |
| (G) | I understand that all of the representations set forth in this Certificate will be relied upon by counsel to the Holder in connection with the preparation of a legal opinion. |
I hereby affix my signature to this Notarized Certificate and hereby confirm the accuracy of the statements made herein.
| Signed: | Date: | |||
| Name: | , Corporate Secretary |
SUBSCRIBED AND SWORN TO BEFORE ME ON THIS ________ DAY OF ____________________ 2024.
| Notary Public |
| 2 |
EXHIBIT D
COMPANY CAPITALIZATION TABLE AS OF March 31, 2023
COMMON STOCK AND COMMON STOCK EQUIVALENTS
ISSUED, OUTSTANDING AND RESERVED
| DESCRIPTION | AMOUNT | |
| Authorized Common Stock | ||
| Authorized Capital Stock | ||
| Authorized Common Stock | ||
| Issued Common Stock | ||
| Outstanding Common Stock | ||
| Treasury Stock | ||
| *Authorized, but unissued | ||
| Authorized Preferred Stock | ||
| Issued Preferred Stock | ||
| Reserved for Equity Incentive Plans | ||
| Reserved for Convertible Debt | ||
| Reserved for Options and Warrants | ||
| Reserved for Other Purposes | ||
TOTAL COMMON STOCK AND COMMON STOCK EQUIVALENTS OUTSTANDING |
* This number includes all shares reserved for Convertible Debt
Note: If not applicable, enter “n/a” or “zero” in Column 2.
SCHEDULE 1
USE OF PROCEEDS
Pursuant to that certain 10% Convertible Promissory Note, the Company covenants that it has, as of the Effective Date of the Note, used the proceeds of the Note in the manner set forth below:
| 1. | ||
| 2. | ||
| 3. |
Hallmark Venture Group, Inc.
| By: | ||
| Dated: | January 11, 2024 |
| Subsequent Note Fundings: |
Exhibit 10.03
ANTI-DILUTION AGREEMENT
THIS ANTI-DILUTION AGREEMENT (the “Agreement”) is dated as of January 11,2024 and is by and among HALLMARK VENTURE GROUP, Inc., a Florida corporation (the “Company” or “HLLK”) and _________, a __________ (“HOLDER”), and Aurum International Ltd. (“AIL”), each a Party and collectively the Parties.
WHEREAS, Pursuant to the terms and conditions of that certain Change of Control Agreement (Exhibit A herein) by and between the Company, HOLDER, and AIL, AIL intends to take control of HLLK and restructure the Company;
WHEREAS, as a result of AIL’s intended restructuring, the capitalization structure of the Company will be materially changed, and AIL shall then cause to issue to HOLDER 5% of the issued and outstanding common shares of the Company after the restructuring is completed (the “Stock Consideration” as defined by the Change of Control Agreement);
NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:
SECTION 1. Additional Issuances.
(a) At any time after the date date of this Agreement, and running for a period of 18 months (“Term”), if the Company shall issue or propose to issue any additional shares of the Company’s common stock, par value, $0.001 per share (“Common Stock”), or warrants, options (excluding any options granted to employees of the Company in accordance with any employee plans, now or hereinafter in effect) or other rights or instruments of any kind convertible into or exercisable or exchangeable for shares of Common Stock (the “Additional Securities”), HOLDER shall be issued that number of Additional Securities necessary to maintain a Fully-Diluted Ownership Percentage (as defined herein below) in the Company equal to the lesser of: (i) 5% Fully-Diluted Ownership Percentage of the Company (as defined below), and (ii) of 5% of the Company’s issued and outstanding Common Stock. Any issuance of Additional Securities made to HOLDER under this Section 1 shall be made by notice in writing (the “Issuance Notice”) at least 20 Business Days prior to the issuance of such Additional Securities. The Issuance Notice shall set forth (i) the number of Additional Securities proposed to be issued to any Person other than HOLDER and the terms of such Additional Securities, (ii) the consideration (or manner of determining the consideration), if any, for which such Additional Securities are proposed to be issued and the terms of payment, (iii) the number of Additional Securities to be issued to HOLDER in compliance with the provisions of this Section 1 and (iv) the proposed date of issuance of such Additional Securities. Not later than 5 Business Days after delivery of a Issuance Notice in accordance with the notice provisions hereof, HOLDER shall deliver a notification to the Company in writing whether it elects to accept all or any portion of the Additional Securities to be issued to HOLDER, pursuant to the Issuance Notice; provided however, that the failure of HOLDER to respond in writing within 5 Business Days shall be deemed a waiver and negative election by HOLDER to receive any of the Additional Securities offered by such Issuance Notice. If HOLDER elects to receive any such Additional Securities, the Additional Securities that it shall have elected to be issued shall be issued to HOLDER by the Company at the same time and on the same terms and conditions as the Additional Securities that are issued and sold to third parties. If, for any reason, the issuance of Additional Securities to third parties is not consummated, HOLDER’s right to its share of such issuance shall lapse, subject to HOLDER’s ongoing issuance rights with respect to issuances of Additional Securities at later dates or times.
(b) The Company represents and covenants to HOLDER that (i) upon issuance, all the shares of Additional Securities issued to HOLDER pursuant to this Section 1 shall be duly authorized, validly issued, fully paid and nonassessable and will be approved (if outstanding securities of the Company of the same type are at the time already approved) for quotation or listing on the principal trading market for the securities of the Company at the time of issuance, (ii) upon delivery of such shares, they shall be free and clear of all liens, claims and encumbrances (other than any restrictions imposed by applicable federal and state securities laws of any nature and shall not be subject to any preemptive right of any stockholder of the Company and (iii) this Section 1 does not and upon the issuance of such Additional Securities will not (a) violate or conflict with any provision of the Certificate of Incorporation or Bylaws of HLLK, each as amended then to date (b) conflict with or constitute a violation by HLLK of any applicable law (including the Florida Business Corporation Act), judgment, order, injunction, decree, rule, regulation or ruling of any governmental authority applicable to HLLK the enforcement of which would have a material adverse effect on HLLK or on HLLK’s ability to perform its obligations hereunder or the ability of HLLK to consummate issuance of the Additional Securities and (c) either alone or with the giving of notice or the passage of time, or both, modify, violate, conflict with, constitute grounds for termination of, or accelerate the performance required by, or result in a breach or default of the terms, conditions or provisions of, or constitute a default under any contract, agreement, note bond, mortgage, indenture, deed of trust, license, franchise, permit, commitment, waiver, exemption, order, obligation, lease, sublease, undertaking, agreement, offer or other instrument, which violation, conflict, termination, acceleration, breach or default would have a material adverse effect on HLLK or on the ability of HLLK to perform its obligations hereunder or the ability of HLLK to issue such shares.
(c) As used herein, the term “Business Day” shall mean any day other than a Saturday, Sunday, U.S. national legal holiday, or a legal holiday under the laws of the State of New York, and the term “Person” shall mean an individual, corporation, partnership, joint venture, joint stock company, association, trust, business trust, unincorporated organization, government authority, or any other entity of whatever nature. As used herein, the term “Fully-Diluted Ownership Percentage” shall mean the percentage ownership calculated by dividing (i) the aggregate number of shares of Common Stock (including any shares of Common Stock issuable upon exercise or conversion of options, warrants or other securities or rights) beneficially owned (as such term is determined in accordance with the Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) by the applicable Person or Persons, howsoever and whenever acquired, by (ii) the aggregate number of all issued and outstanding shares of Common Stock of the Company (including any shares of Common Stock which are issuable upon exercise or conversion of options, warrants or other securities or rights within 60 days of the date on which such calculation is being made).
(d) as used herein, the term “restructuring” and “restructure” shall mean any of the following, including, but not limited to; merger, acquisition, recapitalization, private offering, public offering, private placement, reverse split, forward split.
(e) If the Company, at any time while this Agreement is in force and effect, by reclassification of securities or otherwise (including, but not limited to, a “reincorporation,” merger with or into a wholly owned subsidiary of the Company, an exchange or stock swap or another type of reorganization or recapitalization), shall change or exchange its Common Stock into (or for) different securities of another class or classes or ceases to have common stock, then HOLDER’s rights hereunder shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities that were subject to the Agreement immediately prior to such reclassification or other change. All such adjustments shall be made so as to equitably adjust HOLDER’s rights hereunder.
SECTION 2. Further Assurances. Each of the parties hereto agrees that, at any time and from time to time after the date hereof, it shall, upon written request from the other party hereto, and without further consideration, perform such other and further acts, and execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such further instruments, documents and assurances as such other party reasonably may request for the purpose of carrying out this Agreement.
SECTION 3. Binding Agreement; Assignment. This Agreement is binding upon, will inure to the benefit of, and be enforceable by, the parties hereto and their respective heirs, successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties hereto, without the prior written consent of the other party hereto.
SECTION 4. Entire Agreement; No Third-Party Beneficiaries. This Agreement constitutes the entire agreement and understanding of the parties hereto with respect to the subject matters hereof and thereof and supersedes any and all prior negotiations, agreements, arrangements and understandings between the parties, written or oral, relating to the matters provided for herein or therein. Except as expressly provided in this Agreement, nothing contained in this Agreement, express or implied, is intended to or shall confer on any Person other than the parties hereto and their heirs, successors and permitted assigns, any rights, benefits, remedies or claims under or by reason of this Agreement.
SECTION 5. Amendment; Modification. This Agreement may not be amended or modified except by an instrument in writing signed by a duly authorized officer of each of the Company and HOLDER.
SECTION 6. Extensions; Waivers; Remedies Cumulative.
(a) The conditions to each of the parties’ obligations to consummate this Agreement are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable law. With regard to this Agreement, any party may (i) extend the time for the performance of any of the obligations or other acts of any other party with such first party, or (ii) waive compliance with any of the agreements of any party with such first party or with any conditions to its own obligations. Any agreement on the part of a party hereto to any such extension or waiver of any provision of this Agreement shall be valid and effective only if set forth in an instrument in writing signed on behalf of such party against whom enforcement of any waiver or consent is sought by such first party or a duly authorized officer thereof, if applicable.
(b) No failure or delay on the part of any party in exercising any right, privilege, power, or remedy under this Agreement, and no course of dealing among the parties, shall operate as a waiver of such right, privilege, power, or remedy, nor shall any single or partial exercise of any right, privilege, power, or remedy under this Agreement preclude any other or further exercise of such right, privilege, power, or remedy, or the exercise of any other right, privilege, power, or remedy. No notice to or demand on any party in any case shall entitle such party to any other or further notice or demand in any similar or other circumstances or constitute a waiver of the right of the party giving such notice or making such demand to take any other or further action in any circumstances without notice or demand.
SECTION 7. Section Headings; Interpretation. Reference in this Agreement to a Section unless otherwise indicated, shall constitute references to a Section or an Article of this Agreement. The section headings contained in this Agreement are for convenience of reference only and do not form a part thereof and shall not affect in any way the meaning or interpretation of this Agreement. The parties hereto agree that this Agreement is the product of negotiations among sophisticated parties, all of whom were represented by counsel, and each of whom had an opportunity to participate in, and did participate in the drafting of each provision hereto. Accordingly, ambiguities in this Agreement, if any, shall not be construed strictly against any party hereto but rather shall be given a fair and reasonable construction without regard to the rule of contra proferentem.
SECTION 8. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to agreements made and to be performed entirely within the State of New York without giving effect to the laws that might otherwise govern under applicable principles of conflict of laws thereof.
SECTION 9. Notices. Any notice, demand, claim, request, waiver or consent or other communication required or permitted to be given under the provisions of this Agreement shall be in writing and shall be deemed to have been duly delivered if delivered by any of the following means of delivery, and shall be deemed to have been duly delivered and received on the date (or the next Business Day if delivery is not made on a Business Day) of personal delivery or facsimile transmission or on the date (or the next Business Day if delivery is not made on a Business Day) of receipt, if mailed by registered or certified mail, postage prepaid and return receipt requested, or on the date (or the next Business Day if delivery is not made on a Business Day) of a stamped receipt, if sent by an overnight delivery service, and sent to the following addresses (or to such other address as any party may request, in the case of the Company, by notifying HOLDER, and in the case of HOLDER, by notifying the Company in each case in accordance with this Section):
| (a) | If to the Company: Hallmark Venture Group, Inc. 626 Wilshire Blvd., Suite 410, Los Angeles, California 90017 |
| with a copy to: |
| Legal |
| (b) | If to HOLDER: |
SECTION 10. Consent to Jurisdiction. Each of the parties agrees to submit itself to the jurisdiction of any state or federal court sitting in the State of New York. In addition, each of the parties hereto agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than such court.
SECTION 11. Severability. The parties agree that (i) the provisions of this Agreement shall be severable in the event that any of the provisions hereof are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, (ii) they shall negotiate in good faith to replace any provisions that are finally determined to be invalid, void or otherwise unenforceable with other provisions that are as similar as possible in terms to such invalid, void or otherwise unenforceable provisions but are valid and enforceable, and (iii) the balance of this Agreement shall not be affected and shall remain enforceable to the fullest extent permitted by law. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be valid and shall be enforced to the fullest extent permitted by law.
SECTION 12. Counterparts. This Agreement may be executed in one or more counterparts, each of which when executed and delivered shall be deemed an original, and all of which when taken together shall be considered one and the same instrument, and this Agreement shall become effective when such counterparts have been signed by each of the parties hereto and delivered to the other parties. The parties hereto agree that signatures of the parties and their duly authorized officers may be exchanged by facsimile transmission, and that such signatures shall be binding to the same extent, and have the same force and effect, as the exchange of original written signatures. The originals of such signatures shall be sent to the other parties hereto by overnight courier.
(Signature Page Follows)
[Remainder of this page intentionally left blank]
This Agreement has been duly executed by an authorized officer by each of the following parties as of the date first set forth above.
| Sincerely, | ||
HALLMARK VENTURE GROUP, INC. BOARD OF DIRECTORS |
||
| BY: | ||
| Name: | ||
| Title: | ||
Accepted and agreed to
this 11 day of January 2024
| By: | ||
| Name: | ||
| Title: |
| Aurum International Ltd. | ||
| By: | ||
| Name: | Steven Arenal | |
| Title: | President | |
Exhibit A: Change of Control Agreement
Exhibit 10.04
FORM OF DEBT CANCELLATION AGREEMENT
Debt Cancellation Agreement
Hallmark Venture Group, Inc.
5112 West Taft Road, Suite M,
Liverpool, NY 13088
Telephone: 877-646-4833
Email:
Re: Debt Cancellation Agreement (this “Letter”).
Reference is made to that certain 10% Convertible Promissory Note Issued by the Company on ________ (the “NOTE”) by and among Hallmark Venture Group, Inc., a Florida corporation, whose principal executive offices are located at 5112 West Taft Road, Suite M, Liverpool, NY 13088 (the “Company”), and _____________ (the “Creditor”). As of the date last written below, the remaining NOTE balance is _________ (“Remaining Note Balance”).
The undersigned Creditor and the Company hereby agree as follows:
| 1. | As of the date last written below, the Creditor shall consider the NOTE paid in full and forego payment of the Remaining Note Balance. | |
| 2. | No payments pursuant to the NOTE shall be due by Company to Creditor. | |
| 3. | If the Company fails to deliver the “Stock Consideration” as defined by the Change of Control Agreement, this Agreement shall be deemed NULL & VOID. | |
| 4. | Release. The undersigned, jointly and severally, for themselves and each of their present and former, direct and/or indirect, parents, subsidiaries, Affilates, attorneys, agents, representatives, employees, consultants, brokers, officers, directors, equity and/or debt holders, managers, members, successors, predecessors, heirs and assigns (collectively the “Releasors”), hereby expressly and irrevocably release, waive and forever discharge and hold harmless each of the Company, the Creditor, each of the undersigned and each of all of their respective present and former, direct and/or indirect, parents, subsidiaries, affiliates, attorneys, agents, representatives, employees, consultants, brokers, officers, directors, equity and/or debt holders, managers, members, successors, predecessors, and assigns (collectively, the “Released Parties”) from any and all actions, causes of action, suits, losses, liabilities, rights, debts, dues, sums of money, accounts, reckonings, obligations, costs, expenses, liens, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, and demands, of every kind and nature whatsoever, whether now known or unknown, suspected or unsuspected, foreseen or unforeseen, matured or unmatured, suspected or unsuspected, in law, admiralty or equity, which any of the Holder Releasors ever had, now have, or hereafter can, shall, or may have against any of the Holder Released Parties from the beginning of time through and including the date hereof, respecting the matters covered hereby or in any way related to the NOTE assuming the closing of this Agreement. |
| 5. | Governing Law. This Agreement and the terms and conditions set forth herein, shall be governed by and construed solely and exclusively in accordance with the internal laws of the State of __________________ without regard to the conflicts of laws principles thereof. The parties hereto hereby expressly and irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement shall be brought solely in a federal or state court located in __________________ County, __________________. By its execution hereof, the parties hereto covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in __________________ County and the State of __________________ and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in __________________. The parties hereto expressly and irrevocably waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other parties hereto of all of its reasonable counsel fees and disbursements. | |
| 6. | Counterparts. This Letter may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when such counterparts have been signed by each party and delivered to the other parties; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile, signature. |
[ACKNOWLEDGMENT SIGNATURE PAGES TO FOLLOW]
[ACKNOWLEDGMENT SIGNATURE PAGE TO
DEBT CANCELLATION AGREEMENT/ PAY-OFF LETTER]
Agreed and Acknowledged:
| COMPANY: | Creditor: | |||
| Hallmark Venture Group, Inc. | ||||
| By: | By: | |||
| Name: | Name: | |||
| Title: | Title: | |||
| Date: | Date: | |||
Exhibit 10.05
ESCROW AGREEMENT
THIS AGREEMENT is made as of the date last indicated below, by and between Hallmark Venture Group, Inc. (the “Company” or “HLLK”) and John D. Murphy, Jr. and JMJ Associates, LLC (collectively, “Murphy”), Paul Strickland, Selkirk Global Holdings, LLC, and Beartooth Asset Holdings, LLC, (collectively, “Strickland”), and Aurum International Ltd. and Steven Arenal (collectively, “Purchaser”) and Liberty Stock Transfer, Inc., (the “Escrow Agent”), and each shall be referred to individually as a Party and collectively the Parties, and concerns the change of control of the Company from Murphy and Strickland to Purchaser.
W I T N E S S E T H:
WHEREAS, Purchaser proposes to execute certain Definitive Agreements (the “Change of Control Agreement”) with Murphy and Strickland (collectively, “Seller”) to assume control of Hallmark Venture Group, Inc., a publicly-traded corporation trading under the ticker symbol “HLLK”, which requires that Purchaser place certain monies into an escrow account with Escrow Agent and issue a certain percentage of shares to Seller at a later date as Stock Consideration. In exchange, Seller will deliver the Series A Preferred stock and Restricted Common Stock, as defined in Exhibit A below, (the “CoC Shares) into an escrow account with Agent; and;
WHEREAS, pursuant to the terms of this Agreement, the Parties agree that Liberty Stock Transfer, Inc., shall serve as Escrow Agent for the deposit as well as depository for the CoC Shares to be delivered by Seller to Purchaser or its designee(s).
NOW, THEREFORE, in consideration of the covenants and mutual promises contained herein and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged and intending to be legally bound hereby, the Parties agree as follows:
1. Purchaser shall deposit ($70,000) seventy thousand dollars into Escrow Agent’s escrow account within 6 weeks of the execution of this Agreement (the “Murphy Fee”);
2. Within 3 days of signing this Agreement, Seller shall deliver to Escrow Agent original, endorsed stock certificates with executed and notarized stock powers evidencing the CoC Shares to be transferred to Purchaser;
3. The Murphy Fee deposited with the Agent by the Purchaser will not be disbursed to Murphy until the CoC Shares have been transferred into Purchaser’s name at Liberty Stock Transfer.
4. No CoC Shares deposited with Agent by Seller will be transferred into Purchaser’s name until the “Stock Consideration”, as defined below, has been issued to Seller. The Stock Consideration shall consist of 10% of the issued and outstanding shares of the Company following the completion of the proposed corporate restructuring of the Company. Such completion of the proposed corporate restructuring of the Company shall be confirmed by both Sellers and Purchaser in writing to the Agent prior to delivery of the Murphy Fee to Murphy and the transfer and delivery of the CoC Shares to Purchaser. The Stock Consideration is subject to an Anti- Dilution Agreement attached below as Exhibit B.
5. Should the exchange described herein not be completed by January 16, 2025, unless all Parties agree to extend this Agreement, Agent shall return all property to be exchanged as described in this Agreement to the original Party, without further notice, and administrative control of the Company shall revert to Seller. The Escrow Agent may act in reliance upon any writing or instrument or signature which it, in good faith, believes to be genuine, may assume the validity and accuracy of any statements or assertion contained in such writing or instrument; and may assume that any person purporting to give any writing, notice, advice or instruction in connection with the provisions hereof has been duly authorized to do so. The Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form, manner of execution, or validity of any written instructions delivered to it, nor as to the identity, authority or rights of any person executing the same. The Escrow Agent shall not be liable for any mistakes of fact or error of judgment, or for any act or omissions of any kind unless caused by its willful misconduct or gross negligence.
6. Escrow Agent’s Fee. The Escrow fee for this agreement shall be $500.00. The Escrow Agent shall be entitled to reimbursement for any fees it incurs, including reasonable attorney’s fees, in the performance of its duties and obligations contained in this Agreement. All such costs and expenses shall be borne and divided equally between Purchaser and Seller.
7. This Escrow Agreement will terminate upon the transfer and delivery of the CoC shares to the Purchaser or its designee(s), the payment of the Murphy Fee to Murphy, and the issuance and delivery of the Stock Consideration to the Sellers.
8. The Escrow Agent shall have no duties or obligations other than those specifically set forth herein. The acceptance by the Escrow Agent of their duties under this Escrow Agreement is subject to the terms and conditions hereof, which shall govern and control with respect to its rights, duties, liabilities and immunities.
9. Purchaser and Seller understand and agree that the Escrow Agent is not a principal, participant, or beneficiary of the underlying transactions which necessitate this Escrow Agreement. The Escrow Agent shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in acting or refraining from acting on any instrument believed by it to be genuine and to have been signed or presented by the proper party or parties, their officers, representatives or agents. So long as the Escrow Agent has acted in good faith or on the advice of counsel or has not been guilty of willful misconduct or gross negligence, the Escrow Agent shall have no liability under, or duty to inquire beyond the terms and provisions of this Escrow Agreement, and it is agreed that its duties are purely ministerial in nature.
10. The Escrow Agent shall not be obligated to take any legal actions hereunder which might, in the Escrow Agent’s judgment, involve any expense or liability, unless the Escrow Agent shall have been furnished with reasonable indemnity.
11. The Escrow Agent is not bound in any way by any other contract or agreement between the parties hereto whether or not the Escrow Agent has knowledge thereof of its terms and conditions and the Escrow Agent’s only duty, liability and responsibility shall be to hold and deal with the Escrowed Assets as herein directed.
12. The Escrow Agent shall not be bound by any modification, amendment, termination, cancellation, rescission or supercession of this Escrow Agreement unless the same shall be in writing and signed by all of the other parties hereto and, if its duties as Escrow Agent hereunder are affected thereby, unless it shall have given prior written consent thereto.
13. The parties hereto each jointly and severally agree to indemnify the Escrow Agent against, and hold the Escrow Agent harmless from anything which the Escrow Agent may do or refrain from doing in connection with his performance or non-performance as Escrow Agent under this Agreement and any and all losses, costs, damages, expenses, claims and attorneys’ fees suffered or incurred by the Escrow Agent as a result of, in connection with or arising from or out of the acts of omissions of the Escrow Agent in performance of or pursuant to this Agreement, except such acts or omissions as may result from the Escrow Agent’s willful misconduct or gross negligence.
14. Should Escrow Agent become involved in litigation or arbitration in any manner whatsoever on account of this agreement or the escrowed property, the parties hereto (other than Escrow Agent), hereby bind and obligate themselves, their successors, assigns to pay Escrow Agent, in addition to any charge made hereunder for acting as Escrow Agent, reasonable attorneys’ fees incurred by Escrow Agent, and any other disbursements, expenses, losses, costs and damages in connection with or resulting from such actions. In the event that the Escrow Agent becomes involved in litigation in connection with this Agreement, it shall have the right to retain counsel, and shall have a lien on the Escrowed Property for all reasonable and necessary costs, attorneys’ fees, charges, disbursements and expenses in connection with such litigation, and shall be entitled to reimburse itself for such expenses out of the Escrowed Property.
15. The Escrow Agent may resign as Escrow Agent in respect of the Escrowed Property by giving written notice to all Parties. The resignation of the Escrow Agent shall be effective, and the Escrow Agent shall cease to be bound by this Escrow Agreement, thirty (30) days following the date that notice of resignation was given.
16. Any notices or other communications required or permitted hereunder shall be sufficiently given if personally delivered to or sent by registered mail or certified mail, postage prepaid, or by prepaid telegram addressed as follows:
| If to Purchaser, to: | If to Murphy, to: |
| 1633 East Fourth Street Suite 148 | 5112 West Taft Road, Suite M, Liverpool, NY 13088 |
| Santa Ana, CA 92701 | |
| If to Strickland, to: | If to Escrow Agent, to: |
| 120 State Ave NE, Ste 1014 | |
| Olympia, WA 98501 | Liberty Stock Transfer, Inc. |
| 788 Shrewsbury Ave., Suite 2163 | |
| Tinton Falls, NJ 07724 | |
| Attn: Jeff English | |
| Phone: (732) 372-0707 | |
| E-Mail: [email protected] |
or such other address as shall be furnished in writing by any party in the manner for giving notices hereunder, and any such notice or communication shall be deemed to have been given as of the date so delivered or mailed.
17. This Escrow Agreement shall be construed according to the laws of New Jersey and the parties submit themselves to the exclusive jurisdiction of the Courts of New Jersey in the event of any dispute.
18. This Escrow Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which taken together shall be deemed to constitute one and the same. Facsimile copies may act as originals.
This Escrow Agreement is executed as of January 16, 2024
[signatures on following page]
[signature page to Escrow Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date set forth herein. Hallmark Venture Group, Inc.
| Hallmark Venture Group, Inc. | Date: | |
| Beartooth Asset Holdings, LLC | ||
| John D. Murphy, Jr. | ||
| Title:CEO | ||
| Date | ||
| Paul Strickland | ||
| John D. Murphy, Jr. | Title: Manager | |
| (individually) | Date: | |
| Aurum International Ltd. | ||
| Title: | ||
| Date: | ||
| JMJ Associates, LLC | Title:President | |
| Date: | ||
| John D. Murphy, Jr | Steven Arenal | |
| Title:Manager | (individually) | |
| Date: | ||
| Paul Strickland | Title: | |
| (individually) | Date: | |
| Escrow Agent | ||
| Title: | Liberty Stock Transfer, Inc. | |
| Date: | Jeff English | |
| Selkirk Global Holdings, LLC | Title: President | |
| Date: | ||
| Paul Strickland | ||
| Title:Manager |
Exhibit A
Change of Control Shares
Exhibit B
Anti-Dilution Agreement