Visium Technologies, Inc 8-K, filed Jun 25, 2021
Visium Technologies, Inc. (VISM)
8-K
2021-06-25
For: 2021-06-21
View Original
Added on
April 10, 2026
About this 8-K
Visium Technologies, Inc filed this 8-K on June 25, 2021, reporting on events of June 21, 2021.
Items reported
- Item 4.01: Change of auditor
- Item 4.02: Earlier financial statements no longer reliable
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act
of 1934
Date of Report (Date of earliest event reported): June 21,
2021
VISIUM TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
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Florida
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000-25753
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87-04496677
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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4094 Majestic Lane, Suite 360
Fairfax, Virginia 22033
(Address of principal executive offices, including zip
code)
(703) 273-0383
(Registrant’s telephone number, including area
code)
Check
the appropriate box below if the 8-K filing is intended to
simultaneously satisfy the filing obligations of the registrant
under any of the following provisions:
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☐
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Written
communication pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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☐
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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☐
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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☐
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c)).
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Securities
registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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N/A
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N/A
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N/A
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Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (17 CFR
§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934
(17 CFR §240.12b-2).
Emerging
growth company ☐
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material
Definitive Agreement
Securities Purchase Agreement and Promissory Note
On June 17, 2021, Visium Technologies, Inc., a Florida corporation
(the “Company”), entered into that certain Securities
Purchase Agreement (the “Purchase Agreement”) with
Labrys Fund, LP, a Delaware limited partnership (the
“Investor”), pursuant to which the Investor purchased a
promissory note made by the Company in favor of the Investor (the
“Note”) in the principal amount of $115,000 (the
“Principal Amount”) for a purchase price of $109,250
(the “Purchase Price”). The Note, which reflects a
$5,750 original issuance discount, bears interest of 8% per year
and matures on June 17, 2022 (the “Maturity Date”). The
Company has the right to prepay the Note in full, including accrued
but unpaid interest, without prepayment penalty provided an event
of default, as defined therein, has not occurred. The Note is
convertible into shares of the Company’s common stock at
conversion price of $0.006 per share, subject to adjustment as
provided therein. The closing of the Purchase Agreement occurred on
June 21, 2021.
Pursuant to the Purchase Agreement, the Company issued to the
Investor a warrant to purchase 7,467,532 shares of the Company’s common stock (the
“Warrant”) as a condition to closing. The Warrant is
exercisable for a term of two-years from the date of issuance, at
an exercise price of $0.0077, subject to adjustment as provided
therein. The Warrants provide for cashless exercise to the extent
that the market price (as defined therein) of one share of the
Company’s common stock is greater than the exercise price of
the Warrant.
The foregoing descriptions of the Purchase Agreement, the Note and
the Warrant do not purport to be complete and are qualified in
their entirety by reference to the full text of the Purchase
Agreement, the Note and the Warrant, copies of the forms of which
are filed as Exhibits 10.1, 4.1 and 4.2, respectively, to this
Current Report on Form 8-K and incorporated by reference
herein.
Item 2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The information provided above in Item 1.01 herein is incorporated
by reference into this Item 2.03.
Item 3.02. Unregistered Sales of Equity Securities
The applicable information set forth in Item 1.01 of this Current
Report on Form 8-K is incorporated by reference in this Item 3.02.
The issuance of the securities set forth herein was made in
reliance on the exemption provided by Section 4(a)(2) of the
Securities Act for the offer and sale of securities not involving a
public offering. The Company’s reliance upon Section 4(a)(2)
of the Securities Act in issuing the securities was based upon the
following factors: (a) the issuance of the Shares was an isolated
private transaction by us which did not involve a public offering;
(b) there was only one recipient; (c) there were no subsequent or
contemporaneous public offerings of the Shares by the Company; (d)
the Shares were not broken down into smaller denominations; (e) the
negotiations for the issuance of the Shares took place directly
between the individual and the Company; and (f) the recipient of
the Shares is an accredited investor.
Item. 9.01. Financial Statements and Exhibits.
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Exhibit
No.:
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Description:
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4.1*
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Form of
Unsecured Promissory Note
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4.2*
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Form of
Warrant
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10.1*
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Securities
Purchase Agreement
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* filed herewith
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.
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VISIUM
TECHNOLOGIES, INC.
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Date:
June 25, 2021
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By:
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/s/ Mark
Lucky
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Mark
Lucky
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Chief
Executive Officer
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THIS
INSTRUMENT CONTAINS AN AFFIDAVIT OF CONFESSION OF JUDGMENT
PROVISION WHICH CONSTITUTES A WAIVER OF IMPORTANT RIGHTS BORROWER
MAY HAVE AND ALLOWS THE HOLDER TO OBTAIN A JUDGMENT AGAINST
BORROWER WITHOUT ANY FURTHER NOTICE.
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN
OPINION OF COUNSEL (WHICH MAY BE THE LEGAL COUNSEL OPINION (AS
DEFINED IN THE PURCHASE AGREEMENT)), IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II)
UNLESS SOLD PURSUANT TO RULE 144, RULE 144A OR REGULATION S UNDER
SAID ACT OR OTHER APPLICABLE EXEMPTION. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.
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Principal
Amount: $115,000.00
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Issue
Date: June 17, 2021
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Actual
Amount of Purchase Price: $109,250.00
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PROMISSORY
NOTE
FOR VALUE RECEIVED, VISIUM TECHNOLOGIES, INC., a Florida
corporation (hereinafter called the “Borrower” or the
“Company”) (Trading Symbol: VISM), hereby promises to
pay to the order of LABRYS FUND,
LP, a Delaware limited partnership, or registered assigns
(the “Holder”), in the form of lawful money of the
United States of America, the principal sum of $115,000.00, which
amount is the $109,250.00 actual amount of the purchase price (the
“Consideration”) hereof plus an original issue discount
in the amount of $5,750.00 (the “OID”) (subject to
adjustment herein) (the “Principal Amount”) and to pay
interest on the unpaid Principal Amount hereof at the rate of eight
(8%) (the “Interest Rate”) per annum (with the
understanding that the first twelve months of interest (equal to
$9,200.00) shall be guaranteed) from the date hereof (the
“Issue Date”) until the same becomes due and payable,
whether at maturity or upon acceleration or by prepayment or
otherwise, as further provided herein. The maturity date shall be
twelve (12) months from the Issue Date (the “Maturity
Date”), and is the date upon which the principal sum, the
OID, as well as any accrued and unpaid interest and other fees,
shall be due and payable.
This
Note may not be prepaid or repaid in whole or in part except as
otherwise explicitly set forth herein.
Interest shall
commence accruing on the date that the Note is fully funded and
shall be computed on the basis of a 365-day year and the actual
number of days elapsed. Any Principal Amount or interest on this
Note which is not paid when due shall bear interest at the rate of
the lesser of (i) sixteen percent (16%) per annum and (ii) the
maximum amount permitted by law from the due date thereof until the
same is paid (“Default Interest”).
All
payments due hereunder (to the extent not converted into shares of
common stock, $0.0001 par value per share, of the Borrower (the
“Common Stock”) in accordance with the terms hereof)
shall be made in lawful money of the United States of America. All
payments shall be made at such address as the Holder shall
hereafter give to the Borrower by written notice made in accordance
with the provisions of this Note. Whenever any amount expressed to
be due by the terms of this Note is due on any day which is not a
business day, the same shall instead be due on the next succeeding
day which is a business day and, in the case of any interest
payment date which is not the date on which this Note is paid in
full, the extension of the due date thereof shall not be taken into
account for purposes of determining the amount of interest due on
such date.
Each
capitalized term used herein, and not otherwise defined, shall have
the meaning ascribed thereto in that certain Securities Purchase
Agreement, dated as of the Issue Date, pursuant to which this Note
was originally issued (the “Purchase Agreement”). As
used in this Note, the term “business day” shall mean
any day other than a Saturday, Sunday or a day on which commercial
banks in the city of New York, New York are authorized or required
by law or executive order to remain closed. As used herein, the
term “Trading Day” means any day that shares of Common
Stock are listed for trading or quotation on the Principal Market
(as defined in the Purchase Agreement), any tier of the OTC
Markets, NASDAQ Stock Market, the New York Stock Exchange, or the
NYSE American.
This
Note is free from all taxes, liens, claims and encumbrances with
respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Borrower and
will not impose personal liability upon the holder
thereof.
The
following terms shall also apply to this Note:
ARTICLE
I. CONVERSION RIGHTS
1.1
Conversion Rights.
The Holder shall have the right, at any time on or following the
Issue Date, to convert all or any portion of the then outstanding
and unpaid Principal Amount and interest (including any Default
Interest) into fully paid and non-assessable shares of Common
Stock, as such Common Stock exists on the Issue Date, or any shares
of capital stock or other securities of the Borrower into which
such Common Stock shall hereafter be changed or reclassified, at
the Conversion Price (as defined below) determined as provided
herein (a “Conversion”); provided, however, that notwithstanding
anything to the contrary contained herein, the a Holder shall not
have the right to convert any portion of this Note, pursuant to
Section 1 or otherwise, to the extent that after giving effect to
such issuance after conversion as set forth on the applicable
Notice of Conversion, the Holder (together with the Holder’s
affiliates (the “Affiliates”), and any other Persons
(as defined below) acting as a group together with the Holder or
any of the Holder’s Affiliates (such Persons,
“Attribution Parties”)), would beneficially own in
excess of the Beneficial Ownership Limitation (as defined below).
For purposes of the foregoing sentence, the number of shares of
Common Stock beneficially owned by the Holder and Attribution
Parties shall include the number of shares of Common Stock issuable
upon conversion of this Note with respect to which such
determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (i) conversion of the
remaining, nonconverted portion of this Note beneficially owned by
the Holder or any of its Affiliates or Attribution Parties and (ii)
exercise or conversion of the unexercised or nonconverted portion
of any other securities of the Company subject to a limitation on
conversion or exercise analogous to the limitation contained herein
beneficially owned by the Holder or any of its Affiliates or
Attribution Parties. Except as set forth in the preceding sentence,
for purposes of this Section 1.1, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Holder is solely responsible
for any schedules required to be filed in accordance therewith. In
addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 1.1, in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the
Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Trading Days
confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Note, by the Holder or its Affiliates or Attribution
Parties since the date as of which such number of outstanding
shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 4.99% of the number of shares
of the Common Stock outstanding at the time of the respective
calculation hereunder. “Person” and
“Persons” means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and any governmental
entity or any department or agency thereof. The limitations
contained in this paragraph shall apply to a successor holder of
this Note. The number of Conversion Shares to be issued upon each
conversion of this Note shall be determined by dividing the
Conversion Amount (as defined below) by the applicable Conversion
Price then in effect on the date specified in the notice of
conversion, in the form attached hereto as Exhibit A (the “Notice of
Conversion”), delivered to the Borrower or Borrower’s
transfer agent by the Holder in accordance with Section 1.4 below;
provided that the Notice of Conversion is submitted by facsimile or
e-mail (or by other means resulting in, or reasonably expected to
result in, notice) to the Borrower or Borrower’s transfer
agent before 11:59 p.m., New York, New York time on such conversion
date (the “Conversion Date”). The term
“Conversion Amount” means, with respect to any
conversion of this Note, the sum of (1) the Principal Amount of
this Note to be converted in such conversion plus (2) at the Holder’s
option, accrued and unpaid interest, if any, on such Principal
Amount at the Interest Rate to the Conversion Date, plus (3) at the Holder’s
option, Default Interest, if any, on the amounts referred to in the
immediately preceding clauses (1) and/or (2).
1.2
Conversion Price.
(a) Calculation of Conversion
Price. The per share conversion price into which Principal
Amount and interest (including any Default Interest) under this
Note shall be convertible into shares of Common Stock hereunder
(the “Conversion Price”) shall equal $0.006. If at any
time the Conversion Price as determined hereunder for any
conversion would be less than the par value of the Common Stock,
then at the sole discretion of the Holder, the Conversion Price
hereunder may equal such par value for such conversion and the
Conversion Amount for such conversion may be increased to include
Additional Principal, where “Additional Principal”
means such additional amount to be added to the Conversion Amount
to the extent necessary to cause the number of conversion shares
issuable upon such conversion to equal the same number of
conversion shares as would have been issued had the Conversion
Price not been adjusted by the Holder to the par value price. The
Conversion Price is subject to equitable adjustments for stock
splits, stock dividends or rights offerings by the Borrower
relating to the Borrower’s securities or the securities of
any subsidiary of the Borrower, combinations, recapitalization,
reclassifications, extraordinary distributions and similar events.
Holder shall be entitled to deduct $750.00 from the conversion
amount in each Notice of Conversion to cover Holder’s fees
associated with each Notice of Conversion.
1.3 Authorized and Reserved Shares.
The Borrower covenants that at all times until the Note is
satisfied in full, the Borrower will reserve from its authorized
and unissued Common Stock a sufficient number of shares, free from
preemptive rights, to provide for the issuance of a number of
Conversion Shares equal to the greater of: (a) 28,750,000 shares of
Common Stock or (b) the sum of (i) the number of Conversion Shares
issuable upon the full conversion of this Note (assuming no payment
of Principal Amount or interest, and assuming that an Event of
Default has occurred regardless of whether an Event of Default has
actually occurred under this Note) as of any issue date (taking
into consideration any adjustments to the Conversion Price pursuant
to Section 2 hereof or otherwise) multiplied by (ii) one and a
half (1.5) (the “Reserved Amount”). The Borrower
represents that upon issuance, the Conversion Shares will be duly
and validly issued, fully paid and non-assessable. The Borrower (i)
acknowledges that it has irrevocably instructed its transfer agent
to issue certificates for the Conversion Shares or instructions to
have the Conversion Shares issued as contemplated by Section 1.4(f)
hereof, and (ii) agrees that its issuance of this Note shall
constitute full authority to its officers and agents who are
charged with the duty of executing stock certificates or cause the
Company to electronically issue shares of Common Stock to execute
and issue the necessary certificates for the Conversion Shares or
cause the Conversion Shares to be issued as contemplated by Section
1.4(f) hereof in accordance with the terms and conditions of this
Note.
If, at
any time the Borrower does not maintain the Reserved Amount it will
be considered an Event of Default under this Note.
1.4
Method of Conversion.
(a) Mechanics of Conversion. This
Note may be converted by the Holder in whole or in part, on any
Trading Day, at any time on or following the Issue Date, by
submitting to the Borrower or Borrower’s transfer agent a
Notice of Conversion (by facsimile, e-mail or other reasonable
means of communication dispatched on the Conversion Date prior to
11:59 p.m., New York, New York time). Any Notice of Conversion
submitted after 11:59 p.m., New York, New York time, shall be
deemed to have been delivered and received on the next Trading
Day.
(b) Surrender of Note Upon
Conversion. Notwithstanding anything to the contrary set
forth herein, upon conversion of this Note in accordance with the
terms hereof, the Holder shall not be required to physically
surrender this Note to the Borrower unless the entire unpaid
Principal Amount is so converted. The Holder and the Borrower shall
maintain records showing the Principal Amount so converted and the
dates of such conversions or shall use such other method,
reasonably satisfactory to the Holder and the Borrower, so as not
to require physical surrender of this Note upon each such
conversion. In the event of any dispute or discrepancy, such
records of the Borrower shall, prima facie, be controlling and
determinative in the absence of manifest error. Notwithstanding the
foregoing, if any portion of this Note is converted as aforesaid,
the Holder may not transfer this Note unless the Holder first
physically surrenders this Note to the Borrower, whereupon the
Borrower will forthwith issue and deliver upon the order of the
Holder a new Note of like tenor, registered as the Holder (upon
payment by the Holder of any applicable transfer taxes) may
request, representing in the aggregate the remaining unpaid
Principal Amount of this Note. The Holder and any assignee, by
acceptance of this Note, acknowledge and agree that, by reason of
the provisions of this paragraph, following conversion of a portion
of this Note, the unpaid and unconverted Principal Amount of this
Note represented by this Note may be less than the amount stated on
the face hereof.
(c) Payment of Taxes. The Borrower
shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of
shares of Common Stock or other securities or property on
conversion of this Note in a name other than that of the Holder (or
in street name), and the Borrower shall not be required to issue or
deliver any such shares or other securities or property unless and
until the person or persons (other than the Holder or the custodian
in whose street name such shares are to be held for the
Holder’s account) requesting the issuance thereof shall have
paid to the Borrower the amount of any such tax or shall have
established to the satisfaction of the Borrower that such tax has
been paid.
(d) Delivery of Common Stock Upon
Conversion. Upon receipt by the Borrower from the Holder of
a facsimile transmission or e-mail (or other reasonable means of
communication) of a Notice of Conversion meeting the requirements
for conversion as provided in this Section 1.4, the Borrower shall
issue and deliver or cause to be issued and delivered to or upon
the order of the Holder certificates for the Conversion Shares (or
cause the electronic delivery of the Conversion Shares as
contemplated by Section 1.4(f) hereof) within one (1) Trading Day
after such receipt (the “Deadline”) (and, solely in the
case of conversion of the entire unpaid Principal Amount and
interest (including any Default Interest) under this Note,
surrender of this Note). If the Company shall fail for any reason
or for no reason to issue to the Holder on or prior to the Deadline
a certificate for the number of Conversion Shares or to which the
Holder is entitled hereunder and register such Conversion Shares on
the Company’s share register or to credit the Holder’s
balance account with DTC (as defined below) for such number of
Conversion Shares to which the Holder is entitled upon the
Holder’s conversion of this Note (a “Conversion
Failure”), then, in addition to all other remedies available
to the Holder, (i) the Company shall pay in cash to the Holder on
each day after the Deadline and during such Conversion Failure an
amount equal to 2.0% of the product of (A) the sum of the number of
Conversion Shares not issued to the Holder on or prior to the
Deadline and to which the Holder is entitled and (B) the closing
sale price of the Common Stock on the Trading Day immediately
preceding the last possible date which the Company could have
issued such Conversion Shares to the Holder without violating this
Section 1.4(d); and (ii) the Holder, upon written notice to the
Company, may void its Notice of Conversion with respect to, and
retain or have returned, as the case may be, any portion of this
Note that has not been converted pursuant to such Notice of
Conversion; provided that the voiding of an Notice of Conversion
shall not affect the Company’s obligations to make any
payments which have accrued prior to the date of such notice. In
addition to the foregoing, if on or prior to the Deadline the
Company shall fail to issue and deliver a certificate to the Holder
and register such Conversion Shares on the Company’s share
register or credit the Holder’s balance account with DTC for
the number of Conversion Shares to which the Holder is entitled
upon the Holder’s exercise hereunder or pursuant to the
Company’s obligation pursuant to clause (ii) below, and if on
or after such Trading Day the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of shares of Common Stock
issuable upon such exercise that the Holder anticipated receiving
from the Company, then the Company shall, within two (2) Trading
Days after the Holder’s request and in the Holder’s
discretion, either (i) pay cash to the Holder in an amount equal to
the Holder’s total purchase price (including brokerage
commissions and other reasonable and customary out-of-pocket
expenses, if any) for the shares of Common Stock so purchased (the
“Buy-In Price”), at which point the Company’s
obligation to deliver such certificate (and to issue such
Conversion Shares) or credit such Holder’s balance account
with DTC for such Conversion Shares shall terminate, or (ii)
promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such Conversion Shares or
credit such Holder’s balance account with DTC and pay cash to
the Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of shares of Common
Stock, times (B) the closing sales price of the Common Stock on the
date of exercise. Nothing shall limit the Holder’s right to
pursue any other remedies available to it hereunder, at law or in
equity, including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company’s failure to timely deliver certificates representing
the Conversion Shares (or to electronically deliver such Conversion
Shares) upon the conversion of this Note as required pursuant to
the terms hereof.
(e) Obligation of Borrower to Deliver
Common Stock. At the time that the Holder submits the Notice
of Conversion to the Borrower or Borrower’s transfer agent,
the Holder shall be deemed to be the holder of record of the
Conversion Shares issuable upon such conversion, the outstanding
Principal Amount and the amount of accrued and unpaid interest
(including any Default Interest) under this Note shall be reduced
to reflect such conversion, and, unless the Borrower defaults on
its obligations under this Article I, all rights with respect to
the portion of this Note being so converted shall forthwith
terminate except the right to receive the Common Stock or other
securities, cash or other assets, as herein provided, on such
conversion. If the Holder shall have given a Notice of Conversion
as provided herein, the Borrower’s obligation to issue and
deliver the certificates for the Conversion Shares (or cause the
electronic delivery of the Conversion Shares as contemplated by
Section 1.4(f) hereof) shall be absolute and unconditional,
irrespective of the absence of any action by the Holder to enforce
the same, any waiver or consent with respect to any provision
thereof, the recovery of any judgment against any person or any
action to enforce the same, any failure or delay in the enforcement
of any other obligation of the Borrower to the holder of record, or
any setoff, counterclaim, recoupment, limitation or termination, or
any breach or alleged breach by the Holder of any obligation to the
Borrower, and irrespective of any other circumstance which might
otherwise limit such obligation of the Borrower to the Holder in
connection with such conversion. The Conversion Date specified in
the Notice of Conversion shall be the Conversion Date so long as
the Notice of Conversion is sent to the Borrower or
Borrower’s transfer agent before 11:59 p.m., New York, New
York time, on such date.
(f) Delivery of Conversion Shares by
Electronic Transfer. In lieu of delivering physical
certificates representing the Conversion Shares issuable upon
conversion hereof, provided the Borrower is participating in the
Depository Trust Company (“DTC”) Fast Automated
Securities Transfer or Deposit/Withdrawal at Custodian programs,
upon request of the Holder and its compliance with the provisions
contained in Section 1.1 and in this Section 1.4, the Borrower
shall use its best efforts to cause its transfer agent to
electronically transmit the Conversion Shares issuable upon
conversion hereof to the Holder by crediting the account of
Holder’s Prime Broker with DTC through its Deposit Withdrawal
Agent Commission system.
1.5 Concerning the Shares. The
Conversion Shares issuable upon conversion of this Note may not be
sold or transferred unless (i) such shares are sold pursuant to an
effective registration statement under the 1933 Act or (ii) the
Borrower or its transfer agent shall have been furnished with an
opinion of counsel (which opinion shall be the Legal Counsel
Opinion (as defined in the Purchase Agreement)) to the effect that
the shares to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration or (iii) such
shares are sold or transferred pursuant to Rule 144, Rule 144A,
Regulation S, or other applicable exemption, or (iv) such shares
are transferred to an “affiliate” (as defined in Rule
144) of the Borrower who agrees to sell or otherwise transfer the
shares only in accordance with this Section 1.5 and who is an
Accredited Investor (as defined in the Purchase Agreement). Except
as otherwise provided in the Purchase Agreement (and subject to the
removal provisions set forth below), until such time as the
Conversion Shares have been registered under the 1933 Act or
otherwise may be sold pursuant to Rule 144, Rule 144A, Regulation
S, or other applicable exemption without any restriction as to the
number of securities as of a particular date that can then be
immediately sold, each certificate for the Conversion Shares that
has not been so included in an effective registration statement or
that has not been sold pursuant to an effective registration
statement or an exemption that permits removal of the legend, shall
bear a legend substantially in the following form, as
appropriate:
“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN
OPINION OF COUNSEL (WHICH MAY BE THE LEGAL COUNSEL OPINION (AS
DEFINED IN THE PURCHASE AGREEMENT)), IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II)
UNLESS SOLD PURSUANT TO RULE 144, RULE 144A, REGULATION S UNDER
SAID ACT, OR OTHER APPLICABLE EXEMPTION. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.”
The
legend set forth above shall be removed and the Company shall issue
to the Holder a certificate for the applicable Conversion Shares
without such legend upon which it is stamped or (as requested by
the Holder) issue the applicable Conversion Shares by electronic
delivery by crediting the account of such holder’s broker
with DTC, if, unless otherwise required by applicable state
securities laws: (a) such Conversion Shares are registered for sale
under an effective registration statement filed under the 1933 Act
or otherwise may be sold pursuant to Rule 144, Rule 144A,
Regulation S, or other applicable exemption without any restriction
as to the number of securities as of a particular date that can
then be immediately sold, or (b) the Company or the Holder provides
the Legal Counsel Opinion (as contemplated by and in accordance
with Section 4(m) of the Purchase Agreement) to the effect that a
public sale or transfer of such Conversion Shares may be made
without registration under the 1933 Act, which opinion shall be
accepted by the Company so that the sale or transfer is effected.
The Company shall be responsible for the fees of its transfer agent
and all DTC fees associated with any such issuance. The Holder
agrees to sell all Conversion Shares, including those represented
by a certificate(s) from which the legend has been removed, in
compliance with applicable prospectus delivery requirements, if
any. In the event that the Company does not accept the opinion of
counsel provided by the Holder with respect to the transfer of
Conversion Shares pursuant to an exemption from registration, such
as Rule 144, Rule 144A, Regulation S, or other applicable
exemption, at the Deadline, notwithstanding that the conditions of
Rule 144, Rule 144A, Regulation S, or other applicable exemption,
as applicable, have been met, it will be considered an Event of
Default under this Note.
1.6
Effect of Certain Events.
(a) Effect of Merger, Consolidation,
Etc. At the option of the Holder, the sale, conveyance or
disposition of all or substantially all of the assets of the
Borrower, or the consolidation, merger or other business
combination of the Borrower with or into any other Person (as
defined below) or Persons when the Borrower is not the survivor
shall either: (i) be deemed to be an Event of Default pursuant to
which the Borrower shall be required to pay to the Holder upon the
consummation of and as a condition to such transaction an amount
equal to the Default Amount (defined in Section 3.19) or (ii) be
treated pursuant to Section 1.6(b) hereof. “Person”
shall mean any individual, corporation, limited liability company,
partnership, association, trust or other entity or
organization.
(b) Adjustment Due to Merger,
Consolidation, Etc. If, at any time when this Note is issued
and outstanding and prior to conversion of all of this Note, there
shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a
result of which shares of Common Stock of the Borrower shall be
changed into the same or a different number of shares of another
class or classes of stock or securities of the Borrower or another
entity, or in case of any sale or conveyance of all or
substantially all of the assets of the Borrower other than in
connection with a plan of complete liquidation of the Borrower,
then the Holder of this Note shall thereafter have the right to
receive upon conversion of this Note, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of
Common Stock immediately theretofore issuable upon conversion, such
stock, securities or assets which the Holder would have been
entitled to receive in such transaction had this Note been
converted in full immediately prior to such transaction (without
regard to any limitations on conversion set forth herein), and in
any such case appropriate provisions shall be made with respect to
the rights and interests of the Holder of this Note to the end that
the provisions hereof (including, without limitation, provisions
for adjustment of the Conversion Price and of the number of shares
issuable upon conversion of the Note) shall thereafter be
applicable, as nearly as may be practicable in relation to any
securities or assets thereafter deliverable upon the conversion
hereof. The Borrower shall not effectuate any transaction described
in this Section 1.6(b) unless (a) it first gives, to the extent
practicable, at least thirty (30) days prior written notice (but in
any event at least fifteen (15) days prior written notice) of the
record date of the special meeting of shareholders to approve, or
if there is no such record date, the consummation of, such merger,
consolidation, exchange of shares, recapitalization, reorganization
or other similar event or sale of assets (during which time the
Holder shall be entitled to convert this Note) and (b) the
resulting successor or acquiring entity (if not the Borrower)
assumes by written instrument the obligations of this Section
1.6(b). The above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers or share
exchanges.
(c) Adjustment Due to Distribution.
If the Borrower shall declare or make any distribution of its
assets (or rights to acquire its assets) to holders of Common Stock
as a dividend, stock repurchase, by way of return of capital or
otherwise (including any dividend or distribution to the
Borrower’s shareholders in cash or shares (or rights to
acquire shares) of capital stock of a subsidiary (i.e., a
spin-off)) (a “Distribution”), then the Holder of this
Note shall be entitled, upon any conversion of this Note after the
date of record for determining shareholders entitled to such
Distribution, to receive the amount of such assets which would have
been payable to the Holder with respect to the shares of Common
Stock issuable upon such conversion had such Holder been the holder
of such shares of Common Stock on the record date for the
determination of shareholders entitled to such
Distribution.
(d) Purchase Rights. If, at any
time when all or any portion of this Note is issued and
outstanding, the Borrower issues any convertible securities or
rights to purchase stock, warrants, securities or other property
(the “Purchase Rights”) pro rata to the record holders
of any class of Common Stock, then the Holder of this Note will be
entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which such Holder could have
acquired if such Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Note (without
regard to any limitations on conversion contained herein)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such
record is taken, the date as of which the record holders of Common
Stock are to be determined for the grant, issue or sale of such
Purchase Rights.
(e) Dilutive Issuance. If the
Borrower, at any time while this Note or any amounts due hereunder
are outstanding, issues, sells or grants (or has issued, sold or
granted as of the Issue Date, as the case may be) any option to
purchase, or sells or grants any right to reprice, or otherwise
disposes of, or issues (or has sold or issued, as the case may be,
or announces any sale, grant or any option to purchase or other
disposition), any Common Stock or other securities convertible
into, exercisable for, or otherwise entitle any person or entity
the right to acquire, shares of Common Stock (including, without
limitation, upon conversion of this Note, and any convertible notes
or warrants outstanding as of or following the Issue Date), in each
or any case at an effective price per share that is lower than the
then Conversion Price (such lower price, the “Base Conversion
Price” and such issuances, collectively, a “Dilutive
Issuance”) (it being agreed that if the holder of the Common
Stock or other securities so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to
warrants, options or rights per share which are issued in
connection with such issuance, be entitled to receive shares of
Common Stock at an effective price per share that is lower than the
Conversion Price, such issuance shall be deemed to have occurred
for less than the Conversion Price on such date of the Dilutive
Issuance), then the Conversion Price shall be reduced, at the
option of the Holder, to a price equal to the Base Conversion
Price. Such adjustment shall be made whenever such Common Stock or
other securities are issued. By way of example, and for the
avoidance of doubt, if the Company issues a convertible promissory
note (including but not limited to a Variable Rate Transaction),
and the holder of such convertible promissory note has the right to
convert it into Common Stock at an effective price per share that
is lower than the then Conversion Price (including but not limited
to a conversion price with a discount that varies with the trading
prices of or quotations for the Common Stock), then the Holder has
the right to reduce the Conversion Price to such Base Conversion
Price (including but not limited to a conversion price with a
discount that varies with the trading prices of or quotations for
the Common Stock) in perpetuity regardless of whether the holder of
such convertible promissory note ever effectuated a conversion at
the Base Conversion Price. Notwithstanding the foregoing, no
adjustment will be made under this Section 1.6(e) in respect of an
Exempt Issuance. In the event of an issuance of securities
involving multiple tranches or closings, any adjustment pursuant to
this Section 1.6(e) shall be calculated as if all such securities
were issued at the initial closing.
An
“Exempt Issuance” shall mean the issuance of (a) shares
of Common Stock or other securities to officers or directors of the
Company pursuant to any stock or option or similar equity incentive
plan duly adopted for such purpose, by a majority of the
non-employee members of the Company’s Board of Directors or a
majority of the members of a committee of non-employee directors
established for such purpose in a manner which is consistent with
the Company’s prior business practices; (b) securities issued
pursuant to a merger, consolidation, acquisition or similar
business combination approved by a majority of the disinterested
directors of the Company, provided that any such issuance shall
only be to a Person (or to the equity holders of a Person) which
is, itself or through its subsidiaries, an operating company or an
owner of an asset in a business synergistic with the business of
the Company and shall provide to the Company additional benefits in
addition to the investment of funds, but shall not include a
transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary
business is investing in securities; (c) securities issued pursuant
to any equipment loan or leasing arrangement, real property leasing
arrangement or debt financing from a bank or similar financial
institution approved by a majority of the disinterested directors
of the Company; or (d) securities issued with respect to which the
Holder waives its rights in writing under this Section
1.6(e).
(f) Notice of Adjustments. Upon the
occurrence of each adjustment or readjustment of the Conversion
Price as a result of the events described in this Section 1.6, the
Borrower, at its expense, shall promptly compute such adjustment or
readjustment and prepare and furnish to the Holder a certificate
setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The
Borrower shall, upon the written request at any time of the Holder,
furnish to such Holder a like certificate setting forth (i) such
adjustment or readjustment, (ii) the Conversion Price at the time
in effect and (iii) the number of shares of Common Stock and the
amount, if any, of other securities or property which at the time
would be received upon conversion of the Note.
1.7 [Intentionally
Omitted].
1.8 Status as Shareholder. Upon
submission of a Notice of Conversion by a Holder, (i) the
Conversion Shares covered thereby (other than the Conversion
Shares, if any, which cannot be issued because their issuance would
exceed such Holder’s allocated portion of the Reserved Amount
or Maximum Share Amount) shall be deemed converted into shares of
Common Stock and (ii) the Holder’s rights as a Holder of such
converted portion of this Note shall cease and terminate, excepting
only the right to receive certificates for such shares of Common
Stock and to any remedies provided herein or otherwise available at
law or in equity to such Holder because of a failure by the
Borrower to comply with the terms of this Note. Notwithstanding the
foregoing, if a Holder has not received certificates for all shares
of Common Stock prior to the tenth (10th) business day after the
expiration of the Deadline with respect to a conversion of any
portion of this Note for any reason, then (unless the Holder
otherwise elects to retain its status as a holder of Common Stock
by so notifying the Borrower) the Holder shall regain the rights of
a Holder of this Note with respect to such unconverted portions of
this Note and the Borrower shall, as soon as practicable, return
such unconverted Note to the Holder or, if the Note has not been
surrendered, adjust its records to reflect that such portion of
this Note has not been converted. In all cases, the Holder shall
retain all of its rights and remedies for the Borrower’s
failure to convert this Note.
1.9 Prepayment. At any time prior
to the date that an Event of Default occurs under this Note (the
“Prepayment Period”), the Borrower shall have the
right, exercisable on one (1) Trading Day prior written notice to
the Holder of the Note, to prepay the outstanding Principal Amount
and interest then due under this Note in accordance with this
Section 1.9. Any notice of prepayment hereunder (an “Optional
Prepayment Notice”) shall be delivered to the Holder of the
Note at its registered addresses and shall state: (1) that the
Borrower is exercising its right to prepay the Note, and (2) the
date of prepayment which shall be one (1) Trading Day from the date
of the Optional Prepayment Notice. On the date fixed for prepayment
(the “Optional Prepayment Date”), the Borrower shall
make payment of the amounts designated below to or upon the order
of the Holder as specified by the Holder in writing to the
Borrower. If the Borrower exercises its right to prepay the Note in
accordance with this Section 1.9, the Borrower shall make payment
to the Holder of an amount in cash equal to the sum of: (w) 100%
multiplied by the Principal Amount then outstanding plus (x) accrued and unpaid
interest on the Principal Amount to the Optional Prepayment
Date.
If the
Borrower delivers an Optional Prepayment Notice and fails to pay
the applicable prepayment amount due to the Holder of the Note as
provided in this Section 1.9, then the Borrower shall forever
forfeit its right to prepay any part of the Note pursuant to this
Section 1.9.
1.10 Repayment
from Proceeds. If, at any time prior to the full repayment
or full conversion of all amounts owed under this Note, the Company
receives cash proceeds from any source or series of related or
unrelated sources, including but not limited to, from payments from
customers, the issuance of equity or debt, the conversion of
outstanding warrants of the Borrower, the issuance of securities
pursuant to an equity line of credit of the Borrower or the sale of
assets, the Borrower shall, within one (1) business day of
Borrower’s receipt of such proceeds, inform the Holder of or
publicly disclose such receipt, following which the Holder shall
have the right in its sole discretion to require the Borrower to
immediately apply up to 30% of such proceeds to repay all or any
portion of the outstanding Principal Amount and interest (including
any Default Interest) then due under this Note. Failure of the
Borrower to comply with this provision shall constitute an Event of
Default.
ARTICLE
II. RANKING AND CERTAIN COVENANTS
2.1 Ranking and Security. The
obligations of the Borrower under this Note shall rank senior with
respect to any and all unsecured Indebtedness incurred following
the Issue Date.
2.2 Other Indebtedness. So long as
the Borrower shall have any obligation under this Note, the
Borrower shall not (directly or indirectly through any Subsidiary
or affiliate) incur or suffer to exist or guarantee any unsecured
Indebtedness that is senior to or pari passu with (in priority of
payment and performance) the Borrower’s obligations
hereunder. As used in this Section 2.2, the term
“Borrower” means the Borrower and any Subsidiary of the
Borrower. As used herein, the term “Indebtedness” means
(a) all indebtedness of the Borrower for borrowed money or for the
deferred purchase price of property or services, including any type
of letters of credit, but not including deferred purchase price
obligations in place as of the Issue Date and as disclosed in the
SEC Documents or obligations to trade creditors incurred in the
ordinary course of business, (b) all obligations of the Borrower
evidenced by notes, bonds, debentures or other similar instruments,
(c) purchase money indebtedness hereafter incurred by the Borrower
to finance the purchase of fixed or capital assets, including all
capital lease obligations of the Borrower which do not exceed the
purchase price of the assets funded, (d) all guarantee obligations
of the Borrower in respect of obligations of the kind referred to
in clauses (a) through (c) above that the Borrower would not be
permitted to incur or enter into, and (e) all obligations of the
kind referred to in clauses (a) through (d) above that the Borrower
is not permitted to incur or enter into that are secured and/or
unsecured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured and/or
unsecured by) any lien or encumbrance on property (including
accounts and contract rights) owned by the Borrower, whether or not
the Borrower has assumed or become liable for the payment of such
obligation.
2.3 Distributions on Capital Stock.
So long as the Borrower shall have any obligation under this Note,
the Borrower shall not without the Holder’s written consent
(a) pay, declare or set apart for such payment, any dividend or
other distribution (whether in cash, property or other securities)
on shares of capital stock other than dividends on shares of Common
Stock solely in the form of additional shares of Common Stock or
(b) directly or indirectly or through any subsidiary make any other
payment or distribution in respect of its capital stock except for
distributions pursuant to any shareholders’ rights plan which
is approved by a majority of the Borrower’s disinterested
directors.
2.4 Restriction on Stock Repurchases and
Debt Repayments. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not without the
Holder’s written consent redeem, repurchase or otherwise
acquire (whether for cash or in exchange for property or other
securities or otherwise) in any one transaction or series of
related transactions any shares of capital stock of the Borrower or
any warrants, rights or options to purchase or acquire any such
shares, or repay any pari passu or subordinated indebtedness of
Borrower.
2.5 Sale of Assets. So long as the
Borrower shall have any obligation under this Note, the Borrower
shall not, without the Holder’s written consent, sell, lease
or otherwise dispose of any significant portion of its assets
outside the ordinary course of business. Any consent to the
disposition of any assets may be conditioned on a specified use of
the proceeds of disposition.
2.6 Advances and Loans; Affiliate
Transactions. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not, without the
Holder’s written consent, lend money, give credit, make
advances to or enter into any transaction with any person, firm,
joint venture or corporation, including, without limitation,
officers, directors, employees, subsidiaries and affiliates of the
Borrower, except loans, credits or advances (a) in existence or
committed on the Issue Date and which the Borrower has informed
Holder in writing prior to the Issue Date, (b) in regard to
transactions with unaffiliated third parties, made in the ordinary
course of business or (c) in regard to transactions with
unaffiliated third parties, not in excess of $100,000. So long as
the Borrower shall have any obligation under this Note, the
Borrower shall not, without the Holder’s written consent,
repay any affiliate (as defined in Rule 144) of the Borrower in
connection with any indebtedness or accrued amounts owed to any
such party.
2.7 Section 3(a)(9) or 3(a)(10)
Transaction. So long as this Note is outstanding, the
Borrower shall not enter into any transaction or arrangement
structured in accordance with, based upon, or related or pursuant
to, in whole or in part, either Section 3(a)(9) of the Securities
Act (a “3(a)(9) Transaction”) or Section 3(a)(10) of
the Securities Act (a “3(a)(10) Transaction”). In the
event that the Borrower does enter into, or makes any issuance of
Common Stock related to a 3(a)(9) Transaction or a 3(a)(10)
Transaction while this note is outstanding, a liquidated damages
charge of 25% of the outstanding principal balance of this Note,
but not less than $25,000, will be assessed and will become
immediately due and payable to the Holder at its election in the
form of a cash payment or added to the balance of this Note (under
Holder's and Borrower's expectation that this amount will tack back
to the Issue Date).
2.8 Preservation of Business and
Existence, etc. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not, without the
Holder’s written consent, (a) change the nature of its
business;
(b)
sell, divest, change the structure of any material assets other
than in the ordinary course of business; or (c) enter into any
variable rate transactions or Merchant Cash Advance transactions.
In addition, so long as the Borrower shall have any obligation
under this Note, the Borrower shall maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, its
existence, rights and privileges, and become or remain, and cause
each of its Subsidiaries (other than dormant Subsidiaries that have
no or minimum assets) to become or remain, duly qualified and in
good standing in each jurisdiction in which the character of the
properties owned or leased by it or in which the transaction of its
business makes such qualification necessary.
2.9 Noncircumvention. The Company
hereby covenants and agrees that the Company will not, by amendment
of its Certificate or Articles of Incorporation or Bylaws, or
through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Note, and
will at all times in good faith carry out all the provisions of
this Note and take all action as may be required to protect the
rights of the Holder.
2.10
Lost,
Stolen or Mutilated Note. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and, in the case of loss,
theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary form and, in the case of
mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new
Note.
ARTICLE
III. EVENTS OF DEFAULT
It
shall be considered an event of default if any of the following
events listed in this Article III (each, an “Event of
Default”) shall occur:
3.1 Failure to Pay Principal or
Interest. The Borrower fails to pay the Principal Amount
hereof or interest thereon when due on this Note, whether at
maturity, upon acceleration or otherwise, or fails to fully comply
with Section 1.10 of this Note.
3.2 Conversion and the Shares. The
Borrower (i) fails to issue Conversion Shares to the Holder (or
announces or threatens in writing that it will not honor its
obligation to do so) upon exercise by the Holder of the conversion
rights of the Holder in accordance with the terms of this Note,
(ii) fails to transfer or cause its transfer agent to transfer
(issue) (electronically or in certificated form) any certificate
for the Conversion Shares issuable to the Holder upon conversion of
or otherwise pursuant to this Note as and when required by this
Note, (iii) fails to reserve the Reserved Amount at all times, or
(iii) the Borrower directs its transfer agent not to transfer or
delays, impairs, and/or hinders its transfer agent in transferring
(or issuing) (electronically or in certificated form) any
certificate for the Conversion Shares issuable to the Holder upon
conversion of or otherwise pursuant to this Note as and when
required by this Note, or fails to remove (or directs its transfer
agent not to remove or impairs, delays, and/or hinders its transfer
agent from removing) any restrictive legend (or to withdraw any
stop transfer instructions in respect thereof) on any certificate
for any Conversion Shares issued to the Holder upon conversion of
or otherwise pursuant to this Note as and when required by this
Note (or makes any written announcement, statement or threat that
it does not intend to honor the obligations described in this
paragraph) and any such failure shall continue uncured (or any
written announcement, statement or threat not to honor its
obligations shall not be rescinded in writing) for two (2) Trading
Days after the Holder shall have delivered a Notice of Conversion.
It is an obligation of the Borrower to remain current in its
obligations to its transfer agent. It shall be an Event of Default
of this Note, if a conversion of this Note is delayed, hindered or
frustrated due to a balance owed by the Borrower to its transfer
agent. If at the option of the Holder, the Holder advances any
funds to the Borrower’s transfer agent in order to process a
conversion, such advanced funds shall be paid by the Borrower to
the Holder within forty eight (48) hours of a demand from the
Holder.
3.3 Breach of Agreements and
Covenants. The Borrower breaches any material agreement,
covenant or other material term or condition contained in the
Purchase Agreement, this Note, Irrevocable Transfer Agent
Instructions or in any agreement, statement or certificate given in
writing pursuant hereto or in connection herewith or
therewith.
3.4 Breach of Representations and
Warranties. Any representation or warranty of the Borrower
made in the Purchase Agreement, this Note, the Irrevocable Transfer
Agent Instructions or in any agreement, statement or certificate
given in writing pursuant hereto or in connection herewith or
therewith shall be false or misleading in any material respect when
made and the breach of which has (or with the passage of time will
have) a material adverse effect on the rights of the Holder with
respect to this Note or the Purchase Agreement.
3.5 Receiver or Trustee. The
Borrower or any subsidiary of the Borrower shall make an assignment
for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial
part of its property or business, or such a receiver or trustee
shall otherwise be appointed.
3.6 Judgments. Any money judgment,
writ or similar process shall be entered or filed against the
Borrower or any subsidiary of the Borrower or any of its property
or other assets for more than $500,000, and shall remain unvacated,
unbonded or unstayed for a period of twenty (20) days unless
otherwise consented to by the Holder, which consent will not be
unreasonably withheld.
3.7 Bankruptcy. Bankruptcy,
insolvency, reorganization or liquidation proceedings or other
proceedings, voluntary or involuntary, for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Borrower or any subsidiary of the
Borrower.
3.8 Failure to Comply with the 1934
Act. At any time after the Issue Date, the Borrower shall
fail to comply with the reporting requirements of the 1934 Act
and/or the Borrower shall cease to be subject to the reporting
requirements of the 1934 Act. It shall be an Event of Default under
this Section 3.8 if the Borrower shall file any Notification of
Late Filing on Form 12b-25 with the SEC.
3.9 Liquidation. Any dissolution,
liquidation, or winding up of Borrower or any substantial portion
of its business.
3.10 Cessation
of Operations. Any cessation of operations by Borrower or
Borrower admits it is otherwise generally unable to pay its debts
as such debts become due, provided, however, that any disclosure of
the Borrower’s ability to continue as a “going
concern” shall not be an admission that the Borrower cannot
pay its debts as they become due.
3.11 Maintenance
of Assets. The failure by Borrower to maintain any material
intellectual property rights, personal, real property or other
assets which are necessary to conduct its business (whether now or
in the future).
3.12 Financial
Statement Restatement. The restatement of any financial
statements filed by the Borrower with the SEC for any date or
period from two years prior to the Issue Date of this Note and
until this Note is no longer outstanding, if the result of such
restatement would, by comparison to the unrestated financial
statement, have constituted a material adverse effect on the rights
of the Holder with respect to this Note or the Purchase
Agreement.
3.13 Replacement
of Transfer Agent. In the event that the Borrower proposes
to replace its transfer agent, the Borrower fails to provide, prior
to the effective date of such replacement, a fully executed
Irrevocable Transfer Agent Instructions in a form as initially
delivered pursuant to the Purchase Agreement (including but not
limited to the provision to irrevocably reserve shares of Common
Stock in the Reserved Amount) signed by the successor transfer
agent to Borrower and the Borrower.
3.14 Cross-Default.
The declaration of an event of default by any lender or other
extender of credit to the Company under any notes, loans,
agreements or other instruments of the Company evidencing any
Indebtedness of the Company (including those filed as exhibits to
or described in the Company’s filings with the SEC), after
the passage of all applicable notice and cure or grace
periods.
3.15 Variable
Rate Transactions. The Borrower consummates a Variable Rate
Transaction at any time on or after the Issue Date (excluding this
Note).
3.16 Inside
Information. Any attempt by the Borrower or its officers,
directors, and/or affiliates to transmit, convey, disclose, or any
actual transmittal, conveyance, or disclosure by the Borrower or
its officers, directors, and/or affiliates of, material non-public
information concerning the Borrower, to the Holder or its
successors and assigns, which is not immediately cured by
Borrower’s filing of a Form 8-K pursuant to Regulation FD on
that same date
3.17 Unavailability
of Rule 144. If, at any time on or after the date that is
six (6) calendar months after the Issue Date, the Holder is unable
to (i) obtain a standard “144 legal opinion letter”
from an attorney reasonably acceptable to the Holder, the
Holder’s brokerage firm (and respective clearing firm), and
the Borrower’s transfer agent in order to facilitate the
Holder’s conversion of any portion of the Note into free
trading shares of the Borrower’s Common Stock pursuant to
Rule 144, and/or (ii) thereupon deposit such shares into the
Holder’s brokerage account.
3.18 Delisting
or Suspension of Trading of Common Stock. If, at any time on
or after the Issue Date, the Borrower’s Common Stock (i) is
suspended from trading, (ii) halted from trading, and/or (iii)
fails to be quoted or listed (as applicable) on any level of the
OTC Markets, any tier of the NASDAQ Stock Market, the New York
Stock Exchange, or the NYSE American.
3.19 Rights
and Remedies Upon an Event of Default. Upon the occurrence
of any Event of Default specified in this Article III, this Note
shall become immediately due and payable, and the Borrower shall
pay to the Holder, in full satisfaction of its obligations
hereunder, an amount equal to the Principal Amount then outstanding
plus accrued interest (including any Default Interest) through the
date of full repayment multiplied by 125% (collectively the
“Default Amount”), as well as all costs, including,
without limitation, legal fees and expenses, of collection, all
without demand, presentment or notice, all of which hereby are
expressly waived by the Borrower. Holder may, in its sole
discretion, determine to accept payment part in Common Stock and
part in cash. For purposes of payments in Common Stock, the
conversion formula set forth in Section 1.2 shall apply as well as
all other provisions of this Note. The Holder shall be entitled to
exercise all other rights and remedies available at law or in
equity.
Upon
the occurrence of any Event of Default, and in addition to any
other right or remedy of the Holder hereunder, under the related
transaction documents, or otherwise at law or in equity, the
Borrower hereby irrevocably authorizes and empowers Holder or its
legal counsel, each as the Borrower’s attorney-in-fact, to
appear ex parte and with notice to the Borrower to confess judgment
against the Borrower for the unpaid amount of this Note. The
judgment shall set forth the amount then due hereunder, plus
attorney’s fees and cost of suit, and to release all errors,
and waive all rights of appeal. The Borrower waives the right to
contest Holder’s rights under this section, including without
limitation the right to any stay of execution and the benefit of
all exemption laws now or hereafter in effect. No single exercise
of the foregoing right and power to confess judgment will be deemed
to exhaust such power, whether or not any such exercise shall be
held by any court to be invalid, voidable, or void, and such power
shall continue undiminished and may be exercised from time to time
as the Holder may elect until all amounts owing on this Note have
been paid in full. The Borrower shall provide a signed and
notarized copy of the affidavit of confession of judgment attached
hereto as Exhibit “B” on or before the Closing
Date.
ARTICLE
IV. MISCELLANEOUS
4.1 Failure or Indulgence Not
Waiver. No failure or delay on the part of the Holder in the
exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privileges. All
rights and remedies of the Holder existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise
available.
4.2 Notices. All notices, demands,
requests, consents, approvals, and other communications required or
permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service
with charges prepaid, or (iv) transmitted by hand delivery,
telegram, e-mail or facsimile, addressed as set forth below or to
such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon
hand delivery or delivery by e-mail or facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at
the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be
received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business
day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such
communications shall be:
If to
the Borrower, to:
VISIUM
TECHNOLOGIES, INC.
4094
Majestic Lane, Suite 360
Fairfax, VA
22033
Attention: Mark
Lucky
e-mail:
mlucky@visiumtechnologies.com
If to
the Holder:
LABRYS
FUND, LP
48
Parker Road
Wellesley, MA
02482
e-mail:
admin@equiluxgroup.com
4.3 Amendments. This Note and any
provision hereof may only be amended by an instrument in writing
signed by the Borrower and the Holder. The term “Note”
and all reference thereto, as used throughout this instrument,
shall mean this instrument as originally executed, or if later
amended or supplemented, then as so amended or
supplemented.
4.4 Assignability. This Note shall
be binding upon the Borrower and its successors and assigns, and
shall inure to be the benefit of the Holder and its successors and
assigns. Neither the Borrower nor the Holder shall assign this Note
or any rights or obligations hereunder without the prior written
consent of the other. Notwithstanding the foregoing, the Holder may
assign its rights hereunder to any “accredited
investor” (as defined in Rule 501(a) of the 1933 Act) in a
private transaction from the Holder or to any of its
“affiliates”, as that term is defined under the 1934
Act, without the consent of the Borrower. Notwithstanding anything
in this Note to the contrary, this Note may be pledged as
collateral in connection with a bona fide margin account or other
lending arrangement. The Holder and any assignee, by acceptance of
this Note, acknowledge and agree that following conversion of a
portion of this Note, the unpaid and unconverted principal amount
of this Note represented by this Note may be less than the amount
stated on the face hereof.
4.5 Cost of Collection. If default
is made in the payment of this Note, the Borrower shall pay the
Holder hereof costs of collection, including reasonable
attorneys’ fees.
4.6 Governing Law; Venue; Attorney’s
Fees. This Note shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to
principles of conflicts of laws. Any action brought by either party
against the other concerning the transactions contemplated by this
Note or any other agreement, certificate, instrument or document
contemplated hereby shall be brought only in the state courts
located in the Commonwealth of Massachusetts or federal courts
located in the Commonwealth of Massachusetts. The Borrower hereby
irrevocably waives any objection to jurisdiction and venue of any
action instituted hereunder and shall not assert any defense based
on lack of jurisdiction or venue or based upon forum non conveniens. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS NOTE OR ANY TRANSACTIONS CONTEMPLATED
HEREBY. Each party hereby irrevocably waives personal
service of process and consents to process being served in any
suit, action or proceeding in connection with this Note or any
other agreement, certificate, instrument or document contemplated
hereby or thereby by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to
such party at the address in effect for notices to it under this
Note and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any other manner permitted by law. The prevailing party
in any action or dispute brought in connection with this the Note
or any other agreement, certificate, instrument or document
contemplated hereby or thereby shall be entitled to recover from
the other party its reasonable attorney’s fees and
costs.
4.7 Certain Amounts. Whenever
pursuant to this Note the Borrower is required to pay an amount in
excess of the outstanding Principal Amount (or the portion thereof
required to be paid at that time) plus accrued and unpaid interest
plus Default Interest on such interest, the Borrower and the Holder
agree that the actual damages to the Holder from the receipt of
cash payment on this Note may be difficult to determine and the
amount to be so paid by the Borrower represents stipulated damages
and not a penalty and is intended to compensate the Holder in part
for loss of the opportunity to convert this Note and to earn a
return from the sale of shares of Common Stock acquired upon
conversion of this Note at a price in excess of the price paid for
such shares pursuant to this Note. The Borrower and the Holder
hereby agree that such amount of stipulated damages is not plainly
disproportionate to the possible loss to the Holder from the
receipt of a cash payment without the opportunity to convert this
Note into shares of Common Stock.
4.8 Purchase Agreement. The Company
and the Holder shall be bound by the applicable terms of the
Purchase Agreement and the documents entered into in connection
herewith and therewith.
4.9 Notice of Corporate Events.
Except as otherwise provided below, the Holder of this Note shall
have no rights as a Holder of Common Stock unless and only to the
extent that it converts this Note into Common Stock. The Borrower
shall provide the Holder with prior notification of any meeting of
the Borrower’s shareholders (and copies of proxy materials
and other information sent to shareholders). In the event of any
taking by the Borrower of a record of its shareholders for the
purpose of determining shareholders who are entitled to receive
payment of any dividend or other distribution, any right to
subscribe for, purchase or otherwise acquire (including by way of
merger, consolidation, reclassification or recapitalization) any
share of any class or any other securities or property, or to
receive any other right, or for the purpose of determining
shareholders who are entitled to vote in connection with any Change
in Control or any proposed liquidation, dissolution or winding up
of the Borrower, the Borrower shall mail a notice to the Holder, at
least twenty (20) days prior to the record date specified therein
(or thirty (30) days prior to the consummation of the transaction
or event, whichever is earlier), of the date on which any such
record is to be taken for the purpose of such dividend,
distribution, right or other event, and a brief statement regarding
the amount and character of such dividend, distribution, right or
other event to the extent known at such time. The Borrower shall
make a public announcement of any event requiring notification to
the Holder hereunder substantially simultaneously with the
notification to the Holder in accordance with the terms of this
Section 4.9.
4.10 Remedies.
The Borrower acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder, by vitiating
the intent and purpose of the transaction contemplated hereby.
Accordingly, the Borrower acknowledges that the remedy at law for a
breach of its obligations under this Note will be inadequate and
agrees, in the event of a breach or threatened breach by the
Borrower of the provisions of this Note, that the Holder shall be
entitled, in addition to all other available remedies at law or in
equity, and in addition to the penalties assessable herein, to an
injunction or injunctions restraining, preventing or curing any
breach of this Note and to enforce specifically the terms and
provisions thereof, without the necessity of showing economic loss
and without any bond or other security being required.
4.11 Construction;
Headings. This Note shall be deemed to be jointly drafted by
the Company and all the Holder and shall not be construed against
any person as the drafter hereof. The headings of this Note are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Note.
4.12 Usury.
To the extent it may lawfully do so, the Company hereby agrees not
to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or
advantage of, usury laws wherever enacted, now or at any time
hereafter in force, in connection with any action or proceeding
that may be brought by the Holder in order to enforce any right or
remedy under this Note. Notwithstanding any provision to the
contrary contained in this Note, it is expressly agreed and
provided that the total liability of the Company under this Note
for payments which under the applicable law are in the nature of
interest shall not exceed the maximum lawful rate authorized under
applicable law (the “Maximum Rate”), and, without
limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other
sums which under the applicable law in the nature of interest that
the Company may be obligated to pay under this Note exceed such
Maximum Rate. It is agreed that if the maximum contract rate of
interest allowed by applicable law and applicable to this Note is
increased or decreased by statute or any official governmental
action subsequent to the Issue Date, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to
this Note from the effective date thereof forward, unless such
application is precluded by applicable law. If under any
circumstances whatsoever, interest in excess of the Maximum Rate is
paid by the Company to the Holder with respect to indebtedness
evidenced by this the Note, such excess shall be applied by the
Holder to the unpaid principal balance of any such indebtedness or
be refunded to the Company, the manner of handling such excess to
be at the Holder’s election.
4.13 Severability.
In the event that any provision of this Note is invalid or
unenforceable under any applicable statute or rule of law
(including any judicial ruling), then such provision shall be
deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of
any other provision of this Note.
4.14 Terms
of Future Financings. So long as this Note is outstanding,
upon any issuance by the Borrower or any of its subsidiaries of any
security, or amendment to a security that was originally issued
before the Issue Date, with any term that the Holder reasonably
believes is more favorable to the holder of such security or with a
term in favor of the holder of such security that the Holder
reasonably believes was not similarly provided to the Holder in
this Note, then (i) the Borrower shall notify the Holder of such
additional or more favorable term within one (1) business day of
the issuance and/or amendment (as applicable) of the respective
security, and (ii) such term, at Holder’s option, shall
become a part of the transaction documents with the Holder
(regardless of whether the Borrower complied with the notification
provision of this Section 4.14). The types of terms contained in
another security that may be more favorable to the holder of such
security include, but are not limited to, terms addressing
conversion discounts, prepayment rate, conversion lookback periods,
interest rates, and original issue discounts.
4.15 Dispute
Resolution. In the case of a dispute as to the determination
of the Conversion Price, Conversion Amount, any prepayment amount
or Default Amount, Issue, Closing or Maturity Date, the closing bid
price, or fair market value (as the case may be) or the arithmetic
calculation of the Conversion Price or the applicable prepayment
amount(s) (as the case may be), the Borrower or the Holder shall
submit the disputed determinations or arithmetic calculations via
facsimile (i) within one (1) Trading Day after receipt of the
applicable notice giving rise to such dispute to the Borrower or
the Holder or (ii) if no notice gave rise to such dispute, at any
time after the Holder learned of the circumstances giving rise to
such dispute. If the Holder and the Borrower are unable to agree
upon such determination or calculation within one (1) Trading Day
of such disputed determination or arithmetic calculation (as the
case may be) being submitted to the Borrower or the Holder, then
the Borrower shall, within one (1) Trading Day, submit (a) the
disputed determination of the Conversion Price, the closing bid
price, the or fair market value (as the case may be) to an
independent, reputable investment bank selected by the Borrower and
approved by the Holder or (b) the disputed arithmetic calculation
of the Conversion Price, Conversion Amount, any prepayment amount
or Default Amount, to an independent, outside accountant selected
by the Holder that is reasonably acceptable to the Borrower. The
Borrower shall cause at its expense the investment bank or the
accountant to perform the determinations or calculations and notify
the Borrower and the Holder of the results no later than one (1)
Trading Day from the time it receives such disputed determinations
or calculations. Such investment bank’s or accountant’s
determination or calculation shall be binding upon all parties
absent demonstrable error.
4.16 Right
of First Refusal. If at any time while this Note is
outstanding, the Borrower has a bona fide offer of capital or
financing from any 3rd party, that the Borrower intends to act
upon, then the Borrower must first offer such opportunity to the
Holder to provide such capital or financing to the Borrower on the
same terms as each respective 3rd party’s terms. Should the
Holder be unwilling or unable to provide such capital or financing
to the Borrower within 5 trading days from Holder’s receipt
of written notice of the offer (the “Offer Notice”)
from the Borrower, then the Borrower may obtain such capital or
financing from that respective 3rd party upon the exact same terms
and conditions offered by the Borrower to the Holder, which
transaction must be completed within 30 days after the date of the
Offer Notice. If the Borrower does not receive the capital or
financing from the respective 3rd party within 30 days after the
date of the respective Offer Notice, then the Borrower must again
offer the capital or financing opportunity to the Holder as
described above, and the process detailed above shall be repeated.
The Offer Notice must be sent via electronic mail to
Admin@EquiluxGroup.com.
[signature page
follows]
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IN WITNESS WHEREOF, Borrower has caused
this Note to be signed in its name by its duly authorized officer
on June 17, 2021.
VISIUM
TECHNOLOGIES, INC.
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By:
/s/ Mark
Lucky
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Name:
Mark Lucky
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Title:
Chief Executive Officer
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EXHIBIT
A -- NOTICE OF CONVERSION
The
undersigned hereby elects to convert
$ principal
amount of the Note (defined below) into that number of shares of
Common Stock to be issued pursuant to the conversion of the Note
(“Common Stock”) as set forth below, of VISIUM TECHNOLOGIES, INC., a Florida
corporation (the “Borrower”), according to the
conditions of the promissory note of the Borrower dated as of June
17, 2021 (the “Note”), as of the date written below. No
fee will be charged to the Holder for any conversion, except for
transfer taxes, if any.
Box
Checked as to applicable instructions:
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The
Borrower shall electronically transmit the Common Stock issuable
pursuant to this Notice of Conversion to the account of the
undersigned or its nominee with DTC through its Deposit Withdrawal
Agent Commission system (“DWAC Transfer”).
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Name of
DTC Prime Broker:
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Account
Number:
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☐
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The
undersigned hereby requests that the Borrower issue a certificate
or certificates for the number of shares of Common Stock set forth
below (which numbers are based on the Holder’s
calculation
attached hereto) in
the name(s) specified immediately below or, if additional space is
necessary, on an attachment hereto:
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Date of
Conversion:
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Applicable
Conversion Price:
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$
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Number
of Shares of Common Stock to be
Issued
Pursuant to Conversion of the Note:
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Amount
of Principal Balance Due remaining Under the Note after this
conversion:
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By:
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Name:
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Title:
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Date:
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SECURITIES
PURCHASE AGREEMENT
This
SECURITIES PURCHASE
AGREEMENT (the “Agreement”), dated as of June
17, 2021, by and between VISIUM
TECHNOLOGIES, INC., a Florida corporation, with headquarters
located at 4094 Majestic Lane, Suite 360, Fairfax, VA 22033 (the
“Company”), and LABRYS
FUND, LP, a Delaware limited partnership, with its address
at 48 Parker Road, Wellesley, MA 02482 (the
“Buyer”).
WHEREAS:
A. The Company and the
Buyer are executing and delivering this Agreement in reliance upon
the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the “1933
Act”) and Rule 506(b) promulgated by the United States
Securities and Exchange Commission (the “SEC”) under
the 1933 Act;
B. Buyer desires to
purchase from the Company, and the Company desires to issue and
sell to the Buyer, upon the terms and conditions set forth in this
Agreement, a promissory note of the Company, in the aggregate
principal amount of $115,000.00 (as the principal amount thereof
may be increased pursuant to the terms thereof, and together with
any note(s) issued in replacement thereof or as a dividend thereon
or otherwise with respect thereto in accordance with the terms
thereof, in the form attached hereto as Exhibit A, the
“Note”), convertible into shares of common stock,
$0.0001 par value per share, of the Company (the “Common
Stock”), upon the terms and subject to the limitations and
conditions set forth in such Note;
C. The Buyer wishes to
purchase, upon the terms and conditions stated in this Agreement,
such principal amount of the Note as is set forth immediately below
its name on the signature pages hereto;
D. The Company wishes
to issue a common stock purchase warrant to purchase 7,467,532
shares of Common Stock (the “Warrant”) to the Buyer as
additional consideration for the purchase of the Note, which shall
be earned in full as of the Closing Date, as further provided
herein.
NOW THEREFORE, in consideration of the
foregoing and of the agreements and covenants herein contained, and
for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the
Buyer hereby agree as follows:
1.
Purchase and Sale of Note.
a. Purchase of Note. On the
Closing Date (as defined below), the Company shall issue and sell
to the Buyer, and the Buyer agrees to purchase from the Company,
the Note, as further provided herein.
b.
Form of Payment. On the Closing
Date: (i) the Buyer shall pay the purchase price of
$109,250.00 (the
“Purchase Price”) for the Note, to be issued and sold
to it at the Closing (as defined below), by wire transfer of
immediately available funds to the Company, in accordance with the
Company’s written wiring instructions, against delivery of
the Note, and (ii) the Company shall deliver such duly executed
Note and Warrant on behalf of the Company, to the Buyer, against
delivery of such Purchase Price. On the Closing, the Buyer shall
withhold a non-accountable sum of $2,500.00 from the Purchase Price
to cover the Buyer’s legal fees in connection with the
transactions contemplated by this Agreement.
c. Closing Date. Subject to the
satisfaction (or written waiver) of the conditions thereto set
forth in Section 6 and Section 7 below, the date and time of the
issuance and sale of the Note pursuant to this Agreement (the
“Closing Date”) shall be 4:00 PM, Eastern Time on the
date first written above, or such other mutually agreed upon
time.
d. Closing. The closing of the
transactions contemplated by this Agreement (the
“Closing”) shall occur on the Closing Date at such
location as may be agreed to by the parties (including via exchange
of electronic signatures).
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1A.
Warrant. On or
before the Closing Date, the Company shall issue the Warrant to the
Buyer pursuant to the terms of contained therein.
2. Buyer’s Representations and
Warranties. The Buyer represents and warrants to the Company
as of the Closing Date that:
a. Investment Purpose. As of the
Closing Date, the Buyer is purchasing the Note, the Warrant, and
the shares of Common Stock issuable upon conversion of or otherwise
pursuant to the Note and such additional shares of Common Stock, if
any, as are issuable on account of interest on the Note pursuant to
this Agreement and/or upon exercise of the Warrant, such shares of
Common Stock being collectively referred to herein as the
“Conversion Shares” and, collectively with the Note and
Warrant, the “Securities”) for its own account and not
with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from
registration under the 1933 Act; provided, however, that by making the
representations herein, the Buyer does not agree to hold any of the
Securities for any minimum or other specific term and reserves the
right to dispose of the Securities at any time in accordance with
or pursuant to a registration statement or an exemption under the
1933 Act.
b. Accredited Investor Status. The
Buyer is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D (an “Accredited
Investor”).
c. Reliance on Exemptions. The
Buyer understands that the Securities are being offered and sold to
it in reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the
Buyer’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Buyer set
forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the
Securities.
d. Information. The Buyer and its
advisors, if any, have been, and for so long as the Note remains
outstanding will continue to be, furnished with all materials
relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Securities
which have been requested by the Buyer or its advisors. The Buyer
and its advisors, if any, have been, and for so long as the Note
remains outstanding will continue to be, afforded the opportunity
to ask questions of the Company regarding its business and affairs.
Notwithstanding the foregoing, the Company has not disclosed to the
Buyer any material nonpublic information regarding the Company or
otherwise and will not disclose such information unless such
information is disclosed to the public prior to or promptly
following such disclosure to the Buyer. Neither such inquiries nor
any other due diligence investigation conducted by Buyer or any of
its advisors or representatives shall modify, amend or affect
Buyer’s right to rely on the Company’s representations
and warranties contained in Section 3 below.
e. Governmental Review. The Buyer
understands that no United States federal or state agency or any
other government or governmental agency has passed upon or made any
recommendation or endorsement of the Securities.
f. Transfer or Re-sale. The Buyer
understands that (i) the sale or resale of the Securities has not
been and is not being registered under the 1933 Act or any
applicable state securities laws, and the Securities may not be
transferred unless (a) the Securities are sold pursuant to an
effective registration statement under the 1933 Act,
(b) the
Buyer shall have delivered to the Company, at the cost of the
Company, an opinion of counsel (which may be the Legal Counsel
Opinion (as defined below)) that shall be in form, substance and
scope customary for opinions of counsel in comparable transactions
to the effect that the Securities to be sold or transferred may be
sold or transferred pursuant to an exemption from such
registration, which opinion shall be accepted by the Company, (c)
the Securities are sold or transferred to an
“affiliate” (as defined in Rule 144 promulgated under
the 1933 Act (or a successor rule) (“Rule 144”)) of the
Buyer who agrees to sell or otherwise transfer the Securities only
in accordance with this Section 2(f) and who is an Accredited
Investor, (d) the Securities are sold pursuant to Rule 144 or other
applicable exemption, or (e) the Securities are sold pursuant to
Regulation S under the 1933 Act (or a successor rule)
(“Regulation S”), and the Buyer shall have delivered to
the Company, at the cost of the Company, an opinion of counsel that
shall be in
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form,
substance and scope customary for opinions of counsel in corporate
transactions, which opinion shall be accepted by the Company; (ii)
any sale of such Securities made in reliance on Rule 144 may be
made only in accordance with the terms of said Rule and further, if
said Rule is not applicable, any re-sale of such Securities under
circumstances in which the seller (or the person through whom the
sale is made) may be deemed to be an underwriter (as that term is
defined in the 1933 Act) may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person
is under any obligation to register such Securities under the 1933
Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder (in each case).
Notwithstanding the foregoing or anything else contained herein to
the contrary, the Securities may be pledged in connection with a
bona fide margin
account or other lending arrangement secured by the Securities, and
such pledge of Securities shall not be deemed to be a transfer,
sale or assignment of the Securities hereunder, and the Buyer in
effecting such pledge of Securities shall be not required to
provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or
otherwise.
g. Legends. The Buyer understands
that until such time as the Note, Warrant, and, upon conversion of
the Note and/or exercise of the Warrant in accordance with its
respective terms, the Conversion Shares, have been registered under
the 1933 Act or may be sold pursuant to Rule 144, Rule 144A under
the 1933 Act, Regulation S, or other applicable exemption without
any restriction as to the number of securities as of a particular
date that can then be immediately sold, the Securities may bear a
restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the
certificates for such Securities):
“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[CONVERTIBLE/EXERCISABLE] HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE
SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144, RULE 144A, REGULATION S, OR OTHER APPLICABLE
EXEMPTION UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.”
The
legend set forth above shall be removed and the Company shall issue
a certificate for the applicable shares of Common Stock without
such legend to the holder of any Security upon which it is stamped
or (as requested by such holder) issue the applicable shares of
Common Stock to such holder by electronic delivery by crediting the
account of such holder’s broker with The Depository Trust
Company (“DTC”),
if, unless otherwise required by applicable state securities laws,
(a) such Security is registered for sale under an effective
registration statement filed under the 1933 Act or otherwise may be
sold pursuant to Rule 144, Rule 144A, Regulation S, or other
applicable exemption without any restriction as to the number of
securities as of a particular date that can then be immediately
sold, or (b) the Company or the Buyer provides the Legal Counsel
Opinion (as contemplated by and in accordance with Section 4(m)
hereof) to the effect that a public sale or transfer of such
Security may be made without registration under the 1933 Act, which
opinion shall be accepted by the Company so that the sale or
transfer is effected. The Company shall be responsible for the fees
of its transfer agent and all DTC fees associated with any such
issuance. The Buyer agrees to sell all Securities, including those
represented by a certificate(s) from which the legend has been
removed, in compliance with applicable prospectus delivery
requirements, if any. In the event that the Company does not accept
the opinion of counsel provided by the Buyer with respect to the
transfer of Securities pursuant to an exemption from registration,
such as Rule 144, Rule 144A, Regulation S, or other applicable
exemption at the Deadline (as defined in the Note), it will be
considered an Event of Default pursuant to Section 3.2 of the
Note.
h. Authorization; Enforcement.
This Agreement has been duly and validly authorized by the Buyer
and has been duly executed and delivered on behalf of the Buyer,
and this Agreement constitutes a valid
and
binding agreement of the Buyer enforceable in accordance with its
terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally and except as may be
limited by the exercise of judicial discretion in applying
principles of equity.
3. Representations and Warranties of the
Company. The Company represents and warrants to the Buyer as
of the Closing Date that:
a. Organization and Qualification.
The Company and each of its Subsidiaries (as defined below), if
any, is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
incorporated, with full power and authority (corporate and other)
to own, lease, use and operate its properties and to carry on its
business as and where now owned, leased, used, operated and
conducted. Schedule 3(a), if attached hereto, sets forth a list of
all of the Subsidiaries of the Company and the jurisdiction in
which each is incorporated. The Company and each of its
Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which its
ownership or use of property or the nature of the business
conducted by it makes such qualification necessary except where the
failure to be so qualified or in good standing would not have a
Material Adverse Effect. “Material Adverse Effect”
means any material adverse effect on the business, operations,
assets, financial condition or prospects of the Company or its
Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements or instruments to be
entered into in connection herewith. “Subsidiaries”
means any corporation or other organization, whether incorporated
or unincorporated, in which the Company owns, directly or
indirectly, any equity or other ownership interest.
b. Authorization; Enforcement. (i)
The Company has all requisite corporate power and authority to
enter into and perform this Agreement, the Note, and to consummate
the transactions contemplated hereby and thereby and to issue the
Securities, in accordance with the terms hereof and thereof, (ii)
the execution and delivery of this Agreement, the Warrant, the
Note, and the Conversion Shares by the Company and the consummation
by it of the transactions contemplated hereby and thereby
(including without limitation, the issuance of the Note, Warrant,
as well as the issuance and reservation for issuance of the
Conversion Shares issuable upon conversion of the Note and/or
exercise of the Warrant) have been duly authorized by the
Company’s Board of Directors and no further consent or
authorization of the Company, its Board of Directors, its
shareholders, or its debt holders is required, (iii) this Agreement
and the Note (together with any other instruments executed in
connection herewith or therewith) have been duly executed and
delivered by the Company by its authorized representative, and such
authorized representative is the true and official representative
with authority to sign this Agreement, the Note and the other
instruments documents executed in connection herewith or therewith
and bind the Company accordingly, and (iv) this Agreement
constitutes, and upon execution and delivery by the Company of the
Note, each of such instruments will constitute, a legal, valid and
binding obligation of the Company, enforceable against the Company
in accordance with their terms.
c. Capitalization; Governing
Documents. As of June 17, 2021, the authorized capital stock
of the Company consists of: 10,000,000,000 authorized shares of
Common Stock, of which 3,050,598,132 shares were issued and
outstanding, and 100,000,000 authorized shares of preferred stock,
of which 13,992,340 shares of Series A, 1,327,640 shares of Series
B, and 1 share of Series AA were issued and outstanding. All of
such outstanding shares of capital stock of the Company and the
Conversion Shares, are, or upon issuance will be, duly authorized,
validly issued, fully paid and non-assessable. No shares of capital
stock of the Company are subject to preemptive rights or any other
similar rights of the shareholders of the Company or any liens or
encumbrances imposed through the actions or failure to act of the
Company. As of the effective date of this Agreement, other than as
publicly announced prior to such date and reflected in the SEC
filings of the Company (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, puts, calls, rights of
first refusal, agreements, understandings, claims or other
commitments or rights of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for any
shares of capital stock of the Company or any of its Subsidiaries,
or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue additional shares of capital stock of
the Company or any of its Subsidiaries, (ii) there are no
agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of its or
their securities under the 1933 Act and (iii) there are no
anti-dilution or price adjustment provisions contained in any
security issued by the Company (or in any agreement providing
rights to security holders) that will be triggered by the issuance
of any of the Securities. The Company has furnished to the Buyer
true and correct copies of the Company’s Certificate of
Incorporation as in effect on the date hereof (“Certificate
of Incorporation”), the Company’s By-laws, as in effect
on the date hereof (the “By-laws”), and the terms of
all securities convertible into or exercisable for Common Stock of
the Company and the material rights of the holders thereof in
respect thereto.
d. Issuance of Conversion Shares.
The Conversion Shares are duly authorized and reserved for issuance
and, upon conversion of the Note in accordance with its terms, will
be validly issued, fully paid and non-assessable, and free from all
taxes, liens, claims and encumbrances with respect to the issue
thereof and shall not be subject to preemptive rights or other
similar rights of shareholders of the Company and will not impose
personal liability upon the holder thereof.
e. Issuance of Warrant. The
issuance of the Warrant is duly authorized and will be validly
issued, fully paid and non-assessable, and free from all taxes,
liens, claims and encumbrances with respect to the issue thereof
and shall not be subject to preemptive rights or other similar
rights of shareholders of the Company and will not impose personal
liability upon the holder thereof.
f. Acknowledgment of Dilution. The
Company understands and acknowledges the potentially dilutive
effect of the Conversion Shares to the Common Stock upon the
conversion of the Note. The Company further acknowledges that its
obligation to issue, upon conversion of the Note, the Conversion
Shares, in accordance with this Agreement, and the Note are
absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other
shareholders of the Company.
g. Ranking; No Conflicts. The Note
shall have priority in payment and performance over all future
unsecured indebtedness of the Company. The execution, delivery and
performance of this Agreement and the Note by the Company and the
consummation by the Company of the transactions contemplated hereby
and thereby (including, without limitation, the issuance and
reservation for issuance of the Conversion Shares) will not (i)
conflict with or result in a violation of any provision of the
Certificate of Incorporation or By-laws, or (ii) violate or
conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of
time or both could become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of,
any agreement, note, evidence of indebtedness, indenture, patent,
patent license or instrument to which the Company or any of its
Subsidiaries is a party, or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and regulations of any
self-regulatory organizations to which the Company or its
securities is subject) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or
any of its Subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect), or (iv) trigger any
anti-dilution and/or ratchet provision contained in any other
contract in which the Company is a party thereto or any security
issued by the Company. Neither the Company nor any of its
Subsidiaries is in violation of its Certificate of Incorporation,
By-laws or other organizational documents and neither the Company
nor any of its Subsidiaries is in default (and no event has
occurred which with notice or lapse of time or both could put the
Company or any of its Subsidiaries in default) under, and neither
the Company nor any of its Subsidiaries has taken any action or
failed to take any action that would give to others any rights of
termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of
its Subsidiaries is a party or by which any property or assets of
the Company or any of its Subsidiaries is bound or affected, except
for possible defaults as would not, individually or in the
aggregate, have a Material Adverse Effect. The businesses of the
Company and its Subsidiaries, if any, are not being conducted, and
shall not be conducted so long as the Buyer owns any of the
Securities, in violation of any law, ordinance or regulation of any
governmental entity. Except as specifically contemplated by this
Agreement and as required under the 1933 Act and any applicable
state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or
registration with, any court, governmental agency, regulatory
agency, self-regulatory organization or stock market or any third
party in order for it to execute, deliver or perform any of its
obligations under this Agreement and the Note in accordance with
the terms hereof or thereof or to issue and sell the Note in
accordance with the terms hereof and, upon conversion of the Note
and/or exercise of the Warrant, issue Conversion Shares. All
consents, authorizations, orders, filings and registrations which
the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date
hereof. The Company is not in violation of the listing requirements
of the Principal Market (as defined herein) and does
not
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reasonably
anticipate that the Common Stock will be delisted by the Principal
Market in the foreseeable future. The Company and its Subsidiaries
are unaware of any facts or circumstances which might give rise to
any of the foregoing. The Principal Market shall mean any tier of
the OTC Markets, any tier of the NASDAQ Stock Market (including
NASDAQ Capital Market), or the NYSE American, or any successor to
such markets.
h. SEC Documents; Financial
Statements. The Company has timely filed all reports,
schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of
the Securities Exchange Act of 1934, as amended (the “1934
Act”) (all of the foregoing filed prior to the date hereof
and all exhibits included therein and financial statements and
schedules thereto and documents (other than exhibits to such
documents) incorporated by reference therein, being hereinafter
referred to herein as the “SEC Documents”). As of their
respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were
filed with the SEC, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. None of the statements made in any such SEC Documents
is, or has been, required to be amended or updated under applicable
law (except for such statements as have been amended or updated in
subsequent filings prior the date hereof). As of their respective
dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with United States
generally accepted accounting principles, consistently applied,
during the periods involved and fairly present in all material
respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the
financial statements of the Company included in the SEC Documents,
the Company has no liabilities, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business
subsequent to March 31, 2021, and (ii) obligations under contracts
and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be
reflected in such financial statements, which, individually or in
the aggregate, are not material to the financial condition or
operating results of the Company. The Company is subject to the
reporting requirements of the 1934 Act. The Company has never been
a “shell company” as described in Rule
144(i)(1)(i).
i. Absence of Certain Changes.
Since March 31, 2021, there has been no material adverse change and
no material adverse development in the assets, liabilities,
business, properties, operations, financial condition, results of
operations, prospects or 1934 Act reporting status of the Company
or any of its Subsidiaries.
j. Absence of Litigation. There is
no action, suit, claim, proceeding, inquiry or investigation before
or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company or
any of its Subsidiaries, threatened against or affecting the
Company or any of its Subsidiaries, or their officers or directors
in their capacity as such, that could have a Material Adverse
Effect. The SEC Documents contain a complete list and summary
description of any pending or, to the knowledge of the Company,
threatened proceeding against or affecting the Company or any of
its Subsidiaries, without regard to whether it would have a
Material Adverse Effect. The Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to any
of the foregoing.
k. Intellectual Property. The
Company and each of its Subsidiaries owns or possesses the
requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets,
trademarks, trademark applications, service marks, service names,
trade names and copyrights (“Intellectual Property”)
necessary to enable it to conduct its business as now operated
(and, as presently contemplated to be operated in the future);
there is no claim or action by any person pertaining to, or
proceeding pending, or to the Company’s knowledge threatened,
which challenges the right of the Company or of a Subsidiary with
respect to any Intellectual Property necessary to enable it to
conduct its business as now operated (and, as presently
contemplated to be operated in the future); to the best of the
Company’s knowledge, the Company’s or its
Subsidiaries’ current and intended products, services and
processes do not infringe on any Intellectual Property or other
rights held by any person; and the Company is unaware of any facts
or circumstances which might give rise to any of the
foregoing.
The
Company and each of its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of their
Intellectual Property.
l. No Materially Adverse Contracts,
Etc. Neither the Company nor any of its Subsidiaries is
subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which in the
judgment of the Company’s officers has or is expected in the
future to have a Material Adverse Effect. Neither the Company nor
any of its Subsidiaries is a party to any contract or agreement
which in the judgment of the Company’s officers has or is
expected to have a Material Adverse Effect.
m. Tax Status. The Company and
each of its Subsidiaries has made or filed all federal, state and
foreign income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries
has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes
and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has
set aside on its books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim. The Company has not executed a
waiver with respect to the statute of limitations relating to the
assessment or collection of any foreign, federal, state or local
tax. None of the Company’s tax returns is presently being
audited by any taxing authority.
n. Transactions with Affiliates.
Except for arm’s length transactions pursuant to which the
Company or any of its Subsidiaries makes payments in the ordinary
course of business upon terms no less favorable than the Company or
any of its Subsidiaries could obtain from third parties and other
than the grant of stock options described in the SEC Documents,
none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company or any of its
Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer,
director, trustee or partner.
o. Disclosure. All information
relating to or concerning the Company or any of its Subsidiaries
set forth in this Agreement and provided to the Buyer pursuant to
Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all
material respects and the Company has not omitted to state any
material fact necessary in order to make the statements made herein
or therein, in light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or
exists with respect to the Company or any of its Subsidiaries or
its or their business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the
Company but which has not been so publicly announced or disclosed
(assuming for this purpose that the Company’s reports filed
under the 1934 Act are being incorporated into an effective
registration statement filed by the Company under the 1933
Act).
p. Acknowledgment Regarding Buyer’s
Purchase of Securities. The Company acknowledges and agrees
that the Buyer is acting solely in the capacity of arm’s
length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges
that the Buyer is not acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and any
statement made by the Buyer or any of its respective
representatives or agents in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation
and is merely incidental to the Buyer’s purchase of the
Securities. The Company further represents to the Buyer that the
Company’s decision to enter into this Agreement has been
based solely on the independent evaluation of the Company and its
representatives.
q. No Integrated Offering. Neither
the Company, nor any of its affiliates, nor any person acting on
its or their behalf, has directly or indirectly made any offers or
sales in any security or solicited any offers to buy any security
under circumstances that would require registration under the 1933
Act of the issuance of the
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Securities to the
Buyer. The issuance of the Securities to the Buyer will not be
integrated with any other issuance of the Company’s
securities (past, current or future) for purposes of any
shareholder approval provisions applicable to the Company or its
securities.
r. No Brokers; No Solicitation.
Except with respect to Donald Capital LLC, a registered
broker-dealer (CRD#: 297763), the Company has taken no action which
would give rise to any claim by any person for brokerage
commissions, transaction fees or similar payments relating to this
Agreement or the transactions contemplated hereby. The Company
acknowledges and agrees that neither the Buyer nor its employee(s),
member(s), beneficial owner(s), or partner(s) solicited the Company
to enter into this Agreement and consummate the transactions
described in this Agreement.
s. Permits; Compliance. The
Company and each of its Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements,
variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on
its business as it is now being conducted (collectively, the
“Company Permits”), and there is no action pending or,
to the knowledge of the Company, threatened regarding suspension or
cancellation of any of the Company Permits. Neither the Company nor
any of its Subsidiaries is in conflict with, or in default or
violation of, any of the Company Permits, except for any such
conflicts, defaults or violations which, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect. Since March 31, 2021, neither the Company nor any
of its Subsidiaries has received any notification with respect to
possible conflicts, defaults or violations of applicable laws,
except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations would not have
a Material Adverse Effect.
t.
Environmental Matters.
(i) There are, to the
Company’s knowledge, with respect to the Company or any of
its Subsidiaries or any predecessor of the Company, no past or
present violations of Environmental Laws (as defined below),
releases of any material into the environment, actions, activities,
circumstances, conditions, events, incidents, or contractual
obligations which may give rise to any common law environmental
liability or any liability under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or similar
federal, state, local or foreign laws and neither the Company nor
any of its Subsidiaries has received any notice with respect to any
of the foregoing, nor is any action pending or, to the
Company’s knowledge, threatened in connection with any of the
foregoing. The term ”Environmental Laws” means all
federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface
or subsurface strata), including, without limitation, laws relating
to emissions, discharges, releases or threatened releases of
chemicals, pollutants contaminants, or toxic or hazardous
substances or wastes (collectively, “Hazardous
Materials”) into the environment, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as
all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated
or approved thereunder.
(ii) Other
than those that are or were stored, used or disposed of in
compliance with applicable law, no Hazardous Materials are
contained on or about any real property currently owned, leased or
used by the Company or any of its Subsidiaries, and no Hazardous
Materials were released on or about any real property previously
owned, leased or used by the Company or any of its Subsidiaries
during the period the property was owned, leased or used by the
Company or any of its Subsidiaries, except in the normal course of
the Company’s or any of its Subsidiaries’
business.
(iii) There
are no underground storage tanks on or under any real property
owned, leased or used by the Company or any of its Subsidiaries
that are not in compliance with applicable law.
u. Title to Property. The Company
and its Subsidiaries have good and marketable title in fee simple
to all real property and good and marketable title to all personal
property owned by them which is material to the business of the
Company and its Subsidiaries, in each case free and clear of all
liens, encumbrances and defects except such as are described in
Schedule 3(u), if attached hereto, or such as would not have a
Material Adverse Effect. Any real property and facilities held
under lease by the Company and its Subsidiaries are held
by
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them
under valid, subsisting and enforceable leases with such exceptions
as would not have a Material Adverse Effect.
v. Insurance. The Company and each
of its Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in
the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has any reason
to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
Upon written request the Company will provide to the Buyer true and
correct copies of all policies relating to directors’ and
officers’ liability coverage, errors and omissions coverage,
and commercial general liability coverage.
w. Internal Accounting Controls.
The Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient, in the judgment of the
Company’s board of directors, to provide reasonable assurance
that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with
management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
x. Foreign Corrupt Practices.
Neither the Company, nor any of its Subsidiaries, nor any director,
officer, agent, employee or other person acting on behalf of the
Company or any Subsidiary has, in the course of his actions for, or
on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices
Act of 1977, as amended, or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.
y. Solvency. The Company (after
giving effect to the transactions contemplated by this Agreement)
is solvent (i.e.,
its assets have a fair market value in excess of the amount
required to pay its probable liabilities on its existing debts as
they become absolute and matured) and currently the Company has no
information that would lead it to reasonably conclude that the
Company would not, after giving effect to the transaction
contemplated by this Agreement, have the ability to, nor does it
intend to take any action that would impair its ability to, pay its
debts from time to time incurred in connection therewith as such
debts mature. The Company’s financial statements for its most
recent fiscal year end and interim financial statements have been
prepared assuming the Company will continue as a going concern,
which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.
z. No Investment Company. The
Company is not, and upon the issuance and sale of the Securities as
contemplated by this Agreement will not be an “investment
company” required to be registered under the Investment
Company Act of 1940 (an “Investment Company”). The
Company is not controlled by an Investment Company.
aa.
No Off Balance Sheet
Arrangements. There is no transaction, arrangement, or other
relationship between the Company or any of its Subsidiaries and an
unconsolidated or other off balance sheet entity that is required
to be disclosed by the Company in its 1934 Act filings and is not
so disclosed or that otherwise could be reasonably likely to have a
Material Adverse Effect.
bb.
No Disqualification
Events. None of the Company, any of its predecessors, any
affiliated issuer, any director, executive officer, other officer
of the Company participating in the offering hereunder, any
beneficial owner of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power,
nor any promoter (as that term is defined in Rule 405 under the
1933 Act) connected with the Company in any capacity at the time of
sale (each, an “Issuer Covered Person”) is subject to
any of the “Bad Actor” disqualifications described in
Rule 506(d)(1)(i) to (viii) under the 1933 Act (a
“Disqualification Event”), except for
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a
Disqualification Event covered by Rule 506(d)(2) or (d)(3). The
Company has exercised reasonable care to determine whether any
Issuer Covered Person is subject to a Disqualification
Event.
cc.
Manipulation of
Price. The Company has not, and to its knowledge no one
acting on its behalf has: (i) taken, directly or indirectly, any
action designed to cause or to result, or that could reasonably be
expected to cause or result, in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale
or resale of any of the Securities, (ii) sold, bid for, purchased,
or paid any compensation for soliciting purchases of, any of the
Securities, or (iii) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other
securities of the Company.
dd.
Bank Holding Company
Act. Neither the Company nor any of its Subsidiaries is
subject to the Bank Holding Company Act of 1956, as amended (the
“BHCA”) and to regulation by the Board of Governors of
the Federal Reserve System (the “Federal Reserve”).
Neither the Company nor any of its Subsidiaries or affiliates owns
or controls, directly or indirectly, five percent (5%) or more of
the outstanding shares of any class of voting securities or
twenty-five percent (25%) or more of the total equity of a bank or
any entity that is subject to the BHCA and to regulation by the
Federal Reserve. Neither the Company nor any of its Subsidiaries or
affiliates exercises a controlling influence over the management or
policies of a bank or any entity that is subject to the BHCA and to
regulation by the Federal Reserve.
ee.
Illegal or Unauthorized
Payments; Political Contributions. Neither the Company nor
any of its Subsidiaries nor, to the Company’s knowledge, any
of the officers, directors, employees, agents or other
representatives of the Company or any of its Subsidiaries or any
other business entity or enterprise with which the Company or any
Subsidiary is or has been affiliated or associated, has, directly
or indirectly, made or authorized any payment, contribution or gift
of money, property, or services, whether or not in contravention of
applicable law, (i) as a kickback or bribe to any person or (ii) to
any political organization, or the holder of or any aspirant to any
elective or appointive public office except for personal political
contributions not involving the direct or indirect use of funds of
the Company or any of its Subsidiaries.
ff.
Breach of Representations
and Warranties by the Company. The Company agrees that if
the Company breaches any of the representations or warranties set
forth in this Section 3 and in addition to any other remedies
available to the Buyer pursuant to this Agreement, it will be
considered an Event of Default under Section 3.4 of the
Note.
4.
ADDITIONAL COVENANTS, AGREEMENTS AND
ACKNOWLEDGEMENTS.
a. Best Efforts. The parties shall
use their best efforts to satisfy timely each of the conditions
described in Section 6 and 7 of this Agreement.
b. Form D; Blue Sky Laws. The
Company agrees to file a Form D with respect to the Securities as
required under Regulation D and to provide a copy thereof to the
Buyer promptly after such filing. The Company shall, on or before
the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to the
Buyer at the applicable closing pursuant to this Agreement under
applicable securities or “blue sky” laws of the states
of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so
taken to the Buyer on or prior to the Closing Date.
c. Use of Proceeds. The Company
shall use the proceeds for business development, and not for the
repayment of any indebtedness owed to officers, directors or
employees of the Company or their affiliates or in violation or
contravention of any applicable law, rule or
regulation.
d.
[Intentionally Omitted].
e. Usury. To the extent it may
lawfully do so, the Company hereby agrees not to insist upon or
plead or in any manner whatsoever claim, and will resist any and
all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force,
in connection with any action or proceeding that may be brought by
the Buyer in order to enforce any right or remedy under this
Agreement, the Note and any document, agreement or instrument
contemplated thereby. Notwithstanding any
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provision to the
contrary contained in this Agreement, the Note and any document,
agreement or instrument contemplated thereby, it is expressly
agreed and provided that the total liability of the Company under
this Agreement, the Note or any document, agreement or instrument
contemplated thereby for payments which under applicable law are in
the nature of interest shall not exceed the maximum lawful rate
authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of
interest or default interest, or both of them, when aggregated with
any other sums which under applicable law in the nature of interest
that the Company may be obligated to pay under this Agreement, the
Note and any document, agreement or instrument contemplated thereby
exceed such Maximum Rate. It is agreed that if the maximum contract
rate of interest allowed by law applicable to this Agreement, the
Note and any document, agreement or instrument contemplated thereby
is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to
this Agreement, the Note and any document, agreement or instrument
contemplated thereby from the effective date thereof forward,
unless such application is precluded by applicable law. If under
any circumstances whatsoever, interest in excess of the Maximum
Rate is paid by the Company to the Buyer with respect to
indebtedness evidenced by this Agreement, the Note and any
document, agreement or instrument contemplated thereby, such excess
shall be applied by the Buyer to the unpaid principal balance of
any such indebtedness or be refunded to the Company, the manner of
handling such excess to be at the Buyer’s
election.
f. Restriction on Activities.
Commencing as of the date first above written, and until the
earlier of payment of the Note in full or full conversion of the
Note, the Company shall not, directly or indirectly, without the
Buyer’s prior written consent, which consent shall not be
unreasonably withheld: (a) change the nature of its business; (b)
sell, divest, acquire, change the structure of any material assets
other than in the ordinary course of business; or (c) consummate
any Variable Rate Transaction (as defined herein).
g. Listing. The Company will, so
long as the Buyer owns any of the Securities, maintain the listing
and trading of its Common Stock on the Principal Market or any
equivalent replacement exchange or electronic quotation system
(including but not limited to the Pink Sheets electronic quotation
system) and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules
of the Financial Industry Regulatory Authority
(“FINRA”) and such exchanges, as applicable. The
Company shall promptly provide to the Buyer copies of any notices
it receives from the Principal Market and any other exchanges or
electronic quotation systems on which the Common Stock is then
traded regarding the continued eligibility of the Common Stock for
listing on such exchanges and quotation systems.
h. Corporate Existence. The
Company will, so long as the Buyer beneficially owns any of the
Securities, maintain its corporate existence and shall not sell all
or substantially all of the Company’s assets, except in the
event of a merger or consolidation or sale of all or substantially
all of the Company’s assets, where the surviving or successor
entity in such transaction (i) assumes the Company’s
obligations hereunder and under the agreements and instruments
entered into in connection herewith and (ii) is a publicly traded
corporation whose Common Stock is listed for trading or quotation
on the Principal Market, any tier of the NASDAQ Stock Market, the
New York Stock Exchange or the NYSE MKT.
i. No Integration. The Company
shall not make any offers or sales of any security (other than the
Securities) under circumstances that would require registration of
the Securities being offered or sold hereunder under the 1933 Act
or cause the offering of the Securities to be integrated with any
other offering of securities by the Company for the purpose of any
stockholder approval provision applicable to the Company or its
securities.
j. Breach of Covenants. The
Company acknowledges and agrees that if the Company breaches any of
the covenants set forth in this Section 4, in addition to any other
remedies available to the Buyer pursuant to this Agreement, it will
be considered an Event of Default under Section 3.4 of the
Note.
k. Compliance with 1934 Act; Public
Information Failures. For so long as the Buyer beneficially
owns the Note, Warrant, or any Conversion Shares, the Company shall
comply with the reporting requirements of the 1934 Act; and the
Company shall continue to be subject to the reporting requirements
of the 1934 Act. During the period that the Buyer beneficially owns
the Note, if the Company shall (i) fail for any reason to satisfy
the requirements of Rule 144(c)(1), including, without limitation,
the failure to satisfy the current public
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information
requirements under Rule 144(c) or (ii) if the Company has ever been
an issuer described in Rule 144(i)(1)(i) or becomes such an issuer
in the future, and the Company shall fail to satisfy any condition
set forth in Rule 144(i)(2) (each, a “Public Information
Failure”) then, as partial relief for the damages to the
Buyer by reason of any such delay in or reduction of its ability to
sell the Securities (which remedy shall not be exclusive of any
other remedies available pursuant to this Agreement, the Note, or
at law or in equity), the Company shall pay to the Buyer an amount
in cash equal to three percent (3%) of the Purchase Price on each
of the day of a Public Information Failure and on every thirtieth
day (pro rated for periods totaling less than thirty days)
thereafter until the date such Public Information Failure is cured.
The payments to which a holder shall be entitled pursuant to this
Section 4(k) are referred to herein as “Public Information
Failure Payments.” Public Information Failure Payments shall
be paid on the earlier of (i) the last day of the calendar month
during which such Public Information Failure Payments are incurred
and (iii) the third business day after the event or failure giving
rise to the Public Information Failure Payments is cured. In the
event the Company fails to make Public Information Failure Payments
in a timely manner, such Public Information Failure Payments shall
bear interest at the rate of 5% per month (prorated for partial
months) until paid in full.
l. Acknowledgement Regarding
Buyer’s Trading Activity. Until the Note is fully
repaid or fully converted, the Buyer shall not effect any
“short sale” (as such term is defined in Rule 200 of
Regulation SHO of the 1934 Act) of the Common Stock which
establishes a net short position with respect to the Common
Stock.
m. Disclosure of Transactions and Other
Material Information. By 9:00 a.m., New York time, following
the date this Agreement has been fully executed, the Company shall
file a Current Report on Form 8-K describing the terms of the
transactions contemplated by this Agreement in the form required by
the 1934 Act and attaching this Agreement, the form of Note (the
“8-K Filing”). From and after the filing of the 8-K
Filing with the SEC, the Buyer shall not be in possession of any
material, nonpublic information received from the Company, any of
its Subsidiaries or any of their respective officers, directors,
employees or agents that is not disclosed in the 8-K Filing. In
addition, effective upon the filing of the 8-K Filing, the Company
acknowledges and agrees that any and all confidentiality or similar
obligations under any agreement, whether written or oral, between
the Company, any of its Subsidiaries or any of their respective
officers, directors, affiliates, employees or agents, on the one
hand, and the Buyer or any of its affiliates, on the other hand,
shall terminate.
n. Legal Counsel Opinions. Upon
the request of the Buyer from to time to time, the Company shall be
responsible (at its cost) for promptly supplying to the
Company’s transfer agent and the Buyer a customary legal
opinion letter of its counsel (the “Legal Counsel
Opinion”) to the effect that the resale of the Conversion
Shares by the Buyer or its affiliates, successors and assigns is
exempt from the registration requirements of the 1933 Act pursuant
to Rule 144 (provided the requirements of Rule 144 are satisfied
and provided the Conversion Shares are not then registered under
the 1933 Act for resale pursuant to an effective registration
statement) or other applicable exemption (provided the requirements
of such other applicable exemption are satisfied). Should the
Company’s legal counsel fail for any reason to issue the
Legal Counsel Opinion, the Buyer may (at the Company’s cost)
secure another legal counsel to issue the Legal Counsel Opinion,
and the Company will instruct its transfer agent to accept such
opinion. The Company hereby agrees that it may never take the
position that it is a “shell company” in connection
with its obligations under this Agreement or
otherwise.
o. Piggyback Registration Rights.
The Company hereby grants to the Buyer the registration rights set
forth on Exhibit B
hereto.
p. Most Favored Nation. While the
Note or any principal amount, interest or fees or expenses due
thereunder remain outstanding and unpaid, the Company shall not
enter into any public or private offering of its securities
(including securities convertible into shares of Common Stock) with
any individual or entity (an “Other Investor”) that has
the effect of establishing rights or otherwise benefiting such
Other Investor in a manner more favorable in any material respect
to such Other Investor than the rights and benefits established in
favor of the Buyer by this Agreement or the Note unless, in any
such case, the Buyer has been provided with such rights and
benefits pursuant to a definitive written agreement or agreements
between the Company and the Buyer.
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q. Subsequent Variable Rate
Transactions. From the date hereof until such time as the
Note is fully converted or fully repaid, the Company shall be
prohibited from effecting or entering into an agreement involving a
Variable Rate Transaction. “Variable Rate Transaction”
means a transaction in which the Company (i) issues or sells any
debt or equity securities that are convertible into, exchangeable
or exercisable for, or include the right to receive, additional
shares of Common Stock either (A) at a conversion price, exercise
price or exchange rate or other price that is based upon, and/or
varies with, the trading prices of or quotations for the shares of
Common Stock at any time after the initial issuance of such debt or
equity securities or (B) with a conversion, exercise or exchange
price that is subject to being reset at some future date after the
initial issuance of such debt or equity security or upon the
occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common
Stock or (ii) enters into any agreement, including, but not limited
to, an equity line of credit, whereby the Company may issue
securities at a future determined price. The Buyer shall be
entitled to obtain injunctive relief against the Company to
preclude any such issuance, which remedy shall be in addition to
any right to collect damages.
r.
[Intentionally
Omitted].
s. Non-Public Information. The
Company covenants and agrees that neither it, nor any other person
acting on its behalf will provide the Buyer or its agents or
counsel with any information that constitutes, or the Company
reasonably believes constitutes, material non-public information,
unless prior thereto the Buyer shall have consented to the receipt
of such information and agreed with the Company to keep such
information confidential. The Company understands and confirms that
the Buyer shall be relying on the foregoing covenant in effecting
transactions in securities of the Company. To the extent that the
Company delivers any material, non-public information to the Buyer
without such Buyer’s consent, the Company hereby covenants
and agrees that such Buyer shall not have any duty of
confidentiality to the Company, any of its Subsidiaries, or any of
their respective officers, directors, agents, employees or
affiliates, not to trade on the basis of, such material, non-
public information, provided that the Buyer shall remain subject to
applicable law. To the extent that any notice provided, information
provided, or any other communications made by the Company, to the
Buyer, constitutes or contains material non-public information
regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice or other material information with
the SEC pursuant to a Current Report on Form 8-
K. In
addition to any other remedies provided by this Agreement or the
related transaction documents, if the Company provides any material
non-public information to the Buyer without their prior written
consent, and it fails to immediately (no later than that business
day) file a Form 8-K disclosing this material non-public
information, it shall pay the Buyer as partial liquidated damages
and not as a penalty a sum equal to $3,000 per day beginning with
the day the information is disclosed to the Buyer and ending and
including the day the Form 8-K disclosing this information is
filed.
t. D&O Insurance. Within 60
calendar days of the Closing, the Company shall purchase director
and officer insurance on behalf of the Company's (including its
subsidiary) officers and directors for a period of 18 months after
the Closing with respect to any losses, claims, damages,
liabilities, costs and expense in connection with any actual or
threatened claim or proceeding that is based on, or arises out of
their status as a director or officer of the Company. The insurance
policy shall provide for two years of tail coverage.
5. Transfer Agent Instructions.
The Company shall issue irrevocable instructions to the
Company’s transfer agent to issue certificates, registered in
the name of the Buyer or its nominee, upon conversion of the Note
and/or exercise of the Warrant, the Conversion Shares, in such
amounts as specified from time to time by the Buyer to the Company
in accordance with the terms thereof (the “Irrevocable
Transfer Agent Instructions”). In the event that the Company
proposes to replace its transfer agent, the Company shall provide,
prior to the effective date of such replacement, a fully executed
Irrevocable Transfer Agent Instructions in a form as initially
delivered pursuant to this Agreement (including but not limited to
the provision to irrevocably reserved shares of Common Stock in the
Reserved Amount (as defined in the Note)) signed by the successor
transfer agent to the Company and the Company. Prior to
registration of the Conversion Shares under the 1933 Act or the
date on which the Conversion Shares may be sold pursuant to Rule
144, Rule 144A, Regulation S, or other applicable exemption without
any restriction as to the number of Securities as of a particular
date that can then be immediately sold, all such certificates shall
bear the restrictive legend specified in Section 2(g) of this
Agreement. The Company warrants that: (i) no instruction other than
the Irrevocable Transfer Agent Instructions referred to in this
Section 5 will be given by the Company to its transfer agent and
that the Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in
this Agreement and the Note; (ii) it will not direct its transfer
agent not to transfer or delay, impair, and/or hinder its transfer
agent in transferring (or issuing)(electronically or in
certificated form) any certificate for Securities to be issued to
the Buyer upon conversion of or otherwise pursuant to the Note as
and when required by the Note and this Agreement; (iii) it will not
fail to remove (or directs its transfer agent not to remove or
impairs, delays, and/or hinders its transfer agent from removing)
any restrictive legend (or to withdraw any stop transfer
instructions in respect thereof) on any certificate for any
Securities issued to the Buyer upon conversion of or otherwise
pursuant to the Note as and when required by the Note and this
Agreement and (iv) it will provide any required corporate
resolutions and issuance approvals to its transfer agent within 6
hours of each conversion of the Note. Nothing in this Section shall
affect in any way the Buyer’s obligations and agreement set
forth in Section 2(g) hereof to comply with all applicable
prospectus delivery requirements, if any, upon re-sale of the
Securities. If the Buyer provides the Company, at the cost of the
Company, with (i) an opinion of counsel in form, substance and
scope customary for opinions in comparable transactions, to the
effect that a public sale or transfer of such Securities may be
made without registration under the 1933 Act and such sale or
transfer is effected or (ii) the Buyer provides reasonable
assurances that the Securities can be sold pursuant to 144, Rule
144A, Regulation S, or other applicable exemption, the Company
shall permit the transfer, and, in the case of the Securities,
promptly instruct its transfer agent to issue one or more
certificates, free from restrictive legend, in such name and in
such denominations as specified by the Buyer. The Company
acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer, by vitiating the intent and
purpose of the transactions contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5 may be inadequate and agrees, in
the event of a breach or threatened breach by the Company of the
provisions of this Section, that the Buyer shall be entitled, in
addition to all other available remedies, to an injunction
restraining any breach and requiring immediate transfer, without
the necessity of showing economic loss and without any bond or
other security being required.
6. Conditions to the Company’s
Obligation to Sell. The obligation of the Company hereunder
to issue and sell the Note to the Buyer at the Closing is subject
to the satisfaction, at or before the Closing Date, of each of the
following conditions thereto, provided that these conditions are
for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion:
a.
The Buyer shall
have executed this Agreement and delivered the same to the
Company.
b.
The Buyer shall
have delivered the Purchase Price in accordance with Section
1(b)
above.
c. The representations
and warranties of the Buyer shall be true and correct in all
material respects as of the date when made and as of the Closing
Date, as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall
have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Buyer
at or prior to the Closing Date.
d. No litigation,
statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the
consummation of any of the transactions contemplated by this
Agreement.
7. Conditions to The Buyer’s
Obligation to Purchase. The obligation of the Buyer
hereunder to purchase the Note, on the Closing Date, is subject to
the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the
Buyer’s sole benefit and may be waived by the Buyer at any
time in its sole discretion:
a.
The Company shall
have executed this Agreement and delivered the same to the
Buyer.
b. The Company shall
have delivered to the Buyer the duly executed Note in such
denominations as the Buyer shall request and in accordance with
Section 1(b) above.
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c.
The Company shall
have delivered to the Buyer the Warrant.
d. The Irrevocable
Transfer Agent Instructions, in form and substance satisfactory to
the Buyer, shall have been delivered to and acknowledged in writing
by the Company’s Transfer Agent.
e. The representations
and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of Closing Date,
as though made at such time (except for representations and
warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date.
f. No litigation,
statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the
consummation of any of the transactions contemplated by this
Agreement.
g. No event shall have
occurred which could reasonably be expected to have a Material
Adverse Effect on the Company including but not limited to a change
in the 1934 Act reporting status of the Company or the failure of
the Company to be timely in its 1934 Act reporting
obligations.
h. Trading in the
Common Stock on the Principal Market shall not have been suspended
by the SEC, FINRA or the Principal Market.
i. The Company shall
have delivered to the Buyer (i) a certificate evidencing the
formation and good standing of the Company and each of its
Subsidiaries in such entity’s jurisdiction of formation
issued by the Secretary of State (or comparable office) of such
jurisdiction, as of a date within ten (10) days of the Closing Date
and (ii) resolutions adopted by the Company’s Board of
Directors at a duly called meeting or by unanimous written consent
authorizing this Agreement and all other documents, instruments and
transactions contemplated hereby.
8.
Governing Law; Miscellaneous.
a. Governing Law; Venue. This
Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to principles of
conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement,
the Note, or any other agreement, certificate, instrument or
document contemplated hereby shall be brought only in the state
courts located in Commonwealth of Massachusetts or in the federal
courts located in Commonwealth of Massachusetts. The parties to
this Agreement hereby irrevocably waive any objection to
jurisdiction and venue of any action instituted hereunder and shall
not assert any defense based on lack of jurisdiction or venue or
based upon forum non
conveniens. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTIONS CONTEMPLATED HEREBY. The prevailing party shall
be entitled to recover from the other party its reasonable
attorney’s fees and costs. Each party hereby irrevocably
waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this
Agreement, the Note, or any other agreement, certificate,
instrument or document contemplated hereby or thereby by mailing a
copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect
for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
law.
b. Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall be
deemed an original but all of which shall constitute one and the
same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party. A
facsimile or .pdf signature shall be considered due execution and
shall be binding upon the signatory thereto with the same force
and
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effect
as if the signature were an original, not a facsimile or .pdf
signature. Delivery of a counterpart signature hereto by facsimile
or email/.pdf transmission shall be deemed validly delivery
thereof.
c. Construction; Headings. This
Agreement shall be deemed to be jointly drafted by the Company and
the Buyer and shall not be construed against any person as the
drafter hereof. The headings of this Agreement are for convenience
of reference only and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. In the event that
any provision of this Agreement, the Note, or any other agreement
or instrument delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform with
such statute or rule of law. Any such provision which may prove
invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision of this
Agreement, the Note, or any other agreement, certificate,
instrument or document contemplated hereby or thereby.
e. Entire Agreement; Amendments.
This Agreement, the Note, and the instruments referenced herein
contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set
forth herein or therein, neither the Company nor the Buyer makes
any representation, warranty, covenant or undertaking with respect
to such matters. No provision of this Agreement or any agreement or
instrument contemplated hereby may be waived or amended other than
by an instrument in writing signed by the Buyer.
f. Notices. All notices, demands,
requests, consents, approvals, and other communications required or
permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be
(i)
personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or
(iv) transmitted by hand delivery, telegram, e-mail or facsimile,
addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or
other communication required or permitted to be given hereunder
shall be deemed effective (a) upon hand delivery or delivery by
e-mail or facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated
below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day
during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first
occur. The addresses for such communications shall be:
If to
the Company, to:
VISIUM
TECHNOLOGIES, INC.
4094
Majestic Lane, Suite 360
Fairfax, VA
22033
Attention: Mark
Lucky
e-mail:
info@visiumtechnologies.com
If to
the Buyer:
LABRYS
FUND, LP
48
Parker Road
Wellesley, MA
02482
e-mail:
admin@equiluxgroup.com
g. Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns. Neither the Company nor
the Buyer shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other.
Notwithstanding the foregoing, subject to Section 2(f), the Buyer
may assign its rights hereunder to any person that purchases
Securities in a private
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transaction from
the Buyer or to any of its “affiliates,” as that term
is defined under the 1934 Act, without the consent of the
Company.
h. Third Party Beneficiaries. This
Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for
the benefit of, nor may any provision hereof be enforced by, any
other person.
i. Survival. The representations
and warranties of the Company and the agreements and covenants set
forth in this Agreement shall survive the closing hereunder
notwithstanding any due diligence investigation conducted by or on
behalf of the Buyer. The Company agrees to indemnify and hold
harmless the Buyer and all their officers, directors, employees and
agents for loss or damage arising as a result of or related to any
breach or alleged breach by the Company of any of its
representations, warranties and covenants set forth in this
Agreement or any of its covenants and obligations under this
Agreement, including advancement of expenses as they are
incurred.
j. Publicity. The Company, and the
Buyer shall have the right to review a reasonable period of time
before issuance of any press releases, SEC, Principal Market or
FINRA filings, or any other public statements with respect to the
transactions contemplated hereby; provided, however, that the Company shall
be entitled, without the prior approval of the Buyer, to make any
press release or SEC, Principal Market (or other applicable trading
market) or FINRA filings with respect to such transactions as is
required by applicable law and regulations (although the Buyer
shall be consulted by the Company in connection with any such press
release prior to its release and shall be provided with a copy
thereof and be given an opportunity to comment
thereon).
k. Further Assurances. Each party
shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents, as the
other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.
l. No Strict Construction. The
language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any
party.
m. Indemnification. In
consideration of the Buyer’s execution and delivery of this
Agreement and acquiring the Securities hereunder, and in addition
to all of the Company’s other obligations under this
Agreement or the Note, the Company shall defend, protect, indemnify
and hold harmless the Buyer and its stockholders, partners,
members, officers, directors, employees and direct or indirect
investors and any of the foregoing persons’ agents or other
representatives (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnitees”) from and against any
and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee
is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys’ fees and
disbursements (the “Indemnified Liabilities”), incurred
by any Indemnitee as a result of, or arising out of, or relating to
(a) any misrepresentation or breach of any representation or
warranty made by the Company in this Agreement, the Note or any
other agreement, certificate, instrument or document contemplated
hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement, the Note or
any other agreement, certificate, instrument or document
contemplated hereby or thereby or (c) any cause of action, suit or
claim brought or made against such Indemnitee by a third party
(including for these purposes a derivative action brought on behalf
of the Company) and arising out of or resulting from (i) the
execution, delivery, performance or enforcement of this Agreement,
the Note or any other agreement, certificate, instrument or
document contemplated hereby or thereby, (ii) any transaction
financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, or
(iii) the status of the Buyer or holder of the Securities as an
investor in the Company pursuant to the transactions contemplated
by this Agreement. To the extent that the foregoing undertaking by
the Company may be unenforceable for any reason, the Company shall
make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities that is permissible under
applicable law.
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n. Remedies. The Company
acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its
obligations under this Agreement or the Note will be inadequate and
agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Agreement or the Note, that the
Buyer shall be entitled, in addition to all other available
remedies at law or in equity, and in addition to the penalties
assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Agreement or the Note and
to enforce specifically the terms and provisions hereof, without
the necessity of showing economic loss and without any bond or
other security being required.
o. Payment Set Aside. To the
extent that the Company makes a payment or payments to the Buyer
hereunder or pursuant to the Note, or the Buyer enforces or
exercises its rights hereunder or thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other person or entity under
any law (including, without limitation, any bankruptcy law,
foreign, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation
or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment
had not been made or such enforcement or setoff had not
occurred.
p. Failure or Indulgence Not
Waiver. No failure or delay on the part of the Buyer in the
exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privileges. All
rights and remedies of the Buyer existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise
available.
[Signature Page
Follows]
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IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused
this Agreement to be duly executed as of the date first above
written.
VISIUM
TECHNOLOGIES, INC.
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By: /s/ Mark
Lucky
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Name:
MARK LUCKY
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Title:
CHIEF EXECUTIVE OFFICER
|
LABRYS
FUND, LP
|
By:
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Name:
THOMAS SILVERMAN
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Title:
MANAGING MEMBER
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SUBSCRIPTION
AMOUNT:
|
Principal
Amount of Note: $115,000.00
|
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Actual
Amount of Purchase Price of Note: $109,250.00
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EXHIBIT
A FORM OF NOTE
[attached
hereto]
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EXHIBIT
B REGISTRATION RIGHTS
All of
the Conversion Shares and shares into which the Warrant is
exercisable into will be deemed “Registrable
Securities” subject to the provisions of this Exhibit B. All
capitalized terms used but not defined in this Exhibit B shall have
the meanings ascribed to such terms in the Securities Purchase
Agreement to which this Exhibit is attached.
1.
Piggy-Back
Registration.
1.1 Piggy-Back Rights. If at any
time on or after the date of the Closing the Company proposes to
file any Registration Statement under the 1933 Act (a
“Registration Statement”) with respect to any offering
of equity securities, or securities or other obligations
exercisable or exchangeable for, or convertible into, equity
securities, by the Company for its own account or for shareholders
of the Company for their account (or by the Company and by
shareholders of the Company), other than a Registration Statement
(i) filed in connection with any employee stock option or other
benefit plan on Form S-8, (ii) for a dividend reinvestment plan or
(iii) in connection with a merger or acquisition, then the Company
shall (x) give written notice of such proposed filing to the
holders of Registrable Securities appearing on the books and
records of the Company as such a holder as soon as practicable but
in no event less than ten (10) days before the anticipated filing
date of the Registration Statement, which notice shall describe the
amount and type of securities to be included in such Registration
Statement, the intended method(s) of distribution, and the name of
the proposed managing underwriter or underwriters, if any, of the
offering, and (y) offer to the holders of Registrable Securities in
such notice the opportunity to register the sale of such number of
Registrable Securities as such holders may request in writing
within three (3) days following receipt of such notice (a
“Piggy-Back Registration”). The Company shall cause
such Registrable Securities to be included in such registration and
shall cause the managing underwriter or underwriters of a proposed
underwritten offering to permit the Registrable Securities
requested to be included in a Piggy-Back Registration on the same
terms and conditions as any similar securities of the Company and
to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method(s) of
distribution thereof. All holders of Registrable Securities
proposing to distribute their securities through a Piggy-Back
Registration that involves an underwriter or underwriters shall
enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such Piggy-Back
Registration.
1.2 Withdrawal. Any holder of
Registrable Securities may elect to withdraw such holder’s
request for inclusion of Registrable Securities in any Piggy-Back
Registration by giving written notice to the Company of such
request to withdraw prior to the effectiveness of the Registration
Statement. The Company (whether on its own determination or as the
result of a withdrawal by persons making a demand pursuant to
written contractual obligations) may withdraw a Registration
Statement at any time prior to the effectiveness of such
Registration Statement. Notwithstanding any such withdrawal, the
Company shall pay all expenses incurred by the holders of
Registrable Securities in connection with such Piggy-Back
Registration as provided in Section 1.5 below.
1.3 The Company shall
notify the holders of Registrable Securities at any time when a
prospectus relating to such holder’s Registrable Securities
is required to be delivered under the 1933 Act, upon discovery
that, or upon the happening of any event as a result of which, the
prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the
circumstances then existing. At the request of such holder, the
Company shall also prepare, file and furnish to such holder a
reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of the Registrable Securities, such
prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances then existing. The holders of Registrable
Securities shall not to offer or sell any Registrable Securities
covered by the Registration Statement after receipt of such
notification until the receipt of such supplement or
amendment.
1.4 The Company may
request a holder of Registrable Securities to furnish the Company
such information with respect to such holder and such
holder’s proposed distribution of the Registrable
Securities
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pursuant to the
Registration Statement as the Company may from time to time
reasonably request in writing or as shall be required by law or by
the SEC in connection therewith, and such holders shall furnish the
Company with such information.
1.5 All fees and
expenses incident to the performance of or compliance with this
Exhibit B by the Company shall be borne by the Company whether or
not any Registrable Securities are sold pursuant to a Registration
Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation,
(i) all
registration and filing fees (including, without limitation, fees
and expenses of the Company’s counsel and independent
registered public accountants) (A) with respect to filings made
with the SEC, (B) with respect to filings required to be made with
any trading market on which the Common Stock is then listed for
trading, (C) in compliance with applicable state securities or Blue
Sky laws reasonably agreed to by the Company in writing (including,
without limitation, fees and disbursements of counsel for the
Company in connection with Blue Sky qualifications or exemptions of
the Registrable Securities) and (D) with respect to any filing that
may be required to be made by any broker through which a holder of
Registrable Securities intends to make sales of Registrable
Securities with the FINRA, (ii) printing expenses, (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) 1933 Act liability insurance, if the
Company so desires such insurance, (vi) fees and expenses of all
other persons or entities retained by the Company in connection
with the consummation of the transactions contemplated by this
Exhibit B and (vii) reasonable fees and disbursements of a single
special counsel for the holders of Registrable Securities (selected
by holders of the majority of the Registrable Securities requesting
such registration). In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the
expense of any annual audit and the fees and expenses incurred in
connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the
Company be responsible for any broker or similar commissions of any
holder of Registrable Securities.
1.6 The Company and its
successors and assigns shall indemnify and hold harmless the Buyer,
each holder of Registrable Securities, the officers, directors,
members, partners, agents and employees (and any other individuals
or entities with a functionally equivalent role of a person holding
such titles, notwithstanding a lack of such title or any other
title) of each of them, each individual or entity who controls the
Buyer or any such holder of Registrable Securities (within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act) and the officers, directors, members, stockholders, partners,
agents and employees (and any other individuals or entities with a
functionally equivalent role of a person holding such titles,
notwithstanding a lack of such title or any other title) of each
such controlling individual or entity (each, an “Indemnified
Party”), to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities,
costs (including, without limitation, reasonable attorneys’
fees) and expenses (collectively, “Losses”), as incurred,
arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in a Registration Statement,
any related prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus,
or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any such prospectus or
supplement thereto, in light of the circumstances under which they
were made) not misleading or (2) any violation or alleged violation
by the Company of the 1933 Act, the 1934 Act or any state
securities law, or any rule or regulation thereunder, in connection
with the performance of its obligations under this Exhibit B,
except to the extent, but only to the extent, that (i) such untrue
statements or omissions are based upon information regarding the
Buyer or such holder of Registrable Securities furnished to the
Company by such party for use therein. The Company shall notify the
Buyer and each holder of Registrable Securities promptly of the
institution, threat or assertion of any proceeding arising from or
in connection with the transactions contemplated by this Exhibit B
of which the Company is aware.
1.7 If the
indemnification under Section 1.6 is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless for any
Losses, then the Company shall contribute to the amount paid or
payable by such Indemnified Party, in such proportion as is
appropriate to reflect the relative fault of the Company and
Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of the
Company and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by,
or relates to information supplied by, the Company or the
Indemnified Party, and the parties’ relative
intent,
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knowledge, access
to information and opportunity to correct or prevent such action,
statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include any reasonable
attorneys’ or other fees or expenses incurred by such party
in connection with any proceeding to the extent such party would
have been indemnified for such fees or expenses if the
indemnification provided for in Section 1.6 was available to such
party in accordance with its terms. It is agreed that it would not
be just and equitable if contribution pursuant to this Section 1.7
were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable
considerations referred to in the immediately preceding sentence.
Notwithstanding the provisions of this Section 1.7, neither the
Buyer nor any holder of Registrable Securities shall be required to
contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds actually received by such party from the
sale of all of their Registrable Securities pursuant to such
Registration Statement or related prospectus exceeds the amount of
any damages that such party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or
alleged omission.
[End
of Exhibit B]
NEITHER
THIS SECURITY NOR THE SECURITIES AS TO WHICH THIS SECURITY MAY BE
EXERCISED HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE 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 AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY
A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON
STOCK PURCHASE WARRANT
VISIUM
TECHNOLOGIES, INC.
Warrant
Shares: 7,467,532
Date of
Issuance: June 17, 2021 (“Issuance
Date”)
This
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that,
for value received (in connection with the issuance of the
promissory note in the principal amount of $115,000.00 to the
Holder (as defined below) of even date) (the “Note”),
Labrys Fund, LP, a Delaware limited partnership (including any
permitted and registered assigns, the “Holder”), is entitled,
upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date
of issuance hereof, to purchase from VISIUM TECHNOLOGIES, INC., a
Florida corporation (the “Company”), 7,467,532
shares of Common Stock (the “Warrant Shares”) (whereby
such number may be adjusted from time to time pursuant to the terms
and conditions of this Warrant) at the Exercise Price per share
then in effect. This Warrant is issued by the Company as of the
date hereof in connection with that certain securities purchase
agreement dated June 17, 2021, by and among the Company and the
Holder (the “Purchase
Agreement”).
Capitalized terms
used in this Warrant shall have the meanings set forth in the
Purchase Agreement unless otherwise defined in the body of this
Warrant or in Section 12 below. For purposes of this Warrant, the
term “Exercise Price” shall mean $0.0077, subject to
adjustment as provided herein (including but not limited to
cashless exercise), and the term “Exercise Period”
shall mean the period commencing on the Issuance Date and ending on
5:00 p.m. eastern standard time on the two-year anniversary
thereof.
1.
EXERCISE OF
WARRANT.
(a) Mechanics of Exercise. Subject to the
terms and conditions hereof, the rights represented by this Warrant
may be exercised in whole or in part at any time or times during
the Exercise Period by delivery of a written notice, in the form
attached hereto as Exhibit
A (the “Exercise Notice”), of the
Holder’s election to exercise this Warrant. The Holder shall
not be required to deliver the original Warrant in order to effect
an exercise hereunder. Partial exercises of this Warrant resulting
in purchases of a portion of the total number of Warrant Shares
available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.
On or before the second Trading Day (the “Warrant Share Delivery
Date”) following the date on which the Holder sent the
Exercise Notice to the Company or the Company’s transfer
agent, and upon receipt by the Company of payment to the Company of
an amount equal to the applicable Exercise Price multiplied by the
number of Warrant Shares as to which all or a portion of this
Warrant is being exercised (the “Aggregate Exercise Price”
and together with the Exercise Notice, the “Exercise Delivery
Documents”) in cash or by wire transfer of immediately
available funds (or by cashless exercise, in which case there shall
be no Aggregate Exercise Price provided), the Company shall (or
direct its transfer agent to) issue and dispatch by overnight
courier to the address as specified in the Exercise Notice, a
certificate, registered in the Company’s share register in
the name of the Holder or its designee, for the number of shares of
Common Stock to which the Holder is entitled pursuant to such
exercise (or deliver such shares of Common Stock in electronic
format if requested by the Holder). Upon delivery of the Exercise
Delivery Documents, the Holder shall be deemed for all corporate
purposes to have become the holder of record of the Warrant Shares
with respect to which this Warrant has been exercised, irrespective
of the date of delivery of the certificates evidencing such Warrant
Shares. If this Warrant is submitted in connection with any
exercise and the number of Warrant Shares represented by this
Warrant submitted for exercise is greater than the number of
Warrant Shares being acquired upon an exercise, then the Company
shall as soon as practicable and in no event later than three
Business Days after any exercise and at its own expense, issue a
new Warrant (in accordance with Section 6) representing the right
to purchase the number of Warrant Shares purchasable immediately
prior to such exercise under this Warrant, less the number of
Warrant Shares with respect to which this Warrant is
exercised.
If the
Company fails to cause its transfer agent to transmit to the Holder
the respective shares of Common Stock by the respective Warrant
Share Delivery Date, then the Holder will have the right to rescind
such exercise in Holder’s sole discretion in addition to all
other rights and remedies at law or otherwise, and such failure
shall also be deemed an event of default under the
Note.
If the
Market Price of one share of Common Stock is greater than the
Exercise Price, then the Holder may elect to receive Warrant Shares
pursuant to a cashless exercise, in lieu of a cash exercise, equal
to the value of this Warrant determined in the manner described
below (or of any portion thereof remaining unexercised) by
surrender of this Warrant and a Notice of Exercise, in which event
the Company shall issue to Holder a number of Common Stock computed
using the following formula:
X =
Y
(A-B)
A
Where X
=
the number of
Shares to be issued to Holder.
Y
=
the number of
Warrant Shares that the Holder elects to purchase under this
Warrant (at the date of such calculation).
A
=
the Market Price
(at the date of such calculation).
B
=
Exercise Price (as
adjusted to the date of such calculation).
(b) No Fractional Shares. No fractional
shares shall be issued upon the exercise of this Warrant as a
consequence of any adjustment pursuant hereto. All Warrant Shares
(including fractions) issuable upon exercise of this Warrant may be
aggregated for purposes of determining whether the exercise would
result in the issuance of any fractional share. If, after
aggregation, the exercise would result in the issuance of a
fractional share, the Company shall, in lieu of issuance of any
fractional share, pay the Holder otherwise entitled to such
fraction a sum in cash equal to the product resulting from
multiplying the then-current fair market value of a Warrant Share
by such fraction.
(c) Holder’s Exercise Limitations.
Notwithstanding anything to the contrary contained herein, the
Company shall not effect any exercise of this Warrant, and a Holder
shall not have the right to exercise any portion of this Warrant,
pursuant to Section 1 or otherwise, to the extent that after giving
effect to such issuance after exercise as set forth on the
applicable Notice of Exercise, the Holder (together with the
Holder’s affiliates (the “Affiliates”), and any
other Persons acting as a group together with the Holder or any of
the Holder’s Affiliates (such Persons, “Attribution
Parties”)), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of
the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and Attribution Parties shall
include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of
its Affiliates or Attribution Parties and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other
Common Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for
purposes of this Section 1(c), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Holder is solely responsible
for any schedules required to be filed in accordance therewith. In
addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 1(c), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the
Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Trading Days
confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates or
Attribution Parties since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial Ownership Limitation” shall be 4.99% of the
number of shares of the Common Stock outstanding at the time of the
respective calculation hereunder. The limitations contained in this
paragraph shall apply to a successor holder of this
Warrant.
2. ADJUSTMENTS. The Exercise Price
and the number of Warrant Shares shall be adjusted from time to
time as follows:
(a) Distribution of Assets. If the Company
shall declare or make any dividend or other distribution of its
assets (or rights to acquire its assets) to holders of shares of
Common Stock, by way of return of capital or otherwise (including
without limitation any distribution of cash, stock or other
securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement or other similar
transaction) (a “Distribution”), at any
time after the issuance of this Warrant, then, in each such
case:
(i) any Exercise Price
in effect immediately prior to the close of business on the record
date fixed for the determination of holders of shares of Common
Stock entitled to receive the Distribution shall be reduced,
effective as of the close of business on such record date, to a
price determined by multiplying such Exercise Price by a fraction
(i) the numerator of which shall be the Closing Sale Price of the
shares of Common Stock on the Trading Day immediately preceding
such record date minus the value of the Distribution (as determined
in good faith by the Company’s Board of Directors) applicable
to one share of Common Stock, and (ii) the denominator of which
shall be the Closing Sale Price of the shares of Common Stock on
the Trading Day immediately preceding such record date;
and
(ii) the
number of Warrant Shares shall be increased to a number of shares
equal to the number of shares of Common Stock obtainable
immediately prior to the close of business on the record date fixed
for the determination of holders of shares of Common Stock entitled
to receive the Distribution multiplied by the reciprocal of the
fraction set forth in the immediately preceding clause (i);
provided, however, that in the event that the Distribution is of
shares of common stock of a company (other than the Company) whose
common stock is traded on a national securities exchange or a
national automated quotation system (“Other Shares of Common
Stock”), then the Holder may elect to receive a
warrant to purchase Other Shares of Common Stock in lieu of an
increase in the number of Warrant Shares, the terms of which shall
be identical to those of this Warrant, except that such warrant
shall be exercisable into the number of shares of Other Shares of
Common Stock that would have been payable to the Holder pursuant to
the Distribution had the Holder exercised this Warrant immediately
prior to such record date and with an aggregate exercise price
equal to the product of the amount by which the exercise price of
this Warrant was decreased with respect to the Distribution
pursuant to the terms of the immediately preceding clause (i) and
the number of Warrant Shares calculated in accordance with the
first part of this clause (ii).
(b) Anti-Dilution Adjustments to Exercise
Price. If the Company or any Subsidiary thereof, as
applicable, at any time while this Warrant is outstanding, shall
sell or grant any option to purchase, or sell or grant any right to
reprice, or otherwise dispose of or issue (or announce any offer,
sale, grant or any option to purchase or other disposition) any
Common Stock or securities entitling any person or entity to
acquire shares of Common Stock (upon conversion, exercise or
otherwise) (including but not limited to the price at which Common
Stock is issued under the Note), at an effective price per share
less than the then Exercise Price (such lower price, the
“Base Share Price” and such issuances collectively, a
“Dilutive Issuance”) (if the holder of the Common Stock
or Common Stock Equivalents so issued shall at any time, whether by
operation of purchase price adjustments, elimination of an
applicable floor price for any reason in the future (including but
not limited to the passage of time or satisfaction of certain
condition(s)), reset provisions, floating conversion, exercise or
exchange prices or otherwise, or due to warrants, options or rights
per share which are issued in connection with such issuance, be
entitled or potentially entitled to receive shares of Common Stock
at an effective price per share which is less than the Exercise
Price at any time while such Common Stock or Common Stock
Equivalents are in existence, such issuance shall be deemed to have
occurred for less than the Exercise Price on such date of the
Dilutive Issuance (regardless of whether the Common Stock or Common
Stock Equivalents are (i) subsequently redeemed or retired by the
Company after the date of the Dilutive Issuance or (ii) actually
converted or exercised at such Base Share Price), then the Exercise
Price shall be reduced at the option of the Holder and only reduced
to equal the Base Share Price. Such adjustment shall be made
whenever such Common Stock or Common Stock Equivalents are issued,
regardless of whether the Common Stock or Common Stock Equivalents
are (i) subsequently redeemed or retired by the Company after the
date of the Dilutive Issuance or (ii) actually converted or
exercised at such Base Share Price by the holder thereof (for the
avoidance of doubt, the Holder may utilize the Base Share Price
even if the Company did not actually issue shares of its common
stock at the Base Share Price under the respective Common stock
Equivalents). The Company shall notify the Holder in writing, no
later than the Trading Day following the issuance of any Common
Stock or Common Stock Equivalents subject to this Section 2(b),
indicating therein the applicable issuance price, or applicable
reset price, exchange price, conversion price and other pricing
terms (such notice the “Dilutive Issuance Notice”). For
purposes of clarification, whether or not the Company provides a
Dilutive Issuance Notice pursuant to this Section 2(b), upon the
occurrence of any Dilutive Issuance, after the date of such
Dilutive Issuance the Holder is entitled to receive a number of
Warrant Shares based upon the Base Share Price regardless of
whether the Holder accurately refers to the Base Share Price in the
Notice of Exercise.
(c) Subdivision or Combination of Common
Stock. If the Company at any time on or after the Issuance
Date subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares,
the Exercise Price in effect immediately prior to such subdivision
will be proportionately reduced and the number of Warrant Shares
will be proportionately increased. If the Company at any time on or
after the Issuance Date combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price
in effect immediately prior to such combination will be
proportionately increased and the number of Warrant Shares will be
proportionately decreased. Any adjustment under this Section 2(c)
shall become effective at the close of business on the date the
subdivision or combination becomes effective. Each such adjustment
of the Exercise Price shall be calculated to the nearest
one-hundredth of a cent. Such adjustment shall be made successively
whenever any event covered by this Section 2(c) shall
occur.
3. FUNDAMENTAL TRANSACTIONS. If,
at any time while this Warrant is outstanding, (i) the Company
effects any merger of the Company with or into another entity and
the Company is not the surviving entity (such surviving entity, the
“Successor
Entity”), (ii) the Company effects any sale of all or
substantially all of its assets in one or a series of related
transactions, (iii) any tender offer or exchange offer (whether by
the Company or by another individual or entity, and approved by the
Company) is completed pursuant to which holders of Common Stock are
permitted to tender or exchange their shares of Common Stock for
other securities, cash or property and the holders of at least 50%
of the Common Stock accept such offer, or (iv) the Company effects
any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property
(other than as a result of a subdivision or combination of shares
of Common Stock) (in any such case, a “Fundamental
Transaction”), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive the number
of shares of Common Stock of the Successor Entity or of the Company
and any additional consideration (the “Alternate Consideration”)
receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by
a holder of the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such event
(disregarding any limitation on exercise contained herein solely
for the purpose of such determination). For purposes of any such
exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and
the Company shall apportion the Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. To the extent necessary to
effectuate the foregoing provisions, any Successor Entity in such
Fundamental Transaction shall issue to the Holder a new warrant
consistent with the foregoing provisions and evidencing the
Holder’s right to exercise such warrant into Alternate
Consideration.
4. NON-CIRCUMVENTION. The Company
covenants and agrees that it will not, by amendment of its
certificate of incorporation, bylaws or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement,
dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, and will at all times in good faith
carry out all the provisions of this Warrant and take all action as
may be required to protect the rights of the Holder. Without
limiting the generality of the foregoing, the Company (i) shall not
increase the par value of any shares of Common Stock receivable
upon the exercise of this Warrant above the Exercise Price then in
effect, (ii) shall take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock upon the
exercise of this Warrant, and (iii) shall, for so long as this
Warrant is outstanding, have authorized and reserved, free from
preemptive rights, one and a half (1.5) times the number of shares
of Common Stock into which the Warrants are then exercisable into
to provide for the exercise of the rights represented by this
Warrant (without regard to any limitations on
exercise).
5. WARRANT HOLDER NOT DEEMED A
STOCKHOLDER. Except as otherwise specifically provided
herein, this Warrant, in and of itself, shall not entitle the
Holder to any voting rights or other rights as a stockholder of the
Company. In addition, nothing contained in this Warrant shall be
construed as imposing any liabilities on the Holder to purchase any
securities (upon exercise of this Warrant or otherwise) or as a
stockholder of the Company, whether such liabilities are asserted
by the Company or by creditors of the Company.
6.
REISSUANCE.
(a) Lost, Stolen or Mutilated Warrant. If
this Warrant is lost, stolen, mutilated or destroyed, the Company
will, on such terms as to indemnity or otherwise as it may
reasonably impose (which shall, in the case of a mutilated Warrant,
include the surrender thereof), issue a new Warrant of like
denomination and tenor as this Warrant so lost, stolen, mutilated
or destroyed.
(b) Issuance of New Warrants. Whenever the
Company is required to issue a new Warrant pursuant to the terms of
this Warrant, such new Warrant shall be of like tenor with this
Warrant, and shall have an issuance date, as indicated on the face
of such new Warrant which is the same as the Issuance
Date.
7. TRANSFER. This Warrant shall be
binding upon the Company and its successors and assigns, and shall
inure to be the benefit of the Holder and its successors and
assigns. Notwithstanding anything to the contrary herein, the
rights, interests or obligations of the Company hereunder may not
be assigned, by operation of law or otherwise, in whole or in part,
by the Company without the prior signed written consent of the
Holder, which consent may be withheld at the sole discretion of the
Holder (any such assignment or transfer shall be null and void if
the Company does not obtain the prior signed written consent of the
Holder). This Warrant or any of the severable rights and
obligations inuring to the benefit of or to be performed by Holder
hereunder may be assigned by Holder to a third party, in whole or
in part, without the need to obtain the Company’s consent
thereto.
8. NOTICES. Whenever notice is
required to be given under this Warrant, unless otherwise provided
herein, such notice shall be given in accordance with the notice
provisions contained in the Purchase Agreement. The Company shall
provide the Holder with prompt written notice (i) immediately upon
any adjustment of the Exercise Price, setting forth in reasonable
detail, the calculation of such adjustment and (ii) at least 20
days prior to the date on which the Company closes its books or
takes a record (A) with respect to any dividend or distribution
upon the shares of Common Stock, (B) with respect to any grants,
issuances or sales of any stock or other securities directly or
indirectly convertible into or exercisable or exchangeable for
shares of Common Stock or other property, pro rata to the holders
of shares of Common Stock or (C) for determining rights to vote
with respect to any Fundamental Transaction, dissolution or
liquidation, provided in each case that such information shall be
made known to the public prior to or in conjunction with such
notice being provided to the Holder.
9. AMENDMENT AND WAIVER. The terms
of this Warrant may be amended or waived (either generally or in a
particular instance and either retroactively or prospectively) only
with the written consent of the Company and the
Holder.
10. GOVERNING LAW AND VENUE. This
Warrant shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to principles of
conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Warrant
shall be brought only in the state courts located in the
Commonwealth of Massachusetts or federal courts located in
Commonwealth of Massachusetts. The parties to this Warrant hereby
irrevocably waive any objection to jurisdiction and venue of any
action instituted hereunder and shall not assert any defense based
on lack of jurisdiction or venue or based upon forum non conveniens. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER
TRANSACTION DOCUMENT ENTERED INTO IN CONNECTION WITH OR ARISING OUT
OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THEREBY. The prevailing
party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any
provision of this Warrant or any other agreement delivered in
connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be
deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of
any other provision of any agreement. Each party hereby irrevocably
waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this
Agreement or any other Transaction Document by mailing a copy
thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect
for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
law.
11. ACCEPTANCE. Receipt
of this Warrant by the Holder shall constitute acceptance of and
agreement to all of the terms and conditions contained
herein.
12. CERTAIN DEFINITIONS. For
purposes of this Warrant, the following terms shall have the
following meanings:
(a)
“Nasdaq” means
www.Nasdaq.com.
(b) “Closing Sale Price”
means, for any security as of any date, (i) the last closing trade
price for such security on the Principal Market, as reported by
Nasdaq, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing trade
price, then the last trade price of such security prior to 4:00
p.m., New York time, as reported by Nasdaq, or (ii) if the
foregoing does not apply, the last trade price of such security in
the over-the-counter market for such security as reported by
Nasdaq, or (iii) if no last trade price is reported for such
security by Nasdaq, the average of the bid and ask prices of any
market makers for such security as reported by the OTC Markets. If
the Closing Sale Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Closing Sale
Price of such security on such date shall be the fair market value
as mutually determined by the Company and the Holder. All such
determinations to be appropriately adjusted for any stock dividend,
stock split, stock combination or other similar transaction during
the applicable calculation period.
(c) “Common Stock” means the
Company’s common stock, and any other class of securities
into which such securities may hereafter be reclassified or
changed.
(d) “Common Stock Equivalents”
means any securities of the Company that would entitle the holder
thereof to acquire at any time Common Stock, including without
limitation any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.
(e)
[Intentionally
Omitted].
(f) “Person” and
“Persons” means an
individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization,
any other entity and any governmental entity or any department or
agency thereof.
(g) “Principal Market” means
the primary national securities exchange on which the Common Stock
is then traded.
(h) “Market Price” means the
highest traded price of the Common Stock during the ninety Trading
Days prior to the date of the respective Exercise
Notice.
(i) “Trading Day” means (i)
any day on which the Common Stock is listed or quoted and traded on
its Principal Market, (ii) if the Common Stock is not then listed
or quoted and traded on any national securities exchange, then a
day on which trading occurs on any over-the-counter markets, or
(iii) if trading does not occur on the over-the-counter markets,
any Business Day.
* * * *
* * *
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of the Issuance Date set forth above.
VISIUM TECHNOLOGIES, INC.
Name:
Mark Lucky
Title:
Chief Executive Officer
EXHIBIT A
EXERCISE
NOTICE
(To be
executed by the registered holder to exercise this Common Stock
Purchase Warrant)
THE UNDERSIGNED holder hereby exercises the
right to
purchase of
the shares of Common Stock (“Warrant Shares”) of VISIUM
TECHNOLOGIES, INC., a Florida corporation (the
“Company”), evidenced by the attached copy of the
Common Stock Purchase Warrant (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Warrant.
1.
Form of Exercise Price. The
Holder intends that payment of the Exercise Price shall be made as
(check one):
a cash exercise
with respect
to Warrant
Shares; or
by cashless
exercise pursuant to the Warrant.
2.
Payment of Exercise Price. If
cash exercise is selected above, the holder shall pay the
applicable Aggregate Exercise Price in the sum of $ to the
Company in accordance with the terms of the Warrant.
3.
Delivery of Warrant Shares. The
Company shall deliver to the
holder Warrant
Shares in accordance with the terms of the Warrant.
Date:
(Print
Name of Registered Holder)
By:
Name:
Title:
EXHIBIT B
ASSIGNMENT
OF WARRANT
(To be
signed only upon authorized transfer of the Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns, and transfers unto
the right to
purchase
shares of common
stock of VISIUM TECHNOLOGIES, INC., to which the within Common
Stock Purchase Warrant relates and appoints, as attorney-in-fact,
to transfer said right on the books of VISIUM TECHNOLOGIES, INC.
with full power of substitution and re-substitution in the
premises. By accepting such transfer, the transferee has agreed to
be bound in all respects by the terms and conditions of the within
Warrant.
Dated:
(Signature)
*
(Name)
(Address)
(Social
Security or Tax Identification No.)
* The
signature on this Assignment of Warrant must correspond to the name
as written upon the face of the Common Stock Purchase Warrant in
every particular without alteration or enlargement or any change
whatsoever. When signing on behalf of a corporation, partnership,
trust or other entity, please indicate your position(s) and
title(s) with such entity.