VIVAKOR, Inc. AMENDED AND RESTATED CONVERTIBLE NOTE
Exhibit 4.1
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.
Dated as of: March 29, 2024 | Principal Amount: | $ | 1,000,000.00 | ||
Maturity Date: December 31, 2024 |
AMENDED AND RESTATED CONVERTIBLE NOTE
THIS AMENDED AND RESTATED CONVERTIBLE NOTE is a duly authorized and validly issued promissory note of Vivakor, Inc., a company incorporated under the law of Nevada (the “Company”), designated as its Amended and Restated Convertible Note due December 31, 2024 (the “Amended Note”). This Amended Note is being entered into to replace, amend and restate that certain Secured Promissory Note dated December 5, 2023 entered into between the Company and the Holder (the “Original Note”).
FOR VALUE RECEIVED, the Company promises to pay to Xxxx Xxxxx, (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of up to $1,000,000 on the earlier of December 31, 2024 (the “Maturity Date”) or such earlier date as this Amended 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 Amended Note at a rate per annum equal to ten percent (10%), compounded semi-annually, and computed on the basis of a 365-day year beginning on the Funding Date. The principal and interest payable hereunder shall be paid by the Company in the form of Common Stock at the Conversion Price based upon conversion by the Holder, otherwise unconverted principal and interest shall be payable in cash at the Maturity Date.
This Amended Note is subject to the following additional provisions:
“Action” means any action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company or any its properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign).
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Bankruptcy Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts, (g) the Company or any Significant Subsidiary thereof admits in writing that it is generally unable to pay its debts as they become due, (h) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
“Beneficial Ownership Limitation” shall have the meaning set forth in Section 4(c)(vii).
“Board of Directors” means the board of directors of the Company.
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally are open for use by customers on such day.
“Common Stock” means the common stock of the Company, par value $0.001.
“Conversion” means a conversion of this Amended Note pursuant to Section 4.
“Conversion Date” means the date of a Conversion hereunder.
“Conversion Price” shall have the meaning set forth in Section 4(b).
“Conversion Shares” means a number of shares of Common Stock equal to the quotient (rounded down to the nearest whole share) obtained by dividing (x) the outstanding principal amount, any unpaid accrued interest and any other amounts owing hereunder on the Conversion Date elected by the Holder in writing to be converted by (y) the Conversion Price.
“Dallas Courts” shall have the meaning set forth in Section 8(d).
“Event of Default” shall have the meaning set forth in Section 7(a).
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“Fully Diluted” means the total aggregate number of shares of Common Stock which would be issued assuming all securities issued by the Company convertible into or exercisable for shares of Common Stock were exercised or converted, plus any shares of Common Stock reserved for issuance, but not subject to outstanding options or other awards under any equity incentive or similar plan or arrangement of the Company, but excluding: (a) this Amended Note; (b) any other notes, or (c) any shares reserved for issuance upon conversion of this Amended Note or any other note.
“Funding Date” means December 5, 2023.
“Indebtedness” means any liabilities of the Company for borrowed money or amounts owed and all guaranties made by the Company of borrowed money or amounts owed by others.
“Interest Payment Date” shall have the meaning set forth in Section 2(a).
“Original Issue Date” means the date of the first issuance of this Amended Note, regardless of any transfers of any Amended Note and regardless of the number of instruments which may be issued to evidence such Amended Note.
“Permitted Indebtedness” means: (a) the Indebtedness evidenced by this Amended Note, (b) additional Indebtedness of up to an aggregate of $200,000, inclusive of any interest, fees, penalties or other amounts due or payable thereunder, and (c) trade payables incurred in the ordinary course of the business.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Prepayment Amount” means the sum of (i) the outstanding principal amount of this Amended Note, plus (ii) accrued and unpaid interest hereon.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Successor Entity” shall have the meaning set forth in Section 5(a).
“Trading Day” means a day on which the principal Trading Market is open for trading.
“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 New York Stock Exchange, the NYSE American, The Nasdaq Capital Market, The Nasdaq Global Market, or The Nasdaq Global Select Market (or any successors to any of the foregoing).
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Section 2. Prepayment. The Company shall have the option to prepay this Amended Note at any time after the Original Issue Date prior to the Maturity Date by paying the Prepayment Amount.
Section 3. Registration of Transfers and Exchanges.
Section 4. Conversion.
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i. Reserved.
ii. Not later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) after each Conversion Date (the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder, (A) the Conversion Shares representing the number of Conversion Shares being acquired upon the conversion of this Amended Note and (B) a bank check or wire transfer in the amount of any accrued and unpaid interest. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Conversion. The Conversion Shares to be delivered pursuant to this Section 4(c)(ii) shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with the Depository trust company through its Deposit or Withdrawal at Custodian system if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Conversion Shares to or resale of the Conversion Shares by the Holder or (B) the requisite holding period provided by Rule 144 for the resale of the Conversion Shares by the Holder has been satisfied, and otherwise by delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Conversion Shares to which the Holder is entitled pursuant any such conversion of the Amended Note and issuance of Conversion Shares under this Section 4. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as any portion of this Amended Note remains outstanding (the “Transfer Agent”).
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Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(c)(vii) applies, the determination of whether this Amended Note is convertible (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which principal amount of this Amended Note is convertible shall be in the sole discretion of the Holder. 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(c)(vii), 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: (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company, or (C) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within 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 Amended Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Amended Note held by the Holder. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 4(c)(vii), 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 Amended Note held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(c)(vii) 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(c)(vii) 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 Amended Note.
Section 5. [Reserved].
Section 6. Reserved.
Section 7. 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):
i. | any default in the payment of: (A) the principal amount of this Amended Note, or (B) liquidated damages and other amounts owing to a Holder on this Amended 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 5 Trading Days; |
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ii. | the Company shall fail to observe or perform any other covenant or agreement contained in the Amended Note, which failure is not cured, if possible to cure, within the earlier to occur of 10 calendar days after (A) after receiving notice of such failure sent by the Holder or by any other Holder to the Company and (B) after the Company has become or should have become aware of such failure; |
iii. | the Company shall cause 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) the Amended Note or (B) any other material agreement, lease, document or instrument to which the Company is obligated (and not covered by clause (vi) below); |
iv. | any material representation or warranty made in this Amended Note, 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; |
v. | the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event; and |
vi. | the Company shall fail for any reason to deliver Conversion Shares to a Holder prior to the fifth Trading Day after a Conversion Date pursuant to Section 4(c) or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the Company’s intention to not honor requests for conversions of any notes in accordance with the terms hereof. |
Upon the conversion or payment in full of the outstanding principal and interest amount of this Amended Note, plus liquidated damages and other amounts owing in respect thereof, the Holder shall promptly surrender this Amended Note to or as directed by the Company. The Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.
Section 8. Miscellaneous.
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at the facsimile number, email address or address of the Holder appearing on the books of the Company, or if no such facsimile number or email attachment or address appears on the books of the Company, at the principal place of business of such Holder, as set forth herein. 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 facsimile at the facsimile number or email attachment to the email address set forth on the signature pages attached hereto prior to 5:30 p.m. (Eastern time) on any date, (ii) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment to the email address set forth on the signature pages attached hereto on a day that is not a Business Day or later than 5:30 p.m. (Eastern time) on any Business Day, (iii) the second Business 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.
d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Amended Note shall be governed by and construed and enforced in accordance with the internal laws of the state of Texas, 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 under this Amended Note (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of Dallas, Texas (the “Dallas Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the Dallas Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, 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 Dallas Courts, or such Dallas 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 Amended 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 Amended Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this Amended Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorney’s fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
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Section 9. Amendments; Waivers.
Any modifications, amendments or waivers of the provisions hereof shall be subject to approval of the Holder and the Company.
Section 10. Reserved.
Section 11. Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any Action or Proceeding that may be brought by any Holder in order to enforce any right or remedy under this Amended Note. Notwithstanding any provision to the contrary contained herein, it is expressly agreed and provided that the total liability of the Company under this Amended Note for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under this Amended Note exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to this Amended Note is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to this Amended Note from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Holder with respect to indebtedness evidenced by this Amended Note, such excess shall be applied by such Holder to the unpaid principal amount of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Holder’s election.
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Amended Note to be duly executed by a duly authorized officer as of the date first above indicated.
VIVAKOR, Inc. | |||
By: | |||
Name: | |||
Title: |
Agreed and accepted by: | |
HOLDER: | |
XXXX XXXXX, individually |
GUARANTOR: | |
Xxxxx Xxxxxxxxx, individually |
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ANNEX A
The undersigned hereby elects to convert principal under the Amended and Restated Convertible Note due December 31, 2024 of Vivakor, Inc., a company incorporated under the law of Nevada (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 of this Amended 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 and/or Interest Amount of Amended Note 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: |
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