ORIGINAL ISSUE DISCOUNT SENIOR SECURED CONVERTIBLE PROMISSORY NOTE DUE NOVEMBER 3, 2023
Exhibit 4.5
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 THE COMPANY.
THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
Original
Issue Date: November 3, 2020
Original Principal Amount: $3,888,889
Purchase
Price: $3,500,000
ORIGINAL ISSUE DISCOUNT SENIOR SECURED
CONVERTIBLE PROMISSORY NOTE
DUE NOVEMBER 3, 2023
THIS
ORIGINAL ISSUE DISCOUNT SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
is a duly authorized and validly issued debt obligation of
Transworld Holdings, Inc., a Delaware corporation (which was
formerly known as GoIP Global, Inc., a Colorado corporation) (the
“Company” or the
“Borrower”), having its
principal place of business at 0000 Xxxx Xxxx Xxxxx, Xxxxx, Xxxxxxx
00000, designated as its Original Issue Discount Senior Secured
Convertible Promissory Note due November 3, 2023 (the
“Note”).
FOR
VALUE RECEIVED, the Company promises to pay to Arena Structured
Private Investments (Cayman), LLC or its registered assigns (the
“Holder”), or shall have
paid pursuant to the terms hereunder, the principal sum of
$3,888,889 and any other sums due hereunder on November 3, 2023
(the “Maturity
Date”), or such earlier date as this Note is required
or permitted to be repaid as provided hereunder, and to pay
interest 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:
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:
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“Alternate Conversion
Price” means the greater of (i) $0.01 or (ii) 75% of
the average VWAP of the Common Stock for the five (5) Trading Days
on the Trading Market immediately preceding the date of conversion;
provided, however, that the Alternate Conversion price may not
exceed the Conversion Price of $0.25 per share, as adjusted
pursuant to the terms hereof.
“Bankruptcy Event”
means any of the following events: (a) the Company 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, (b) there is commenced against the Company
any such case or proceeding that is not dismissed within 60 days
after commencement, (c) the Company is adjudicated insolvent or
bankrupt or any order of relief or other order approving any such
case or proceeding is entered, (d) the Company 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 makes a
general assignment for the benefit of creditors, (f) the Company
calls a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts or (g) the
Company, 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(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 the New York
Federal Reserve Bank is closed.
“Buy-In” shall have the
meaning set forth in Section 4(c)(v).
“Change of Control
Transaction” means the occurrence after the date
hereof of any of the following: (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 fifty percent (50%) of the voting securities of the
Company (other than by means of conversion or exercise of the
Note), (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
fifty-one percent (51%) of the aggregate voting power of the
Company or the successor entity of such transaction, (c) the
Company 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 fifty-one percent (51%) 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.
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“Conversion
Date” shall have the meaning set forth in Section 4(a).
“Conversion Price” shall
have the meaning set forth in Section 4(b). References
to “Conversion Price” herein may refer to the Alternate
Conversion Price and/or the Base Conversion Price, where
appropriate, based on the terms set forth herein.
“Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion
of this Note in accordance with the terms hereof.
“Distribution”
shall have the meaning set forth in Section 5(c).
“Event of
Default” shall have the
meaning set forth in Section 6(a).
“Equity Conditions” means,
during the period in question, (a) the
Company shall have duly honored all conversions and redemptions
scheduled to occur or occurring by virtue of one or more Notices of
Conversion of the Holder, if any, (b) the Company shall have paid
all liquidated damages and other amounts owing to the Holder in
respect of this Note, (c) the Common Stock is trading on a
Trading Market and all of the shares issuable pursuant to the
Transaction Documents are listed or quoted for trading on such
Trading Market (and the Company believes, in good faith, that
trading of the Common Stock on a Trading Market will continue
uninterrupted for the foreseeable future), (d) there is a
sufficient number of authorized but unissued and otherwise
unreserved shares of Common Stock for the issuance of all of the
shares issuable pursuant to the Transaction Documents (including
upon conversion of the outstanding principal amount of the Note),
(e) there is no existing Event of Default or no existing event
which, with the passage of time or the giving of notice, would
constitute an Event of Default, (f) the issuance of the shares in
question to the Holder would not violate the limitations set forth
in Section 4(d)
herein, (g) there has been no public
announcement of a pending or proposed Fundamental Transaction or
Change of Control Transaction that has not been consummated, and
(h) the Holder is not in possession of any information provided by
the Company that constitutes, or may constitute, material
non-public information.
“Late Fees” shall have the
meaning set forth in Section 2(d).
“Mandatory Default Amount”
means either, at the Holder’s discretion (i) the conversion
of the outstanding principal amount of this Note, and, at the
Holder’s election, all accrued and unpaid interest hereon,
converted at the Alternate Conversion Price, or (ii) the payment of
100% of the outstanding principal amount of this Note and accrued
and unpaid interest hereon, in addition to, for both (i) and (ii)
above, the payment in cash of all other amounts, costs, expenses
and liquidated damages due in respect of this Note. In the event
the Holder makes the election described in (i) above but does not
elect to receive Conversion Shares in respect of all accrued and
unpaid interest on the Note, all accrued and unpaid interest shall
be paid to the Holder in cash no later than the date the Conversion
Shares are required to be delivered to the Holder.
“New York Courts” shall
have the meaning set forth in Section 8(d).
“Note Register” shall have
the meaning set forth in Section 2(c).
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“Notice of Conversion”
shall have the meaning set forth in Section 4(a).
“Optional Redemption”
shall have the meaning set forth in Section 2(e).
“Optional Redemption
Amount” means the sum of (a) 100% of the then
outstanding principal amount of the Note, (b) accrued but unpaid
interest and (c) all liquidated damages and other amounts due in
respect of the Note.
“Optional Redemption Date”
shall have the meaning set forth in Section 2(e).
“Optional Redemption
Notice” shall have the meaning set forth in
Section
2(e).
“Optional Redemption Notice
Date” shall have the meaning set forth in Section 2(e).
“Optional Redemption
Period” shall
have the meaning set forth in Section 2(e).
“Original Issue Date”
means the date of the first issuance of the Note, as set forth on
the first page hereof, regardless of any transfers of any Note and
regardless of the number of instruments which may be issued to
evidence such Note.
“Purchase Agreement” means
the Securities Purchase Agreement, dated as of November 3, 2020
among the Company and the original Holder, as amended, modified or
supplemented from time to time in accordance with its
terms.
“Purchase
Rights” shall have the
meaning set forth in Section 5(c).
“Required Minimum” means,
as of any date, the number of shares of Common Stock that equals
the aggregate number of shares of Common Stock as shall be issuable
(taking into account the adjustments of Section 5) upon the
conversion of the then outstanding principal amount of this Note
and payment of interest hereunder. The initial reserve shall be
15,555,556 shares of Common Stock.
“Share Delivery Date”
shall have the meaning set forth in Section 4(c)(ii).
Section 2. Interest, Prepayment, Redemption and
Put Provisions.
a) Payment of Interest in Cash.
The Company shall pay interest to the Holder on the aggregate
unconverted and then outstanding principal amount of this Note at
the rate of eight percent (8%) per annum, payable quarterly on
January 1, April 1, July 1 and October 1, beginning on the first
such date after the Original Issue Date, on each Conversion Date
(as to that principal amount then being converted), on each
Optional Redemption Date (as to that principal amount then being
redeemed) and on the Maturity Date (each such date, an
“Interest Payment
Date”) (if any Interest Payment Date is not a Business
Day, then the applicable payment shall be due on the next
succeeding Business Day), in cash. Upon the occurrence of an Event
of Default, the Company shall pay interest to the Holder on the
aggregate unconverted and then outstanding principal amount of this
Note at the rate of twenty percent (20%) per annum.
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b) Intentionally
Omitted.
c) Interest Calculations. Interest
shall be calculated on the basis of a 360-day year, consisting of
twelve 30 calendar day periods, and shall accrue daily commencing
on the Original Issue Date until payment in full of the outstanding
principal, together with all accrued and unpaid interest,
liquidated damages and other amounts which may become due
hereunder, has been made. Interest shall cease to accrue with
respect to any principal amount converted, provided that, the
Company actually delivers the Conversion Shares within the time
period required by Section
4(c)(ii) herein. Interest hereunder will be paid to the
Person in whose name this Note is registered on the records of the
Company regarding registration and transfers of this Note (the
“Note
Register”).
d) All
overdue accrued and unpaid interest to be paid hereunder shall
incur a late fee at an interest rate equal to the lesser of 20% per
annum (the “Late
Fees”) which shall accrue daily from the date such
interest is due hereunder through and including the date of actual
payment in full.
e) Optional
Redemption. At any time beginning on the eighteen (18) month
anniversary of the Original Issue Date and before the Maturity
Date, the Company may,
deliver a written notice to the Holder (an “Optional Redemption
Notice” and the date such
notice is deemed delivered hereunder, the
“Optional
Redemption Notice Date”)
of its irrevocable election to redeem all of the then outstanding
principal amount of this Note for cash in an amount equal to the
Optional Redemption Amount on the 30th
calendar day following the Optional
Redemption Notice Date (such date, the “Optional Redemption
Date”, such 30 day
period, the “Optional Redemption
Period” and such
redemption, the “Optional
Redemption”). The
Optional Redemption Amount is payable in full on the Optional
Redemption Date. The Company may only effect an Optional Redemption
if each of the Equity Conditions shall have been met (unless waived
in writing by the Holder) on each Trading Day during the period
commencing on the Optional Redemption Notice Date through to the
Optional Redemption Date and through and including the date
payment of the Optional Redemption Amount is actually made in
full. If any of the Equity Conditions
shall cease to be satisfied at any time during the Optional
Redemption Period, then the Holder may elect to nullify the
Optional Redemption Notice by notice to the Company within 3
Trading Days after the first day on which any such Equity Condition
has not been met (provided that if, by a provision of the
Transaction Documents, the Company is obligated to notify the
Holder of the non-existence of an Equity Condition, such notice
period shall be extended to the third Trading Day after proper
notice from the Company) in which case the Optional Redemption
Notice shall be null and void, ab initio.
f) SBA
Loan Redemption. From
the date hereof until the date that the Note is no longer
outstanding, upon any issuance by the Company or any of its
Subsidiaries of Indebtedness evidenced by a Small Business
Administration loan (a “SBA
Financing”), the Holder
shall have the right, upon one (1) day written notice (the
“SBA Financing
Redemption Date”), to
require the Company to use 50% of the gross proceeds received in
such SBA Financing, to the extent not prohibited under the terms of
the SBA Financing (the “SBA Financing
Redemption Amount”), to
redeem the Note at the Optional Redemption Amount (the
“SBA Financing
Redemption”). The SBA
Financing Redemption Amount payable on the SBA Financing Redemption
Date shall be paid in cash. The Company shall provide the Holder
with prompt written notice upon consummation of any SBA
Financing.
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g) Redemption
Procedure. The Company
covenants and agrees that it will honor all Notices of Conversion
tendered from the time of delivery of the Optional Redemption
Notice or SBA Financing Notice through the date all amounts owing
thereon are due and paid in full. If any portion of the
payment pursuant to an Optional Redemption or SBA Financing
Redemption shall not be paid by the Company by the applicable due
date, Late Fees shall accrue until such amount is paid in full.
Notwithstanding anything herein contained to the contrary, if any
portion of the Optional Redemption Amount or SBA Financing
Redemption Amount, as applicable, remains unpaid after the Option
Redemption Date or the SBA Financing Redemption Date, as
applicable, the Holder may elect, by written notice to the Company
given at any time thereafter, to invalidate such Optional
Redemption, ab initio, and, the Company shall have no further right
to exercise such Optional Redemption. To effect an SBA Financing
Redemption hereunder, the Holder shall not be required to
physically surrender this Note to the Company unless the entire
principal amount of this Note, plus all accrued and unpaid interest
thereon, has been so redeemed. Partial SBA Financing Redemptions
hereunder shall have the effect of lowering the outstanding
principal amount of this Note in an amount equal to the applicable
amount redeemed. The Holder and the Company shall maintain records
showing the principal amount(s) redeemed and the date of such
redemption(s).
h) Put
Provision. Beginning on the
eighteen (18) month anniversary of the Initial Issuance Date (the
“Put
Date”), the Holder shall
have the right (the “Put
Right”), but not the
obligation, to cause the Company, at the written request of the
Holder (a “Put
Notice”), to prepay this
Note, in whole or in part, together with all accrued and unpaid
interest on this Note, upon seven (7) days prior written
notice. To effect the Holder’s exercise of its
Put Right hereunder, the Holder shall not be required to physically
surrender this Note to the Company unless the entire principal
amount of this Note, plus all accrued and unpaid interest thereon,
has been prepaid. Partial prepayments hereunder shall have the
effect of lowering the outstanding principal amount of this Note in
an amount equal to the applicable amount prepaid. The Holder and
the Company shall maintain records showing the principal amount(s)
and interest amount(s) prepaid and the date of such
prepayments.
Section 3. Registration of Transfers and
Exchanges.
a) Different Denominations. This
Note is exchangeable for an equal aggregate principal amount of
Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be payable for
such registration of transfer or exchange.
b) Investment Representations.
This Note has been issued subject to certain investment
representations of the original Holder set forth in the Purchase
Agreement and may be transferred or exchanged only in compliance
with the Purchase Agreement and applicable federal and state
securities laws and regulations.
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c) Reliance on Note Register.
Prior to due presentment for transfer to the Company of this Note,
the Company and any agent of the Company may treat the Person in
whose name this Note is duly registered on the Note Register as the
owner hereof for the purpose of receiving payment as herein
provided and for all other purposes, whether or not this Note is
overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary. The Company shall update the
Note Register to reflect permitted transferees and assignees of the
Note.
Section 4. Conversion.
a) At any time after
the Original Issue Date until this Note is no longer outstanding,
this Note shall be convertible, in whole or in part, into shares of
Common Stock at the option of the Holder, at any time and from time
to time (subject to the conversion limitations set forth in
Section 4(d)
hereof). The Holder shall effect conversions by delivering to the
Company a Notice of Conversion, the form of which is attached
hereto as Annex A
(each, a “Notice of
Conversion”), specifying therein the principal amount
of this Note, and amount of accrued and unpaid interest (if any),
to be converted and the date on which such conversion shall be
effected (such date, the “Conversion Date”). If no
Conversion Date is specified in a Notice of Conversion, the
Conversion Date shall be the date that such Notice of Conversion is
deemed delivered hereunder. To effect conversions hereunder, the
Holder shall not be required to physically surrender this Note to
the Company unless the entire principal amount of this Note, plus
all accrued and unpaid interest thereon, has been so converted.
Conversions hereunder shall have the effect of lowering the
outstanding principal amount of this Note in an amount equal to the
applicable conversion. The Holder and the Company shall maintain
records showing the principal amount(s) converted and the date of
such conversion(s). The Company may deliver an objection to any
Notice of Conversion within two Business Days of delivery of such
Notice of Conversion, stating the basis of such objection and
citing the relevant Section of the Note upon which such objection
is based. In the event of any dispute or discrepancy, the Company
and the Holder shall work to resolve such dispute or discrepancy to
the mutual satisfaction of both parties. 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 may be
less than the amount stated on the face hereof.
b) Conversion Price. Except as
expressly set forth herein, the conversion price in effect on any
Conversion Date shall be equal to $0.25, subject to adjustment
herein (the “Conversion Price”).
Notwithstanding the foregoing, at any time during the continuance
of any Event of Default, the Conversion Price in effect shall be
equal to the Alternate Conversion Price. 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 principal amount of this Note 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. In the event the
Borrower has a DTC “Chill” on its shares, the Holder
may convert the Note at the Alternate Conversion Price while that
“Chill” is in effect. All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock
combination, reclassification or similar transaction that
proportionately decreases or increases the Common Stock during such
measuring period.
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c) Mechanics of
Conversion.
i. Conversion Shares Issuable Upon
Conversion of Principal Amount. The number of Conversion
Shares issuable upon a conversion hereunder shall be determined by
the quotient obtained by dividing (x) the outstanding principal
amount of this Note to be converted by (y) the Conversion
Price.
ii. Delivery of Certificate Upon
Conversion. Not later than three Trading Days after each
Conversion Date (the “Share Delivery Date”),
the Company shall deliver, or cause to be delivered, to the Holder
(A) a certificate or certificates representing the Conversion
Shares representing the number of Conversion Shares being acquired
upon the conversion of this Note and (B) a bank check in the amount
of accrued and unpaid interest (unless the Holder has elected to
receive Conversion Shares for the accrued and unpaid
interest).
iii. Failure
to Deliver Certificates. If, in the case of any Notice of
Conversion, such certificate or certificates are not delivered to
or as directed by the applicable Holder by the Share Delivery Date,
the Holder shall be entitled to elect by written notice to the
Company at any time on or before its receipt of such certificate or
certificates, to rescind such Notice of Conversion, ab initio, in
which event the Company shall promptly return to the Holder any
original Note delivered to the Company and the Holder shall
promptly return to the Company the Common Stock certificates issued
to such Holder pursuant to the rescinded Notice of
Conversion.
iv. Obligation Absolute; Partial
Liquidated Damages. The Company’s obligations to issue
and deliver the Conversion Shares upon conversion of this Note in
accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the
same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other
Person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Company to the Holder in
connection with the issuance of such Conversion Shares;
provided,
however, that such
delivery shall not operate as a waiver by the Company of any such
action the Company may have against the Holder. If the Company
fails for any reason to deliver to the Holder such certificate or
certificates pursuant to Section 4(c)(ii) by the Share
Delivery Date, the Company shall pay to the Holder, in cash, as
liquidated damages and not as a penalty, for each $1,000 of
principal amount being converted $5 per Trading Day (increasing to
$10 per Trading Day on the fifth (5th)
Trading Day after such liquidated damages begin to accrue) for each
Trading Day after such Share Delivery Date until such certificates
are delivered or Holder rescinds such conversion. Nothing herein
shall limit the Holder’s right to pursue actual damages or
declare an Event of Default pursuant to Section 6 hereof for the
Company’s failure to deliver Conversion Shares within the
period specified herein and the Holder shall have the right to
pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance
and/or injunctive relief. The exercise of any such rights shall not
prohibit the Holder from seeking to enforce damages pursuant to any
other Section hereof or under applicable law.
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v. Compensation for Buy-In on Failure to
Timely Deliver Certificates Upon Conversion. In addition to
any other rights available to the Holder, if the Company fails for
any reason to deliver to the Holder such certificate or
certificates by the Share Delivery Date pursuant to Section 4(c)(ii), and if after
such Share Delivery Date the Holder is required by its brokerage
firm to purchase (in an open market transaction or otherwise), or
the Holder’s brokerage firm otherwise purchases, shares of
Common Stock to deliver in satisfaction of a sale by the Holder of
the Conversion Shares which the Holder was entitled to receive upon
the conversion relating to such Share Delivery Date (a
“Buy-In”), then the
Company shall (A) pay in cash to the Holder (in addition to any
other remedies available to or elected by the Holder) the amount,
if any, by which (x) the Holder’s total purchase price
(including any brokerage commissions) for the Common Stock so
purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that the Holder was entitled to receive from
the conversion at issue multiplied by (2) the actual sale price at
which the sell order giving rise to such purchase obligation was
executed (including any brokerage commissions) and (B) at the
option of the Holder, either reissue (if surrendered) this Note in
a principal amount equal to the principal amount of the attempted
conversion (in which case such conversion shall be deemed
rescinded) or deliver to the Holder the number of shares of Common
Stock that would have been issued if the Company had timely
complied with its delivery requirements under Section 4(c)(ii). For
example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted conversion of this Note
with respect to which the actual sale price of the Conversion
Shares (including any brokerage commissions) giving rise to such
purchase obligation was a total of $10,000 under clause (A) of the
immediately preceding sentence, the Company shall be required to
pay the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of
the Buy-In and, upon request of the Company, evidence of the amount
of such loss. Nothing herein shall limit a Xxxxxx’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
shares of Common Stock upon conversion of this Note as required
pursuant to the terms hereof.
vi. Reservation of Shares Issuable Upon
Conversion. The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued
shares of Common Stock a number of shares of Common Stock at least
equal to 100% of the Required Minimum (to be adjusted monthly) for
the sole purpose of issuance upon conversion of this Note and
payment of interest on this Note, each as herein provided, free
from preemptive rights or any
other actual contingent purchase rights of Persons other than the
Holder (and the other holders of the Note). The Company covenants
that all shares of Common Stock that shall be so issuable shall,
upon issue, be duly authorized, validly issued, fully paid and
nonassessable.
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vii. Fractional
Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of this Note.
As to any fraction of a share which the Holder would otherwise be
entitled to purchase upon such conversion, the Company shall at its
election, either pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the
Conversion Price or round up to the next whole share.
viii. Transfer
Taxes and Expenses. The issuance of certificates for shares
of the Common Stock on conversion of this Note shall be made
without charge to the Holder hereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or
delivery of such certificates, provided that, the Company shall not
be required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any such
certificate upon conversion in a name other than that of the Holder
of this Note so converted and the Company shall not be required to
issue or deliver such certificates unless or until the Person or
Persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid. The
Company shall pay all Transfer Agent fees required for same-day
processing of any Notice of Conversion.
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d) Xxxxxx’s
Conversion Limitations. The Company shall not effect any
conversion of this Note, and a Holder shall not have the right to
convert any portion of this Note, to the extent that after giving
effect to the conversion set forth on the applicable Notice of
Conversion, the Holder (together with the Holder’s
Affiliates, and any 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 its Affiliates and
Attribution Parties shall include the number of shares of Common
Stock issuable upon conversion of this Note or any portion of this
Note with respect to which such determination is being made, but
shall exclude the number of shares of Common Stock which are
issuable upon (i) conversion of the remaining, unconverted
principal amount 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 unconverted 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
(including, but not limited to, the senior secured notes and
warrants issued to Affiliates of the Holder in the May 2020
Financing). Except as set forth in the preceding sentence,
for purposes of this Section 4(d), beneficial
ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated
thereunder. To the extent that the limitation contained in this
Section 4(d)
applies, the determination of whether this Note is convertible (in
relation to other securities owned by the Holder together with any
Affiliates and Attribution Parties) and the portion of principal
amount (and accrued but unpaid interest) of this Note that is
convertible shall be in the sole discretion of the Holder, and the
submission of a Notice of Conversion shall be deemed to be the
Holder’s determination of whether this Note may be converted
(in relation to other securities owned by the Holder together with
any Affiliates) and the portion of principal amount of this Note
(and, if applicable, accrued and unpaid interest) that is
convertible, in each case subject to the Beneficial Ownership
Limitation. To ensure compliance with this restriction, the Holder
will be deemed to represent to the Company each time it delivers a
Notice of Conversion that such Notice of Conversion has not
violated the restrictions set forth in this paragraph and the
Company shall have no obligation to
verify or confirm the accuracy of such determination.
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 4(d),
in determining the number of outstanding shares of Common Stock,
the Holder may rely on the number of outstanding shares of Common
Stock as stated in the most recent of the following: (i) the
Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (ii) a more recent public
announcement by the Company, or (iii) a more recent written notice
delivered by the Company or the Company’s transfer agent to
the Holder setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of the Holder,
the Company shall within one Trading Day 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 9.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon conversion of this
Note held by the Holder. The Holder may increase or decrease the
Beneficial Ownership Limitation provisions of this Section 4(d), provided that the
Beneficial Ownership Limitation in no event exceeds 9.99% of the
number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock upon
conversion of this Note held by the Holder and the Beneficial
Ownership Limitation provisions of this Section 4(d) shall continue to
apply. Any increase in the Beneficial Ownership Limitation will not
be effective until the 61st day after such
notice is delivered to the Company. The Beneficial Ownership
Limitation provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with
the terms of this Section 4(d) to correct
this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation
contained herein or to make changes or
supplements necessary or desirable to properly give effect to such
limitation. The limitations
contained in this paragraph shall apply to a successor holder of
this Note.
-11-
Section 5. Certain
Adjustments.
a) Stock Dividends and Stock
Splits. If the Company, at any time while this Note is
outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions payable in shares of Common Stock on
shares of Common Stock or any Common Stock Equivalents (which, for
avoidance of doubt, shall not include any shares of Common Stock
issued by the Company upon conversion of, or payment of interest
on, the Note), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by way of
a reverse stock split) outstanding shares of Common Stock into a
smaller number of shares or (iv) issues, in the event of a
reclassification of shares of the Common Stock, any shares of
capital stock of the Company, then the Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number
of shares of Common Stock (excluding any treasury shares of the
Company) outstanding immediately before such event, and of which
the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made
pursuant to this Section shall become effective immediately after
the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination or re-classification.
b) Subsequent Equity Sales. If, at
any time while this Note is outstanding, the Company or any
Subsidiary, as applicable, sells or grants any option to purchase
or sells or grants any right to reprice, or otherwise disposes of
or issues (or announces any sale, grant or any option to purchase
or other disposition), any Common Stock or Common Stock Equivalents
entitling any Person to acquire shares of Common Stock 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”) (if
the holder of the Common Stock or Common Stock Equivalents 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 to equal the Base Conversion Price. Such
adjustment shall be made whenever such Common Stock or Common Stock
Equivalents are issued. Notwithstanding the foregoing, no adjustment will
be made under this Section 5(b)
in respect of an Exempt
Issuance. For the avoidance of doubt, if the Company engages
in an at-the-market offering, the Company shall be deemed to have
issued Common Stock at the lowest sale price at which the Common
Stock was sold in such offering. If the Company enters into a
Variable Rate Transaction, despite the prohibition set forth in the
Purchase Agreement, the Company shall be deemed to have issued
Common Stock or Common Stock Equivalents at the lowest possible
conversion price, exercise price or exchange rate (or other price)
at which such securities may be converted into or exchangeable or
exercised for. The Company shall notify the Holder in writing, no
later than 1 Business Day following the issuance of any Common
Stock or Common Stock Equivalents subject to this Section 5(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 5(b),
upon the occurrence of any Dilutive Issuance, the Holder is
entitled to receive a number of Conversion Shares based upon the
Base Conversion Price (as adjusted in accordance with Section 5)(a)) on or after the
date of such Dilutive Issuance, regardless of whether the Holder
accurately refers to the Base Conversion Price in the Notice of
Conversion.
-12-
c) Subsequent Rights Offerings.
In addition to any adjustments
pursuant to Section 5(a)
and Section 5(b)
above, if at any time the Company
grants, issues or sells any Common Stock Equivalents or rights to
purchase stock, warrants, securities or other property pro rata to
the record holders of any class of shares of Common Stock (the
“Purchase
Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of
Common Stock acquirable upon complete conversion of this Note
(without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation)
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 shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided, however, to the extent that the
Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in
abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).
d) Pro Rata Distributions. During
such time as this Note is outstanding, 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, scheme of arrangement or other similar transaction)
(a “Distribution”), at any
time after the issuance of this Note, then, in each such case, the
Holder shall be entitled to participate in such Distribution to the
same extent that the Holder would have participated therein if the
Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Note (without regard to any
limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date of
which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such
Distribution (provided, however, to the extent that the
Holder's right to participate in any such Distribution would result
in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any
shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
-13-
e) Fundamental Transaction. If, at
any time while this Note is outstanding, (i) the Company effects
any merger or consolidation of the Company with or into another
Person, (ii) the Company effects any sale of all or substantially
all of its assets in one transaction or a series of related
transactions, (iii) any tender offer or exchange offer (whether by
the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, 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
(in any such case, a “Fundamental
Transaction”), then, upon any subsequent conversion of
this Note, the Holder shall have the right to receive, for each
Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such Fundamental
Transaction, the same kind and amount of securities, cash or
property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the holder of 1
share of Common Stock (the “Alternate
Consideration”). For purposes of any such conversion,
the determination of the Conversion Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of 1 share of
Common Stock in such Fundamental Transaction, and the Company shall
apportion the Conversion 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 conversion of this Note following such
Fundamental Transaction. To the extent necessary to effectuate the
foregoing provisions, any successor to the Company or surviving
entity in such Fundamental Transaction shall issue to the Holder a
new Note consistent with the foregoing provisions and evidencing
the Holder’s right to convert such Note into Alternate
Consideration. The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring
any such successor or surviving entity to comply with the
provisions of this Section
5(e) and insuring that this Note (or any such replacement
security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction. For the
avoidance of doubt, the provisions of this Section shall not apply
to the acquisitions contemplated by the Charge Acquisition
Agreement or the PTGI Acquisition Agreement.
f) Calculations. All calculations
under this Section 5 shall be made to
the nearest cent or the nearest 1/100th of a share, as the case may
be. For purposes of this Section 5, the number of
shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock
(excluding any treasury shares of the Company) issued and
outstanding.
g) Notice to the
Holder.
i. Adjustment to Conversion Price.
Whenever the Conversion Price is adjusted pursuant to any provision
of this Section 5, the Company
shall promptly deliver to each Holder a notice setting forth the
Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.
-14-
ii. Notice to Allow Conversion by
Xxxxxx. If (A) the Company shall declare a dividend (or any
other distribution in whatever form) on the Common Stock, (B) the
Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the
granting to all holders of the Common Stock of rights or warrants
to subscribe for or purchase any shares of capital stock of any
class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially
all of the assets of the Company, or any compulsory share exchange
whereby the Common Stock is converted into other securities, cash
or property or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company, then, in each case, the
Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of this Note, and shall cause to
be delivered to the Holder at
its last address as it shall appear upon the Note Register, at
least twenty (20) calendar days prior to the applicable record or
effective date hereinafter specified (or such shorter period as is
reasonably possible, but not less than ten (10) calendar days, if
twenty (20) calendar days is not reasonably possible), a notice
stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, or the date on which the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company was authorized,
and the date as of which it is expected that holders of the Common
Stock of record shall be entitled to exchange their shares of the
Common Stock for securities, cash or other property deliverable
upon any such reclassification, consolidation, merger, sale,
transfer, share exchange, or voluntary
or involuntary dissolution, liquidation or winding up of the
affairs of the Company, provided that the failure to deliver
such notice or any defect therein or in the delivery thereof shall
not affect the validity of the corporate action required to be
specified in such notice. To the extent that any notice provided
hereunder constitutes, or contains, material, non-public
information regarding the Company or any of the Subsidiaries, the
Company shall simultaneously file such notice with the Commission
pursuant to a Current Report on Form 8-K or if it is not subject to
the reporting requirements of the Commission, a press release. The
Holder shall remain entitled to convert this Note during the 20-day
period commencing on the date of such notice through the effective
date of the event triggering such notice except as may otherwise be
expressly set forth herein.
Section 6. Events of Default.
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):
-15-
i. any
default in the payment of (A) the principal amount of the Note or
(B) interest, liquidated damages and other amounts owing to the
Holder on the 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 an
interest payment or other default under clause (B) above, is not
cured within five (5) Trading days;
ii. the
Company shall fail to observe or perform any other covenant or
agreement contained in the Note (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 (xi) below)
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 to
the Company and (B) ten (10) Trading Days after the Company has
become or should have become aware of such
failure;
iii. a
breach, default, event of default or the failure observe or perform
any covenant or agreement (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 or any Subsidiary is obligated, including the senior
secured notes, warrants and other transaction documents related to
the May 2020 Financing (and not covered by clause (v)
below);
iv. the
Company experiences a Material Adverse Effect;
v. any
Person shall breach any agreement delivered to the initial Holder
pursuant to Section 2.2 of the Purchase Agreement;
vi. 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 (or, to the extent such
representation or warranty is qualified by materiality or Material
Adverse Effect, in any respect) as of
the date when made or deemed made;
vii. the
Company 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;
viii. 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;
-16-
ix. (A) the Common
Stock shall not be eligible for listing or quotation for trading,
or has been suspended from listing or quotation, on its Principal
Market and shall not resume listing or quotation for trading
thereon or on any other Trading Market (other than OTC Pink) within
three (3) Trading Days, or (B) the transfer of shares of Common
Stock through the Depository Trust Company System is no longer
available or “chilled”;
x. the Company shall
be a party to any Change of Control Transaction or shall agree to
sell or dispose of all or in excess of fifty percent (50%) of its
assets in one transaction or a series of related transactions
(whether or not such sale would constitute a Change of Control
Transaction);
xi. the Company shall
fail for any reason to deliver certificates to the Holder prior to
the fifth Trading Day after a Conversion Date 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 the Note in accordance with the terms
hereof;
xii. the
Company fails to be in compliance with Rule 144(c)(1) (or
Rule 144(i)(2), if applicable);
xiii. the
occurrence of any levy upon or seizure or attachment of, or any
uninsured loss of or damage to, any property of the Borrower or any
Subsidiary having an aggregate fair value or repair cost (as the
case may be) in excess of $100,000 individually or in the
aggregate, and any such levy, seizure or attachment shall not be
set aside, bonded or discharged within forty-five (45) days after
the date thereof;
xiv. any
monetary judgment, writ or similar final process shall be entered
or filed against the Company, any Subsidiary or any of their
respective property or other assets for more than $100,000, and
such judgment, writ or similar final process shall remain
unvacated, unbonded or unstayed for a period of forty-five (45)
calendar days;
xv. prior to the
payment in full and satisfaction of the owed under this Note, any
security interest and Lien purported to be created by any
Transaction Document shall cease to be in full force and effect, or
shall cease to give the Holders, the Liens, rights, powers and
privileges purported to be created and granted under such
Transaction Documents (including a perfected first priority
security interest in and Lien on all of the Collateral thereunder
(except as otherwise expressly provided in such Transaction
Document)) in favor of the Holders, or shall be asserted by the
Company or any Affiliate(s) not to be a valid, perfected, first
priority (except as otherwise expressly provided in this Agreement
or any such Transaction Document) security interest in or Lien on
the Collateral covered thereby;
-17-
xvi. the
Company shall enter into any transaction or arrangement structured
in accordance with, based upon, or related or pursuant to, in whole
or in part, Section 3(a)(l0) of the Securities Act;
xvii. the
Company shall enter into a Variable Rate Transaction;
xviii. 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
Xxxxxxxx’s public disclosure of such information on that same
date;
xix. the
Initial Registration Statement (as defined in the Registration
Rights Agreement) shall not have been filed by the Filing Date (as
defined in the Registration Rights Agreement) or declared effective
by the Commission on or prior to the Effectiveness Date (as defined
in the Registration Rights Agreement);
xx. if, during the
Effectiveness Period (as defined in the Registration Rights
Agreement), either (a) the effectiveness of the Registration
Statement lapses for any reason or (b) the Holder shall not be
permitted to resell Registrable Securities (as defined in the
Registration Rights Agreement) under the Registration Statement for
a period of more than 20 consecutive Trading Days or 30
non-consecutive Trading Days during any 12 month period;
provided,
however, that if
the Company is negotiating a merger, consolidation, acquisition or
sale of all or substantially all of its assets or a similar
transaction and, in the written opinion of counsel to the Company,
the Registration Statement would be required to be amended to
include information concerning such pending transaction(s) or the
parties thereto which information is not available or may not be
publicly disclosed at the time, the Company shall be permitted an
additional 10 consecutive Trading Days during any 12 month period
pursuant to this Section; or
xxi. the
closing of the Subsequent Financing does not occur on or prior to
the six (6) month anniversary of the Closing Date.
b) Remedies Upon Event of Default.
If any Event of Default occurs, at the Holder’s election (i)
the outstanding principal amount of this Note, plus accrued but
unpaid interest, liquidated damages and other amounts owing in
respect thereof through the date of acceleration, shall become
immediately due and payable in cash pursuant to clause (ii) of the
definition of Mandatory Default Amount, or (ii) the outstanding
principal amount of this Note, and, if elected by the Holder, all
accrued and unpaid interest hereon, shall be converted into share
of Common Stock at the Alternate Conversion Price pursuant to
clause (i) of the definition of Mandatory Default Amount. In the
event the Holder makes the election described in clause (ii) of
this Section above, but does not elect to receive Conversion Shares
in respect of all accrued and unpaid interest on the Note, all
accrued and unpaid interest shall be paid to the Holder in cash no
later than the date the Conversion Shares are required to be
delivered to the Holder. Commencing on the occurrence of any Event
of Default and for as long an Event of Default is not cured, the
interest rate on this Note as set forth in Section 2 above shall accrue at
a rate equal to 20% per annum . Upon the payment in full of the
Mandatory Default Amount, the Holder shall promptly surrender this
Note to or as directed by the Company. In connection with such
acceleration described herein, the Holder need not provide, and 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. Such acceleration may be rescinded and annulled by
Xxxxxx at any time prior to payment hereunder and the Holder shall
have all rights as a holder of the Note until such time, if any, as
the Holder receives full payment pursuant to this Section 6(b). No such
rescission or annulment shall affect any subsequent Event of
Default or impair any right consequent thereon. No such rescission
or annulment shall affect any subsequent Event of Default or impair
any right consequent thereon; and in addition to any other rights
and remedies available to the Holder in an Event of Default, the
Conversion Price in effect on any Conversion Date shall be equal to
the Alternate Conversion Price, subject to adjustment herein,
without any notice or any action taken by the Holder. The Borrower
shall pay the Holder hereof costs of collection, including
reasonable attorneys’ fees.
-18-
Section 7 Negative Covenants. As long as
any portion of this Note remains outstanding, unless the Holder
shall have otherwise given prior written consent, the Company shall
not, and shall not permit any of its subsidiaries (whether or not a
Subsidiary on the Original Issue Date) to, directly or
indirectly:
a) except for
Permitted Indebtedness, enter into, create, incur, assume,
guarantee or suffer to exist any indebtedness for borrowed money of
any kind, including, but not limited to, a guarantee, 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;
b) except for
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) except for
Permitted Indebtedness, 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 and (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 $100,000 for all officers and directors during the
term of this Note;
e) repay, repurchase
or offer to repay, repurchase or otherwise acquire any
Indebtedness, other than the Liabilities, and other than regularly
scheduled principal and interest payments of Permitted Indebtedness
as such terms are in effect as of the Original Issue Date, provided
that such payments shall not be permitted if, at such time, or
after giving effect to such payment, any Event of Default exist or
occur; provided that neither the Company nor any of its
Subsidiaries shall make any cash payment in respect of the
Indebtedness issued pursuant to the Additional Note Financing or
the Subsequent Financing, until the full and final payment in cash
of the Liabilities;
f) pay cash dividends
or distributions on any equity securities of the
Company;
g) enter into any
transaction with any Affiliate of the Company 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
the Company (even if less than a quorum otherwise required for
board approval);
h) sell, lease or
otherwise dispose of any significant portion of its assets or
acquire any assets or business on or after the Original Issue Date
other than as contemplated by the FedEx Route Acquisition
Agreements, the Charge Acquisition Agreement or the PTGI
Acquisition Agreement;
i) make or suffer to
exist any Investments using any proceeds from the Holder or any of
its Affiliates (including the holders of the senior secured notes
issued to Affiliates of the Holder in May 2020 Financing)
(including without limitation, loans and advances to, and other
Investments in, Subsidiaries), or commitments therefor, or to
become or remain a partner in any partnership or joint venture,
except for: (i) Investments in cash and cash equivalents; and (ii)
Investments in Subsidiaries that have guaranteed the Liabilities
and joined the Security Agreement as a debtor pursuant to Section
4.24(b) of the Purchase Agreement;
-19-
j) pay any
compensation that may be due and payable and/or accrued, whether in
cash, in kind or any combination thereof, to its executive
officers;
k) use any proceeds
from the Holder or any of its Affiliates (including the holders of
the senior secured notes issued to Affiliates of the Holder in the
May 2020 Financing) to pay any liquidated damages, penalties, fees
or other amounts that may be due and payable under the
Note;
l) file any
registration statement with respect to any securities issued
pursuant to the Additional Note Financing, the Subsequent Note
Financing or any other Indebtedness issued after the date hereof,
or otherwise cause such securities to become registered with the
SEC or under any state securities laws; and
m) enter into any
agreement with respect to any of the foregoing.
Section 8. Miscellaneous.
a) Notices. Any and all notices or
other communications or deliveries to be provided by the Holder
hereunder, including, without limitation, any Notice of Conversion,
shall be in writing and delivered personally, by facsimile,
electronic mail or sent by a nationally recognized overnight
courier service, addressed to the Company, at the facsimile number,
email address or mailing address set forth on its signature page
hereto, or such other facsimile number, electronic mail or address
as the Company may specify for such purposes by notice to the
Holder delivered in accordance with this Section 8(a). Any and all
notices or other communications or deliveries to be provided by the
Company hereunder shall be in writing and delivered personally, by
electronic mail, by facsimile, or sent by a nationally recognized
overnight courier service addressed to the Holder at the email
address, facsimile number or address of the Holder appearing on the
books of the Company, or if no such email address or facsimile
number or address appears on the books of the Company, at the
principal place of business of such Holder, as set forth in the
Purchase Agreement, or such other facsimile number, electronic mail
or address as the Holder may specify for such purposes by notice to
the Company delivered in accordance with this Section 8(a). Any notice
or other communication or deliveries hereunder shall be deemed
given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via
electronic mail or facsimile prior to 5:30 p.m. (New York City
time) on any Trading Day, (ii) the next Trading Day after the date
of transmission, if such notice or communication is delivered via
electronic mail or facsimile on a day that is not a Trading Day or
later than 5:30 p.m. (New York City time) on any Trading Day, (iii)
the second Trading Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service or (iv) upon
actual receipt by the party to whom such notice is required to be
given.
b) Absolute Obligation. Except as
expressly provided herein, no provision of this Note shall alter or
impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, liquidated damages and
accrued interest, as applicable, on this Note at the time, place,
and rate, and in the coin or currency, herein prescribed. This Note
is a direct debt obligation of the Company. This Note ranks
pari passu with all other Notes now
or hereafter issued under the terms set forth herein.
-20-
c) Lost or Mutilated Note. If this
Note shall be mutilated, lost, stolen or destroyed, the Company
shall execute and deliver, in exchange and substitution for and
upon cancellation of a mutilated Note, or in lieu of or in
substitution for a lost, stolen or destroyed Note, a new Note for
the principal amount of this Note so mutilated, lost, stolen or
destroyed, but only upon receipt of evidence of such loss, theft or
destruction of such Note, and of the ownership hereof, reasonably
satisfactory to the Company.
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.
e) Waiver. Any waiver by the
Company or the Holder of a breach of any provision of this Note
shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of
this Note. The failure of the Company or the Holder to insist upon
strict adherence to any term of this Note on one or more occasions
shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any
other term of this Note on any other occasion. Any waiver by the
Company or the Holder must be in writing.
-21-
f) Severability. If any provision
of this Note is invalid, illegal or unenforceable, the balance of
this Note shall remain in effect, and if any provision is
inapplicable to any Person or circumstance, it shall nevertheless
remain applicable to all other Persons and circumstances. If it
shall be found that any interest or other amount deemed interest
due hereunder violates the applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum rate of interest permitted under
applicable law. The Company covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would
prohibit or forgive the Company from paying all or any portion of
the principal of or interest on this Note as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which
may affect the covenants or the performance of this Note, and the
Company (to the extent it may lawfully do so) hereby expressly
waives all benefits or advantage of any such law, and covenants
that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no
such law has been enacted.
g) Remedies, Characterizations, Other
Obligations, Breaches and Injunctive Relief. The
remedies provided in this Note shall be cumulative and in addition
to all other remedies available under this Note and any of the
other Transaction Documents at law or in equity (including a decree
of specific performance and/or other injunctive relief), and
nothing herein shall limit the Holder’s right to pursue
actual and consequential damages for any failure by the Company to
comply with the terms of this Note. The Company covenants to
the Holder that there shall be no characterization concerning this
instrument other than as expressly provided herein. Amounts set
forth or provided for herein with respect to payments, conversion
and the like (and the computation thereof) shall be the amounts to
be received by the Holder and shall not, except as expressly
provided herein, be subject to any other obligation of the Company
(or the performance thereof). The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable
harm to the Holder and that the remedy at law for any such breach
may be inadequate. The Company therefore agrees that, in the event
of any such breach or threatened breach, the Holder shall be
entitled, in addition to all other available remedies, to an
injunction restraining any such breach or any such threatened
breach, without the necessity of showing economic loss and without
any bond or other security being required. The Company shall
provide all information and documentation to the Holder that is
requested by the Holder to enable the Holder to confirm the
Company’s compliance with the terms and conditions of this
Note.
h) Next Business Day. Whenever any
payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next
succeeding Business Day.
i) Headings. The headings
contained herein are for convenience only, do not constitute a part
of this Note and shall not be deemed to limit or affect any of the
provisions hereof.
-22-
j) Secured Obligation. The
obligations of the Company under this Note are secured by all
assets of the Company and each Subsidiary pursuant to the Amended
and Restated Security Agreement, dated as of November 3, 2020
between the Company, the Subsidiaries of the Company and the
Secured Parties (as defined therein).
(Signature Pages Follow)
-23-
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.
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TRANSWORLD HOLDINGS, INC.
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By:__________________________________________
Name:
Title:
Mailing
Address for Notices:
Email
Address for delivery of Notices:
Facsimile
No. for delivery of Notices:
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-24-
ANNEX A - NOTICE OF CONVERSION
The
undersigned hereby elects to convert principal (and, if applicable,
accrued and unpaid interest) under the Original Issue Discount
Senior Secured Convertible Promissory Note due November 3, 2023 of
Transworld Holdings, Inc., a Delaware corporation (the
“Company”), into shares of
common stock (the “Common Stock”), of the
Company 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
the Company 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 the Company that its ownership of the Common Stock
does not exceed the amounts specified under Section 4(d) of this Note,
as determined in accordance with such Section.
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 Information
Date to Effect
Conversion:
Outstanding
Principal Before
Conversion:
Outstanding
Interest Before
Conversion:
Principal Amount of
Note
to be Converted:
Interest Amount of
Note to be
Converted:
Conversion Price Calculations:
Total Shares of Common Stock to be Issued:
Outstanding
Principal After
Conversion:
Outstanding
Interest After
Conversion:
-25-
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DWAC Instructions
Broker:
DTC#:
Account:
Account Name:
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Physical Delivery
Issue to:
Address:
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Entity
Name:
Signatory
Name:
Title:
Signature:
-26-
Schedule 1
CONVERSION SCHEDULE
This
Original Issue Discount Senior Secured Convertible Promissory Note
due on November 3, 2023 in the original principal amount of
$3,888,889 is issued by
Transworld Holdings, Inc., a Delaware corporation. This Conversion
Schedule reflects conversions made under Section 4 of the above
referenced Note.
Dated:
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Date of
Conversion
(or for
first entry, Original Issue Date)
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Amount
of Conversion
|
Aggregate
Principal Amount Remaining Subsequent to Conversion
(or
original Principal Amount)
|
Company
Attest
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-27-
