SINGLEPOINT INC. 12% ORIGINAL ISSUE DISCOUNT CONVERTIBLE PROMISSORY NOTE
EXHIBIT 4.1
Execution Version
NEITHER THIS SECURITY NOR, EXCEPT AS EXPRESSLY REQUIRED HEREIN, ANY SECURITY INTO WHICH AMOUNTS EVIDENCED BY THIS SECURITY ARE CONVERTIBLE, HAS 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. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF AMOUNTS EVIDENCED BY THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
Dated as of: April 26, 2024 |
| Purchase Price: |
| $ | 1,000,000 |
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Maturity Date: April 26, 2026 |
| Original Issue Discount: |
| $ | 250,000 | |
Interest Rate: 12.0% |
| Original Principal Amount: |
| $ | 1,250,000 |
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12% ORIGINAL ISSUE DISCOUNT CONVERTIBLE PROMISSORY NOTE
THIS 12% ORIGINAL ISSUE DISCOUNT CONVERTIBLE PROMISSORY NOTE is one of a series of duly authorized and validly issued Notes of SinglePoint Inc., a Nevada corporation (the “Company”), designated as its 12% Convertible Promissory Note due April 26, 2026 (this “Note” and, collectively with the other notes of such series, the “Notes”), issued under the Purchase Agreement (as defined below).
FOR VALUE RECEIVED, the Company promises to pay to Target Capital 10 LLC or its registered assigns (the “Holder” and, collectively with the holders of the other Notes, the “Holders”) the original principal amount of $1,250,000 (the “Original Principal Amount”), as such Original Principal Amount may hereafter be increased by any PIK Interest Amount (as defined below), and reduced by any repayment thereof required hereunder, any prepayment thereof permitted hereunder, and/or any conversion thereof permitted hereunder, on April 26, 2026 (the “Maturity Date”), or such earlier date on which the maturity of the then aggregate unconverted and outstanding principal amount of this Note is accelerated pursuant to the terms hereof, and to pay interest on such outstanding principal amount to the Holder in accordance with the provisions hereof. This Note is subject to the following additional provisions:
Section 1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Note: (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement, and (b) the following terms shall have the following meanings:
“Alternate Consideration” shall have the meaning set forth in Section 5(a).
“Arizona Courts” shall have the meaning set forth in Section 8(d).
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“Bankruptcy Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts, (g) the Company or any Significant Subsidiary thereof admits in writing that it is generally unable to pay its debts as they become due, (h) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
“Beneficial Ownership Limitation” shall have the meaning set forth in Section 4(c).
“Change of Control Transaction” means the occurrence after the date hereof of any of: (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 50% of the voting securities of the Company (other than by means of conversion of the Notes), (b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the Company or the successor entity of such transaction, (c) the Company (and all of its Subsidiaries, taken as a whole) sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.
“Conversion” means the payment of any Conversion Amount by delivery to the Holder of Conversion Shares in full satisfaction of such Conversion Amount pursuant to Section 4. “Convert” shall have the correlative meaning.
“Conversion Amount” means, with respect to any Conversion of any Outstanding Amount or all Outstanding Amounts on any Conversion Date, the aggregate such Outstanding Amount to be so Converted on such date.
“Conversion Date” as applicable, (a) with respect to all or any portion of any principal and/or interest due hereunder on any Payment Date (or the date of any prepayment of the Outstanding Amounts) that the Company has elected to pay by Converting such amount to Conversion Shares, the earlier of (i) the date specified by the Holder by written notice to the Company also specifying the portion of such amount to be so paid on such date and (ii) if no such notice is received with respect to all or a portion of such amount, the date that is 90 days following such Payment Date, and (b) with respect all or any portion of the Outstanding Amounts due to the Holder hereunder and the Outstanding Amounts (as defined under the other Notes) that the Majority Holders haves elected to Convert by delivery of a notice pursuant to Section 4(a), the date specified in such notice.
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“Conversion Price” means: (a) if no Event of Default has occurred and is continuing, the product of (i) the VWAP Price multiplied by (ii) the Discount, and (b) if an Event of Default has occurred and is continuing, the Default Conversion Price.
“Conversion Shares” means a number of shares of Common Stock equal to the quotient (rounded down to the nearest whole share) obtained by dividing (a) the applicable Conversion Amount being Converted on the applicable Conversion Date by (b) the Conversion Price for such Conversion Date. A registration statement registering the resale of Conversion Shares shall be in effect as provided in Section 4(b)(v).
“Default Conversion Price” means the product of (a) the lowest traded price of the Common Stock on the Trading Market in the five Trading Day period immediately prior to the applicable Conversion Date and (b) 0.40.
“Discount” means 0.90 (representing a discount of ten percent (10%)).
“Event of Default” shall have the meaning set forth in Section 7(a).
“Fundamental Transaction” shall have the meaning set forth in Section 5(a).
“Indebtedness” means any liabilities of the Company or any Subsidiary for borrowed money and all guaranties made by the Company or any Subsidiary of borrowed money owed by others.
“Mandatory Default Amount” means as of any date the sum of (a) 120% of the unconverted outstanding principal amount of this Note, plus (b) the then accrued and unpaid interest on the unconverted outstanding principal amount of this Note, plus (c) any other amounts then due and payable to the Holder under the terms of this Note.
“Note Register” shall have the meaning set forth in Section 2(f).
“Original Issue Date” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless of the number of instruments which may be issued to evidence the Notes.
“Outstanding Amounts” means, as of any date, the unconverted principal balance then outstanding under this Note, all accrued and unpaid interest thereon pursuant to the terms hereof and all other amounts then due to the Holder hereunder.
“Permitted Indebtedness” means: (a) the Indebtedness evidenced by the Notes, Indebtedness incurred by the Company and the Subsidiaries to finance the payment of any obligation of the Company under the Purchase Agreement and any refinancings of any such Indebtedness, (b) Indebtedness of up to an aggregate of $200,000, inclusive of any interest, fees, penalties or other amounts due or payable thereunder, and (c) a traditional working capital line in an aggregate amount not to exceed $1,500,000.00 provided to The Boston Solar Company LLC, by a national banking association or other traditional commercial lender on terms that are commercially reasonable solely for working capital purposes of such subsidiary of the Company, including to fund distributions to the Company.
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“Prepayment Amount” means an aggregate amount on any date this Note is prepaid in full prior to the Maturity Date equal to the sum of (i) the then unconverted outstanding principal amount of this Note, plus (ii) any then accrued and unpaid interest hereon, plus (iii) any other then unpaid amount due to the Holder in respect of this Note.
“Purchase Agreement” means the Securities Purchase Agreement, dated as of April 26, 2024, among the Company and the original Holder, as amended, modified, or supplemented from time to time in accordance with its terms.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Share Delivery Date” shall have the meaning set forth in Section 4(b)(ii).
“Successor Entity” shall have the meaning set forth in Section 5(a).
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for the Trading Day immediately prior to such date (or the nearest preceding date) on such Trading Market, (b) if the Common Stock is not then listed or quoted for trading on a Trading Market and if prices for the Common Stock are then reported in the OTCQB, OTCQX or “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (c) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Company and reasonably acceptable to the Majority Holders, the fees and expenses of which shall be paid by the Company.
“VWAP Price” means, as of any date, the average of the VWAP determined for each Trading Day during the five-calendar day period ending on such date.
Section 2. Interest; Repayment; and Prepayment.
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Section 3. Registration of Transfers and Exchanges.
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i. At any time that is more than six months after the date of the issuance of the initial Note, at the option of the Majority Holders, subject to Section 4(c), any or all of the then Outstanding Amounts hereunder and the Outstanding Amounts (as defined under the other Notes), shall be Convertible into Conversion Shares, on the date specified in a notice of conversion, in the form attached hereto as Exhibit A (each a “Notice of Conversion”), delivered to the Company or Company’s transfer agent by the Majority Holders; provided that each Notice of Conversion is submitted by e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Company or Company’s transfer agent before 11:59 p.m., New York, New York time on the Conversion Date specified therein.
ii. On any Payment Date (and on any date this Note is prepaid pursuant to Section 3(e)), at the option of the Company, the amount due to the Holder hereunder on such Payment Date (or such other date), including any such principal amount and any such unpaid accrued interest, may be Converted into Conversion Shares upon notice from the Company pursuant to Section 2(g).
iii. The number of Conversion Shares to be issued upon the Conversion of any applicable Conversion Amount on any Conversion Date shall be determined by dividing such Conversion Amount by the Conversion Price for such Conversion Date.
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Section 5. Certain Adjustments.
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Section 6. Negative Covenants.
As long as any portion of this Note remains outstanding, unless the Majority Holders shall have otherwise given prior written consent, the Company shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:
a) other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any Indebtedness;
b) amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights of the Holders;
c) repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or Common Stock Equivalents other than as to (i) the Conversion Shares as permitted or required under the Transaction Documents, (ii) repurchases of Common Stock or Common Stock Equivalents of departing officers and directors of the Company, provided that such repurchases shall not exceed an aggregate of $25,000 for all officers and directors during the term of this Note, or (iii) shares of Common Stock and Common Stock Equivalents which do not vest or are otherwise forfeited, provided (in case of forfeiture) that such Common Stock and Common Stock Equivalents are not acquired for cash;
d) repay, repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than the Notes on a pro-rata basis, other than regularly scheduled principal and interest payments as such terms are in effect as of the Original Issue Date and other than refinancings thereof that constitute Permitted Indebtedness, provided that such payments shall not be permitted if, at such time, or after giving effect to such payment, any Event of Default exists or occurs;
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e) pay cash dividends or distributions on any equity securities of the Company;
f) enter into any material transaction with any Affiliate of the Company, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for board approval); or
g) enter into any agreement with respect to any of the foregoing.
a) “Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
i. any default in the payment of: (A) the principal amount of any Note, or (B) interest owing to a Holder on any Note, as and when the same shall become due and payable (whether on a Payment Date or by acceleration or otherwise) which default, solely in the case of an interest payment under clause (B) above, is not cured within 15 Trading Days;
ii. the Company shall fail to observe or perform any other material covenant or agreement contained in the Notes (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (viii) below) or in any Transaction Document, which failure is not cured, if possible to cure, within the earlier to occur of (A) five (5) Trading Days after notice of such failure sent by the Holder or by any other Holder to the Company and (B) seven (7) Trading Days after the Company has become aware of such failure;
iii. a material default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall occur under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which the Company is obligated and which is necessary for the operation of the business of the Company (and not covered by clause (vi) below);
iv. any material representation or warranty made in this Note, any other Transaction Documents, or any certificate made or delivered to the Holder or any other Holder pursuant to the terms hereof or any other Transaction Document shall be untrue or incorrect in any material respect as of the date when made;
v. the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;
vi. the Company shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $250,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, subject to the expiration of any and all applicable cure period(s) in such instrument;
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vii. the Company (and all of its Subsidiaries, taken as a whole) shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of all or in excess of 33% of its assets in one transaction or a series of related transactions (whether or not such sale would constitute a Change of Control Transaction), provided that neither the sale of the Company’s interests in ShieldSaver, LLC or Discount Indoor Garden Supplies, Inc. nor the Spin-Out Transaction shall constitute an Event Default for purposes of this Section 7(a)(vii);
viii. the Company shall fail for any reason to deliver Conversion Shares to a Holder prior to the fifth Trading Day after a Conversion Date pursuant to Section 4(b) or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the Company’s intention to not honor requests for conversions of any Notes in accordance with the terms hereof;
ix. a final non-appealable judgment by any competent court in the United States for the payment of money in an amount of at least $250,000 is rendered against the Company, and the same remains undischarged and unpaid for a period of 45 days during which execution of such judgment is not effectively stayed;
x. the Common Stock fails to be listed or quoted for trading on any Trading Market and such failure shall continue for five (5) Trading Days; or
xi. the Company shall be in breach of its material reporting obligations under the Securities Act or the Exchange Act and such breach shall continue unremedied for forty-five (45) days following written notice thereof from the Majority Holders.
(i) the interest rate on this Note shall immediately accrue at an interest rate equal to 15% per annum which shall be paid in cash monthly to Holder until the Event of Default is cured; or
(ii) the amount immediately due and payable hereunder shall be the Mandatory Default Amount.
Upon the conversion or payment in full of the outstanding principal amount of this Note, plus accrued but unpaid interest and any other amounts owing in respect thereof, the Holder shall promptly surrender this Note to or as directed by the Company. The Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.
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d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the state of Arizona, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in Arizona (the “Arizona Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the Arizona Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such Arizona Courts, or such Arizona Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding 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 applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorney’s fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
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Section 9. Amendments; Waivers.
Any modifications, amendments or waivers of the provisions hereof shall be subject to Section 5.05 of the Purchase Agreement.
Section 10. Equal Treatment of Holder.
No consideration (including any modification of this Note) shall be offered or paid to any Person (as such term is defined in the Purchase Agreement) to amend or consent to a waiver, or modification of any provision hereof unless the same consideration is also offered to all Holders. Further, subject to Section 4(c), the Company shall not make any payment of principal or interest on the Notes in amounts which are disproportionate to the respective principal amounts outstanding on the Notes at any applicable time. For clarification purposes, this provision constitutes a separate right granted to each Holder by the Company and negotiated separately by each Holder and is intended for the Company to treat the Holders as a class and shall not in any way be construed as the Holders acting in concert or as a group with respect to the purchase or disposition of the Notes or otherwise.
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 any Holder in order to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments 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 in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents 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 the Transaction Documents 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 any Holder with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by such Holder to the unpaid principal amount of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Xxxxxx’s election.
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.
| SINGLEPOINT, INC. |
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| By: |
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| Name: | Xxx Xxxxxxx |
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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) together with $________________ of accrued and unpaid interest thereon, totaling $_____________ into that number of shares of Common Stock to be issued pursuant to the conversion of such outstanding amount under the Note (“Common Stock”) as set forth below, of SinglePoint, Inc., a Nevada corporation (the “Company”), according to the conditions of the 12% original issue discount convertible note of the Company dated April 26, 2024 (the “Note”; capitalized terms used and not defined herein having the meanings therein provided), as of the date written below. No fee will be charged to the Holder for such Conversion, except for transfer taxes, if any.
Box Checked as to applicable instructions:
| ☐ | The Company 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 At Custodian system (“DWAC Transfer”). |
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| ☐ | The undersigned hereby requests that the Company 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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| Name: Address: |
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| Date of Conversion: |
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| Number of Shares of Common Stock to be issued upon the Conversion of the above Conversion Amount: |
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| Amount of Principal Balance Due remaining under the Note after this Conversion: |
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| Accrued and unpaid interest remaining: |
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