附件10.2
[高級次級可轉債券形式]
此安全性及此安全性可轉換之安全性均未根據1933年證券法（經修訂）註冊於證券交易委員會或任何州證券委員會，依賴於證券法豁免登記，因此可能不能在未根據證券法生效的註冊聲明或根據可用豁免方式下出售，或者在未受到證券法登記要求管轄或根據適用州證券法與要求協調的交易下出售。此安全性及可轉換之安全性可能用作在具備真正按金帳戶的註冊經紀商或其他貸款與財務機構，後者是「依《證券法第501（a）條規定的認定投資者」所定義的註冊經紀商擔保的貸款。本可轉讓本票的受讓人應仔細審閱本票條款，包括此處的第3（c）（iii）和18（a）條。根據本票第3（c）（iii）條所規定，由本票代表的本金金額可能會低於本票正面所規定的金額。
Greenlane Holdings，Inc。
高級 次級 可轉換票據
| 發行日期 日期: 2024年10月29日 | 原始 本金金額: 美元 $[ ] |
對於所收到的貨款 ，Delaware州法人 greenlane Holdings, Inc.（以下簡稱“公司”）在此承諾支付給 [Empery】或受讓人（以下簡稱“持有人”）現金和/或普通股份額，原始本金金額如上所述（根據本協議項下根據贖回、轉換或其他方式減少的金額，以下簡稱“主要根據本協議規定，當到期時，無論是在到期日（如下所定義）、加速還是贖回或其他情況下（均按照本協議的條款），應支付利息（"利息在發生並持續發生自上文所述發行日期起的任何違約事件期間，根據適用的違約利率，按時支付未償本金的利息（"發行日期），直至同在到期日、加速、轉換、贖回或其他情況下（均按照本協議的條款）支付爲止。這份高級次級可轉換票據（包括以交換、轉讓或更換方式發行的所有高級次級可轉換票據，本“單張債券”是根據交易協議在成交日發行的一部分高級次級可轉換票據（統稱爲“票據 ” 和其他高級次級可轉換票據，“其他說明”). 此處使用的部分大寫字母定義見第31節。
(1) 償還本金支付；預付款。在到期日，如果本票的任何部分尚未償還，公司應支付給持有人現金金額，代表所有未償還的本金，以及任何應計未支付的利息。該到期日應為2025年10月29日，持有人可選擇延長（x）在到期日該發生且持續發生違約事件（如第4(a)條所定義）的情況下，或任何事件發生且持續發生在到期日（根據本第1節進行延長），隨著時間的流逝和無法解決的情況下將導致違約事件和／或（y）在控制權變更事項完成十（10）業務日之後的日期，如果控制權變更是公開宣布或在到期日前交付控制權變更通知書（如第5(b)條所定義）。除本票明確允許的情況外，公司不得提前償還任何未償還的本金或應計未支付的利息（若有）。到期日在到期日，如果本票的任何部分尚未償還，公司應支付給持有人現金金額，代表所有未償還的本金，以及任何應計未支付的利息。該到期日應為2025年10月29日，持有人可選擇延長（x）在到期日該發生且持續發生違約事件（如第4(a)條所定義）的情況下，或任何事件發生且持續發生在到期日（根據本第1節進行延長），隨著時間的流逝和無法解決的情況下將導致違約事件和／或（y）在控制權變更事項完成十（10）業務日之後的日期，如果控制權變更是公開宣布或在到期日前交付控制權變更通知書（如第5(b)條所定義）。除本票明確允許的情況外，公司不得提前償還任何未償還的本金或應計未支付的利息，如果有的話。
(2) 利息除非發生違約事件，否則不應計發任何利息。自發生違約事件之日起，在違約事件持續期間，應按年利率百分之十（10.0%）計發利息（“默認利率 ”），應根據360天一年十二個30天的月計算，並應在到期日支付給本票據持有人現金，通過電匯立即可用資金，根據持有人以書面形式提供給公司的電匯指示。應償付的任何已計付未償的利息（如果適用）也可由持有人選擇按照每個（i）轉股日期（如第3(b)(i)條所定義）按照第3(c)(i)條的規定和/或（ii）在到期日之前發生的任何贖回轉換金額中支付，包括但不限於發生破產違約贖回。如果隨後消除了違約事件（且隨後不存在任何其他違約事件（包括但不限於公司未按到期日的默認利率支付利息)），利息應自取得糾正的當天起即刻停止計發； 在每種情況下，該B類股東和/或該B類股東的家庭成員需獨立控制在此類帳戶、計劃或信託中持有的B類普通股實時； 在此類違約事件持續期間計算並未付清的利息應繼續適用，以涉及自違約事件發生之後至包括違約事件糾正之日之間的天數。 在每種情況下，該B類股東和/或該B類股東的家庭成員需獨立控制在此類帳戶、計劃或信託中持有的B類普通股實時；, 此外根據本第2節規定，除非應支付給持有人的任何應計及未支付利息已支付，否則不視爲糾正此違約事件。
(3) 轉換權任何在發行日期之後的時間，本票據均可按照本第3條所載條款轉換為普通股。
(a) 轉換權：根據第3(d)節的規定，在發行日期之後的任何時間，持有人應有權將所有或任何未清償的Conversion Amount按照第3(c)節的規定轉換爲已全額支付且不得調查的普通股，按照Conversion Rate（如下定義）。公司不得在任何轉換時發行任何普通股份的零頭。如果發行導致發行一部分普通股份，公司應將該部分普通股份四捨五入爲最接近的整數股份。公司應支付因按照任何Conversion Amount轉換髮行並交付普通股份而可能應付的任何轉讓、印花和類似稅款。
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(b) 轉換比率任何根據第3(a)條款進行轉換的轉換金額可換髮的普通股股份數量，應通過將(x)該轉換金額除以(y)轉換價格來確定（“轉換比率”).
(i) “轉換金額”表示要轉換、贖回或就該確定作出決定的本金部分（x），及有關該本金未支付的應計利息（如果有的話）之和（y）。
(ii) “換股價格” 在任何轉換日期或其他確定日期時，為3.17美元，根據本文所述進行調整。
(c) 轉換機制.
(i) 可選轉換任何日期（以下簡稱“轉換日期”）將任何轉換金額轉換為普通股份時，持有人應在該日期之前進行交付（無論通過電子郵件或其他方式），在當日紐約時間11點59分之前，將已簽署的轉換通知副本以所附的形式遞交給公司和受託人。如根據第3（c）（iii）條的規定要求，在本註記轉換後的一（1）個交易日內，持有人應向一家知名的隔夜快遞服務提供本註記的交付，以交付給公司（或根據第17（b）條的規定，提供有關本註記的遺失、失竊或毀壞的損失賠償承諾）。收到轉換通知的當日，公司應通過電子郵件發送確認收到該轉換通知的確認書，其形式附於本註記之後（以下簡稱“初始確認書”），寄送給持有人、受託人和公司的轉移代理（以下簡稱“轉移代理”），該確認書將構成對轉移代理的指令，以便根據本規定處理該轉換通知。在公司收到轉換通知的日期（或根據1934年法案或其他適用的法規或規定在該股票的轉換日期啟動交易的結算日之前的較早日期）即可發行這些普通股轉換日期在此，賬戶持有人應（A）透過電子郵件（或以其他方式交付），交付於當日晚上11:59之前紐約時間之複印本轉換通知，表格如附件所示。 附件I (a “轉換通知公司接到通知後（B），如果根據第3(c)(iii)條款需要，但不影響公司在適用的股票交付日期（下文定義）上交付普通股之要求，應儘快在該日期之後或之後將此票證交給普通運輸公司，以交付給公司（或就遺失、被盜、毀壞或損壞情況下此票證的賠償承諾遵守第十八(b)條款中列明的程序）。不需要使用原稿轉換通知，也不需要任何勋章擔保（或其他類型的擔保或公證）轉換通知。在第一（1st交割通知書交付之日起的交易日內，公司應將收據轉發至持有人和公司的過戶代理（「股票轉倉代理」）。 在或之前（i）第一（1st）個交易日和（ii）標準結算期間包括的交易日數，根據持有人向公司提供適用的轉換通知之後的日期（「分享 交付日期」），公司應（x）倘若過戶代理參與儲存信託公司（「DTC快速自動證券轉移計劃 以（A）適用的轉換股份對持有人有利的有效轉售登記聲明為條件；或（B）如果在Rule 144允許持有人轉售相應的轉換股份的時間進行轉換，將持有人根據該換股應享有的總轉換股份數額記入其或其指定人的DTC賬戶通過其存入／提取代保管人系統；或（y）如果（A）轉讓代理不參與DTC快速自動證券轉移計劃，或（B）適用的轉換股份沒有受到對持有人有利的有效轉售登記聲明的限制或（B）適用的轉換股份沒有受到對持有人有利的有效轉售登記聲明的限制，且如果在Rule 144不允許持有人轉售相應的轉換股份的時間進行轉換，按照換股通知書中指定的地址發行並提供由持有人或其指定人登記的股份證書，標明持有人應享有的普通股數量。如果根據第3(c)(iii)條的規定將此票據實際交還用於轉換，且此票據的未偿還本金大於被轉換的轉換金額的本金部分，那麼公司應盡快且不得晚於傳遞此票據後的兩（2）個業務日（根據第18（d）條的規定），發行並交付給持有人一份新的票據代表未轉換的未偿還本金。根據此票據的換股，有權收取普通股的人或人群，無論這些換股股份何時記入DTC的持有人賬戶，或是交付憑證證明這些換股股份的日期，一概被視為具有相關換股日期上的該等普通股的名稱記錄持有人或持有人，不受任何與執行本條款相關的行為或不作為、關於本條款的任何條款的豁免或同意、追索對某人的任何判決或執行該等的行動，或任何抵銷、反訴、抵銷、限制或解除的影響。只要有未解決的票據，公司應使用參與DTC快速自動證券轉移計劃的轉讓代理。
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(ii) 公司未能及時轉換如果公司在適用的股票交付日期之前未能出具和交付證書給持有人，無論任何原因，如果證券過戶代理人未參與DTC快速自動證券轉移計劃，或在轉換後，當 適用的 轉換股份 尚未受益於持有人的有效轉售登記聲明，且Rule 144無法用於持有人出售 參見隨附的綜合財務報表 轉換股份，或DTC將持有人的餘額賬戶記入DTC，如果轉售代理人參與DTC快速自動證券轉移計劃且（a） 適用轉換股份受益於持有人的有效轉售登記聲明，或（b）在Rule 144可以用於持有人出售轉換股份的情況下轉換 參見隨附的綜合財務報表 持有人的換股股份数，乃指持有人在將任何換股金額轉換後有權獲得的普通股數量 （以下稱“A”），則（A）公司應在此換股期間的每一個交易日支付現金給持有人，金額等於（1）尚未發行給持有人的普通股數目加上或等於持有人有權但在適用的股份交付日期之前，以及（2）持有人在書面中選擇的任何時間段內的普通股交易價格之乘積的1.5% ，此時間段自適用換股日期開始並在適用的股份交付日期結束，以及（B）持有人可以在書面通知公司後，就未按照該換股通知轉換的本票部分作廢換回，作廢換回或繼續持有，具體情況而定；轉換失敗使觸發換股但在適用的股份交付日期前未向持有人發行的普通股證書數量及持有人有權的總和（2）持有人在適用的換股日期開始並在適用的股份交付日期結束之間的任何時間內有效選擇的普通股交易價格之乘積等於1.5%，公司應支付現金給持有人，金額等於前述未發行的普通股數目。 ，前提是交割日不晚於2023年12月6日。取消換股通知不影響公司根據本條款3(c)(ii)或其他規定應於此通知日期之前負擔的任何支付義務。除上述情況外，如果公司未能在適用的股份交付日期之前發行並交付證書予持有人，則（A）若轉讓代理不參與DTC快速自動證券轉移計劃，或（B）若適用換股股份数未受到有效的支持持有人的轉售登記聲明且在基於的轉換日期無法依法依䦌144條進行轉售者的情況下轉換該換股股份，則轉讓持有人的餘額賬戶與DTC授信。 若轉讓代理參與DTC快速自動證券轉移計劃 或轉換時不受144條轉售對於換股股份的限制，公司未能在適用的股份交付日期之前發行並交付證書予持有人若轉換代理參與DTC快速自動證券轉移計劃，則在或適用的股份交付日期之前發行並交付證書予持有人，或依照持有人指定的任何時候有效中選擇的普通股交易價格向持有人的餘額賬户授信 及 (A)適用的轉換股份受惠於一項有效的轉售登記聲明，以支持持有人；或（B）如果在Rule 144允許持有人轉換相關轉換股份的時候，用於持有人在任何Conversion金額轉換時應享有的普通股數量，或根據下述（y）條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後，持有人購買（在公開市場交易或其他方式）普通股來滿足持有人銷售公司可出售普通股之銷售預期，則公司買入，在持有人要求後的兩（2）個交易日並由持有人自行決定，（x）支付現金給持有人，金額等於持有人購買該等普通股的總價（包括券商佣金和其他開支，如有）（“售股價”），此時公司發出並交付該證書或向持有人DTC帳戶存入持有人對應轉換金額轉換時應享有的普通股數量的義務即終止，或者（y）迅速履行其對交付給持有人代表該等普通股的證書或證書（或向持有人DTC帳戶存入該等普通股）的義務，並支付現金給持有人，金額等於Buy-In價格超出（如有）的何者之乘積：（A）該等普通股數，乘(B)持有人書面選定的任何時段內在可轉換日期開始並於可交付日期結束的任何時候生效的普通股的交易價格。 本文未限制持有人在此的其他救濟權利，法律或平等地包括，但不限於，具體履行法令和/或針對公司未能按照本條款要求及時交付代表普通股的證書（或以電子方式交付該等普通股）的救濟。
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(iii) 註冊；電子註冊。公司應保持登記冊（“登記冊”），記錄每張票據持有人的姓名和地址，以及該等持有人持有的票據本金（及附帶利息）金額（“登記冊”）。登記冊中的記錄對所有目的具有決定性和約束力，除非有明顯錯誤。公司和票據持有人應將登記冊中記載姓名的任何人均視為票據的所有者，並包括但不限於權利，也包括接受本金和利息（如有）支付的權利等，無論有否相反通知。註冊票據只能通過將該等轉讓或銷售登記在冊上，全部或部分轉讓或銷售。當公司收到持有人要求轉讓或出售任何註冊票據全部或部分的要求時，應將其中所含信息記錄於登記冊，並根據第18條發行一個或多個同等本金金額的新登記票據予指定受讓人或受讓人。儘管本第3(c)(iii)條中有任何相反情況，持有人可以將任何票據或任何部分分配給持有人的聯屬公司或持有人的相關基金，而無需向公司提交轉讓或出售該票據的要求及將該等分配或銷售記錄在冊上（“相關方轉讓」。註冊」以記錄每張票據持有人的姓名和地址，以及該等持有人持有的票據本金（及附帶利息）金額（「」）。登記冊中的記錄對所有目的具有決定性和約束力，除非有明顯錯誤。公司和票據持有人應將登記冊中記載姓名的任何人均視為票據的所有者，並包括但不限於權利，也包括接受本金和利息（如有）支付的權利等，無論有否相反通知。註冊票據只能通過將該等轉讓或銷售登記在冊上，全部或部分轉讓或銷售。當公司收到持有人要求轉讓或出售任何註冊票據全部或部分的要求時，應將其中所含信息記錄於登記冊，並根據第18條發行一個或多個同等本金金額的新登記票據予指定受讓人或受讓人。儘管本第3(c)(iii)條中有任何相反情況，持有人可以將任何票據或任何部分分配給持有人的聯屬公司或持有人的相關基金，而無需向公司提交轉讓或出售該票據的要求及將該等分配或銷售記錄在冊上（「相關方轉讓」註冊票據對於此第3(c)(iii)條之任何情形有異議，持有人可將任何票據或部分轉讓予持有人的聯屬公司或持有人的相關基金，而無需向公司提交轉讓或出售該票據的要求及在登記冊中記載該等分配或銷售（「相關方分配」）相關方分配”); 提供公司可能會繼續僅與指定或賣出持有人進行交易，直到該持有人已提交指定或賣出票據或部分票據的請求，以記錄於登記冊；該指定或賣出持有人未提交指定或賣出票據或部分票據的請求不影響該指定或賣出的合法性、有效性或約束力，且該指定或賣出持有人應僅作為公司的非受託代理，為此目的保留一份登記簿（“關聯方登記簿”），與公司的登記冊相媲美，並且任何此類指定或賣出在關聯方登記簿中記錄後即生效。儘管本文中訂明的任何規定相反，根據本票條款轉換本票任何部分時，持有人無需將本票實體交還給公司，除非（A）本票代表的全部轉換金額正在轉換，或（B）持有人已向公司提供事先書面通知（該通知可以包含在轉換通知中）請求交還本票後重新發行本票。持有人和公司應保留記錄，顯示已轉換及/或已支付（視情況而定）的本金和利息，以及這些轉換和/或支付的日期，或者可以採用其他方法，合理地令持有人和公司滿意，從而無需在轉換時實體交還本票。如果公司未及時更新登記冊以記錄已轉換及/或已支付（視情況而定）的本金和利息，以及這些轉換及/或支付的日期，則若在此類事發生後的兩（2）個營業日內，登記冊將自動被視為已更新以反映此類事發生。關聯方登記簿基金為何未立即更新登記冊以記錄已轉換及/或已支付（視情況而定）的本金和利息，以及這些轉換及/或支付的日期，則在此類事發生後的兩（2）個營業日內，登記冊將自動被視為已更新以反映此類事發生。
(iv) 按比例轉換；爭議. 如果公司從持有人及一個或多個其他票據持有人於同一換股日期收到換股通知，且公司可以轉換該筆票據及/或其他票據的某些部分，但不是全部，則公司應根據第3(d)條款，根據持有人和每位選擇在該日期換股的其他票據持有人選擇對其提交換股的票據的本金金額及本金金額的比例，在該日期轉換該持有人提交的該筆票據及其他票據的一部分。相對於在該日期提交換股的本筆票據和所有其他票據的累計本金金額。如果就與本票據換股有關的普通股可發行股數有爭議，公司應向持有人發行未有爭議的普通股股數，並根據第23條條款解決爭議。
(v) [有意省略].
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(d) 有益業權轉換限制儘管本文中有相反規定，公司不得根據本票據條款發行任何普通股，持有人也無權根據本票據條款發行的任何應發放的普通股擁有權，任何此類發行將被視為無效，並被視為從未發生，只要在生效此等發行後，持有人與其他歸因方共同持有的數量超過9.99％（「最大百分比」）發行後立即存在的普通股數量的數量。根據上述句子，持有人和其他歸因方所擁有的普通股股份總數將包括持有人和所有其他歸因方持有的普通股股份數以及根據本票據條款有權發放的普通股股份，在這種句子的確定方面，不包括將發放的普通股股份數量（i）根據持有人或任何其他歸因方持有的本票據的其餘未轉換部分的條款，或（ii）在對公司的任何其他有限制條件的未行使或未轉換部分（包括但不限於公司的任何可轉換票據或可轉換優先股或認股權證，包括其他票據和認股權證）的行使或轉換時應被發放。好處所有權應根據交易法案第13（d）條計算。為了確定持有人根據票據條款可以獲得的但不超過最高百分比的普通股股份數量，持有人可以信賴作為他所能夠在不超出最高百分比的情況下根據本票據條款取得的普通股的數量，這些普通股的數量反映在（i）公司最近的年度第10-k表格、季度第10-Q表格、第8-K表格的當中，（ii）公司的更近一次公開宣佈或（iii）由公司或過戶代理發出的任何其他書面通知，說明普通股的股份數量（「已報告的傑出股份數當公司接到持有人發出的換股通知時，如實際普通股的流通股數少於報告的優先股數時，公司應書面通知持有人當時流通的普通股數，並且在此次換股通知否則會導致持有人的受益所有權根據本第3(d)條確定的超出最大百分比時，持有人應通知公司降低根據該換股通知應購買的普通股數。在任何原因的任何時間內，持有人書面或口頭要求時，公司應於一（1）個交易日內口頭和書面或通過電子郵件確認當時流通的普通股數。在任何情況下，普通股的流通股數應在考慮公司的證券（包括本票據）自報告的流通股數截至之日以來的換股或行使後，由持有人和任何其他歸屬方所決定。如果根據《交易所法》第13(d)條的規定，將本票據轉換為持有人而發行的普通股會導致持有人和其他歸屬方在合計上擁有超過普通股流通股數的最大百分比，因此發行的股份數超出最大百分比，則這些股份將被認為無效並應自始無效，並且所轉換的換股金額中的任何部分應被恢復，持有人將無權投票或轉讓超量股份。在向公司發出書面通知後，持有人可能隨時將最大百分比增加或減少到任何不超過9.99％的其他百分比指定在該通知中；條件是（i）最大百分比的任何增加在六十一（61過量股份）將不生效直至第六十一（61st在此通知交付後的一天內，(ii)任何增加或減少僅適用於持有人和其他歸屬方，而不適用於任何其他並非持有人的債券持有人。為明確起見，根據本票據條款可發行的普通股份，超過最高百分比的部分不得被認為是持有人在任何目的上受益擁有，包括根據《證券交易法》第13(d)條或第16a-1(a)(1)條規定的目的。本段條款應被解釋和執行，以不嚴格符合本第3(d)條款的條件，必要時可對本段條款（或本段條款的任何部分）進行修正，以消除可能存在的缺陷或與本第3(d)條旨在設定的有利擁有限制不一致的情況，或進行必要或有益的更改或補充，以適當實現該限制。本段條款中的限制不得被免除，並應適用於本票據的續任持有人。
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(4) 違約事件發生時的權利.
(a) 違約事件。每個以下事件或未遵守構成一個“違約事件” 並且在第（vii）和（viii）款描述的每一事件亦應構成“破產違約事件”:
(i) 普通股票在合格市場上連續兩個(2)交易日停牌，或在任何365天期間內累計停牌超過十(10)個交易日，或普通股票未被列入合格市場；
(ii) 公司未能在適用的轉換日期後五個（5）交易日內交付所需數量的普通股，治癒轉換失敗，或於任何時間對持有人或其他票據持有人發送書面或口頭通知，包括通過公開宣布或通過任何其代理商透露，表明該公司不打算遵守轉換為普通股的要求，該要求已根據本票據或其他票據的條款提交，但不包括根據第3(d)條（和其他票據中的類似條文）的情況。
(iii) 在授權股票配額(如第10(a)條所定義)小於持有人應有之優先配額合計金額(如第10(a)條所定義)的連續第五個(5個)業務日後的任何時間；日) consecutive業務日達到或超過持有人應有之優先配額的張數，而比之所要求的儲備金額(如第10(a)條所定義)的持有人的優先配額合計金額小
(iv) 如公司未能按時向持有人支付應付的本金、利息、贖回價或其他款項，根據本票或任何其他交易文件的規定，但在未能按時支付利息的情況下，僅當此失敗持續至少兩（2）個業務日時。
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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: | ||