CONVERTIBLE NOTE DUE NOVEMBER 9, 2018
Exhibit 10.2
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
CONVERTIBLE 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 BORROWER. THIS
SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR”
AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN
SECURED BY SUCH SECURITIES.
Original Issue Date:
November 9,
2017
Principal Amount: $54,000.00
Purchase Price: $50,000.00
CONVERTIBLE NOTE
DUE NOVEMBER 9, 2018
THIS
CONVERTIBLE NOTE is issued by Sincerity Applied Materials
Holdings Corp., a Nevada corporation, (the
“Borrower”), due November 9, 2018 (this note, the
“Note”
and, collectively with the other notes of such series, the
“Notes”).
FOR
VALUE RECEIVED, Borrower promises to pay to ______________ or its registered assigns
(the “Holder”), with an address
at _________________________, or shall have paid pursuant to the
terms hereunder, the principal sum of Fifty Four Thousand Dollars ($54,000.00)
on November 9, 2018 (the “Maturity Date”) or such
earlier date as this Note is required or permitted to be repaid or
such later date if extended by the Holder as provided hereunder,
and to pay interest, if any, to the Holder on the aggregate
unconverted and then outstanding principal amount of this Note in
accordance with the provisions hereof.
This
Note is subject to the following additional
provisions:
“Alternate Consideration”
shall have the meaning set forth in Section 5(d).
“Asset Disposition” means
the sale, transfer, lease, license, contribution or other
conveyance of assets of Borrower in one or more dispositions not in
the ordinary course of business that results in net cash proceeds
to Borrower of $10,000 or more, in the aggregate.
“Bankruptcy Event” means
any of the following events: (a) Borrower or any Subsidiary 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 Borrower or any Subsidiary thereof, (b)
there is commenced against Borrower or any Subsidiary thereof any
such case or proceeding that is not dismissed within 60 days after
commencement, (c) Borrower or any Subsidiary thereof is adjudicated
insolvent or bankrupt or any order of relief or other order
approving any such case or proceeding is entered, (d) Borrower or
any 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) Borrower or any Subsidiary thereof makes a general
assignment for the benefit of creditors, (f) Borrower or any
Subsidiary thereof calls a meeting of its creditors with a view to
arranging a composition, adjustment or restructuring of its debts
or (g) Borrower or any 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.
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“Beneficial Ownership
Limitation” shall have the meaning set forth in
Section 4(d).
“Business Day” means any
day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of New York are required by law or other
governmental action to close.
“Buy-In” shall have the
meaning set forth in Section 4(c)(v).
“Change of Control
Transaction” means, other than by means of conversion
or exercise of the Notes and the Securities issued together with
the Notes, 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 Borrower,
by contract or otherwise) of in excess of 50% of the voting
securities of Borrower, (b) Borrower merges into or consolidates
with any other Person, or any Person merges into or consolidates
with Borrower and, after giving effect to such transaction, the
stockholders of Borrower immediately prior to such transaction own
less than 50% of the aggregate voting power of Borrower or the
successor entity of such transaction, (c) Borrower sells or
transfers all or substantially all of its assets to another Person
and the stockholders of Borrower 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 Borrower of an
agreement to which Xxxxxxxx is a party or by which it is bound,
providing for any of the events set forth in clauses (a) through
(d) above.
“Closing Price” means on
any particular date (a) the last reported closing bid price
per share of Common Stock on such date on the Trading Market (as
reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), or
(b) if there is no such price on such date, then the closing bid
price on the Trading Market on the date nearest preceding such date
(as reported by Bloomberg L.P. at 4:15 p.m. (New York City time)),
or (c) if the Common Stock is not then listed or quoted on a
Trading Market and if prices for the Common Stock are then reported
in the “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 (d) if the shares of
Common Stock are not then publicly traded the fair market value of
a share of Common Stock as determined by an independent appraiser
selected in good faith by the Holder and reasonably acceptable to
Borrower, the fees and expenses of which shall be paid by
Borrower.
“Conversion” shall have
the meaning ascribed to such term in Section 4.
“Conversion Date” shall
have the meaning set forth in Section 4(a).
“Conversion Price” shall
have the meaning set forth in Section 4(b).
“Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion
of this Note in accordance with the terms hereof.
“Dilutive Issuance” shall
have the meaning set forth in Section 5(e).
“Equity Conditions” means,
during the period in question,
(a) Borrower shall have duly honored all conversions scheduled to
occur or occurring by virtue of one or more Notices of Conversion
of the applicable Holder on or prior to the dates so requested or
required, if any, (b) Borrower shall have paid all liquidated
damages and other amounts owing to the applicable Holder in respect
of this Note and the other Transaction Documents, (c) there
is an effective registration statement pursuant to which the
Holders are permitted to utilize the prospectus thereunder to
resell all of the Conversion Shares and Warrant Shares issuable
pursuant to the Transaction Documents (and Xxxxxxxx believes, in
good faith, that such effectiveness will continue uninterrupted for
the foreseeable future), and Company counsel has delivered to the
Company’s transfer agent and Holder a standing, written
unqualified opinion that resales may then be made by the Holder of
all of the Holders Conversion Shares and Warrant Shares pursuant to
such effective registration statement, (d) the Common Stock is
listed or traded on a Trading Market, (e) there is a sufficient
number of authorized, but unissued and otherwise unreserved, shares
of Common Stock for the issuance of all of the shares then issuable
pursuant to the Transaction Documents, (f) an Event of Default has
not occurred, whether or not such Event of Default has been cured,
(g) there is no existing event which, with the passage of time or
the giving of notice, would constitute an Event of Default, (h) the
issuance of the shares in question to the applicable Holder would
not exceed the Beneficial Ownership Limitation,
(i) there has been no public announcement of a pending or proposed
Fundamental Transaction or Change of Control Transaction that has
not been consummated, and (j) the applicable Holder is not in
possession of any information provided by Borrower that
constitutes, or may constitute, material non-public
information.
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“Event of Default” shall
have the meaning set forth in Section 8(a).
“Fundamental Transaction”
shall have the meaning set forth in Section 5(d).
“Interest Payment Date”
shall have the meaning set forth in Section 2(a).
“Interest Share Amount”
shall have the meaning set forth in Section 2(a).
“Mandatory Default Amount”
means the sum of (a) the greater of (i) the outstanding principal
amount of this Note divided by the Conversion Price on the date the
Mandatory Default Amount is either (A) demanded (if demand or
notice is required to create an Event of Default), (B) otherwise
due, or (C) paid in full, whichever is lowest, multiplied by the
VWAP on the date the Mandatory Default Amount is either (x)
demanded, (y) due, or (z) paid in full, whichever is highest, or
(ii) 120% of the outstanding principal amount of this Note plus (b)
all other amounts, costs, expenses and liquidated damages due in
respect of this Note.
“New York Courts” shall
have the meaning set forth in Section 9(d).
“Note Register” shall have
the meaning set forth in Section 3(c).
“Notice of Conversion”
shall have the meaning set forth in Section 4(a).
“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 such
Notes.
“Other Holder” means a
holder of one or more Other Notes (collectively,
“Other
Holders”).
“Other Notes” means Notes
nearly identical to this Note issued to other Holders pursuant to
the Purchase Agreement.
“Permitted Lien” means the
individual and collective reference to the following: (a) Liens for
taxes, assessments and other governmental charges or levies not yet
due or Liens for taxes, assessments and other governmental charges
or levies being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment
of the management of Borrower) have been established in accordance
with GAAP, (b) Liens imposed by law which were incurred in the
ordinary course of Borrower’s business, such as
carriers’, warehousemen’s and mechanics’ Liens,
statutory landlords’ Liens, and other similar Liens arising
in the ordinary course of Borrower’s business, and which (x)
do not individually or in the aggregate materially detract from the
value of such property or assets or materially impair the use
thereof in the operation of the business of Borrower and its
consolidated Subsidiaries or (y) are being contested in good faith
by appropriate proceedings, which proceedings have the effect of
preventing for the foreseeable future the forfeiture or sale of the
property or asset subject to such Lien, and (c) Liens in connection
with Permitted Indebtedness under clauses (a) and (b) thereunder,
and Liens incurred in connection with Permitted Indebtedness under
clause (c) thereunder, provided that such Liens are not secured by
assets of Borrower or its Subsidiaries other than the assets so
acquired or leased, and (d) Liens in effect prior to the Original
Issue Date.
“Purchase Agreement” means
the Securities Purchase Agreement, dated as of November 9, 2017
among Borrower and the original Holders, 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(c)(ii).
“Successor Entity” shall
have the meaning set forth in Section 5(d).
“Trading Day” means a day
on which the principal Trading Market is open for
trading.
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“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE MKT,
the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ
Global Select Market, the New York Stock Exchange, the OTC Bulletin
Board, the OTCQB, the OTCQX or the OTC Pink (or any successors to
any of the foregoing).
“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 such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)),
(b) if any of the NASDAQ markets or exchanges is not a
Trading Market, the volume weighted average price of the Common
Stock for such date (or the nearest preceding date) on the OTC
Bulletin Board, (c) if the Common Stock is not then listed or
quoted for trading on the OTC Bulletin Board and if prices for the
Common Stock are then reported on the OTCQX, OTCQB or OTC Pink
Marketplace maintained by the OTC Markets Group, Inc. (or a similar
organization or agency succeeding to its functions of reporting
prices), the volume weighted average price of the Common Stock on
the first such facility (or a similar organization or agency
succeeding to its functions of reporting prices), or (d) 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 Purchasers of a majority in interest of the Securities then
outstanding and reasonably acceptable to Borrower, the fees and
expenses of which shall be paid by Borrower.
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5
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Section 5.
Certain
Adjustments.
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(i) Issuance of Options. If the
Company in any manner grants or sells any options (other than
options that qualify as Exempt Issuances) and the lowest price per
share for which one share of Common Stock is issuable upon the
exercise of any such option or upon conversion, exercise or
exchange of any Common Stock Equivalents issuable upon exercise of
any such option is less than the Applicable Price, then such share
of Common Stock shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the granting or sale
of such option for such price per share. For purposes of this
Section 5(e)(i), the “lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such
options or upon conversion, exercise or exchange of any Common
Stock Equivalents issuable upon exercise of any such option”
shall be equal to (1) the lower of (x) the sum of the lowest
amounts of consideration (if any) received or receivable by the
Company with respect to any one share of Common Stock upon the
granting or sale of such option, upon exercise of such option and
upon conversion, exercise or exchange of any Common Stock
Equivalent issuable upon exercise of such option and (y) the lowest
exercise price set forth in such option for which one share of
Common Stock is issuable upon the exercise of any such options or
upon conversion, exercise or exchange of any Common Stock
Equivalents issuable upon exercise of any such option minus (2) the
sum of all amounts paid or payable to the holder of such option (or
any other Person) upon the granting or sale of such option, upon
exercise of such option and upon conversion, exercise or exchange
of any Common Stock Equivalent issuable upon exercise of such
option plus the value of any other consideration received or
receivable by, or benefit conferred on, the holder of such option
(or any other Person). Except as contemplated below, no further
adjustment of the Fixed Conversion Price shall be made upon the
actual issuance of such shares of Common Stock or of such Common
Stock Equivalents upon the exercise of such options or upon the
actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Common Stock Equivalents.
(ii) Issuance
of Common Stock Equivalents. If the Company in any manner
issues or sells any Common Stock Equivalents (other than Common
Stock Equivalents that qualify as Exempt Issuances) and the lowest
price per share for which one share of Common Stock is issuable
upon the conversion, exercise or exchange thereof is less than the
Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company
at the time of the issuance or sale of such Common Stock
Equivalents for such price per share. For the purposes of this
Section 5(e)(ii), the “lowest price per share for which one
share of Common Stock is issuable upon the conversion, exercise or
exchange thereof” shall be equal to (1) the lower of (x) the
sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to one share of Common Stock
upon the issuance or sale of the Common Stock Equivalent and upon
conversion, exercise or exchange of such Common Stock Equivalent
and (y) the lowest conversion price set forth in such Common Stock
Equivalent for which one share of Common Stock is issuable upon
conversion, exercise or exchange thereof minus (2) the sum of all
amounts paid or payable to the holder of such Common Stock
Equivalent (or any other Person) upon the issuance or sale of such
Common Stock Equivalent plus the value of any other consideration
received or receivable by, or benefit conferred on, the holder of
such Common Stock Equivalent (or any other Person). Except as
contemplated below, no further adjustment of the Fixed Conversion
Price shall be made upon the actual issuance of such shares of
Common Stock upon conversion, exercise or exchange of such Common
Stock Equivalents, and if any such issue or sale of such Common
Stock Equivalents is made upon exercise of any Options for which
adjustment of this Note has been or is to be made pursuant to other
provisions of this Section 5(e), except as contemplated below, no
further adjustment of the Fixed Conversion Price shall be made by
reason of such issue or sale.
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(iii) Change
in Option Price or Rate of Conversion. If the purchase or
exercise price provided for in any options, the additional
consideration, if any, payable upon the issue, conversion, exercise
or exchange of any Common Stock Equivalents, or the rate at which
any Common Stock Equivalents are convertible into or exercisable or
exchangeable for shares of Common Stock increases or decreases at
any time, the Fixed Conversion Price in effect at the time of such
increase or decrease shall be adjusted to the Fixed Conversion
Price which would have been in effect at such time had such options
or Common Stock Equivalents provided for such increased or
decreased purchase price, additional consideration or increased or
decreased conversion rate, as the case may be, at the time
initially granted, issued or sold. For purposes of this Section
5(e)(iii), if the terms of any option or Common Stock Equivalent
that was outstanding as of the date of issuance of this Note are
increased or decreased in the manner described in the immediately
preceding sentence, then such option or Common Stock Equivalent and
the shares of Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued
as of the date of such increase or decrease. No adjustment pursuant
to this Section 5(e) shall be made if such adjustment would result
in an increase of the Fixed Conversion Price then in
effect.
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a) enter
into any transaction pursuant to Section 3(a)(10) of the Securities
Act;
b) other
than Permitted Liens, enter into, create, incur, assume or suffer
to exist any Liens of any kind, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest
therein or any income or profits therefrom;
c) 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
Holder;
d) 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 the Conversion Shares or Warrant Shares as permitted or
required under the Transaction Documents;
e) redeem,
defease, repurchase, repay or make any payments in respect of, by
the payment of cash or cash equivalents (in whole or in part,
whether by way of open market purchases, tender offers, private
transactions or otherwise), all or any portion of any Indebtedness
(other than the Notes if on a pro-rata basis), whether by way of
payment in respect of principal of (or premium, if any) or interest
on, such Indebtedness;
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f) declare
or make any dividend or other distribution of its assets or rights
to acquire its assets to holders of shares of Common Stock,
preferred stock, or any other equity security 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, scheme of arrangement or other similar
transaction;
g) enter
into any transaction with any Affiliate of Borrower which would be
required to be disclosed in any public filing with the Commission,
unless such transaction is made on an arm’s-length basis and
expressly approved by a majority of the disinterested directors of
Borrower (even if less than a quorum otherwise required for board
approval);
h) enter
into any capital transaction 30 days after the Original Issue Date;
or
h) 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 or interest amount of
this Note or (B) liquidated damages and other amounts owing to a
Holder on any Note, as and when the same shall become due and
payable (whether on a Conversion Date or the Maturity Date or by
acceleration or otherwise) which default, solely in the case of a
default under clause (B) above, is not cured within 3 Trading Days
after Borrower has become or should have become aware of such
default;
ii. Borrower
shall fail to observe or perform any other covenant or agreement
contained in the Notes (other than a breach by Borrower of its
obligations to deliver shares of Common Stock to the Holder upon
conversion, which breach is addressed in clause (ix) below) which
failure is not cured, if possible to cure, within the earlier to
occur of (A) five (5) Trading Days
after written notice of such failure sent by the Holder or by any
Other Holder to Borrower and (B) ten (10) Trading Days after
Borrower has become or should have become aware of such
failure;
iii. a
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, including but not
limited to failure to strictly comply with the provisions of the
Transaction Documents, or (B) any other material agreement, lease,
document or instrument to which Borrower or any Subsidiary is
obligated (and not covered by clause (vi) below), which, in the
case of subsection (B), would reasonably be expected to have a
Material Adverse Effect;
iv. any
representation or warranty made in this Note, any other Transaction
Documents, any written statement pursuant hereto or thereto or any
other report, financial statement or certificate made or delivered
to the Holder or any Other Holder shall be untrue or incorrect in
any material respect as of the date when made or deemed
made;
v. Borrower
or any Subsidiary shall be subject to a Bankruptcy
Event;
vi. Borrower
or any Subsidiary 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 $100,000, 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;
vii. Borrower
shall be a party to any Change of Control Transaction or
Fundamental Transaction;
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viii. Borrower
does not meet the current public information requirements under
Rule 144;
ix. Borrower
shall fail for any reason to deliver certificates to a Holder prior
to the fifth (5th) Trading Day after
a Conversion Date pursuant to Section 4(c) or Borrower shall
provide at any time notice to the Holder, including by way of
public announcement, of Xxxxxxxx’s intention to not honor
requests for conversions of any Notes in accordance with the terms
hereof;
x. any
Person shall breach any material term of any agreement delivered to
the initial Holders pursuant to Section 2.2(a) of the Purchase
Agreement;
xi. any
monetary judgment, writ or similar final process shall be entered
or filed against Borrower, any subsidiary or any of their
respective property or other assets for more than $50,000, and such
judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 90 calendar days;
xii. any
dissolution, liquidation or winding up by Borrower or a material
Subsidiary of a substantial portion of their business;
xiii. cessation
of operations by Borrower or a material Subsidiary;
xiv. an
event resulting in the Common Stock no longer being listed or
quoted on a Trading Market, or notification from a Trading Market
that the Borrower is not in compliance with the conditions for such
continued quotation and such non-compliance continues for twenty
(20) days following such notification;
xv. a
Commission or judicial stop trade order or suspension from the
Borrower’s Principal Trading Market;
xvi. the
Borrower effectuates a reverse split of its Common Stock without
ten (10) days prior written notice to the Holder;
xvii. a
failure by Borrower to notify Holder of any material event of which
Borrower is obligated to notify Holder pursuant to the terms of
this Note or any other Transaction Document;
xviii. a
default by the Borrower of a material term, covenant, warranty or
undertaking of any other agreement to which the Borrower and Holder
are parties, or the occurrence of an event of default under any
such other agreement to which Borrower and Holder are parties which
is not cured after any required notice and/or cure period or
waived;
xix. the
occurrence of an Event of Default under any Other
Note;
xx. any
material provision of any Transaction Document shall at any time
for any reason (other than pursuant to the express terms thereof)
cease to be valid and binding on or enforceable against the
Borrower, or the validity or enforceability thereof shall be
contested by Borrower, or a proceeding shall be commenced by
Borrower or any governmental authority having jurisdiction over
Borrower or Holder, seeking to establish the invalidity or
unenforceability thereof, or Borrower shall deny in writing that it
has any liability or obligation purported to be created under any
Transaction Document;
xxi. the
failure by Borrower or any material Subsidiary to maintain any
material intellectual property rights, personal, real property,
equipment, leases or other assets which are necessary to conduct
its business (whether now or in the future) and such breach is not
cured with twenty (20) days after the first day of such occurrence;
or
xxii. the
restatement after the date hereof of any financial statements filed
by the Borrower with the Commission for any date or period from and
after the Original Issue Date and until this Note is no longer
outstanding, if the result of such restatement would, by comparison
to the unrestated financial statements, have constituted a Material
Adverse Effect. For the avoidance of doubt, any restatement related
to new accounting pronouncements shall not constitute a default
under this Section.
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xxiii the
Conversion Price falls below the par value of the common stock
subject to cure as set forth above.
xxiv the
Borrower fails to deliver original “wet” signature
signed copies of the Notes, Warrants and COJ to Purchaser Counsel
on or before November 14, 2017.
In the
event more than one grace, cure or notice period is applicable to
an Event of Default, then the shortest grace, cure or notice period
shall be applicable thereto.
a)
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
facsimile, or e-mail with accurate confirmation generated by the
transmitting facsimile machine or transmitting computer(e-mail), 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: (i) if to Borrower, to: Sincerity
Applied Materials Holdings Corp., Level 0, 00 Xxxxx Xxxxxx, Xxxxx
Xxxxx, XXX 0000 Xxxxxxxxx, Attn: Xxxxx Xxxxx, President and CEO,
email: Xxxxx@xxxxxxxxxxxxxxxxx.xxx, with a copy by fax or email
only to (which shall not constitute notice): Xxxxx Xxxxxxxx, Esq.,
Fax: (212) 259–8200, Email: xxxxxxxxx@xxxxxx.xxx
and (ii) if to the Holder, to: the address and fax number indicated
on the front page of this Note, with an additional copy by fax only
to (which shall not constitute notice): Grushko & Xxxxxxx,
P.C., 000 Xxxxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxx Xxxx 00000,
xxxxxxxxx: (000) 000-0000.
15
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 New
York, 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 in
the state and federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”). Each
party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York 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 New York Courts, or such New York 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 attorneys’ fees and other costs
and expenses incurred in the investigation, preparation and
prosecution of such action or proceeding. This Note shall be deemed an unconditional
obligation of Borrower for the payment of money and, without
limitation to any other remedies of Holder, may be enforced against
Borrower by summary proceeding pursuant to New York Civil Procedure
Law and Rules Section 3213 or any similar rule or statute in the
jurisdiction where enforcement is sought. For purposes of such rule
or statute, any other document or agreement to which Holder and
Borrower are parties or which Borrower delivered to Holder, which
may be convenient or necessary to determine Holder’s rights
hereunder or Xxxxxxxx’s obligations to Holder are deemed a
part of this Note, whether or not such other document or agreement
was delivered together herewith or was executed apart from this
Note.
16
*********************
(Signature Pages Follow)
17
IN WITNESS WHEREOF, Xxxxxxxx has caused
this Note to be signed in its name by an authorized officer as of
the Date written above.
By:
_______________________________
Name: Xxxxx Xxxxx
Title: President and CEO
18
ANNEX A
The
undersigned hereby elects to convert principal under the
Convertible Note due November 9, 2018 of Sincerity Applied
Materials Holdings Corp., a Nevada corporation (the
“Company”), into shares of
common stock (the “Common Stock”), of
Borrower according to the conditions hereof, as of the date written
below. If shares of Common Stock are to be issued in the name of a
person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by
Borrower in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if
any.
By the
delivery of this Notice of Conversion the undersigned represents
and warrants to Borrower that its ownership of the Common Stock
does not exceed the amounts specified under Section 4 of this Note,
as determined in accordance with Section 13(d) of the Exchange
Act.
The
undersigned agrees to comply with the prospectus delivery
requirements under the applicable securities laws in connection
with any transfer of the aforesaid shares of Common
Stock.
Conversion
calculations:
|
Date to
Effect Conversion: ____________________________
|
|
|
|
Principal
Amount of Note to be Converted: $__________________
|
|
|
|
Additional
Interest to be Converted: $_______________
|
|
|
|
Number
of shares of Common Stock to be issued: ______________
|
|
|
|
Signature:
_________________________________________
|
|
|
|
Name:
____________________________________________
|
|
|
|
Address
for Delivery of Common Stock Certificates: __________
|
|
_____________________________________________________
|
|
_____________________________________________________
|
|
|
|
Or
|
|
|
|
DWAC
Instructions: _________________________________
|
|
|
|
Broker
No:_____________
|
|
Account
No: _______________
|
19