UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 5, 2016
AGRITEK HOLDINGS, INC.
(Exact Name of Registrant as Specified in Charter)
| Delaware |
| (State or Other Jurisdiction of Incorporation) |
| 001-15673 | 20-8484256 | |
| (Commission File Number) | (IRS Employer Identification No.) |
|
777 Brickell Avenue, Suite 500 Miami, FL |
33131 | |
| (Address of principal executive offices) | (Zip code) |
|<PHONE_NUMBER> |
| (Registrant’s telephone number, including area code) |
| Not applicable |
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 1.01. | Entry into a Material Definitive Agreement. |
On December 16, 2015, Agritek Holdings, Inc. (the “Company”) and the Agritek Venture Holdings, Inc.(“AVHI”), the Company’s wholly owned subsidiary entered into a Deed in Lieu of Foreclosure Agreement (the “Agreement”) with Tonaquint, Inc. (the “Tonaquint”), pursuant to which in exchange for the Company conveying its’ interest in the Company’s Nevada owned real estate (the “Property”) Tonaquint agreed to refrain and forbear from exercising and enforcing its remedies under that certain secured convertible promissory note dated January 31, 2014 in the original principal amount of $1,660,000 (the “Note”). Additionally, the Company received $25,000 and a reduction of the Note balance of $500,000. AVHI previously paid approximately $225,000 for the Property. After the transaction the balance of the Note was approximately $311,000.
The foregoing description of the Agreement is qualified in its entirety by reference to the Deed in Lieu of Foreclosure Agreement, which is filed as Exhibit 10.1 to, and incorporated by reference in, this Current Report on Form 8-K.
On January 6, 2016, the Company accepted and agreed to a Debt Purchase Agreement (the “DPA”), whereby LG Capital Funding, LLC (“LG”) acquired a convertible promissory note from Vis Vires Group Inc. The Company issued an 8% Replacement Note to LG for $53,613 (the “First Replacement Note”). The First Replacement Note is due January 5, 2017 and is convertible into shares of the Company’s common stock at any time at the discretion of LG at a variable conversion price (“VCP”). The VCP is calculated as the lowest trading price during the eighteen (18) trading days immediately prior to the conversion date multiplied by fifty eight percent (58%), representing a forty two percent (42%) discount.
The foregoing description of the First Replacement Note does not purport to be complete and is qualified in its entirety by reference to the full text of the document, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
On January 19, 2016, the Company accepted and agreed to a DPA, whereby LG acquired $157,500 of the Tonaquint Note in exchange for $75,000. The Company issued an 8% Replacement Note to LG for $157,500 (the “Second Replacement Note”). The Second Replacement Note is due January 19, 2017 and is convertible into shares of the Company’s common stock at any time at the discretion of LG at a VCP. The VCP is calculated as the lowest trading price during the eighteen (18) trading days immediately prior to the conversion date multiplied by fifty eight percent (58%), representing a forty two percent (42%) discount.
The foregoing description of the Second Replacement Note does not purport to be complete and is qualified in its entirety by reference to the full text of the document, which is filed as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference.
On January 19, 2016, the Company accepted and agreed to a DPA, whereby Cerebrus Finance Group, LTD (“Cerebrus”) acquired $156,749.09 of the Tonaquint Note in exchange for $75,000. The Company issued an 8% Replacement Note to Cerebrus for $156,749.09 (the “Third Replacement Note”). The Third Replacement Note is due January 19, 2017 and is convertible into shares of the Company’s common stock at any time at the discretion of LG at a VCP. The VCP is calculated as the lowest trading price during the eighteen (18) trading days immediately prior to the conversion date multiplied by fifty eight percent (58%), representing a forty two percent (42%) discount.
The foregoing description of the Third Replacement Note does not purport to be complete and is qualified in its entirety by reference to the full text of the document, which is filed as Exhibit 10.4 to this Current Report on Form 8-K and is incorporated herein by reference.
The LG DPA and the Cerebrus DPA resulted in the Tonaquint Note being paid in full, accordingly as of January 19, 2016, the Company does not owe any amounts to Tonaquint.
On January 19, 2016, the Company completed the closing of a private placement financing transaction (the “Transaction”) with LG, pursuant to a Securities Purchase Agreement (the “LG Purchase Agreement”). Pursuant to the LG Purchase Agreement, LG purchased an 8% Convertible Debenture (the “LG Debenture”) in the aggregate principal amount of $76,080.67, and delivered on January 31, 2016, gross proceeds of $62,500.00 excluding transaction costs, fees, and expenses.
Principal and interest is due and payable January 18, 2017, and the LG Debenture is convertible into shares of the Company’s common stock at any time at the discretion of LG at a VCP. The VCP is calculated as the lowest trading price during the eighteen (18) trading days immediately prior to the conversion date multiplied by fifty eight percent (58%), representing a forty two percent (42%) discount.
The Company may prepay the LG Debenture, subject to prior notice to LG within an initial 30 day period after issuance, by paying an amount equal to 118% multiplied by the amount that the Company is prepaying. For each additional 30 day period the amount being prepaid is multiplied by an additional 6%, up to a maximum of 148% on the 180th day from issuance. Beginning on the 180th day after the issuance of the LG Debenture, the Company is not permitted to prepay the LG Debenture, so long as the LG Debenture is still outstanding, unless the Company and LG agree otherwise in writing.
The foregoing description of the LG Purchase Agreement and the LG Debenture does not purport to be complete and is qualified in its entirety by reference to the full text of each document, which are filed as Exhibits 10.5 and 10.6, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
On January 19, 2016, the Company completed the closing of a private placement financing transaction (the “Transaction”) with Cerebrus, pursuant to a Securities Purchase Agreement (the “Cerebrus Purchase Agreement”). Pursuant to the Cerebrus Purchase Agreement, Cerebrus purchased an 8% Convertible Debenture (the “Cerebrus Debenture”) in the aggregate principal amount of $34,775, and delivered on January 25, 2016, gross proceeds of $25,000 excluding transaction costs, fees, and expenses.
Principal and interest is due and payable January 19, 2017, and the Cerebrus Debenture is convertible into shares of the Company’s common stock at any time at the discretion of Cerebrus at a VCP. The VCP is calculated as the lowest trading price during the eighteen (18) trading days immediately prior to the conversion date multiplied by fifty eight percent (58%), representing a forty two percent (42%) discount.
The Company may prepay the Cerebrus Debenture, subject to prior notice to Cerebrus within an initial 30 day period after issuance, by paying an amount equal to 118% multiplied by the amount that the Company is prepaying. For each additional 30 day period the amount being prepaid is multiplied by an additional 6%, up to a maximum of 148% on the 180th day from issuance. Beginning on the 180th day after the issuance of the Cerebrus Debenture, the Company is not permitted to prepay the Cerebrus Debenture, so long as the Cerebrus Debenture is still outstanding, unless the Company and Cerebrus agree otherwise in writing.
The foregoing description of the Cerebrus Purchase Agreement and the Cerebrus Debenture does not purport to be complete and is qualified in its entirety by reference to the full text of each document, which are filed as Exhibits 10.7 and 10.8, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
| ITEM 2.03 | CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT. |
The information provided in response to Item 1.01 of this report is incorporated by reference into this Item 2.03.
| ITEM 3.02 | UNREGISTERED SALES OF EQUITY SECURITIES. |
The information provided in response to Item 1.01 of this report is incorporated by reference into this Item 3.02. The securities were issued in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D under the Securities Act. Each investor represented that it was an accredited investor, as defined in Rule 501 of Regulation D, and that it was acquiring the securities for its own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the Act.
| ITEM 8.01 | OTHER EVENTS |
On January 25, 2016, the Company issued a press release announcing the elimination of $500,000 of debt. A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K.
| Exhibit No. | Description | |
10.1 |
Deed in Lieu of Foreclosure Agreement dated December 16, 2015, by and among Agritek Holdings, Inc., Agritek Venture Holdings, Inc. and Tonaquint, Inc. | |
| 10.2 | Replacement Note dated January 5, 2016, issued to LG Capital Funding, LLC | |
| 10.3 | Replacement Note dated January 19, 2016, issued to LG Capital Funding, LLC | |
| 10.4 | Replacement Note dated January 19, 2016, issued to Cerebrus Finance Group, LTD | |
| 10.5 | Securities Purchase Agreement dated January 19, 2016 by and between Agritek Holdings, Inc. and LG Capital Funding, LLC. | |
| 10.6 | Convertible Redeemable Note dated January 19, 2016, by and between Agritek Holdings, Inc. and LG Capital Funding, LLC. | |
| 10.7 | Securities Purchase Agreement dated January 19, 2016 by and between Agritek Holdings, Inc. and Cerebrus Finance Group, LLC. | |
| 10.8 | Convertible Redeemable Note dated January 19, 2016, by and between Agritek Holdings, Inc. and Cerebrus Finance Group, LLC. | |
| 99.1 | Press Release dated January 27, 2016. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AGRITEK HOLDINGS, INC. | ||
| Date: February 12, 2016 | By: | /s/ B. Michael Friedman |
|
B. Michael Friedman Interim Chief Executive Officer |
Exhibit 10.1
DEED IN LIEU OF FORECLOSURE AGREEMENT
THIS DEED IN LIEU OF FORECLOSURE AGREEMENT (this “Agreement”) is entered into as of December 16, 2015, by and among AGRITEK VENTURE HOLDINGS, INC., a Florida corporation (“Trustor”), AGRITEK HOLDINGS, INC., a Delaware corporation (formerly MediSwipe, Inc., a Delaware corporation) (“Borrower”), and TONAQUINT, INC., a Utah corporation (“Lender”). Borrower, Trustor, and Lender are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”
RECITALS:
A. Trustor owns certain real property situated in Clark County, Nevada, as more particularly described on Exhibit A attached hereto (the “Real Property”).
B. The Real Property was pledged by Trustor to Lender on or about July 28, 2015, as security for a loan previously extended by Lender to Borrower in the amount of $1,660,000.00 (the “Loan”).
C. The Loan is evidenced by that certain Secured Promissory Note, dated January 31, 2014, executed by Borrower, as maker, to Lender, as payee, in the original principal amount of $1,660,000.00 (as amended from time to time, the “Note”).
D. The Note was amended pursuant to that certain Global Amendment and Forbearance Agreement dated July 28, 2015 between Borrower and Lender (the “Global Amendment”).
E. Pursuant to the terms of the Global Amendment, Trustor executed and delivered to Lender, as beneficiary, that certain Deed of Trust, Assignment of Leases and Rents, and Security Agreement, dated July 28, 2015 (as amended from time to time, the “Trust Deed”). The Trust Deed encumbers the Real Property and was recorded August 12, 2015, as Instrument No.<PHONE_NUMBER>02674 in the official records of Clark County, Nevada.
F. The Note and Trust Deed, together with any and all other documents evidencing, securing and/or guaranteeing the Loan, are collectively referred to herein as the “Loan Documents.”
G. Borrower defaulted in performing Borrower’s obligations under the Loan Documents, by, among other things, failing to pay to Lender the required payments due under the Note. All notice provisions contained in the Loan Documents have been satisfied, all grace periods have either expired or been waived by Borrower and the outstanding principal balance continues to be due and owing to Lender by Borrower without any counterclaims, setoffs or defenses.
H. Lender has the immediate right to pursue all of its remedies under the Loan Documents, including, without limitation, foreclosure of the Trust Deed.
I. Borrower and Trustor have determined that the present fair market value of the Real Property does not exceed the amount of the outstanding principal and interest of the Note.
J. Borrower and Trustor have requested that the defaults by Borrower under the Loan Documents be resolved by Lender agreeing to accept a conveyance of Borrower’s interests in and to the Real Property and the other assets and rights and interests given as collateral under the Loan Documents (including, without limitation, all improvements situated on the Real Property, together with any and all fixtures, furnishings, equipment, and other personal property located on the Real Property) and any and all other rights of Borrower under the Loan Documents (collectively, the “Property”) in lieu of foreclosure in consideration of Lender’s covenant not to exercise foreclosure remedies (except as specifically provided below) otherwise available to Lender under the Loan Documents and at law, all upon the terms and conditions set forth below.
NOW, THEREFORE, for and in consideration of the above recitals, the mutual promises set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower, Trustor, and Lender do hereby agree as follows:
1. Recitals Incorporated. The recitals to this Agreement are fully incorporated herein and the Parties hereto acknowledge the truth of each of the statements contained therein.
2. Capitalized Terms. All capitalized terms used herein but not otherwise defined shall have the meanings ascribed thereto in the Note or the Trust Deed, as applicable.
3. Transfer of Property. Subject to the terms and conditions of this Agreement, Trustor shall convey to Lender, absolutely free of any right of redemption, reinstatement or other right or interests of Trustor or Borrower, or anyone claiming by, through or under Trustor or Borrower, the Property, free and clear of any liens and encumbrances, with the exception of the title matters set forth on Exhibit B attached hereto (the “Permitted Exceptions”), by recordable warranty deed (the “Deed”) in the form attached hereto as Exhibit C, which shall provide Lender with marketable fee simple title to the Property and all right, title and interest in and to all easements, rights, privileges and appurtenances to the Property and all streets, alleys and other public ways adjacent thereto.
4. Title. Borrower shall cooperate with Lender to permit Lender to obtain any policy of title insurance related to the Property, if desired by Lender (the “Title Policy”).
5. Conditions Precedent to Closing. The Parties’ performance under this Agreement shall be subject to the satisfaction of the following conditions precedent on or before the Closing Date (as defined below), any one or more of which may be waived, in writing, at the applicable Party’s option:
(a) Except as specified in this Agreement, the representations and warranties of Borrower and Trustor set forth in Section 8 of this Agreement shall be true and correct on and as of Closing with the same effect as though made on or as of Closing.
(b) Borrower and Trustor shall each have delivered all of the Closing Documents (defined below) into escrow pursuant to Section 7 of this Agreement.
(c) Lender shall have received for the Property the Title Policy as set forth in Section 4 of this Agreement, if desired by Lender.
6. Closing. Provided all terms, provisions, and conditions contained in this Agreement to be satisfied on or before Closing have been satisfied so as to provide for the closing of the transaction contemplated hereby, closing of the transaction contemplated in this Agreement (the “Closing”) shall take place by means of exchange of email of .pdf documents for the signature page to this Agreement upon the date of the mutual execution of this Agreement (the “Closing Date”); provided, however, that the Deed shall be delivered as set forth in Section 7(d) below.
7. Closing Deliveries, Etc. The following deliveries/actions shall constitute the Closing and shall be delivered at Closing (collectively, the “Closing Documents”):
(a) Transfer Documents. The Deed, together with any other document required by Lender to be executed by Trustor in connection with the same, all of which are referred to below as the “Transfer Documents.”
(b) Other Deliverables. With respect to property insurance, in the event that either (i) Trustor’s insurance coverage related to the Property cannot be assigned to Lender, or (ii) Lender elects to obtain separate insurance coverage and instructs Trustor to cancel its insurance related to the Property as of the Closing Date, Trustor shall assign to Lender its rights to a refund, if any, of any prepaid insurance premiums refundable upon such cancellation.
(c) Further Assurances. All such further conveyances, assignments, instruments of further assurance, and other instruments and documents as may be reasonably necessary, in order to complete any and all conveyances, transfers, sales and assignments contemplated herein.
(d) Delivery of Deed. Notwithstanding anything to the contrary herein, Trustor shall, concurrently with its execution of this Agreement, deliver to Lender a fully executed and notarized original of the Deed, such delivery being subject to Section 7(g) below.
(e) Payment. At such time that the Deed has been properly recorded and title to the Property has been vested in Lender, Lender shall pay the sum of $25,000.00 to Borrower by check or wire transfer (the “Closing Payment”).
(f) Reduction in Note Balance. The Parties acknowledge and agree that upon the recording of the Deed, the outstanding balance of the Note shall automatically be reduced by $500,000.00 and that immediately following the application of such reduction the Parties acknowledge and agree that the Outstanding Balance of the Note will be $311,814.68.
(g) Close of Escrow. By executing this Agreement, the Parties acknowledge and agree that the Closing Documents (even if fully executed) shall not be in force and effect until such time as the Closing of the transactions described in this Agreement are complete. In the event the Closing is not completed for any reason whatsoever on or before the Closing Date, the Closing Documents, whether or not executed by all of the Parties, or any of them, shall be of no force or effect, and all previous agreements, if any, among the Parties outside of any Closing Documents and this Agreement shall remain in full force and affect, unmodified by any of the Closing Documents.
8. Representations and Warranties of Borrower and Trustor.
(a) The transaction contemplated herein is not a preference, voidable transfer, fraudulent conveyance, or otherwise in violation of the United States Bankruptcy Code (US Code: Title 11) (the “Bankruptcy Code”) or any other similar state or federal law.
(b) Each of Borrower and Trustor has the power, capacity, and authority to enter into this Agreement and to execute and deliver the Closing Documents to Lender and has done or will do so freely and voluntarily, with full knowledge and without duress.
(c) There are no occupancy rights, easement rights (whether prescriptive or otherwise), leases or tenancies, or any other contractual rights or interests of any kind presently affecting the Property other than as may be disclosed in the Permitted Exceptions.
(d) Neither Borrower nor Trustor is a “foreign person” as that term is defined in Section 1445(f) of the Internal Revenue Code and the Regulations, as amended, or any successor to same.
(e) Borrower and Trustor have requested conveyance of title to the Property in lieu of the exercise of Lender’s foreclosure remedies against Borrower and Trustor pursuant to the Loan Documents and throughout the negotiation, preparation, and execution of this Agreement has been, and will through the Closing be represented by competent legal counsel of its own choosing. This Agreement was entered into out of the free will of Borrower and Trustor and pursuant to arm’s-length negotiations, and each of Borrower and Trustor believes this Agreement is fair. Lender has not taken advantage of Borrower or Trustor by threats, intimidation, overreaching, unconscionable conduct, or otherwise, and each of Borrower and Trustor is voluntarily proceeding in this transaction because such Party perceives such a course of action to be in such Party’s own best interest.
(f) With respect to Hazardous Materials and applicable laws:
(1) To the best of Borrower’s and Trustor’s knowledge: (i) there has been no generation, disposal, transport, treatment, storage, release or discovery of any Hazardous Materials affecting the Real Property subject to regulation under any federal, state or local law, rule or regulation relating to Hazardous Materials; (ii) no activity has ever occurred on any of the Real Property or adjoining property that could have toxic results affecting the Real Property or is otherwise in violation of any law affecting the Real Property; and (iii) there is no proceeding or inquiry pending or anticipated by any governmental agency or other authority with respect thereto.
(2) To the best of Borrower’s knowledge, the Real Property has never been used for the generation, treatment, collection, storage or disposal of any refuse, objectionable waste or any Hazardous Material in a manner which violates the regulations issued by the U.S. Environmental Protection Agency or any other federal, state, or local governmental agency.
(3) Each of Trustor and Borrower has complied with all applicable laws, ordinances, regulations, statutes and rules relating to the Property or any part thereof, and neither Trustor nor Borrower has received any notices alleging that the Property itself does not currently comply with all applicable laws, ordinances, regulations, statutes and rules relating to the Property or any part thereof.
(4) Each of Borrower and Trustor shall indemnify, defend, and hold Lender harmless from any actual loss or cost (including without limitation court costs and attorney fees) incurred by Lender by reason of breach by Borrower or Trustor of the representations and warranties set forth in subsections (1), (2) and (3) of this Section 8(g).
(5) For purposes of this Section 8(g), “Hazardous Materials” means any flammable explosives, radioactive materials, oil or petroleum or chemical liquids or solids, liquid or gaseous products or hazardous wastes, toxic substances and similar substances and materials regulated under any applicable federal, state or local health or environmental law, rule or regulation, including, without limitation, asbestos.
(i) Neither Borrower nor Trustor has entered into any sales contracts or granted any options or rights of first refusal in any third party to purchase all or any part of the Property.
(j) To the knowledge of Borrower and Trustor, and except as disclosed in the Permitted Exceptions, no work has been performed or is in progress at the Property, and no materials have been furnished to the Property as of the date of Closing, which have not been paid for or that might give rise to mechanic’s, materialman’s or other liens against the Property.
(k) Neither Borrower nor Trustor has entered into any listing agreement pursuant to which a real estate broker has been granted the right to sell all or any part of the Property.
The continued validity in all respects of the above representations and warranties shall be a condition precedent to Lender’s obligation to proceed with the Closing. All representations and warranties contained in this Section 8 or elsewhere in this Agreement shall survive the Closing Date in full force and effect.
9. Possession; Obligation of Lender to Third Parties.
(a) Trustor shall deliver possession and enjoyment of the Property to Lender on December 16, 2015, whereupon Lender shall then have the immediate right to manage, operate, use, possess, sell, and transfer the Property or any part of the Property for its own account to the total exclusion of Borrower and Trustor. Upon delivery of the Property by Borrower to Lender in a condition satisfactory to Lender, Lender shall pay to Borrower the Closing Payment by check or wire transfer.
(b) Each of Borrower and Trustor acknowledges and agrees that acceptance by Lender of title to the Property pursuant to the terms of this Agreement shall not create any obligations on the part of Lender or Lender’s successors and assigns to third parties which may have claims, demands, or causes of action of any kind against Borrower, Trustor, or any portion of the Property, and except as provided herein, Lender does not assume or agree to discharge any such claims, demands or causes of action which were made or arose prior to the Closing (in the event the Closing occurs). No person not a party to this Agreement shall have any “third party beneficiary” rights or any other rights hereunder.
(c) Lender shall have no obligation and hereby disclaims all liability for any act or neglect by Borrower and Trustor prior to the Closing Date. Trustor shall have no obligation and hereby disclaims all liability for any act or neglect by Lender after the Closing Date. It is understood that Lender is not purchasing or continuing the business of Trustor or Borrower on the Property. Lender is not a successor to any such business and has no liability for the debts, acts, or omissions of Borrower or Trustor, or the employees or agents of Borrower or Trustor. Lender will be liable only for its own debts, acts, or omissions, which take place from and after the Closing Date.
10. Absolute Conveyance. Transfer of title to the Property to Lender at the Closing pursuant to this Agreement shall constitute an absolute and unconditional conveyance of indefeasible fee simple title to the Property, in substance and effect as well as in form, subject only to the Permitted Exceptions. Such transfer is not intended as and shall not constitute a mortgage, trust conveyance, Trust Deed or security interest of any kind for the payment or performance of any obligation of Borrower, Trustor, or any other person or entity. Following the Closing, neither Borrower nor Trustor shall have any further right, title, interest, or claim in or to the Property of any kind whatsoever, or to the rents, profits, or proceeds which may be derived therefrom. Without limitation of the foregoing, following the Closing, neither Borrower nor Trustor, nor anyone claiming by, through or under Borrower or Trustor shall have any right of redemption in or pertaining to the Property.
11. No Merger. The Parties acknowledge and agree that this Agreement and the Closing Documents shall not cancel or release the Loan and that all of the Loan Documents which evidence or secure such indebtedness shall remain in full force and effect (subject to the express terms of this Agreement) after the transactions contemplated by this Agreement have been consummated. The Parties further acknowledge and agree that the interest of Lender in the Property under the conveyance provided for in this Agreement shall not merge with the interest of Lender in the Property under the Loan Documents. It is the express intention of each of the Parties (and all of the conveyances provided for in this Agreement shall so recite) that such interest of Lender in the Property shall not merge, but shall be and remain at all times separate and distinct, notwithstanding any union of said interest in Lender at any time by purchase, termination or otherwise, and that the liens and security interests of Lender in the Property created by the Loan Documents shall be and remain at all times valid and continuous liens and security interests in the Property.
12. Option to Foreclose. Notwithstanding anything herein to the contrary, at the Closing, Lender may elect, at its sole discretion, to accept the Deed in lieu of foreclosure of the Trust Deed pursuant to the terms of this Agreement, or to foreclose on the Trust Deed pursuant to its remedies under the Loan Documents. In the event Lender elects to foreclose rather than accept the Deed in lieu of foreclosure, each of Borrower and Trustor hereby agrees to cooperate with such foreclosure as reasonably requested by Lender.
13. Notices. Any notice, demand, request, statement or consent made hereunder shall be in writing, signed by the party giving such notice, request, demand, statement, or consent, and shall be deemed to have been properly given: (i) when delivered personally, (ii) when delivered to a reputable overnight delivery service providing a receipt, or (iii) when deposited in the United States mail, postage prepaid and registered or certified return receipt requested, at the address set forth in the Loan Documents, or at such other address within the continental United States of America as may have theretofore have been designated in writing. The effective date of any notice given as provided above shall be (a) the date of personal service, (b) one (1) business day after delivery to such overnight delivery service, or (c) three (3) business days after being deposited in the United States mail, whichever is applicable.
14. Invalidation of Closing Documents. If, in any insolvency, bankruptcy or reorganization proceedings or other proceedings similar to the foregoing which may be instituted in any state or federal court or other tribunal, by or against Borrower or Trustor, the Deed or any other Closing Document, or any other documents or instruments to be executed and delivered by Borrower or Trustor pursuant to the terms of this Agreement, are challenged and sought to be canceled, nullified or set aside, and if any such documents or instruments are canceled, nullified or set aside by a final non-appealable decision of a state or federal court, then all Closing Documents and all other documents and instruments executed and delivered pursuant to the terms of this Agreement shall be void and of no further force and effect and in such event, Lender shall have any and all rights and remedies available to it under the Loan Documents or under this Agreement.
15. Bankruptcy.
(a) Each of Borrower and Trustor hereby acknowledges and agrees that, in consideration of the recitals and mutual covenants contained herein, in the event Borrower or Trustor shall: (i) file a petition for relief under the Bankruptcy Code; (ii) be the subject of any order for relief issued under the Bankruptcy Code; (iii) file or be the subject of any petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for debts; (iv) have sought or consented to or acquiesced in the appointment of any trustee, receiver, conservator or liquidator; (v) be the subject of any order, judgment or decree entered by any court of competent jurisdiction approving a petition filed against Borrower or Trustor for any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future federal or state act or law relating to bankruptcy, insolvency or relief for debts, Borrower or Trustor, as applicable, shall, to the full extent permitted by applicable law, expressly consent to and shall take no action in opposition to any attempt by Lender to: (a) obtain relief from any automatic stay imposed by Section 362 of the Bankruptcy Code with respect to the Trust Deed, the Property, and/or the rights and remedies available to Lender as provided in the Loan Documents as hereby amended, and as otherwise provided by law; or (b) terminate any exclusive right of Borrower or Trustor to file or solicit acceptances of a plan or reorganization.
(b) Each of Borrower and Trustor hereby acknowledges and agrees that: (i) this Agreement is of considerable benefit to it; (ii) such Party has received substantial legal and financial accommodations from Lender under this Agreement; and (iii) Lender is entering into this Agreement in reliance on Borrower’s and Trustor’s representations in this Agreement. Each of Borrower and Trustor further affirms it is such Party’s understanding and belief that the estimated value of the Property is less than the amount currently owing under the Note. To the best of Borrower’s and Trustor’s knowledge, as of the date of execution and delivery of the Agreement, the conveyance of the Property to Lender will not constitute a preference or fraudulent conveyance against other creditors.
16. Acknowledgment and Release.
(a) Each of Borrower and Trustor acknowledges and agrees that the Loan Documents are in full force and effect and are the valid and legally binding obligations of Borrower and Trustor, as applicable, free from all legal and equitable defenses, offsets and counterclaims. Each of Borrower and Trustor hereby ratifies and confirms its liabilities, obligations and agreements under all of the Loan Documents, except as may be specifically and expressly modified by this Agreement and the liens and security interests created thereby, and acknowledge that (a) Borrower is in default of its liabilities and obligations under the Loan Documents and that Borrower has no defenses, claims, counterclaims or set-offs of any kind or nature whatsoever to the enforcement by Lender of the liabilities, obligations and agreements contained in the Loan Documents, and hereby forever waives any right to assert any such defense, claim, counterclaim, or setoff, (b) Lender has fully performed all obligations to Borrower that it may have had or has on and as of the date hereof under the Loan and the Loan Documents, and (c) Lender does not waive, diminish or limit any term or condition contained in any of the Loan Documents, except as specifically and expressly set forth in this Agreement.
(b) Each of Borrower and Trustor affirms its understanding and belief that, notwithstanding the price at which Lender may resell all or any portion of the Property, neither Borrower nor Trustor or any other person is entitled to share in any proceeds of a resale, even if such a resale is at a greater price than the current market value of the Property or the consideration given by Lender hereunder, regardless of the timing of such resale or the identity of the purchaser. Each of Borrower and Trustor acknowledges that it is receiving substantial benefits as a consequence of this Agreement, and each Party knowingly and willingly accepts the risks associated with such a valuation of the Property. At the time of execution of this Agreement, each of Borrower and Trustor believes that the consideration recited above constitutes a fair and adequate consideration for the agreements and transfers contained herein.
(c) Borrower, TRUSTOR AND ANY OTHER OBLIGOR UNDER THE debt, on behalf of THEMSELVES and THEIR RESPECTIVE successors, assigns, affiliates, attorneys, agents and properties, past, present and future, and their respective heirs, successors and assigns (collectively and individually, the “Borrower Parties”), hereby fully, finally and completely RELEASE, ACQUIT AND FOREVER DISCHARGE, AND AGREE TO HOLD HARMLESS Lender and its successors, assigns, affiliates, attorneys, agents and properties, past, present and future, and their respective heirs, successors and assigns (collectively and individually, the “LENDER Parties”), of and from any and all claims, controversies, disputes, liabilities, obligations, demands, damages, debts, liens, actions and causes of action of any and every nature whatsoever, known or unknown, whether at law, by statute or in equity, in contract or in tort, under state or federal jurisdiction, and whether or not the economic effects of such alleged matters arise or are discovered in the future (COLLECTIVELY, the “CLAIMS”), which Borrower Parties have as of the date Borrower and trustor execute this Agreement (“Borrower’s Execution Date”) or may claim to have against LENDER Parties arising out of or with respect to any and all transactions relating to the Loan, the Loan Documents or the property occurring on or before the CLOSING Date, including any loss, cost or damage of any kind or character arising out of or in any way connected with or in any way resulting from the acts, actions or omissions of lENDER Parties occurring on or before the CLOSING Date. The foregoing release is intended to be, and is, a full, complete and general release in favor of LENDER Parties with respect to all claims, demands, actions, causes of action and other matters described therein, including specifically, without limitation, any claims, demands or causes of action based upon allegations of NEGLIGENCE, GROSS NEGLIGENCE, breach of fiduciary duty, breach of any alleged duty of fair dealing in good faith, economic coercion, usury, TORTiOUS INTERFERENCE or any other theory, cause of action, occurrence, matter or thing which might result in liability upon LENDER Parties arising or occurring on or before the CLOSING Date. BORROWER Parties understand and agree that the foregoing general release is in consideration for the agreements of lender contained herein and that the borrower parties will receive no further consideration for such release. Furthermore, Each of the Borrower Parties represents and warrants to lender he, she, or it: (i) read this Agreement, including, without limitation, thE release SET FORTH IN THIS SECTION (THE “RELEASE”), and understands all of the terms and conditions hereof; (ii) executes this Agreement voluntarily with full knowledge of the significance of this Agreement AND THE RELEASES CONTAINED HEREIN and execution hereof, and (iii) has been represented by HIS, HER, OR its own legal counsel and has been advised by counsel concerning this Agreement AND THE RELEASE CONTAINED HEREIN. The Borrower Parties agree to assume the risk of any and all unknown, unanticipated, or misunderstood Claims that are released by this RELEASE.
17. Remedies. In the event of any default, breach or other non-compliance hereunder by Borrower or Trustor, Lender shall, in addition to any other rights and remedies available to Lender herein, in any of the Loan Documents, at law or in equity, have the right to terminate this Agreement without any cost, obligation or liability to Lender. Any such termination of the Agreement shall not abrogate any rights of Lender to exercise its remedies under any of the Loan Documents or imply any waiver, extension or modification of the terms of any of the Loan Documents, and Borrower’s or Trustor’s defaults under the Loan Documents shall date back to defaults occurring prior to this Agreement.
18. Waiver of Jury Trial. EACH OF THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, THE CLOSING DOCUMENTS, THE LOAN DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF LENDER, TRUSTOR, OR BORROWER WITH RESPECT THERETO. THIS PROVISION SETS FORTH THE MUTUAL DESIRE OF LENDER, TRUSTOR AND BORROWER TO AVOID DELAYS IN THE RESOLUTION OF DISPUTES INVOLVING THIS AGREEMENT.
19. Governing Law; Jurisdiction and Venue. The validity of this Agreement and of any of its terms or provisions, as well as the rights and duties of the Parties under this Agreement, shall be construed pursuant to and in accordance with the laws of the State of Nevada. Each of Borrower and Trustor submits to the exclusive jurisdiction and venue of any state or federal court sitting in Clark County, State of Nevada. This Agreement shall be binding upon, and insure to the benefit of the Parties to this Agreement and their respective successors and assigns.
20. Modifications; Final Agreement. This Agreement may be amended or terminated only by a written instrument executed by the Parties. All agreements, representations and warranties by the respective Parties contained herein or made in writing pursuant to this Agreement are not intended to merge with the Deed. This Agreement supersedes all prior agreements and understandings among the Parties hereto relating to the conveyance of the Property by Trustor to Lender. The prevailing party in any dispute between the parties regarding their rights under this Agreement shall be entitled to recovery of its reasonable attorneys’ fees, court costs, and litigation expenses, including those incurred in any appellate proceeding.
21. Binding Agreement. The delivery of a copy of this Agreement to a Party hereto is not intended to be an offer. All terms and conditions set forth in this Agreement shall only be considered binding and enforceable upon the execution and delivery of signed counterparts of this Agreement among the Parties. The execution and delivery of the Agreement between the Parties by facsimile or email or in .pdf electronic format shall have the same legal effect as delivery of a signed original counterpart by hand.
22. Survival. Except as specifically set forth herein, the terms and provisions of this Agreement shall survive the Closing hereunder.
23. Spin-Out Consent and Waiver. Lender hereby consents and agrees to Borrower’s proposed spin-out transaction of its subsidiary Prohibition Products Inc. into a separate company (the “Spin-Out”). Borrower also hereby waives any of its rights under the Note to prevent the Spin-Out or call an event of default related to the Spin-Out. Notwithstanding the foregoing, the consent and waiver set forth above shall only be effective if no material assets of Borrower are included in the Spin-Out.

PARCEL II:
NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS AS SET FORTH IN THAT CERTAIN DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS FOR APEX INDUSTRIAL PARK RECORDED APRIL 10, 2001, IN BOOK 20010410 AS DOCUMENT NO. 01425, OFFICIAL RECORDS.
EXHIBIT B
to
Deed in Lieu of Foreclosure Agreement
Permitted Exceptions
None
EXHIBIT C
to
Deed in Lieu of Foreclosure Agreement
Warranty Deed
(Attached)
APN: 103-13-010-017
Mail Tax Statements to and
When Recorded Mail to:
Tonaquint, Inc.
Attn: John M. Fife
303 E. Wacker Drive, Suite 1040
Chicago, Illinois 60601
WARRANTY DEED
(IN LIEU OF FORECLOSURE)
For the good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, AGRITEK VENTURE HOLDINGS, INC., a Florida corporation (“Grantor”), hereby conveys and warrants to TONAQUINT, INC., a Utah corporation (“Grantee”), the real property situated in Clark County, State of Nevada, which is more particularly described as follows:
PARCEL I:
A PORTION OF LOT 1 OF THAT CERTAIN PLAT OF “APEX INDUSTRIAL PARK” ON FILE IN THE CLARK COUNTY RECORDER’S OFFICE IN BOOK 95, PAGE 36 OF PLATS, LYING WITHIN THE SOUTHWEST QUARTER (SW 114) OF SECTION 13, TOWNSHIP 18 SOUTH, RANGE 63 EAST, M.D.M., CITY OF NORTH LAS VEGAS, CLARK COUNTY, NEVADA, DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHWEST CORNER OF SAID SOUTHWEST QUARTER (SW 114); THENCE NORTH 89°35’21” EAST ALONG THE SOUTH LINE OF SAID SOUTHWEST QUARTER (SW 114), A DISTANCE OF 710.67 FEET TO THE POINT OF BEGINNING; THENCE DEPARTING SAID SOUTH LINE, NORTH 11°48’41” WEST, A DISTANCE OF 405.94 FEET TO THE BEGINNING OF A NON-TANGENT CURVE, CONCAVE NORTHWESTERLY, HAVING A RADIUS OF 500.00 FEET, A RADIAL LINE TO WHICH BEARS SOUTH 11°48’41” EAST; THENCE NORTHEASTERLY 199.21 FEET ALONG THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 22°49’40”; THENCE SOUTH 34°38’22” EAST ALONG A RADIAL LINE, A DISTANCE OF 574.09 FEET TO SAID SOUTH LINE OF SAID SOUTHWEST QUARTER (SW 114); THENCE SOUTH 89°35’21” WEST ALONG SAID SOUTH LINE, A DISTANCE OF 425.10 FEET TO THE POINT OF BEGINNING; FURTHER DEPICTED AS LOT THREE (3) ON THAT RECORD OF SURVEY ON FILE IN FILE 193 OF SURVEYS, PAGE 70, IN THE OFFICE OF THE COUNTY RECORDER, CLARK COUNTY, NEVADA OFFICIAL RECORDS.
PARCEL II:
NON-EXCLUSIVE EASEMENTS FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS AS SET FORTH IN THAT CERTAIN DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS FOR APEX INDUSTRIAL PARK RECORDED APRIL 10, 2001, IN BOOK 20010410 AS DOCUMENT NO. 01425, OFFICIAL RECORDS.
TOGETHER WITH: all right, title and interest in and to all easements, rights, privileges and appurtenances applicable to such real property, and all streets, alleys and other public ways adjacent thereto, and all improvements situated thereon, and any and all fixtures, furnishings, equipment, and other personal property located thereon.
THIS WARRANTY DEED is an absolute conveyance, Grantor having sold said property to Grantee herein for fair and adequate consideration. Grantor declares that this conveyance is freely and fairly made.
The parties hereto do not intend a merger of any existing lien held by Grantee or any affiliated or related entity of Grantee on the real property with the fee title acquired under this Warranty Deed. Specifically, Grantee’s right to foreclose liens of whatever nature is hereby preserved to the full extent allowed by law.
DATED this 16th day of December 2015.
| GRANTOR: | |
| AGRITEK VENTURE HOLDINGS, INC. | |
| By: | |
| Name: | |
| Title: |
STATE OF FLORIDA )
:ss
COUNTY OF PALM BEACH )
On this 16th day of December 2015, personally appeared before me, a notary public, ____________________________ of Agritek Venture Holdings, Inc., personally know (or proved) to me to be the person whose name is subscribed to the foregoing instrument and who acknowledged that he executed the instrument on behalf of such entity.
| NOTARY PUBLIC |
Exhibit 10.2
THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT”)
US $53,613.32
REPLACEMENT NOTE ORIGINALLY ISSUED FEBRUARY 23, 2015 IN THE AMOUNT OF $79,000.00
AGRITEK HOLDINGS, INC.
8% CONVERTIBLE REDEEMABLE NOTE
DUE JANUARY 5, 2017
FOR VALUE RECEIVED, Agritek Holdings, Inc. (the “Company”) promises to pay to the order of LG CAPITAL FUNDING, LLC and its authorized successors and permitted assigns ("Holder"), the aggregate principal face amount of Fifty Three Six Hundred Thirteen Dollars 32/100 cents exactly (U.S. $53,613.32) on January 5, 2017 ("Maturity Date") and to pay interest on the principal amount outstanding hereunder at the rate of 8% per annum commencing on January 5, 2016. The interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are payable at 1218 Union Street, Suite #2, Brooklyn, NY 11225, initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.
This Note is subject to the following additional provisions:
1. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or other governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.
3. This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("Act") and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted ("Notice of Conversion") in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.
4. (a) The Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the "Common Stock") at a price ("Conversion Price") for each share of Common Stock equal to 58% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the eighteen prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent (provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company or its transfer agent after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. To the extent the Conversion Price of the Company’s Common Stock closes below the par value per share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees to honor all conversions submitted pending this increase. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 48% instead of 58% while that “Chill” is in effect. In no event shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates would exceed 9.9% of the outstanding shares of the Common Stock of the Company.
(b) Interest on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company in Common Stock ("Interest Shares"). Holder may, at any time, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.
(c) This note may not be prepaid.
(d) Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, other than a forward or reverse stock split or stock dividend, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.
(e) In case of any Sale Event (not to include a sale of all or substantially all of the Company’s assets) in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.
5. No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.
8. If one or more of the following described "Events of Default" shall occur:
(a) The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or
(b) Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or the Securities Purchase Agreement under which this note was issued shall be false or misleading in any respect; or
(c) The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note or any other note issued to the Holder; or
(d) The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or
(e) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or
(g) One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or
(h) The Company shall have defaulted on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such default within the appropriate grace period; or
(i) The Company shall have its Common Stock delisted from a market (including the OTCQB marketplace) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days or ceases to file its 1934 act reports with the SEC;
(j) If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board;
(k) The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business days of its receipt of a Notice of Conversion; or
(l) The Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder.
(m) The Company shall not be “current” in its filings with the Securities and Exchange Commission; or
(n) The Company shall lose the “bid” price for its stock in a market (including the OTCBB marketplace or other exchange).
Then, or at any time thereafter, unless cured within 5 days, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of Section 8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4th day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th day. The penalty for a breach of Section 8(n) shall be an increase of the outstanding principal amounts by 20%. In case of a breach of Section 8(i), the outstanding principal due under this Note shall increase by 50%. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by 10%. Further, if a breach of Section 8(n) occurs or is continuing after the 6 month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price during the delinquency period as a base price for the conversion. For example, if the lowest closing bid price during the delinquency period is $0.01 per share and the conversion discount is 50% the Holder may elect to convert future conversions at $0.005 per share. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by 10%.
If the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
Make-Whole for Failure to Deliver Loss. At the Holder’s election, if the Company fails for any reason to deliver to the Holder the conversion shares by the by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder incurs a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice indicating the amounts payable to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows:
Failure to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Number of conversion shares)]
The Company must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day from the time of the Holder’s written notice to the Company.
9. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.
10. Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.
11. The Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously has been a “shell” issuer that at least 12 months have passed since the Company has reported form 10 type information indicating it is no longer a “shell issuer. Further. The Company will instruct its counsel to either (i) write a 144 opinion to allow for salability of the conversion shares or (ii) accept such opinion from Holder’s counsel.
12. The Company shall issue irrevocable transfer agent instructions reserving 201,049,950 shares of its Common Stock for conversions under this Note (the “Share Reserve”). Upon full conversion of this Note, any shares remaining in the Share Reserve shall be cancelled. The Company shall pay all transfer agent costs associated with issuing and delivering the share certificates to Holder. If such amounts are to be paid by the Holder, it may deduct such amounts from the Conversion Price. The company should at all times reserve a minimum of four times the amount of shares required if the note would be fully converted. The Holder may reasonably request increases from time to time to reserve such amounts. The Company will instruct its transfer agent to provide the outstanding share information to the Holder in connection with its conversions.
13. The Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits, recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.
14. This Note shall be governed by and construed
in accordance with the laws of New York applicable to contracts made and wholly to be performed within the State of New York and
shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial
by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This Agreement may be executed
in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.
Dated: ______________
AGRITEK HOLDINGS, INC.
By: __________________________________
Title: _________________________________
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Note)
The undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of Agritek Holdings, Inc. (“Shares”) according to the conditions set forth in such Note, as of the date written below.
If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.
Date of Conversion: ___________________________________________________
Applicable Conversion Price: ____________________________________________
Signature: ___________________________________________________________
[Print Name of Holder and Title of Signer]
Address: ___________________________________________________________
___________________________________________________________
SSN or EIN: _______________________
Shares are to be registered in the following name: _____________________________________
Name: _____________________________________________________________
Address: ___________________________________________________________
Tel: ______________________________
Fax: ______________________________
SSN or EIN: _______________________
Shares are to be sent or delivered to the following account:
Account Name: ______________________________________________________
Address: ___________________________________________________________
Exhibit 10.3
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)
US $157,500
PARTIAL REPLACEMENT NOTE ORIGINALLY ISSUED JANUARY 31, 2014 IN THE AMOUNT OF $1,660,000.00
AGRITEK HOLDINGS, INC.
8% CONVERTIBLE REDEEMABLE NOTE
DUE JANUARY 19, 2017
FOR VALUE RECEIVED, AGRITEK HOLDINGS, Inc. (the “Company”) promises to pay to the order of LG CAPITAL FUNDING, LLC and its authorized successors and permitted assigns ("Holder"), the aggregate principal face amount of One Hundred Fifty Seven Thousand Five Hundred Dollars exactly (U.S. $157,500.00) on January 19, 2017 ("Maturity Date") and to pay interest on the principal amount outstanding hereunder at the rate of 8% per annum commencing on January 19, 2016. The interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are payable at 1218 Union Street, Suite #2, Brooklyn, NY 11225, initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.
This Note is subject to the following additional provisions:
1. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or other governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.
3. This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("Act") and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted ("Notice of Conversion") in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.
4. (a) The Holder of this Note is entitled, at its option, after full cash payment for the shares convertible hereunder, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the "Common Stock"), at a price ("Conversion Price") for each share of Common Stock equal to 58% of the lowest closing bid price of the Common Stock as reported on the OTCQB maintained by the OTC Markets Group, Inc. upon which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the eighteen prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent (provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company or its transfer agent after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. To the extent the Conversion Price of the Company’s Common Stock closes below the par value per share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees to honor all conversions submitted pending this increase. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 48% instead of 58% while that “Chill” is in effect. In no event shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates would exceed 9.9% of the outstanding shares of the Common Stock of the Company.
(b) Interest on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company in Common Stock ("Interest Shares"). Holder may, at any time, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.
(c) This note may not be prepaid.
(d) Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.
(e) In case of any Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.
5. No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.
8. If one or more of the following described "Events of Default" shall occur:
(a) The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or
(b) Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or the Securities Purchase Agreement under which this note was issued shall be false or misleading in any material respect; or
(c) The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note or any other note issued to the Holder; or
(d) The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or
(e) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or
(g) One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or
(h) defaulted on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such default within the appropriate grace period; or
(i) The Company shall have its Common Stock delisted from a trading market (including the OTC BB market) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days or ceases to file its 1934 act reports with the SEC;
(j) If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board;
(k) The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business days of its receipt of a Notice of Conversion; or
(l) The Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder.
(m) The Company shall not be “current” in its filings with the Securities and Exchange Commission; or
(n) The Company shall lose the “bid” price for its stock in a market (including the OTCQB marketplace or other exchange).
Then, or at any time thereafter, unless cured within 5 days, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of Section 8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4th day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th day. The penalty for a breach of Section 8(n) shall be an increase of the outstanding principal amounts by 20%. In case of a breach of Section 8(i), the outstanding principal due under this Note shall increase by 50%. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by 10%. Further, if a breach of Section 8(m) occurs or is continuing after the 6 month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price during the delinquency period as a base price for the conversion. For example, if the lowest closing bid price during the delinquency period is $0.01 per share and the conversion discount is 50% the Holder may elect to convert future conversions at $0.005 per share. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by 10%.
If the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
Make-Whole for Failure to Deliver Loss. At the Holder’s election, if the Company fails for any reason to deliver to the Holder the conversion shares by the by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder incurs a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice indicating the amounts payable to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows:
Failure to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Number of conversion shares)]
The Company must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day from the time of the Holder’s written notice to the Company.
9. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.
10. Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.
11. The Company represents that it is not a “shell” issuer and has not been a “shell” issuer for the 12 months following the Company’ having reported Form 10 type information indicating it is no longer a “shell issuer.
12. The Company shall issue irrevocable transfer agent instructions reserving 1,205,834,000 shares of its Common Stock for conversions under this Note, and a $76,080.67 note of even date herewith (the “Share Reserve”). Upon full conversion of this Note, any shares remaining in the Share Reserve shall be cancelled. The Company shall pay all transfer agent costs associated with issuing and delivering the share certificates to Holder. If such amounts are to be paid by the Holder, it may deduct such amounts from the Conversion Price. The company should at all times reserve a minimum of four times the amount of shares required if the note would be fully converted. The Holder may reasonably request increases from time to time to reserve such amounts. The Company will instruct its transfer agent to provide the outstanding share information to the Holder in connection with its conversions.
13. The Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits, recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.
14. This Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.
Dated: ______________
AGRITEK HOLDINGS, INC.
By: __________________________________
Title: _________________________________
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Note)
The undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of AGRITEK HOLDINGS, Inc. (“Shares”) according to the conditions set forth in such Note, as of the date written below.
If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.
Date of Conversion: ___________________________________________________
Applicable Conversion Price: ____________________________________________
Signature: ___________________________________________________________
[Print Name of Holder and Title of Signer]
Address: ___________________________________________________________
___________________________________________________________
SSN or EIN: _______________________
Shares are to be registered in the following name: _____________________________________
Name: _____________________________________________________________
Address: ___________________________________________________________
Tel: ______________________________
Fax: ______________________________
SSN or EIN: _______________________
Shares are to be sent or delivered to the following account:
Account Name: ______________________________________________________
Address: ___________________________________________________________
Exhibit 10.4
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)
US $156,749.09
PARTIAL REPLACEMENT NOTE ORIGINALLY ISSUED JANUARY 31, 2014 IN THE AMOUNT OF $1,660,000.00
AGRITEK HOLDINGS, INC.
8% CONVERTIBLE REDEEMABLE NOTE
DUE JANUARY 19, 2017
FOR VALUE RECEIVED, AGRITEK HOLDINGS, Inc. (the “Company”) promises to pay to the order of CEREBRUS FINANCE GROUP, LTD and its authorized successors and permitted assigns ("Holder"), the aggregate principal face amount of One Hundred Fifty Six Thousand Seven Hundred Forty Nine Dollars and 09/100 cents (U.S. $156,749.09) on January 19, 2017 ("Maturity Date") and to pay interest on the principal amount outstanding hereunder at the rate of 8% per annum commencing on January 19, 2016. The interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are payable at Craigmuir Chambers, Road Town, Tortola VG 1110, British Virgin Islands, initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.
This Note is subject to the following additional provisions:
1. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or other governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.
3. This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("Act") and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted ("Notice of Conversion") in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.
4. (a) The Holder of this Note is entitled, at its option, after full cash payment for the shares convertible hereunder, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the "Common Stock"), at a price ("Conversion Price") for each share of Common Stock equal to 58% of the lowest closing bid price of the Common Stock as reported on the OTCQB maintained by the OTC Markets Group, Inc. upon which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the eighteen prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent (provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company or its transfer agent after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. To the extent the Conversion Price of the Company’s Common Stock closes below the par value per share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees to honor all conversions submitted pending this increase. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 48% instead of 58% while that “Chill” is in effect. In no event shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates would exceed 9.9% of the outstanding shares of the Common Stock of the Company.
(b) Interest on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company in Common Stock ("Interest Shares"). Holder may, at any time, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.
(c) This note may not be prepaid.
(d) Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.
(e) In case of any Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.
5. No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.
8. If one or more of the following described "Events of Default" shall occur:
(a) The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or
(b) Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or the Securities Purchase Agreement under which this note was issued shall be false or misleading in any material respect; or
(c) The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note or any other note issued to the Holder; or
(d) The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or
(e) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or
(g) One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or
(h) defaulted on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such default within the appropriate grace period; or
(i) The Company shall have its Common Stock delisted from a trading market (including the OTC BB market) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days or ceases to file its 1934 act reports with the SEC;
(j) If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board;
(k) The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business days of its receipt of a Notice of Conversion; or
(l) The Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder.
(m) The Company shall not be “current” in its filings with the Securities and Exchange Commission; or
(n) The Company shall lose the “bid” price for its stock in a market (including the OTCQB marketplace or other exchange).
Then, or at any time thereafter, unless cured within 5 days, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of Section 8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4th day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th day. The penalty for a breach of Section 8(n) shall be an increase of the outstanding principal amounts by 20%. In case of a breach of Section 8(i), the outstanding principal due under this Note shall increase by 50%. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by 10%. Further, if a breach of Section 8(m) occurs or is continuing after the 6 month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price during the delinquency period as a base price for the conversion. For example, if the lowest closing bid price during the delinquency period is $0.01 per share and the conversion discount is 50% the Holder may elect to convert future conversions at $0.005 per share. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by 10%.
If the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
Make-Whole for Failure to Deliver Loss. At the Holder’s election, if the Company fails for any reason to deliver to the Holder the conversion shares by the by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder incurs a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice indicating the amounts payable to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows:
Failure to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Number of conversion shares)]
The Company must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day from the time of the Holder’s written notice to the Company.
9. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.
10. Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.
11. The Company represents that it is not a “shell” issuer and has not been a “shell” issuer for the 12 months following the Company’ having reported Form 10 type information indicating it is no longer a “shell issuer.
12. The Company shall issue irrevocable transfer agent instructions reserving 863,379,000 shares of its Common Stock for conversions under this Note, and a $34,775.00 note of even date herewith (the “Share Reserve”). Upon full conversion of this Note, any shares remaining in the Share Reserve shall be cancelled. The Company shall pay all transfer agent costs associated with issuing and delivering the share certificates to Holder. If such amounts are to be paid by the Holder, it may deduct such amounts from the Conversion Price. The company should at all times reserve a minimum of four times the amount of shares required if the note would be fully converted. The Holder may reasonably request increases from time to time to reserve such amounts. The Company will instruct its transfer agent to provide the outstanding share information to the Holder in connection with its conversions.
13. The Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits, recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.
14. This Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.
Dated: ______________
AGRITEK HOLDINGS, INC.
By: __________________________________
Title: _________________________________
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Note)
The undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of AGRITEK HOLDINGS, Inc. (“Shares”) according to the conditions set forth in such Note, as of the date written below.
If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.
Date of Conversion: ___________________________________________________
Applicable Conversion Price: ____________________________________________
Signature: ___________________________________________________________
[Print Name of Holder and Title of Signer]
Address: ___________________________________________________________
___________________________________________________________
SSN or EIN: _______________________
Shares are to be registered in the following name: _____________________________________
Name: _____________________________________________________________
Address: ___________________________________________________________
Tel: ______________________________
Fax: ______________________________
SSN or EIN: _______________________
Shares are to be sent or delivered to the following account:
Account Name: ______________________________________________________
Address: ___________________________________________________________
Exhibit 10.5
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of March 27, 2015, by and between Agritek Holdings, Inc., a Delaware corporation, with headquarters located at 319 Clematis Street, Suite #1008, West Palm Beach, FL 33401 (the “Company”), and LG CAPITAL FUNDING, LLC, a New York limited liability company, with its address at 1218 Union Street, Suite #2, Brooklyn, NY 11225 (the “Buyer”).
WHEREAS:
A. The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”);
B. Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement an 8% convertible note of the Company, in the forms attached hereto as Exhibit A in the aggregate principal amount of $78,750.00 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), convertible into shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note.
C. The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of Note as is set forth immediately below its name on the signature pages hereto; and
NOW THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as follows:
1. Purchase and Sale of Note.
a. Purchase of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase from the Company such principal amount of Note as is set forth immediately below the Buyer’s name on the signature pages hereto.
b. Form of Payment. On the Closing Date (as defined below), (i) the Buyer shall pay the purchase price for the Note to be issued and sold to it at the Closing (as defined below) (the “Purchase Price”) by wire transfer of immediately available funds to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Note in the principal amount equal to the Purchase Price as is set forth immediately below the Buyer’s name on the signature pages hereto, and (ii) the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase Price.
c. Closing Date. The date and time of the first issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be on or about March 27, 2015, or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.
2. Buyer’s Representations and Warranties. The Buyer represents and warrants to the Company that:
a. Investment Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note, such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.
b. Accredited Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).
c. Reliance on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.
d. Information. The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, afforded the opportunity to ask questions of the Company. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer. Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below. The Buyer understands that its investment in the Securities involves a significant degree of risk. The Buyer is not aware of any facts that may constitute a breach of any of the Company's representations and warranties made herein.
e. Governmental Review. The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Securities.
f. Transfer or Re-sale. The Buyer understands that (i) the sale or re-sale of the Securities has not been and is not being registered under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinion shall be accepted by the Company, (c) the Securities are sold or transferred to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”) of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have delivered to the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions, which opinion shall be accepted by the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.
g. Legends. The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the 1933 Act may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Securities):
“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, within 2 business days, it will be considered an Event of Default under the Note.
h. Authorization; Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms.
i. Residency. The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the signature pages hereto.
3. Representations and Warranties of the Company. The Company represents and warrants to the Buyer that:
a. Organization and Qualification. The Company and each of its subsidiaries, if any, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted.
b. Authorization; Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance and reservation for issuance of the Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required, (iii) this Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true and official representative with authority to sign this Agreement and the other documents executed in connection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery by the Company of the Note, each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.
c. Issuance of Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note in accordance with its respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.
d. Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock upon the issuance of the Conversion Shares upon conversion of the Note. The Company further acknowledges that its obligation to issue Conversion Shares upon conversion of the Note in accordance with this Agreement, the Note is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
e. No Conflicts. The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a material adverse effect). All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company is not in violation of the listing requirements of the OTCQB marketplace (the “OTCQB”) and does not reasonably anticipate that the Common Stock will be delisted by the OTCQB in the foreseeable future, nor are the Company’s securities “chilled” by DTC. The Company and its subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.
f. Absence of Litigation. Except as disclosed in the Company’s public filings, there is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its subsidiaries, threatened against or affecting the Company or any of its subsidiaries, or their officers or directors in their capacity as such, that could have a material adverse effect. Schedule 3(f) contains a complete list and summary description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting the Company or any of its subsidiaries, without regard to whether it would have a material adverse effect. The Company and its subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.
g. Acknowledgment Regarding Buyer’ Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting solely in the capacity of arm’s length purchasers with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by the Buyer or any of its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation and is merely incidental to the Buyer’ purchase of the Securities. The Company further represents to the Buyer that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the Company and its representatives.
h. No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the Buyer will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholder approval provisions applicable to the Company or its securities.