附件10.2
[高级次级可转债券形式]
此安全性及此安全性可转换之安全性均未根据1933年证券法（经修订）注册于证券交易委员会或任何州证券委员会，依赖于证券法豁免登记，因此可能不能在未根据证券法生效的注册声明或根据可用豁免方式下出售，或者在未受到证券法登记要求管辖或根据适用州证券法与要求协调的交易下出售。此安全性及可转换之安全性可能用作在具备真正保证金账户的注册经纪商或其他贷款与财务机构，后者是“依《证券法第501（a）条规定的认定投资者”所定义的注册经纪商担保的贷款。本可转让本票的受让人应仔细审阅本票条款，包括此处的第3（c）（iii）和18（a）条。根据本票第3（c）（iii）条所规定，由本票代表的本金金额可能会低于本票正面所规定的金额。
Greenlane Holdings，Inc。
高级 次级 可转换票据
| 发行日期 日期: 2024年10月29日 | 原始 本金金额: 美元 $[ ] |
对于所收到的货款 ，Delaware州法人 greenlane Holdings, Inc.（以下简称“公司”）在此承诺支付给 [Empery】或受让人（以下简称“持有人”）现金和/或普通股份额，原始本金金额如上所述（根据本协议项下根据赎回、转换或其他方式减少的金额，以下简称“主要根据本协议规定，当到期时，无论是在到期日（如下所定义）、加速还是赎回或其他情况下（均按照本协议的条款），应支付利息（"利息在发生并持续发生自上文所述发行日期起的任何违约事件期间，根据适用的违约利率，按时支付未偿本金的利息（"发行日期），直至同在到期日、加速、转换、赎回或其他情况下（均按照本协议的条款）支付为止。这份高级次级可转换票据（包括以交换、转让或更换方式发行的所有高级次级可转换票据，本“单张债券”是根据交易协议在成交日发行的一部分高级次级可转换票据（统称为“票据 ” 和其他高级次级可转换票据，“其他说明”). 此处使用的部分大写字母定义见第31节。
(1) 偿还本金支付；预付款。在到期日，如果本票的任何部分尚未偿还，公司应支付给持有人现金金额，代表所有未偿还的本金，以及任何应计未支付的利息。该到期日应为2025年10月29日，持有人可选择延长（x）在到期日该发生且持续发生违约事件（如第4(a)条所定义）的情况下，或任何事件发生且持续发生在到期日（根据本第1节进行延长），随著时间的流逝和无法解决的情况下将导致违约事件和／或（y）在控制权变更事项完成十（10）业务日之后的日期，如果控制权变更是公开宣布或在到期日前交付控制权变更通知书（如第5(b)条所定义）。除本票明确允许的情况外，公司不得提前偿还任何未偿还的本金或应计未支付的利息（若有）。到期日在到期日，如果本票的任何部分尚未偿还，公司应支付给持有人现金金额，代表所有未偿还的本金，以及任何应计未支付的利息。该到期日应为2025年10月29日，持有人可选择延长（x）在到期日该发生且持续发生违约事件（如第4(a)条所定义）的情况下，或任何事件发生且持续发生在到期日（根据本第1节进行延长），随著时间的流逝和无法解决的情况下将导致违约事件和／或（y）在控制权变更事项完成十（10）业务日之后的日期，如果控制权变更是公开宣布或在到期日前交付控制权变更通知书（如第5(b)条所定义）。除本票明确允许的情况外，公司不得提前偿还任何未偿还的本金或应计未支付的利息，如果有的话。
(2) 利息除非发生违约事件，否则不应计发任何利息。自发生违约事件之日起，在违约事件持续期间，应按年利率百分之十（10.0%）计发利息（“默认利率 ”），应根据360天一年十二个30天的月计算，并应在到期日支付给本票据持有人现金，通过电汇立即可用资金，根据持有人以书面形式提供给公司的电汇指示。应偿付的任何已计付未偿的利息（如果适用）也可由持有人选择按照每个（i）转股日期（如第3(b)(i)条所定义）按照第3(c)(i)条的规定和/或（ii）在到期日之前发生的任何赎回转换金额中支付，包括但不限于发生破产违约赎回。如果随后消除了违约事件（且随后不存在任何其他违约事件（包括但不限于公司未按到期日的默认利率支付利息)），利息应自取得纠正的当天起即刻停止计发； 在每种情况下，该B类股东和/或该B类股东的家庭成员需独立控制在此类帐户、计划或信托中持有的B类普通股实时； 在此类违约事件持续期间计算并未付清的利息应继续适用，以涉及自违约事件发生之后至包括违约事件纠正之日之间的天数。 在每种情况下，该B类股东和/或该B类股东的家庭成员需独立控制在此类帐户、计划或信托中持有的B类普通股实时；, 此外根据本第2节规定，除非应支付给持有人的任何应计及未支付利息已支付，否则不视为纠正此违约事件。
(3) 转换权任何在发行日期之后的时间，本票据均可按照本第3条所载条款转换为普通股。
(a) 转换权. 根据第3(d)条的规定，持有人在发行日期后的任何时间，有权将所有或任何未支付的转换金额按照第3(c)条的规定转换为已全额支付且无需额外补缴款的普通股，按照换股比率（如下定义）。公司不得就任何转换发行任何普通股的分数。如果发行将导致发行不足一股的普通股，公司应将该不足一股的普通股数四舍五入为最接近的整股。在转换任何转换金额为普通股发行和交付方面可能应支付的任何转让、印花和其他类似税项，公司应支付全部。
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(b) 转换率根据第3(a)条的规定，任何转换金额转换后可发行的普通股数量应由(x)该转换金额除以(y)转换价格（「转换率”).
(i) “转换金额”表示要转换、赎回或就该确定作出决定的本金部分（x），及有关该本金未支付的应计利息（如果有的话）之和（y）。
(ii) “换股价格” 在任何转换日期或其他确定日期时，为3.17美元，根据本文所述进行调整。
(c) 转换机制.
(i) 可选转换任何日期（以下简称“转换日期”）将任何转换金额转换为普通股份时，持有人应在该日期之前进行交付（无论通过电子邮件或其他方式），在当日纽约时间11点59分之前，将已签署的转换通知副本以所附的形式递交给公司和受托人。如根据第3（c）（iii）条的规定要求，在本注记转换后的一（1）个交易日内，持有人应向一家知名的隔夜快递服务提供本注记的交付，以交付给公司（或根据第17（b）条的规定，提供有关本注记的遗失、失窃或毁坏的损失赔偿承诺）。收到转换通知的当日，公司应通过电子邮件发送确认收到该转换通知的确认书，其形式附于本注记之后（以下简称“初始确认书”），寄送给持有人、受托人和公司的转移代理（以下简称“转移代理”），该确认书将构成对转移代理的指令，以便根据本规定处理该转换通知。在公司收到转换通知的日期（或根据1934年法案或其他适用的法规或规定在该股票的转换日期启动交易的结算日之前的较早日期）即可发行这些普通股转换日期在此，账户持有人应（A）透过电子邮件（或以其他方式交付），交付于当日晚上11:59之前纽约时间之复印本转换通知，表格如附件所示。 附件I (a “转换通知公司接到通知后（B），如果根据第3(c)(iii)条款需要，但不影响公司在适用的股票交付日期（下文定义）上交付普通股之要求，应尽快在该日期之后或之后将此票证交给普通运输公司，以交付给公司（或就遗失、被盗、毁坏或损坏情况下此票证的赔偿承诺遵守第十八(b)条款中列明的程序）。不需要使用原稿转换通知，也不需要任何勋章担保（或其他类型的担保或公证）转换通知。在第一（1st交割通知书交付之日起的交易日内，公司应将收据转发至持有人和公司的过户代理（「股票转仓代理」）。 在或之前（i）第一（1st）个交易日和（ii）标准结算期间包括的交易日数，根据持有人向公司提供适用的转换通知之后的日期（「分享 交付日期」），公司应（x）倘若过户代理参与储存信托公司（「DTC快速自动证券转移计划 以（A）适用的转换股份对持有人有利的有效转售登记声明为条件；或（B）如果在Rule 144允许持有人转售相应的转换股份的时间进行转换，将持有人根据该换股应享有的总转换股份数额记入其或其指定人的DTC账户通过其存入／提取代保管人系统；或（y）如果（A）转让代理不参与DTC快速自动证券转移计划，或（B）适用的转换股份没有受到对持有人有利的有效转售登记声明的限制或（B）适用的转换股份没有受到对持有人有利的有效转售登记声明的限制，且如果在Rule 144不允许持有人转售相应的转换股份的时间进行转换，按照换股通知书中指定的地址发行并提供由持有人或其指定人登记的股份证书，标明持有人应享有的普通股数量。如果根据第3(c)(iii)条的规定将此票据实际交还用于转换，且此票据的未偿还本金大于被转换的转换金额的本金部分，那么公司应尽快且不得晚于传递此票据后的两（2）个业务日（根据第18（d）条的规定），发行并交付给持有人一份新的票据代表未转换的未偿还本金。根据此票据的换股，有权收取普通股的人或人群，无论这些换股股份何时记入DTC的持有人账户，或是交付凭证证明这些换股股份的日期，一概被视为具有相关换股日期上的该等普通股的名称记录持有人或持有人，不受任何与执行本条款相关的行为或不作为、关于本条款的任何条款的豁免或同意、追索对某人的任何判决或执行该等的行动，或任何抵销、反诉、抵销、限制或解除的影响。只要有未解决的票据，公司应使用参与DTC快速自动证券转移计划的转让代理。
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(ii) 公司未能及时转换如果公司在适用的股票交付日期之前未能出具和交付证书给持有人，无论任何原因，如果证券过户代理人未参与DTC快速自动证券转移计划，或在转换后，当 适用的 转换股份 尚未受益于持有人的有效转售登记声明，且Rule 144无法用于持有人出售 参见随附的综合财务报表 转换股份，或DTC将持有人的余额账户记入DTC，如果转售代理人参与DTC快速自动证券转移计划且（a） 适用转换股份受益于持有人的有效转售登记声明，或（b）在Rule 144可以用于持有人出售转换股份的情况下转换 参见随附的综合财务报表 持有人的换股股份数，乃指持有人在将任何换股金额转换后有权获得的普通股数量 （以下称“A”），则（A）公司应在此换股期间的每一个交易日支付现金给持有人，金额等于（1）尚未发行给持有人的普通股数目加上或等于持有人有权但在适用的股份交付日期之前，以及（2）持有人在书面中选择的任何时间段内的普通股交易价格之乘积的1.5% ，此时间段自适用换股日期开始并在适用的股份交付日期结束，以及（B）持有人可以在书面通知公司后，就未按照该换股通知转换的本票部分作废换回，作废换回或继续持有，具体情况而定；转换失败使触发换股但在适用的股份交付日期前未向持有人发行的普通股证书数量及持有人有权的总和（2）持有人在适用的换股日期开始并在适用的股份交付日期结束之间的任何时间内有效选择的普通股交易价格之乘积等于1.5%，公司应支付现金给持有人，金额等于前述未发行的普通股数目。 ，前提是交割日不晚于2023年12月6日。取消换股通知不影响公司根据本条款3(c)(ii)或其他规定应于此通知日期之前负担的任何支付义务。除上述情况外，如果公司未能在适用的股份交付日期之前发行并交付证书予持有人，则（A）若转让代理不参与DTC快速自动证券转移计划，或（B）若适用换股股份数未受到有效的支持持有人的转售登记声明且在基于的转换日期无法依法依䦌144条进行转售者的情况下转换该换股股份，则转让持有人的余额账户与DTC授信。 若转让代理参与DTC快速自动证券转移计划 或转换时不受144条转售对于换股股份的限制，公司未能在适用的股份交付日期之前发行并交付证书予持有人若转换代理参与DTC快速自动证券转移计划，则在或适用的股份交付日期之前发行并交付证书予持有人，或依照持有人指定的任何时候有效中选择的普通股交易价格向持有人的余额账户授信 及 (A)适用的转换股份受惠于一项有效的转售登记声明，以支持持有人；或（B）如果在Rule 144允许持有人转换相关转换股份的时候，用于持有人在任何Conversion金额转换时应享有的普通股数量，或根据下述（y）条款所涉及的公司交付普通股的任何日期，如果在此交易日或之后，持有人购买（在公开市场交易或其他方式）普通股来满足持有人销售公司可出售普通股之销售预期，则公司买入，在持有人要求后的两（2）个交易日并由持有人自行决定，（x）支付现金给持有人，金额等于持有人购买该等普通股的总价（包括券商佣金和其他开支，如有）（“售股价”），此时公司发出并交付该证书或向持有人DTC账户存入持有人对应转换金额转换时应享有的普通股数量的义务即终止，或者（y）迅速履行其对交付给持有人代表该等普通股的证书或证书（或向持有人DTC账户存入该等普通股）的义务，并支付现金给持有人，金额等于Buy-In价格超出（如有）的何者之乘积：（A）该等普通股数，乘(B)持有人书面选定的任何时段内在可转换日期开始并于可交付日期结束的任何时候生效的普通股的交易价格。 本文未限制持有人在此的其他救济权利，法律或平等地包括，但不限于，具体履行法令和/或针对公司未能按照本条款要求及时交付代表普通股的证书（或以电子方式交付该等普通股）的救济。
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(iii) 注册；电子注册。公司应保持登记册（“登记册”），记录每张票据持有人的姓名和地址，以及该等持有人持有的票据本金（及附带利息）金额（“登记册”）。登记册中的记录对所有目的具有决定性和约束力，除非有明显错误。公司和票据持有人应将登记册中记载姓名的任何人均视为票据的所有者，并包括但不限于权利，也包括接受本金和利息（如有）支付的权利等，无论有否相反通知。注册票据只能通过将该等转让或销售登记在册上，全部或部分转让或销售。当公司收到持有人要求转让或出售任何注册票据全部或部分的要求时，应将其中所含信息记录于登记册，并根据第18条发行一个或多个同等本金金额的新登记票据予指定受让人或受让人。尽管本第3(c)(iii)条中有任何相反情况，持有人可以将任何票据或任何部分分配给持有人的联属公司或持有人的相关基金，而无需向公司提交转让或出售该票据的要求及将该等分配或销售记录在册上（“相关方转让」。注册」以记录每张票据持有人的姓名和地址，以及该等持有人持有的票据本金（及附带利息）金额（「」）。登记册中的记录对所有目的具有决定性和约束力，除非有明显错误。公司和票据持有人应将登记册中记载姓名的任何人均视为票据的所有者，并包括但不限于权利，也包括接受本金和利息（如有）支付的权利等，无论有否相反通知。注册票据只能通过将该等转让或销售登记在册上，全部或部分转让或销售。当公司收到持有人要求转让或出售任何注册票据全部或部分的要求时，应将其中所含信息记录于登记册，并根据第18条发行一个或多个同等本金金额的新登记票据予指定受让人或受让人。尽管本第3(c)(iii)条中有任何相反情况，持有人可以将任何票据或任何部分分配给持有人的联属公司或持有人的相关基金，而无需向公司提交转让或出售该票据的要求及将该等分配或销售记录在册上（「相关方转让」注册票据对于此第3(c)(iii)条之任何情形有异议，持有人可将任何票据或部分转让予持有人的联属公司或持有人的相关基金，而无需向公司提交转让或出售该票据的要求及在登记册中记载该等分配或销售（「相关方分配」）相关方分配”); 提供公司可能会继续仅与指定或卖出持有人进行交易，直到该持有人已提交指定或卖出票据或部分票据的请求，以记录于登记册；该指定或卖出持有人未提交指定或卖出票据或部分票据的请求不影响该指定或卖出的合法性、有效性或约束力，且该指定或卖出持有人应仅作为公司的非受托代理，为此目的保留一份登记簿（“关联方登记簿”），与公司的登记册相媲美，并且任何此类指定或卖出在关联方登记簿中记录后即生效。尽管本文中订明的任何规定相反，根据本票条款转换本票任何部分时，持有人无需将本票实体交还给公司，除非（A）本票代表的全部转换金额正在转换，或（B）持有人已向公司提供事先书面通知（该通知可以包含在转换通知中）请求交还本票后重新发行本票。持有人和公司应保留记录，显示已转换及/或已支付（视情况而定）的本金和利息，以及这些转换和/或支付的日期，或者可以采用其他方法，合理地令持有人和公司满意，从而无需在转换时实体交还本票。如果公司未及时更新登记册以记录已转换及/或已支付（视情况而定）的本金和利息，以及这些转换及/或支付的日期，则若在此类事发生后的两（2）个营业日内，登记册将自动被视为已更新以反映此类事发生。关联方登记簿基金为何未立即更新登记册以记录已转换及/或已支付（视情况而定）的本金和利息，以及这些转换及/或支付的日期，则在此类事发生后的两（2）个营业日内，登记册将自动被视为已更新以反映此类事发生。
(iv) 按比例转换；争议. 如果公司从持有人及一个或多个其他票据持有人于同一换股日期收到换股通知，且公司可以转换该笔票据及/或其他票据的某些部分，但不是全部，则公司应根据第3(d)条款，根据持有人和每位选择在该日期换股的其他票据持有人选择对其提交换股的票据的本金金额及本金金额的比例，在该日期转换该持有人提交的该笔票据及其他票据的一部分。相对于在该日期提交换股的本笔票据和所有其他票据的累计本金金额。如果就与本票据换股有关的普通股可发行股数有争议，公司应向持有人发行未有争议的普通股股数，并根据第23条条款解决争议。
(v) [有意省略].
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(d) 有益业权转换限制尽管本文中有相反规定，公司不得根据本票据条款发行任何普通股，持有人也无权根据本票据条款发行的任何应发放的普通股拥有权，任何此类发行将被视为无效，并被视为从未发生，只要在生效此等发行后，持有人与其他归因方共同持有的数量超过9.99％（「最大百分比」）发行后立即存在的普通股数量的数量。根据上述句子，持有人和其他归因方所拥有的普通股股份总数将包括持有人和所有其他归因方持有的普通股股份数以及根据本票据条款有权发放的普通股股份，在这种句子的确定方面，不包括将发放的普通股股份数量（i）根据持有人或任何其他归因方持有的本票据的其余未转换部分的条款，或（ii）在对公司的任何其他有限制条件的未行使或未转换部分（包括但不限于公司的任何可转换票据或可转换优先股或认股权证，包括其他票据和认股权证）的行使或转换时应被发放。好处所有权应根据交易法案第13（d）条计算。为了确定持有人根据票据条款可以获得的但不超过最高百分比的普通股股份数量，持有人可以信赖作为他所能够在不超出最高百分比的情况下根据本票据条款取得的普通股的数量，这些普通股的数量反映在（i）公司最近的年度第10-k表格、季度第10-Q表格、第8-K表格的当中，（ii）公司的更近一次公开宣布或（iii）由公司或过户代理发出的任何其他书面通知，说明普通股的股份数量（「已报告的杰出股份数当公司接到持有人发出的换股通知时，如实际普通股的流通股数少于报告的优先股数时，公司应书面通知持有人当时流通的普通股数，并且在此次换股通知否则会导致持有人的受益所有权根据本第3(d)条确定的超出最大百分比时，持有人应通知公司降低根据该换股通知应购买的普通股数。在任何原因的任何时间内，持有人书面或口头要求时，公司应于一（1）个交易日内口头和书面或通过电子邮件确认当时流通的普通股数。在任何情况下，普通股的流通股数应在考虑公司的证券（包括本票据）自报告的流通股数截至之日以来的换股或行使后，由持有人和任何其他归属方所决定。如果根据《交易所法》第13(d)条的规定，将本票据转换为持有人而发行的普通股会导致持有人和其他归属方在合计上拥有超过普通股流通股数的最大百分比，因此发行的股份数超出最大百分比，则这些股份将被认为无效并应自始无效，并且所转换的换股金额中的任何部分应被恢复，持有人将无权投票或转让超量股份。在向公司发出书面通知后，持有人可能随时将最大百分比增加或减少到任何不超过9.99％的其他百分比指定在该通知中；条件是（i）最大百分比的任何增加在六十一（61过量股份）将不生效直至第六十一（61st在此通知交付后的一天内，(ii)任何增加或减少仅适用于持有人和其他归属方，而不适用于任何其他并非持有人的债券持有人。为明确起见，根据本票据条款可发行的普通股份，超过最高百分比的部分不得被认为是持有人在任何目的上受益拥有，包括根据《证券交易法》第13(d)条或第16a-1(a)(1)条规定的目的。本段条款应被解释和执行，以不严格符合本第3(d)条款的条件，必要时可对本段条款（或本段条款的任何部分）进行修正，以消除可能存在的缺陷或与本第3(d)条旨在设定的有利拥有限制不一致的情况，或进行必要或有益的更改或补充，以适当实现该限制。本段条款中的限制不得被免除，并应适用于本票据的续任持有人。
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(4) 违约事件发生时的权利.
(a) 违约事件。每个以下事件或未遵守构成一个“违约事件” 并且在第（vii）和（viii）款描述的每一事件亦应构成“破产违约事件”:
(i) 普通股票在合格市场上连续两个(2)交易日停牌，或在任何365天期间内累计停牌超过十(10)个交易日，或普通股票未被列入合格市场；
(ii) 公司未能在适用的转换日期后五个（5）交易日内交付所需数量的普通股，治愈转换失败，或于任何时间对持有人或其他票据持有人发送书面或口头通知，包括通过公开宣布或通过任何其代理商透露，表明该公司不打算遵守转换为普通股的要求，该要求已根据本票据或其他票据的条款提交，但不包括根据第3(d)条（和其他票据中的类似条文）的情况。
(iii) 在授权股票配额(如第10(a)条所定义)小于持有人应有之优先配额合计金额(如第10(a)条所定义)的连续第五个(5个)业务日后的任何时间；日) consecutive业务日达到或超过持有人应有之优先配额的张数，而比之所要求的储备金额(如第10(a)条所定义)的持有人的优先配额合计金额小
(iv) 如公司未能按时向持有人支付应付的本金、利息、赎回价或其他款项，根据本票或任何其他交易文件的规定，但在未能按时支付利息的情况下，仅当此失败持续至少两（2）个业务日时。
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(v) any default under, redemption of or acceleration prior to maturity of any Indebtedness of the Company or any of its Subsidiaries other than with respect to this Note or any Other Notes., except that the Senior Note (as defined below) shall be due on the same date. ;
(vi) the Company or any of its Subsidiaries, pursuant to or within the meaning of Title 11, U.S. Code, or any similar federal, foreign or state law for the relief of debtors (collectively, “Bankruptcy Law”), (A) commences a bankruptcy voluntary case, (B) consents to the entry of an order for relief against it in an involuntary bankruptcy case, (C) consents to the appointment of a receiver, trustee, assignee, liquidator or similar official (a “Custodian”), (D) makes a general assignment for the benefit of its creditors or (E) admits in writing that it is generally unable to pay its debts as they become due;
(vii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the Company or any of its Subsidiaries in an involuntary case, (B) appoints a Custodian of the Company or any of its Subsidiaries or (C) orders the liquidation of the Company or any of its Subsidiaries;
(viii) a final judgment or judgments for the payment of money aggregating in excess of $250,000 are rendered against the Company or any of its Subsidiaries and which judgments are not, within sixty (60) days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within sixty (60) days after the expiration of such stay; provided, however, that any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $250,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;
(ix) other than as specifically set forth in another clause of this Section 4(a), the Company or any of its Subsidiaries breaches any representation, warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term or condition of any Transaction Document which is curable, only if such breach continues for a period of at least an aggregate of five (5) Business Days after notice of such default;
(x) any breach or failure in any respect to comply with either Sections 14 or 15 of this Note;
(xi) any material damage to, or loss, theft or destruction of a material amount of property of the Company, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility of the Company or any Subsidiary, if any such event or circumstance would reasonably be expected to have a Material Adverse Effect;
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(xii) a false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that the Equity Conditions are satisfied or that there has been no Equity Conditions Failure or as to whether any Event of Default has occurred;
(xiii) any Material Adverse Effect occurs;
(xiv) the Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the Holder upon conversion or exercise (as the case may be) of any Securities (including this Note) as and when required by such Securities or the Exchange Agreement, unless otherwise then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five (5) Trading Day;
(xv) the electronic transfer by the Company of shares of Common Stock through the Depository Trust Company or another established clearing corporation is no longer available or is subject to a “chill”; or
(xvi) any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.
(b) Redemption Right. At any time after the earlier of the Holder’s receipt of an Event of Default Notice (as defined in Section 15(f)) and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem (an “Event of Default Redemption”) all or any portion of this Note by delivering written notice thereof (the “Event of Default Redemption Notice”) to the Company, which Event of Default Redemption Notice shall indicate the portion of this Note the Holder is electing to require the Company to redeem. Each portion of this Note subject to redemption by the Company pursuant to this Section 4(b) shall be redeemed by the Company in cash by wire transfer of immediately available funds at a price equal to the greater of (x) the product of (A) the applicable Redemption Premium and (B) the Conversion Amount being redeemed and (y) the product of (A) the Conversion Amount being redeemed and (B) the quotient determined by dividing (I) the greatest Closing Sale Price of the shares of Common Stock during the period beginning on the date immediately preceding such Event of Default and ending on the date the Holder delivers the Event of Default Redemption Notice, by (II) the lowest Conversion Price in effect during such period, in addition to any and all other amounts due hereunder (the “Event of Default Redemption Price”). Redemptions required by this Section 4(b) shall be made in accordance with the provisions of Section 11. To the extent redemptions required by this Section 4(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Note by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 4, but subject to Section 3(d), until the Event of Default Redemption Price is paid in full, the Conversion Amount submitted for redemption under this Section 4(b) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. The parties hereto agree that in the event of the Company’s redemption of any portion of the Note under this Section 4(b), the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any Event of Default Redemption Premium due under this Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty.
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(c) Redemption upon Bankruptcy Event of Default. Notwithstanding anything to the contrary herein, and notwithstanding any conversion that is then required or in process, upon any Bankruptcy Event of Default, whether occurring prior to or following the Maturity Date, the Company shall immediately pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest, if any, in addition to any and all other amounts due hereunder (the “Bankruptcy Event of Default Redemption Price”), without the requirement for any notice or demand or other action by the Holder or any other Person; provided that the Holder may, in its sole discretion, waive such right to receive payment upon a Bankruptcy Event of Default, in whole or in part, and any such waiver shall not affect any other rights of the Holder hereunder, including any other rights in respect of such Bankruptcy Event of Default, any right to conversion, and any right to payment of the Event of Default Redemption Price or any other Redemption Price, as applicable. Redemptions required by this Section 4(c) shall be made in accordance with the provisions of Section 11.
(5) RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.
(a) Assumption. If, at any time while this Note is outstanding, the Company, directly or indirectly, in one or more related transactions effects any Fundamental Transaction or a Fundamental Transaction occurs or is consummated, then, upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each share of Common Stock that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 3(d) on the conversion of this Note), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 3(d) on the conversion of this Note). 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 one 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. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 5(a) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Note immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term “Company” under this Note (so that from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of this Note and the other Transaction Documents referring to the “Company” shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Company prior thereto under this Note and the other Transaction Documents with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company in this Note.
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(b) Redemption Right. No sooner than twenty-five (25) days nor later than twenty (20) days prior to the consummation of a Change of Control, but not prior to the public announcement of such Change of Control, the Company shall deliver written notice thereof via electronic mail and overnight courier to the Holder (a “Change of Control Notice”) setting forth a description of such transaction in reasonable detail and the anticipated Change of Control Redemption Date (as defined in Section 11(a)) if then known. At any time during the period beginning on the earlier to occur of (x) any oral or written agreement by the Company or any of its Subsidiaries, upon consummation of which the transaction contemplated thereby would reasonably be expected to result in a Change of Control, (y) the Holder becoming aware of a Change of Control and (z) the Holder’s receipt of a Change of Control Notice and ending twenty-five (25) Trading Days after the date of the consummation of such Change of Control, the Holder may require the Company to redeem (a “Change of Control Redemption”) all or any portion of this Note by delivering written notice thereof (“Change of Control Redemption Notice”) to the Company, which Change of Control Redemption Notice shall indicate the Conversion Amount the Holder is electing to require the Company to redeem. The portion of this Note subject to redemption pursuant to this Section 5(b) shall be redeemed by the Company in cash by wire transfer of immediately available funds at a price equal to the greater of (x) the Conversion Amount being redeemed and (y) the product of (A) the Conversion Amount being redeemed and (B) the quotient determined by dividing (I) the greatest Closing Sale Price of the shares of Common Stock during the period beginning on the date immediately preceding the earlier to occur of (x) the consummation of the Change of Control and (y) the public announcement of such Change of Control and ending on the date the Holder delivers the Change of Control Redemption Notice, by (II) the lowest Conversion Price in effect during such period (the “Change of Control Redemption Price”). Redemptions required by this Section 5 shall be made in accordance with the provisions of Section 11 and shall have priority to payments to stockholders in connection with a Change of Control. To the extent redemptions required by this Section 5(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Note by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 5, but subject to Section 3(d), until the Change of Control Redemption Price is paid in full, the Conversion Amount submitted for redemption under this Section 5(b) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. The parties hereto agree that in the event of the Company’s redemption of any portion of the Note under this Section 5(b), the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any Change of Control redemption premium due under this Section 5(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty.
(6) DISTRIBUTION OF ASSETS; RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS.
(a) Distribution of Assets. If the Company shall, on or after the Subscription Date, declare or make any dividend or other distributions of its assets (or rights to acquire its assets) to any or all 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, Options, evidence of Indebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), then the Holder will be entitled to such Distribution as if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note) immediately prior to the date on which a record is taken for such Distribution or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for such Distributions (provided, however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to such extent) and the portion of such Distribution shall be held in abeyance for the Holder until such time or times as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution to be held similarly in abeyance) to the same extent as if there had been no such limitation).
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(b) Purchase Rights. If at any time on or after the Subscription Date the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class 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 taking into account any limitations or restrictions on the convertibility of this Note) immediately prior to 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, that to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time or times as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right to be held similarly in abeyance) to the same extent as if there had been no such limitation).
(7) ADJUSTMENTS TO CONVERSION PRICE. The Conversion Price will be subject to adjustment from time to time as provided in this Section 7.
(a) Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time on or after the Subscription Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment under this Section 7(a) shall become effective at the close of business on the date the subdivision or combination becomes effective.
(b) Voluntary Adjustment by Company. The Company may at any time during the term of this Note, with the prior written consent of the Required Holders, reduce the then current Conversion Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.
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(8) OPTIONAL PREPAYMENT. The Company may prepay (each, an “Optional Prepayment”) the Note in whole or in part at any time or from time to time by paying the Holder the Optional Prepayment Price in cash by wire transaction of immediately available funds with respect to the Conversion Amount being prepaid; provided, however, that the aggregate Conversion Amount under this Note and the Other Notes being prepaid in any Optional Prepayment pursuant to this Section 8 (and analogous provisions under the Other Notes) shall be at least $250,000, or such lesser amount that then remains outstanding under this Note and the Other Notes. The Company may exercise its right to require prepayment under this Section 8 by delivering a written notice thereof by electronic mail and overnight courier to the Holder and all, but not less than all, of the holders of the Other Notes (an “Optional Prepayment Notice” and the date all of the holders of the Notes received such notice is referred to as the “Optional Prepayment Notice Date”). Each Optional Prepayment Notice shall be irrevocable. Each Optional Prepayment Notice shall (i) state the date on which the Optional Prepayment shall occur (the “Optional Prepayment Date”), which date shall not be less than thirty (30) Trading Days following the applicable Optional Prepayment Notice Date, (ii) state the aggregate Conversion Amount of the Notes which the Company has elected to be subject to Optional Prepayment from the Holder and all of the other holders of the Other Notes pursuant to this Section 8 (and analogous provisions under the Other Notes) on the related Optional Prepayment Date, (iii) state the aggregate Optional Prepayment Price with respect to the Conversion Amount of Notes that the Company has elected to be subject to the Optional Prepayment (which may be required to be changed if the Optional Prepayment Price with respect to the applicable Conversion Amount being prepaid will be calculated pursuant to clause (ii) of the definition of Optional Prepayment Price) and (iv) state whether there has been an Equity Conditions Failure. If the Company confirmed that there was no Equity Conditions Failure as of the applicable Optional Prepayment Notice Date but an Equity Conditions Failure occurred between the applicable Optional Prepayment Notice Date and any time through the related Optional Prepayment Date (an “Optional Prepayment Interim Period”), the Company shall provide the Holder a subsequent notice to that effect, which notice shall indicate that the Optional Prepayment Price with respect to the applicable Conversion Amount being prepaid will be calculated pursuant to clause (ii) of the definition of Optional Prepayment Price instead of clause (i) of such definition. Immediately prior to the related Optional Prepayment Date, the Company shall provide the Holder with the final Optional Prepayment Price with respect to the applicable Conversion Amount being prepaid. If the Company elects to cause an Optional Prepayment pursuant to this Section 8, then it must simultaneously take the same action in the same proportion with respect to the Other Notes.
(9) NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation or Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note.
(10) RESERVATION OF AUTHORIZED SHARES.
(a) Reservation. From and after the date the Issuance Date, the Company shall reserve a number of authorized and otherwise unreserved shares of Common Stock to satisfy its obligation to issue shares of Common Stock pursuant to the terms of this Note and the Other Notes equal to the maximum number of Conversion Shares issuable pursuant to the terms of the Notes (without regard to any limitation in Section 3(d) on the conversion of this Note) (the “Required Reserve Amount”). So long as any of this Note and the Other Notes are outstanding, the Company shall take all action necessary to reserve and keep available out of its authorized and unissued Common Stock the Required Reserve Amount solely for the purpose of issuing shares of Common Stock pursuant to the terms of this Note and the Other Notes. The initial number of shares of Common Stock reserved for issuances pursuant to the terms of this Note and the Other Notes and each increase in the number of shares so reserved shall be allocated pro rata among the Holder and the holders of the Other Notes based on the Principal amount of this Note and the Other Notes held by each holder at the Closing (as defined in the Exchange Agreement) (the “Authorized Share Allocation”). In the event that a holder shall sell or otherwise transfer this Note or any of such holder’s Other Notes, each transferee shall be allocated a pro rata portion of such holder’s Authorized Share Allocation with respect to the portion of the Notes being transferred. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Notes shall be allocated to the Holder and the remaining holders of Other Notes, pro rata based on the Principal amount of this Note and the Other Notes then held by such holders.
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(b) Insufficient Authorized Shares. If at any time while any of the Notes remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its Board of Directors to recommend to the stockholders that they approve such proposal. Notwithstanding the foregoing, if during any such time of an Authorized Share Failure, the Company is able to obtain the written consent of a majority of the shares of its issued and outstanding Common Stock to approve the increase in the number of authorized shares of Common Stock, the Company may satisfy this obligation by obtaining such consent and submitting for filing with the SEC an Information Statement on Schedule 14C. If, upon any conversion of this Note, the Company does not have sufficient authorized shares to deliver in satisfaction of such conversion, then unless the Holder elects to rescind such attempted conversion, the Holder may require the Company to pay to the Holder within two (2) Trading Days of the applicable attempted conversion, cash in an amount equal to the product of (i) the number of shares of Common Stock that the Company is unable to deliver pursuant to this Section 10, and (ii) the highest Closing Sale Price of the Common Stock during the period beginning on the date of the applicable Conversion Date and ending on the date the Company makes the applicable cash payment.
(11) REDEMPTIONS.
(a) Mechanics. The Company shall deliver the applicable Event of Default Redemption Price to the Holder within three (3) Business Days after the Company’s receipt of the Holder’s Event of Default Redemption Notice; provided that upon a Bankruptcy Event of Default, the Company shall deliver the applicable Bankruptcy Event of Default Redemption Price in accordance with Section 4(c) (as applicable, the “Event of Default Redemption Date”). If the Holder has submitted a Change of Control Redemption Notice in accordance with Section 5(b), the Company shall deliver the applicable Change of Control Redemption Price to the Holder (i) concurrently with the consummation of such Change of Control if such notice is received prior to the consummation of such Change of Control and (ii) within three (3) Business Days after the Company’s receipt of such notice otherwise (such date, the “Change of Control Redemption Date”). The Company shall deliver the applicable Optional Prepayment Price to the Holder on the applicable Optional Prepayment Date. The Company shall pay the applicable Redemption Price to the Holder in cash by wire transfer of immediately available funds pursuant to wire instructions provided by the Holder in writing to the Company on the applicable due date. In the event of a redemption of less than all of the Conversion Amount of this Note, the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section 18(d)) representing the outstanding Principal which has not been redeemed and any accrued Interest on such Principal which shall be calculated as if no Redemption Notice has been delivered. In the event that the Company does not pay a Redemption Price to the Holder within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion of this Note representing the Conversion Amount that was submitted for redemption and for which the applicable Redemption Price has not been paid. Upon the Company’s receipt of such notice, (x) the applicable Redemption Notice shall be null and void with respect to such Conversion Amount, (y) the Company shall immediately return this Note, or issue a new Note (in accordance with Section 18(d)) to the Holder representing such Conversion Amount to be redeemed and (z) the Conversion Price of this Note or such new Notes shall be adjusted to the lesser of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided and (B) the lowest Closing Bid Price of the Common Stock during the period beginning on and including the date on which the applicable Redemption Notice is delivered to the Company and ending on and including the date on which the applicable Redemption Notice is voided.
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(b) Redemption by Other Holders. Upon the Company’s receipt of notice from any of the holders of the Other Notes for redemption or repayment as a result of an event or occurrence substantially similar to the events or occurrences described in Section 4(b), Section 5(b) or Section 8 or pursuant to corresponding provisions set forth in the Other Notes (each, an “Other Redemption Notice”), the Company shall immediately, but no later than one (1) Business Day of its receipt thereof, forward to the Holder by electronic mail a copy of such notice. If the Company receives a Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day period beginning on and including the date which is three (3) Business Days prior to the Company’s receipt of the Holder’s Redemption Notice and ending on and including the date which is three (3) Business Days after the Company’s receipt of the Holder’s Redemption Notice and the Company is unable to redeem all principal, interest and other amounts designated in such Redemption Notice and such Other Redemption Notices received during such seven (7) Business Day period, then the Company shall redeem, a pro rata amount from the Holder and each holder of the Other Notes based on the Principal amount of this Note and the Other Notes submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices received by the Company during such seven (7) Business Day period.
(c) Insufficient Assets. If upon a Redemption Date, the assets of the Company are insufficient to pay the applicable Redemption Price, the Company shall (i) take all appropriate action reasonably within its means to maximize the assets available for paying the applicable Redemption Price, (ii) redeem out of all such assets available therefor on the applicable Redemption Date the maximum possible portion of the applicable Redemption Price that it can redeem on such date, pro rata among the Holder and the holders of the Other Notes to be redeemed in proportion to the aggregate Principal amount of this Note and the Other Notes outstanding on the applicable Redemption Date and (iii) following the applicable Redemption Date, at any time and from time to time when additional assets of the Company become available to pay the balance of the applicable Redemption Price of this Note and the Other Notes, the Company shall use such assets, at the end of the then current fiscal quarter, to pay the balance of such Redemption Price of this Note and the Other Notes, or such portion thereof for which assets are then available, on the basis set forth above at the applicable Redemption Price, and such assets will not be used prior to the end of such fiscal quarter for any other purpose. Interest on the Principal amount of this Note and the Other Notes that have not been redeemed shall continue to accrue until such time as the Company redeems this Note and the Other Notes. The Company shall pay to the Holder the applicable Redemption Price without regard to the legal availability of funds unless expressly prohibited by applicable law or unless the payment of the applicable Redemption Price could reasonably be expected to result in personal liability to the directors of the Company.
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(12) VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law and as expressly provided in this Note.
(13) RANK. All payments due under this Note (a) shall rank pari passu with all Other Notes and (b) shall be senior to all other Indebtedness of the Company and its Subsidiaries, other than the Senior Debt owed to Cobra Alternative Capital Strategies LLC (“Cobra”) pursuant to that certain Amended and Restated Promissory Note, as amended on October 29, 2024, which shall be senior to this Note.
(14) NEGATIVE COVENANTS. Except as noted below, until all of the Notes have been converted, redeemed or otherwise satisfied in full in accordance with their terms, the Company shall not, and the Company shall not permit any of its Subsidiaries without the prior written consent of the Required Holders to, directly or indirectly by merger or otherwise:
(a) while more than twenty percent (20.0%) of the Notes issued on the Closing Date remain outstanding, incur or guarantee, assume or suffer to exist any Indebtedness, other than Permitted Indebtedness;
(b) allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, “Liens”) other than Permitted Liens;
(c) redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness (other than this Note and the Other Notes), whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness if at the time such payment is due or is otherwise made or, after giving effect to such payment, an event constituting, or that with the passage of time and without being cured would constitute, an Event of Default has occurred and is continuing;
(d) redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness (including, without limitation Permitted Indebtedness other than this Note and the Other Notes), by way of payment in respect of principal of (or premium, if any) such Indebtedness. For clarity, such restriction shall not preclude the payment to Cobra of 50% of the gross proceeds of any exercise of the Company’s warrants or any capital raised pursuant to one or more transactions involving the issuance of any securities, which payments may be made against interest or principal.
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(e) redeem or repurchase any Equity Interest of the Company;
(f) declare or pay any cash dividend or distribution on any Equity Interest of the Company or of its Subsidiaries other than wholly-owned Subsidiaries;
(g) make, any material change in the nature of its business as described in the Company’s most recent Annual Report filed on Form 10-K with the SEC or modify its corporate structure or purpose; or
(h) enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, license, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm’s length transaction with a Person that is not an Affiliate thereof; or
(i) issue any Notes or issue any other securities that would cause a breach or default under the Notes.
(15) AFFIRMATIVE COVENANTS. Until all of the Notes have been converted, redeemed or otherwise satisfied in full in accordance with their terms, the Company shall, and the Company shall cause each Subsidiary to, unless otherwise agreed to by the Required Holders, directly and indirectly:
(a) maintain and preserve its existence, rights and privileges, and become or remain duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary;
(b) maintain and preserve all of its properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted, and comply at all times with the provisions of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder;
(c) take all action necessary or advisable to maintain all of the intellectual property and proprietary rights of the Company and its Subsidiaries that is necessary or material to the conduct of its business in full force and effect;
(d) maintain insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated; and
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(e) promptly, but in any event within one (1) Business Day, notify the Holder and the holders of the Other Notes in writing whenever an Event of Default (an “Event of Default Notice”) or an Equity Conditions Failure occurs, and simultaneously with the delivery of such notice to the Holder and the holders of the Other Notes, file a Current Report on Form 8-K with the SEC to state such fact.
(16) VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES. The affirmative vote at a meeting duly called for such purpose or the written consent without a meeting of the Required Holders shall be required for any exchange, change or amendment or waiver of any provision to this Note or any of the Other Notes. Any exchange, change, amendment or waiver by the Company and the Required Holders shall be binding on the Holder of this Note and all holders of the Other Notes. The Holder hereby acknowledges and agrees that any action taken pursuant to this Section may result in, or be perceived to result in, a disproportionate impact on the Holder compared to the impact of such action on one or more holder(s) of Other Notes. This provision constitutes a separate right granted to each of the holders of Notes by the Company and shall not in any way be construed as such holders acting in concert or as a group with respect to the purchase, disposition or voting of securities or otherwise.
(17) TRANSFER. This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject only to the provisions of Section [ ] of the Exchange Agreement.
(18) REISSUANCE OF THIS NOTE.
(a) Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 18(d) and subject to Section 3(c)(iii)), registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a new Note (in accordance with Section 18(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) following conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.
(b) Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form (but without any obligation to post a surety or other bond) and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 18(d)) representing the outstanding Principal.
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(c) Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 18(d)) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.
(d) Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 18(a) or Section 18(c), the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest, if any, from the Issuance Date.
(19) 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). No remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy. 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, redemption 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 breach, without the necessity of showing economic loss and without any bond or other security being required.
(20) PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the reasonable costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that the purchase price paid for this Note was less than the original Principal amount hereof.
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(21) CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and all the Holders and shall not be construed against any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note.
(22) FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
(23) DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Closing Bid Price or the Closing Sale Price or the arithmetic calculation of the Conversion Rate, the Conversion Price or any Redemption Price, the Company shall pay the applicable Redemption Price that is not disputed or shall cause the Transfer Agent to issue to the Holder the number of shares of Common Stock that is not disputed, and the Company shall submit the disputed determinations or arithmetic calculations via electronic mail within one (1) Business Day of receipt, or deemed receipt, of the Conversion Notice or Redemption Notice or other event giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation within one (1) Business Day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within one (1) Business Day submit via electronic mail (a) the disputed determination of the Closing Bid Price or the Closing Sale Price to an independent, reputable investment bank selected by the Holder and approved by the Company, such approval not to be unreasonably withheld, conditioned or delayed, or (b) the disputed arithmetic calculation of the Conversion Rate, Conversion Price or any Redemption Price to an independent, outside accountant, selected by the Holder and approved by the Company, such approval not to be unreasonably withheld, conditioned or delayed. The Company, at the Company’s expense, shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than five (5) Business Days from the time it receives the disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.
(24) NOTICES; PAYMENTS.
(a) Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with Section [ ] of the Exchange Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefor. Without limiting the generality of the foregoing, the Company shall give written notice to the Holder (i) immediately upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least twenty (20) Business Days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.
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(b) Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, such payment shall be made in lawful money of the United States of America via wire transfer of immediately available funds to an account designated by the Holder; provided, that the Holder, upon written notice to the Company, may elect to receive a payment of cash in lawful money of the United States of America by a check drawn on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing (which address, in the case of each of the Holders, shall initially be as set forth on the signature pages attached to the Exchange Agreement). Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day.
(25) CANCELLATION. After all Principal, any accrued Interest and any other amounts at any time owed on this Note have been paid in full, this Note shall automatically be deemed canceled and shall not be reissued, sold or transferred.
(26) WAIVER OF NOTICE. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Exchange Agreement.
(27) GOVERNING LAW; JURISDICTION; JURY TRIAL. This Note shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, 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 any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. The Company 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 to the Company at the address set forth on the Company’s signature page to the Exchange Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
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(28) Severability. If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material change, the original intentions of the Company and the Holder as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the Company or the Holder or the practical realization of the benefits that would otherwise be conferred upon the Company or the Holder. The Company and the Holder will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
(29) DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries, the Company shall contemporaneously with any such receipt or delivery publicly disclose such material, nonpublic information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, nonpublic information relating to the Company or its Subsidiaries, the Company so shall indicate to the Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries.
(30) USURY. This Note is subject to the express condition that at no time shall the Company be obligated or required to pay interest hereunder at a rate or in an amount which could subject the Holder to either civil or criminal liability as a result of being in excess of the maximum interest rate or amount which the Company is permitted by applicable law to contract or agree to pay. If by the terms of this Note, the Company is at any time required or obligated to pay interest hereunder, including by way of an original issue discount, at a rate or in an amount in excess of such maximum rate or amount, the rate or amount of interest under this Note shall be deemed to be immediately reduced to such maximum rate or amount and the interest payable shall be computed at such maximum rate or be in such maximum amount and all prior interest payments in excess of such maximum rate or amount shall be applied and shall be deemed to have been payments in reduction of the principal balance of this Note.
(31) CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a) “Affiliate” shall have the meaning ascribed to such term in Rule 405 of the Securities Act.
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(b) “Attribution Parties” means, collectively, the following Persons: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of the foregoing and (iv) any other Person whose beneficial ownership of the Common Stock would or could be aggregated with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the Exchange Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.
(c) “Bloomberg” means Bloomberg Financial Markets.
(d) “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, New York generally are open for use by customers on such day.
(e) “Change of Control” means any Fundamental Transaction other than (i) any reorganization, recapitalization or reclassification of the Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, are the holders of a majority of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification or (ii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company.
(f) “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported on the Pink Open Market (f/k/a OTC Pink) published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 23. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or other similar transaction relating to the Common Stock during the applicable calculation period.
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(g) “Closing Date” shall have the meaning set forth in the Exchange Agreement, which date is the date the Company initially issued Notes pursuant to the terms of the Exchange Agreement.
(h) “Common Stock” means (i) the Company’s shares of common stock, par value $0.01 per share, and (ii) any capital stock into which such Common Stock shall be changed or any capital stock resulting from a reorganization, recapitalization or reclassification of such Common Stock.
(i) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
(j) “Conversion Shares” means shares of Common Stock issuable by the Company pursuant to the terms of any of the Notes, including any related Interest so converted.
(k) “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.
(l) “Eligible Market” means the Principal Market, The New York Stock Exchange, The Nasdaq Global Market, The Nasdaq Global Select Market or the NYSE American.
(m) “Equity Conditions” means each of the following conditions:
(i) on each day during the applicable Equity Conditions Measuring Period, either (x) one or more registration statements shall be effective and available for the resale of all remaining Underlying Shares, including the shares of Common Stock issuable upon conversion of the Conversion Amount that is subject to the applicable Optional Prepayment, and there shall not have been any suspension of such registration statement(s) or (y) all Underlying Shares, including the shares of Common Stock issuable upon conversion of the Conversion Amount that is subject to the applicable Optional Prepayment, shall be eligible for sale without restriction pursuant to Rule 144 (assuming that all Warrants were exercised pursuant to a cashless exercise (as described in the Warrants)) and without the need for registration under any applicable federal or state securities laws;
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(ii) on each day during the applicable Equity Conditions Measuring Period, the Common Stock is designated for quotation on the Principal Market or any other Eligible Market and shall not have been suspended from trading on such exchange or market nor shall delisting or suspension by such exchange or market been threatened, commenced or pending either (A) in writing by such exchange or market or (B) by falling below the then effective minimum listing maintenance requirements of such exchange or market;
(iii) during the applicable Equity Conditions Measuring Period, the Company shall have delivered shares of Common Stock pursuant to the terms of this Note and the Other Notes and shares of Common Stock upon exercise of the Warrants to the holders on a timely basis as set forth in Section 3(c) hereof (and analogous provisions under the Other Notes) and Section 2 of the Warrants;
(iv) the shares of Common Stock issuable upon conversion of the Conversion Amount that is subject to the applicable Optional Prepayment may be issued in full without violating Section 3(d) hereof and the rules or regulations of the Principal Market or other applicable Eligible Market;
(v) during the applicable Equity Conditions Measuring Period, the Company shall not have failed to timely make any payments within five (5) Business Days of when such payment is due pursuant to any Transaction Document;
(vi) [Intentionally omitted].
(vii) during the applicable Equity Conditions Measuring Period solely with respect to an Optional Prepayment, there shall not have occurred either (A) an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default;
(viii) the Company shall have no knowledge of any fact that would cause any Underlying Shares, including the shares of Common Stock issuable upon conversion of the Conversion Amount that is subject to the applicable Optional Prepayment, not to be eligible for sale without restriction pursuant to Rule 144 (or any successor thereto) promulgated under the Securities Act and any applicable state securities laws;
(ix) during the applicable Equity Conditions Measuring Period, the Company otherwise shall have been in compliance with and shall not have breached any provision, covenant, representation or warranty of any Transaction Document;
(x) during the applicable Equity Conditions Measuring Period, the Holder shall not have been in possession of any material, nonpublic information received from the Company, any Subsidiary or its respective agent or affiliates; and
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(xi) the shares of Common Stock issuable upon conversion of the Conversion Amount that is subject to applicable Optional Prepayment requiring the satisfaction of the Equity Conditions are duly authorized and listed and eligible for trading without restriction on a Qualified Eligible Market.
(n) “Equity Conditions Failure” means that on the applicable date of determination through the applicable date of determination, the Equity Conditions have not each been satisfied or waived in writing by the Holder; provided, however, that the Equity Condition set forth in clause (iv) of such definition is not waivable by the Holder.
(o) “Equity Conditions Measuring Period” means each day during the period beginning ten (10) Trading Days immediately prior to the applicable date of determination and ending on and including the applicable date of determination.
(p) “Equity Interests” means (a) all shares of capital stock (whether denominated as common capital stock or preferred capital stock), equity interests, beneficial, partnership or membership interests, joint venture interests, participations or other ownership or profit interests in or equivalents (regardless of how designated) of or in a Person (other than an individual), whether voting or non-voting and (b) all securities convertible into or exchangeable for any of the foregoing and all warrants, Options or other rights to purchase, subscribe for or otherwise acquire any of the foregoing, whether or not presently convertible, exchangeable or exercisable.
(q) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(r) “Exchange Agreement” means that certain exchange agreement dated as of the Subscription Date by and among the Company and the investors listed on the signature pages attached thereto pursuant to which the Company issued the Notes and Warrants in exchange for certain debt purchased from Agile and Cedar (as such entities are defined therein), as may be amended, amended and restated, supplemented or otherwise modified from time to time.
(s) “Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such Subject Entities as of the Subscription Date calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other stockholders of the Company to surrender their shares of Common Stock without approval of the stockholders of the Company or (C) that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.
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(t) “GAAP” means United States generally accepted accounting principles, consistently applied during the periods involved.
(u) “Group” means a “group” as that term is used in Section 13(d) of the Exchange Act and as defined in Rule 13d-5 thereunder.
(v) “Holders” shall have the meaning ascribed to such term in the Exchange Agreement.
(w) “Indebtedness” of any Person means, without duplication (i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, including (without limitation) “finance leases” in accordance with GAAP (other than trade payables entered into in the ordinary course of business consistent with past practice), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, is classified as a finance lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, deed of trust, lien, pledge, charge, security interest or other encumbrance of any nature whatsoever in or upon any property or assets (including accounts and contract rights) with respect to any asset or property owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (vii) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above.
(a) “Material Adverse Effect” means (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document.
(b) “Optional Prepayment Price” means (i) so long as no Equity Conditions Failure has occurred during the period beginning ten (10) Trading Days prior to the Optional Prepayment Notice Date and ending on the Prepayment Notice Date and no Equity Conditions Failure has occurred during the Optional Prepayment Interim Period, 100% of the Conversion Amount being prepaid, and (ii) if an Equity Conditions Failure has occurred at any time during the period beginning ten (10) Trading Days prior to the Optional Prepayment Notice Date and ending on the Optional Prepayment Date, the greater of (x) the Conversion Amount being prepaid and (y) the product of (A) the Conversion Amount being prepaid and (B) the quotient determined by dividing (I) the greatest Closing Sale Price of the shares of Common Stock during the period beginning on the tenth (10th) Trading Day immediately preceding the applicable Optional Prepayment Notice Date and ending on the Trading Day immediately preceding the Optional Prepayment Date, by (II) the lowest Conversion Price in effect during such period.
(c) “Options” means any rights, warrants or options to subscribe for or purchase (i) shares of Common Stock or (ii) Convertible Securities.
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(d) “Permitted Indebtedness” means (i) Indebtedness evidenced by this Note and the Other Notes, (ii) trade payables incurred in the ordinary course of business and consistent with past practice, (iii) unsecured Indebtedness incurred by the Company that is made expressly subordinate in right of payment to the Indebtedness evidenced by this Note, as reflected in a written agreement acceptable to the Required Holders and approved by the Required Holders in writing, and which Indebtedness (a) does not provide at any time for the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon until ninety-one (91) days after the Maturity Date or later and (b) includes terms and conditions acceptable to the Required Holders, (iv) Indebtedness, up to $1,000,000, in the aggregate, secured by Permitted Liens described in clauses (iv) of the definition of Permitted Liens and (v) an aggregate of $3,955,000 owed to Cobra (“Senior Debt”).
(e) “Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings, (iv) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to secure the purchase price of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment, or (B) existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such equipment, (v) Liens incurred in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type described in clause (iv) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced does not increase, (vi) leases or subleases and licenses and sublicenses granted to others in the ordinary course of the Company’s business, not interfering in any material respect with the business of the Company and its Subsidiaries taken as a whole, (vii) Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of custom duties in connection with the importation of goods, (viii) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 4(a)(viii) and (ix) and (ix) security interests in all of the Company’s assets currently perfected in favor of Cobra..
(f) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any governmental entity or any department or agency thereof.
(g) “Principal Market” means the Nasdaq Capital Market.
(h) “Pro Rata Amount” means a fraction (i) the numerator of which is the aggregate principal amount of Notes issued to the initial Holder of this Note pursuant to the Exchange Agreement and (ii) the denominator of which is the aggregate principal amount of Notes issued to all holders of Notes pursuant to the Exchange Agreement.
(i) “Redemption Dates” means, collectively, the Event of Default Redemption Dates and the Change of Control Redemption Dates and the Optional Prepayment Date, as applicable, each of the foregoing, individually, a Redemption Date.
(j) “Redemption Notices” means, collectively, the Event of Default Redemption Notices and the Change of Control Redemption Notices and the Optional Prepayment Notice, each of the foregoing, individually, a Redemption Notice.
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(k) “Redemption Premium” means 125%.
(l) “Redemption Prices” means, collectively, the Event of Default Redemption Prices and the Change of Control Redemption Prices and the Optional Prepayment Price, each of the foregoing, individually, a Redemption Price.
(m) “Related Fund” means, with respect to any Person, a fund or account managed by such Person or an Affiliate of such Person.
(n) “Required Holders” means the holders of Notes representing at least a majority of the aggregate principal amount of the Notes then outstanding.
(o) “SEC” means the United States Securities and Exchange Commission.
(p) “Securities Act” means the Securities Act of 1933, as amended.
(q) “Securities” means the Notes, the Warrants and the Underlying Shares.
(r) “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the principal securities exchange or securities market on which the Common Stock is then traded as in effect on the date of delivery of the applicable Conversion Notice.
(s) “Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(t) “Subscription Date” means October [ ], 2024.
(u) “Subsidiary” means any direct or indirect subsidiary of the Company.
(v) “Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock on such day, then on the principal securities exchange or securities market on which the Common Stock is then traded.
(w) “Transaction Documents” shall have the meaning ascribed to such term in the Exchange Agreement.
(x) “Underlying Shares” means the Warrant Shares and Conversion Shares, including without limitation, shares of Common Stock issued and issuable in lieu of the cash payment of interest on the Notes in accordance with the terms of the Notes, in each case without respect to any limitation or restriction on the conversion of the Notes or the exercise of the Warrants.
(y) “Warrants” shall have the meaning ascribed to such term in the Exchange Agreement, and shall include all warrants issued in exchange therefor or replacement thereof.
(z) “Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.
| Greenlane Holdings, Inc. | ||
| By: | ||
| Name: | ||
| Title: | ||
EXHIBIT
I
greenlane holdings, Inc.
CONVERSION NOTICE
Reference is made to the Senior Subordinated Convertible Note (the “Note”) issued to the undersigned by Greenlane Holdings, Inc., a Delaware corporation (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Common Stock par value $0.01 per share (the “Common Stock”) of the Company, as of the date specified below.
| Date of Conversion: |
| Aggregate Conversion Amount to be converted or number of Conversion Shares to be issued upon conversion: |
Please confirm the following information:
| Conversion Price: |
| If Aggregate Conversion Amount is provided above, number of shares of Common Stock to be issued: |
Please issue the Common Stock into which the Note is being converted to the Holder, or for its benefit, as follows:
☐ Check here if requesting delivery as a certificate to the following name and to the following address:
| Issue to: | ||
| Address: | ||
| Electronic Mail: |
☐ Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
| DTC Participant: | |
| DTC Number: | |
| Account Number: |
| Authorization: |
| By: |
| Title: |
| Dated: |
| Account Number: | ||
| (if electronic book entry transfer) | ||
| Transaction Code Number: | ||
| (if electronic book entry transfer) |
ACKNOWLEDGMENT
The Company hereby acknowledges this Conversion Notice and hereby directs Pacific Stock Transfer Company to issue the above indicated number of shares of Common Stock.
| Greenlane Holdings, Inc. | ||
| By: | ||
| Name: | ||
| Title: | ||