Exhibit 10.6

 

CONVERTIBLE PROMISSORY NOTE

 

Effective Date: May 15, 2017 U.S. $280,000.00

 

FOR VALUE RECEIVED, Gala Global Inc., a Nevada corporation (“Borrower”),
promises to pay to St. George Investments LLC, a Utah limited liability company,
or its successors or assigns (“Lender”), $280,000.00 and any interest, fees,
charges, and late fees on the date that is six (6) months after the Purchase
Price Date (the “Maturity Date”) in accordance with the terms set forth herein
and to pay interest on the Outstanding Balance at the rate of ten percent (10%)
per annum from the Purchase Price Date until the same is paid in full. This
Convertible Promissory Note (this “Note”) is issued and made effective as of May
15, 2017 (the “Effective Date”). This Note is issued pursuant to that certain
Securities Purchase Agreement dated May 15, 2017, as the same may be amended
from time to time, by and between Borrower and Lender (the “Purchase
Agreement”). All interest calculations hereunder shall be computed on the basis
of a 360-day year comprised of twelve (12) thirty (30) day months, shall
compound daily and shall be payable in accordance with the terms of this Note.
Certain capitalized terms used herein are defined in Attachment 1 attached
hereto and incorporated herein by this reference.

 

St. George Investments LLC, a Utah limited liability company, or its successors
or assigns (“Lender”), $280,000.00 and any interest, fees, charges, and late
fees on the date that is six (6) months after the Purchase Price Date (the
“Maturity Date”) in accordance with the terms set forth herein and to pay
interest on the Outstanding Balance at the rate of ten percent (10%) per annum
from the Purchase Price Date until the same is paid in full. This Convertible
Promissory Note (this “Note”) is issued and made effective as of May 15, 2017
(the “Transaction Expense Amount”), all of which amount is included in the
initial principal balance of this Note. The purchase price for this Note and the
Warrant (as defined in the Purchase Agreement) shall be $250,000.00 (the
“Purchase Price”), computed as follows: $280,000.00 original principal balance,
less the OID, less the Transaction Expense Amount. The Purchase Price shall be
payable by Lender by wire transfer of immediately available funds.

 

1.                   Payment; Prepayment.

 

1.1.             All payments owing hereunder shall be in lawful money of the
United States of America or Conversion Shares (as defined below), as provided
for herein, and delivered to Lender at the address or bank account furnished to
Borrower for that purpose. All payments shall be applied first to (a) costs of
collection, if any, then to (b) fees and charges, if any, then to (c) accrued
and unpaid interest, and thereafter, to (d) principal.

 

1.2.             Prepayment. Borrower may, with Lender’s consent, prepay this
Note at any time. If Borrower exercises its right to prepay this Note and Lender
gives its consent, Borrower shall make payment to Lender of an amount in cash
equal to 125% multiplied by the then Outstanding Balance of this Note (the
“Optional Prepayment Amount”).

 

2.                   Security. This Note is unsecured; provided, however, that
it is guaranteed by GreenGro Technologies, Inc., a Nevada corporation and
significant stockholder of Borrower (“Guarantor”), pursuant to a Guaranty of
even date herewith given by such Guarantor.

 

3.                   Conversion.

 

3.1.             Conversions. Lender has the right at any time after the
Purchase Price Date until the Outstanding Balance has been paid in full,
including without limitation until any Optional Prepayment Date (even if Lender
has received an Optional Prepayment Notice), at its election, to convert (each
instance of conversion is referred to herein as a “Conversion”) all or any part
of the Outstanding Balance into shares (“Conversion Shares”) of fully paid and
non-assessable common stock, $0.001 par value per share (“Common Stock”), of
Borrower as per the following conversion formula: the number of Conversion
Shares equals the amount being converted (the “Conversion Amount”) divided by
the Conversion Price (as defined below). Conversion notices in the form attached
hereto as Exhibit A (each, a “Conversion Notice”) may be effectively delivered
to Borrower by any method of Lender’s choice (including but not limited to
facsimile, email, mail, overnight courier, or personal delivery). Borrower shall
deliver the Conversion Shares from any Conversion to Lender in accordance with
Section 8 below.

 

3.2.             Conversion Price. The conversion price (the “Conversion Price”)
for each Conversion shall be the lesser of: (a) the Fixed Price, and (b) the
Market Price; provided, however, in no event shall the Conversion Price be less
than the Conversion Floor.

 

 

 

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4.                   Defaults and Remedies.

 

4.1.             Defaults. The following are events of default under this Note
(each, an “Event of Default”): (a) Borrower fails to pay any principal,
interest, fees, charges, or any other amount when due and payable hereunder; (b)
Borrower fails to deliver any Conversion Shares in accordance with the terms
hereof; (c) a receiver, trustee or other similar official shall be appointed
over Borrower or a material part of its assets and such appointment shall remain
uncontested for twenty (20) days or shall not be dismissed or discharged within
sixty (60) days; (d) Borrower becomes insolvent or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any; (e) Borrower makes a general assignment for
the benefit of creditors; (f) Borrower files a petition for relief under any
bankruptcy, insolvency or similar law (domestic or foreign); (g) an involuntary
bankruptcy proceeding is commenced or filed against Borrower; (h) Borrower
defaults or otherwise fails to observe or perform any covenant, obligation,
condition or agreement of Borrower contained herein or in any other Transaction
Document (as defined in the Purchase Agreement), other than those specifically
set forth in this Section 4.1 and Section 4 of the Purchase Agreement; (i) any
representation, warranty or other statement made or furnished by or on behalf of
Borrower to Lender herein, in any Transaction Document, or otherwise in
connection with the issuance of this Note is false, incorrect, incomplete or
misleading in any material respect when made or furnished; (j) the occurrence of
a Fundamental Transaction without Lender’s prior written consent; (k) Borrower
fails to maintain the Share Reserve as required under the Purchase Agreement;
(l) Borrower effectuates a reverse split of its Common Stock without twenty (20)
Trading Days prior written notice to Lender; (m) any money judgment, writ or
similar process is entered or filed against Borrower or any subsidiary of
Borrower or any of its property or other assets for more than $20,000.00, and
shall remain unvacated, unbonded or unstayed for a period of twenty (20)
calendar days unless otherwise consented to by Lender; (n) Borrower’s Common
Stock fails to be DTC Eligible; (o) Borrower fails to observe or perform any
covenant set forth in Section 4 of the Purchase Agreement, or (p) Borrower
breaches any covenant or other term or condition contained in any Other
Agreements. Notwithstanding the foregoing, upon the occurrence of an event
described in Section 4.1(c) – 4.1(p) above, such event shall not be considered
an Event of Default if such event is cured within thirty (30) calendar days of
the occurrence of such event.

 

4.2.             Remedies. At any time and from time to time after Lender
becomes aware of the occurrence of any Event of Default, Lender may accelerate
this Note by written notice to Borrower, with the Outstanding Balance becoming
immediately due and payable in cash at the Mandatory Default Amount.
Notwithstanding the foregoing, at any time following the occurrence of any Event
of Default, Lender may, at its option, elect to increase the Outstanding Balance
by applying the Default Effect (subject to the limitation set forth below) via
written notice to Borrower without accelerating the Outstanding Balance, in
which event the Outstanding Balance shall be increased as of the date of the
occurrence of the applicable Event of Default pursuant to the Default Effect,
but the Outstanding Balance shall not be immediately due and payable unless so
declared by Lender (for the avoidance of doubt, if Lender elects to apply the
Default Effect pursuant to this sentence, it shall reserve the right to declare
the Outstanding Balance immediately due and payable at any time and no such
election by Lender shall be deemed to be a waiver of its right to declare the
Outstanding Balance immediately due and payable as set forth herein unless
otherwise agreed to by Lender in writing). Notwithstanding the foregoing, upon
the occurrence of any Event of Default described in clauses (c), (d), (e), (f)
or (g) of Section 4.1, the Outstanding Balance as of the date of acceleration
shall become immediately and automatically due and payable in cash at the
Mandatory Default Amount, without any written notice required by Lender. At any
time following the occurrence of any Event of Default, upon written notice given
by Lender to Borrower, interest shall accrue on the Outstanding Balance
beginning on the date the applicable Event of Default occurred at an interest
rate equal to the lesser of 22% per annum or the maximum rate permitted under
applicable law (“Default Interest”). For the avoidance of doubt, Lender may
continue making Conversions at any time following an Event of Default until such
time as the Outstanding Balance is paid in full. Borrower further acknowledges
and agrees that Lender may continue making Conversions following the entry of
any judgment or arbitration award in favor of Lender until such time that the
entire judgment amount or arbitration award is paid in full. Borrower agrees
that any judgment or arbitration award will, by its terms, be made convertible
into Common Stock. Any Conversions made following a judgment or arbitration
award shall be made pursuant to the following formula: the amount of the
judgment or arbitration award being converted divided by 80% of the lowest
Closing Bid Price in the ten (10) Trading Days immediately preceding the date of
Conversion. In such event, Borrower and Lender agree that it is their
expectation that any such judgment amount or arbitration award that is converted
will tack back to the Purchase Price Date for purposes of determining the
holding period under Rule 144. Borrower and Lender agree and stipulate that any
judgment or arbitration award entered against Borrower shall be reduced by
$1,000.00 and such $1,000.00 shall become the new Outstanding Balance of this
Note and this Note shall expressly survive such judgment or arbitration award.
Additionally, following the occurrence of any Event of Default, Borrower may, at
its option, pay any Conversion in cash instead of Conversion Shares by paying to
Lender on or before the applicable Delivery Date (as defined below) a cash
amount equal to the number of Conversion Shares set forth in the applicable
Conversion Notice multiplied by the highest intra-day trading price of the
Common Stock that occurs during the period beginning on the date the applicable
Event of Default occurred and ending on the date of the applicable Conversion
Notice. In connection with acceleration described herein, Lender need not
provide, and Borrower hereby waives, any presentment, demand, protest or other
notice of any kind, and Lender may immediately and without expiration of any
grace period enforce any and all of its rights and remedies hereunder and all
other remedies available to it under applicable law. Such acceleration may be
rescinded and annulled by Lender at any time prior to payment hereunder and
Lender shall have all rights as a holder of the Note until such time, if any, as
Lender receives full payment pursuant to this Section 4.2. No such rescission or
annulment shall affect any subsequent Event of Default or impair any right
consequent thereon. Nothing herein shall limit Lender’s right to pursue any
other remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to Borrower’s failure to timely deliver Conversion Shares upon
Conversion of the Notes as required pursuant to the terms hereof.

 

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5.                   Unconditional Obligation; No Offset. Borrower acknowledges
that this Note is an unconditional, valid, binding and enforceable obligation of
Borrower not subject to offset, deduction or counterclaim of any kind. Borrower
hereby waives any rights of offset it now has or may have hereafter against
Lender, its successors and assigns, and agrees to make the payments or
Conversions called for herein in accordance with the terms of this Note.

 

6.                   Waiver. No waiver of any provision of this Note shall be
effective unless it is in the form of a writing signed by the party granting the
waiver. No waiver of any provision or consent to any prohibited action shall
constitute a waiver of any other provision or consent to any other prohibited
action, whether or not similar. No waiver or consent shall constitute a
continuing waiver or consent or commit a party to provide a waiver or consent in
the future except to the extent specifically set forth in writing.

 

7.                   Rights Upon Issuance of Securities.

 

7.1.             Adjustment of Conversion Price and Conversion Floor upon
Subdivision or Combination of Common Stock. Without limiting any provision
hereof, if Borrower at any time on or after the Effective Date subdivides (by
any stock split, stock dividend, recapitalization or otherwise) one or more
classes of its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price and the Conversion Floor in effect immediately
prior to such subdivision will be proportionately reduced. Without limiting any
provision hereof, if Borrower at any time on or after the Effective Date
combines (by combination, reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price and Conversion Floor in effect immediately prior to such
combination will be proportionately increased. Any adjustment pursuant to this
Section 7.1 shall become effective immediately after the effective date of such
subdivision or combination. If any event requiring an adjustment under this
Section 7.1 occurs during the period that a Conversion Price is calculated
hereunder, then the calculation of such Conversion Price shall be adjusted
appropriately to reflect such event.

 

7.2.             Other Events. In the event that Borrower (or any subsidiary)
shall take any action to which the provisions hereof are not strictly
applicable, or, if applicable, would not operate to protect Lender from dilution
or if any event occurs of the type contemplated by the provisions of this
Section 7 but not expressly provided for by such provisions (including, without
limitation, the granting of stock appreciation rights, phantom stock rights or
other rights with equity features), then Borrower’s board of directors shall in
good faith determine and implement an appropriate adjustment in the Conversion
Price and the Conversion Floor so as to protect the rights of Lender, provided
that no such adjustment pursuant to this Section 7.2 will increase the
Conversion Price or the Conversion Floor as otherwise determined pursuant to
this Section 7, provided further that if Lender does not accept such adjustments
as appropriately protecting its interests hereunder against such dilution, then
Borrower’s board of directors and Lender shall agree, in good faith, upon an
independent investment bank of nationally recognized standing to make such
appropriate adjustments, whose determination shall be final and binding and
whose fees and expenses shall be borne by Borrower.

 

8.                   Method of Conversion Share Delivery. On or before the close
of business on the fifth (5th) Trading Day following the date of delivery of a
Conversion Notice (the “Delivery Date”), Borrower shall, provided it is DWAC
Eligible at such time, deliver or cause its transfer agent to deliver the
applicable Conversion Shares electronically via DWAC to the account designated
by Lender in the applicable Conversion Notice. If Borrower is not DWAC Eligible,
it shall deliver to Lender or its broker (as designated in the Conversion
Notice), via reputable overnight courier, a certificate representing the number
of shares of Common Stock equal to the number of Conversion Shares to which
Lender shall be entitled, registered in the name of Lender or its designee. For
the avoidance of doubt, Borrower has not met its obligation to deliver
Conversion Shares by the Delivery Date unless Lender or its broker, as
applicable, has actually received the certificate representing the applicable
Conversion Shares no later than the close of business on the relevant Delivery
Date pursuant to the terms set forth above. Moreover, and notwithstanding
anything to the contrary herein or in any other Transaction Document, in the
event Borrower or its transfer agent refuses to deliver any Conversion Shares to
Lender on grounds that such issuance is in violation of Rule 144 under the
Securities Act of 1933, as amended (“Rule 144”), Borrower shall deliver or cause
its transfer agent to deliver the applicable Conversion Shares to Lender with a
restricted securities legend, but otherwise in accordance with the provisions of
this Section 8. In conjunction therewith, Borrower will also deliver to Lender a
written opinion from its counsel or its transfer agent’s counsel opining as to
why the issuance of the applicable Conversion Shares violates Rule 144.

 

 

 

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9.                   Conversion Delays. If Borrower fails to deliver Conversion
Shares in accordance with the timeframe stated in Section 8, Lender, at any time
prior to selling all of those Conversion Shares, may rescind in whole or in part
that particular Conversion attributable to the unsold Conversion Shares, with a
corresponding increase to the Outstanding Balance (any returned amount will tack
back to the Purchase Price Date for purposes of determining the holding period
under Rule 144). In addition, for each Conversion, in the event that Conversion
Shares are not delivered by the fourth Trading Day (inclusive of the day of the
Conversion), a late fee equal to the greater of (a) $500.00 and (b) 2% of the
applicable Conversion Share Value rounded to the nearest multiple of $100.00
(but in any event the cumulative amount of such late fees for each Conversion
shall not exceed 200% of the applicable Conversion Share Value) will be assessed
for each day after the fifth Trading Day (inclusive of the day of the
Conversion) until Conversion Share delivery is made; and such late fee will be
added to the Outstanding Balance (such fees, the “Conversion Delay Late Fees”).
For illustration purposes only, if Lender delivers a Conversion Notice to
Borrower pursuant to which Borrower is required to deliver 100,000 Conversion
Shares to Lender and on the Delivery Date such Conversion Shares have a
Conversion Share Value of $20,000.00, then in such event a Conversion Delay Late
Fee in the amount of $500.00 per day (the greater of $500.00 per day and
$20,000.00 multiplied by 2%, which is $400.00) would be added to the Outstanding
Balance of the Note until such Conversion Shares are delivered to Lender. For
purposes of this example, if the Conversion Shares are delivered to Lender
twenty (20) days after the applicable Delivery Date, the total Conversion Delay
Late Fees that would be added to the Outstanding Balance would be $10,000.00 (20
days multiplied by $500.00 per day). If the Conversion Shares are delivered to
Lender one hundred (100) days after the applicable Delivery Date, the total
Conversion Delay Late Fees that would be added to the Outstanding Balance would
be $40,000.00 (100 days multiplied by $500.00 per day, but capped at 200% of the
Conversion Share Value).

 

10.               Ownership Limitation. Notwithstanding anything to the contrary
contained in this Note or the other Transaction Documents, if at any time Lender
shall or would be issued shares of Common Stock under any of the Transaction
Documents, but such issuance would cause Lender (together with its affiliates)
to beneficially own a number of shares exceeding 4.99% of the number of shares
of Common Stock outstanding on such date (including for such purpose the shares
of Common Stock issuable upon such issuance) (the “Maximum Percentage”), then
Borrower must not issue to Lender shares of Common Stock which would exceed the
Maximum Percentage. For purposes of this section, beneficial ownership of Common
Stock will be determined pursuant to Section 13(d) of the 1934 Act. The shares
of Common Stock issuable to Lender that would cause the Maximum Percentage to be
exceeded are referred to herein as the “Ownership Limitation Shares”. Borrower
will reserve the Ownership Limitation Shares for the exclusive benefit of
Lender. From time to time, Lender may notify Borrower in writing of the number
of the Ownership Limitation Shares that may be issued to Lender without causing
Lender to exceed the Maximum Percentage. Upon receipt of such notice, Borrower
shall be unconditionally obligated to immediately issue such designated shares
to Lender, with a corresponding reduction in the number of the Ownership
Limitation Shares. Notwithstanding the forgoing, the term “4.99%” above shall be
replaced with “9.99%” at such time as the Market Capitalization is less than
$10,000,000.00. Notwithstanding any other provision contained herein, if the
term “4.99%” is replaced with “9.99%” pursuant to the preceding sentence, such
increase to “9.99%” shall remain at 9.99% until increased, decreased or waived
by Lender as set forth below. By written notice to Borrower, Lender may
increase, decrease or waive the Maximum Percentage as to itself but any such
waiver will not be effective until the 61st day after delivery thereof. The
foregoing 61-day notice requirement is enforceable, unconditional and
non-waivable and shall apply to all affiliates and assigns of Lender.

 

11.               Payment of Collection Costs. If this Note is placed in the
hands of an attorney for collection or enforcement prior to commencing
arbitration or legal proceedings, or is collected or enforced through any
arbitration or legal proceeding, or Lender otherwise takes action to collect
amounts due under this Note or to enforce the provisions of this Note, then
Borrower shall pay the costs incurred by Lender for such collection, enforcement
or action including, without limitation, attorneys’ fees and disbursements.
Borrower also agrees to pay for any costs, fees or charges of its transfer agent
that are charged to Lender pursuant to any Conversion or issuance of shares
pursuant to this Note.

 

12.               Opinion of Counsel. In the event that an opinion of counsel is
needed for any matter related to this Note, Lender has the right to have any
such opinion provided by its counsel. Lender also has the right to have any such
opinion provided by Borrower’s counsel.

 

13.               Governing Law; Venue. This Note shall be construed and
enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the
internal laws of the State of Utah, without giving effect to any choice of law
or conflict of law provision or rule (whether of the State of Utah or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Utah. The provisions set forth in the Purchase Agreement
to determine the proper venue for any disputes are incorporated herein by this
reference.

 

 

 

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14.               Resolution of Disputes.

 

14.1.          Arbitration of Disputes. By its acceptance of this Note, each
party agrees to be bound by the Arbitration Provisions (as defined in the
Purchase Agreement) set forth as an exhibit to the Purchase Agreement.

 

14.2.          Calculation Disputes. Notwithstanding the Arbitration Provisions,
in the case of a dispute as to any Calculation (as defined in the Purchase
Agreement), such dispute will be resolved in the manner set forth in the
Purchase Agreement.

 

15.               Cancellation. After repayment or conversion of the entire
Outstanding Balance, this Note shall be deemed paid in full, shall automatically
be deemed canceled, and shall not be reissued.

 

16.               Amendments. The prior written consent of both parties hereto
shall be required for any change or amendment to this Note.

 

17.               Assignments. Borrower may not assign this Note without the
prior written consent of Lender. This Note and any shares of Common Stock issued
upon conversion of this Note may be offered, sold, assigned or transferred by
Lender without the consent of Borrower.

 

18.               Time is of the Essence. Time is expressly made of the essence
with respect to each and every provision of this Note and the documents and
instruments entered into in connection herewith.

 

19.               Notices. Whenever notice is required to be given under this
Note, unless otherwise provided herein, such notice shall be given in accordance
with the subsection of the Purchase Agreement titled “Notices.”

 

20.               Liquidated Damages. Lender and Borrower agree that in the
event Borrower fails to comply with any of the terms or provisions of this Note,
Lender’s damages would be uncertain and difficult (if not impossible) to
accurately estimate because of the parties’ inability to predict future interest
rates, future share prices, future trading volumes and other relevant factors.
Accordingly, Lender and Borrower agree that any fees, balance adjustments,
Default Interest or other charges assessed under this Note are not penalties but
instead are intended by the parties to be, and shall be deemed, liquidated
damages (under Lender’s and Borrower’s expectations that any such liquidated
damages will tack back to the Purchase Price Date for purposes of determining
the holding period under Rule 144).

 

21.               Waiver of Jury Trial. EACH OF LENDER AND BORROWER IRREVOCABLY
WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS NOTE OR
THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO
ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY
APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO
ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY’S
RIGHT TO DEMAND TRIAL BY JURY.

 

22.               Voluntary Agreement. Borrower has carefully read this Note and
has asked any questions needed for Borrower to understand the terms,
consequences and binding effect of this Note and fully understand them. Borrower
has had the opportunity to seek the advice of an attorney of Borrower’s
choosing, or has waived the right to do so, and is executing this Note
voluntarily and without any duress or undue influence by Lender or anyone else.

 

23.               Severability. If any part of this Note is construed to be in
violation of any law, such part shall be modified to achieve the objective of
Borrower and Lender to the fullest extent permitted by law and the balance of
this Note shall remain in full force and effect.

 

[Remainder of page intentionally left blank; signature page follows]

 

 

 

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IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the
Effective Date.

 

  BORROWER:       Gala Global Inc.       /s/ Timothy Madden       Name:
_____________________   Title: ______________________

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

 

LENDER:

 

St. George Investments LLC

 

By: Fife Trading, Inc., Manager

 

By: /s/ John M. Fife                                   

John M. Fife, President

 

 

 

 

 

 

 

 

 

 

[Signature Page to Convertible Promissory Note]

 

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ATTACHMENT 1

DEFINITIONS

 

For purposes of this Note, the following terms shall have the following
meanings:

 

A1.              “Bloomberg” means Bloomberg L.P. (or if that service is not
then reporting the relevant information regarding the Common Stock, a comparable
reporting service of national reputation selected by Lender and reasonably
satisfactory to Borrower).

 

A2.              “Closing Bid Price” and “Closing Trade Price” means the last
closing bid price and last closing trade price, respectively, for the Common
Stock on its principal market, as reported by Bloomberg, or, if its principal
market begins to operate on an extended hours basis and does not designate the
closing bid price or the closing trade price (as the case may be) then the last
bid price or last trade price, respectively, of the Common Stock prior to
4:00:00 p.m., New York time, as reported by Bloomberg, or, if its principal
market is not the principal securities exchange or trading market for the Common
Stock, the last closing bid price or last trade price, respectively, of the
Common Stock on the principal securities exchange or trading market where the
Common Stock is listed or traded as reported by Bloomberg, or if the foregoing
do not apply, the last closing bid price or last trade price, respectively, of
the Common Stock in the over-the-counter market on the electronic bulletin board
for the Common Stock as reported by Bloomberg, or, if no closing bid price or
last trade price, respectively, is reported for the Common Stock by Bloomberg,
the average of the bid prices, or the ask prices, respectively, of any market
makers for the Common Stock as reported by OTC Markets Group, Inc., and any
successor thereto. If the Closing Bid Price or the Closing Trade Price cannot be
calculated for the Common Stock on a particular date on any of the foregoing
bases, the Closing Bid Price or the Closing Trade Price (as the case may be) of
the Common Stock on such date shall be the fair market value as mutually
determined by Lender and Borrower. If Lender and Borrower are unable to agree
upon the fair market value of the Common Stock, then such dispute shall be
resolved in accordance with the procedures in Section 14.2. All such
determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during such period.

 

A3.              “Conversion Factor” means 65%.

 

A4.              “Conversion Floor” means $0.05, subject to adjustment as set
forth in Section 7 above.

 

A5.              “Conversion Share Value” means the product of the number of
Conversion Shares deliverable pursuant to any Conversion multiplied by the
Closing Trade Price of the Common Stock on the Delivery Date for such
Conversion.

 

A6.              “Default Effect” means multiplying the Outstanding Balance as
of the date the applicable Event of Default occurred by 25%.

 

A7.              “DTC” means the Depository Trust Company or any successor
thereto.

 

A8.              “DTC Eligible” means, with respect to the Common Stock, that
such Common Stock is eligible to be deposited in certificate form at the DTC,
cleared and converted into electronic shares by the DTC and held in the name of
the clearing firm servicing Lender’s brokerage firm for the benefit of Lender.

 

A9.              “DTC/FAST Program” means the DTC’s Fast Automated Securities
Transfer program.

 

A10.           “DWAC” means the DTC’s Deposit/Withdrawal at Custodian system.

 

A11.           “DWAC Eligible” means that (a) Borrower’s Common Stock is
eligible at DTC for full services pursuant to DTC’s operational arrangements,
including without limitation transfer through DTC’s DWAC system, (b) Borrower
has been approved (without revocation) by DTC’s underwriting department, (c)
Borrower’s transfer agent is approved as an agent in the DTC/FAST Program, (d)
the Conversion Shares are otherwise eligible for delivery via DWAC; (e) Borrower
has previously delivered all Conversion Shares to Lender via DWAC; and (f)
Borrower’s transfer agent does not have a policy prohibiting or limiting
delivery of the Conversion Shares via DWAC.

 

A12.           “Fixed Price” means $0.35 per share of Common Stock, subject to
adjustment as set forth in Section 7 above.

 

 

Attachment 1 to Convertible Promissory Note, Page 1

   

 

 

A13.           “Fundamental Transaction” means that (a) (i) Borrower or any of
its subsidiaries shall, directly or indirectly, in one or more related
transactions, consolidate or merge with or into (whether or not Borrower or any
of its subsidiaries is the surviving corporation) any other person or entity, or
(ii) Borrower or any of its subsidiaries shall, directly or indirectly, in one
or more related transactions, sell, lease, license, assign, transfer, convey or
otherwise dispose of all or substantially all of its respective properties or
assets to any other person or entity, or (iii) Borrower or any of its
subsidiaries shall, directly or indirectly, in one or more related transactions,
allow any other person or entity to make a purchase, tender or exchange offer
that is accepted by the holders of more than 50% of the outstanding shares of
voting stock of Borrower (not including any shares of voting stock of Borrower
held by the person or persons making or party to, or associated or affiliated
with the persons or entities making or party to, such purchase, tender or
exchange offer), or (iv) Borrower or any of its subsidiaries shall, directly or
indirectly, in one or more related transactions, consummate a stock or share
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with any
other person or entity whereby such other person or entity acquires more than
50% of the outstanding shares of voting stock of Borrower (not including any
shares of voting stock of Borrower held by the other persons or entities making
or party to, or associated or affiliated with the other persons or entities
making or party to, such stock or share purchase agreement or other business
combination), or (v) Borrower or any of its subsidiaries shall, directly or
indirectly, in one or more related transactions, reorganize, recapitalize or
reclassify the Common Stock, other than an increase in the number of authorized
shares of Borrower’s Common Stock, or (b) any “person” or “group” (as these
terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the
rules and regulations promulgated thereunder) is or shall become the “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
50% of the aggregate ordinary voting power represented by issued and outstanding
voting stock of Borrower.

 

A14.           “Mandatory Default Amount” means the greater of (a) the
Outstanding Balance divided by the Conversion Price on the date the Mandatory
Default Amount is demanded, multiplied by the VWAP on the date the Mandatory
Default Amount is demanded, or (b) the Outstanding Balance following the
application of the Default Effect.

 

A15.           “Market Capitalization” means a number equal to (a) the average
VWAP of the Common Stock for the immediately preceding fifteen (15) Trading
Days, multiplied by (b) the aggregate number of outstanding shares of Common
Stock as reported on Borrower’s most recently filed Form 10-Q or Form 10-K.

 

A16.           “Market Price” means the Conversion Factor multiplied by the
average of the three (3) lowest VWAPs in the twenty (20) Trading Days
immediately preceding the applicable Conversion.

 

A17.           “OID” means an original issue discount.

 

A18.           “Other Agreements” means, collectively, (a) all existing and
future agreements and instruments between, among or by Borrower (or an
affiliate), on the one hand, and Lender (or an affiliate), on the other hand,
and (b) any financing agreement or a material agreement that affects Borrower’s
ongoing business operations.

 

A19.           “Outstanding Balance” means as of any date of determination, the
Purchase Price, as reduced or increased, as the case may be, pursuant to the
terms hereof for payment, Conversion, offset, or otherwise, plus the OID, the
Transaction Expense Amount, accrued but unpaid interest, collection and
enforcements costs (including attorneys’ fees) incurred by Lender, transfer,
stamp, issuance and similar taxes and fees related to Conversions, and any other
fees or charges (including without limitation Conversion Delay Late Fees)
incurred under this Note.

 

A20.           “Purchase Price Date” means the date the Purchase Price is
delivered by Lender to Borrower.

 

A21.           “Trading Day” means any day on which the New York Stock Exchange
is open for trading.

 

A22.           “VWAP” means the volume weighted average price of the Common
stock on the principal market for a particular Trading Day or set of Trading
Days, as the case may be, as reported by Bloomberg.

 

 

 

 

Attachment 1 to Convertible Promissory Note, Page 2

   

 

 

EXHIBIT A

 

St. George Investments LLC

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

 

Gala Global Inc. Date: _________________________ Attn: James Haas, CEO   1100
East Orangefair Lane, Suite I   Anaheim, California 92801  

 

CONVERSION NOTICE

 

The above-captioned Lender hereby gives notice to Gala Global Inc., a Nevada
corporation (the “Borrower”), pursuant to that certain Convertible Promissory
Note made by Borrower in favor of Lender on May 15, 2017 (the “Note”), that
Lender elects to convert the portion of the Note balance set forth below into
fully paid and non-assessable shares of Common Stock of Borrower as of the date
of conversion specified below. Said conversion shall be based on the Conversion
Price set forth below. In the event of a conflict between this Conversion Notice
and the Note, the Note shall govern, or, in the alternative, at the election of
Lender in its sole discretion, Lender may provide a new form of Conversion
Notice to conform to the Note. Capitalized terms used in this notice without
definition shall have the meanings given to them in the Note.

 

A.Date of Conversion: ____________

B.Conversion #: ____________

C.Conversion Amount: ____________

D.Conversion Price: _______________ (lower of Fixed Price and Market Price)

E.Conversion Shares: _______________ (C divided by D)

F.Remaining Outstanding Balance of Note: ____________*

 

* Subject to adjustments for corrections, defaults, interest and other
adjustments permitted by the Transaction Documents (as defined in the Purchase
Agreement), the terms of which shall control in the event of any dispute between
the terms of this Conversion Notice and such Transaction Documents.

 

To the extent the Conversion Shares are not able to be delivered to Lender
electronically via the DWAC system, deliver all such certificated shares to
Lender via reputable overnight courier after receipt of this Conversion Notice
(by facsimile transmission or otherwise) to:

_____________________________________

_____________________________________

_____________________________________

 

Sincerely,

 

Lender:

 

St. George Investments LLC

 

By: Fife Trading, Inc., Manager

 

By:   ______________________________

John M. Fife, President

 

 

 

 

 

 

Exhibit A to Convertible Promissory Note, Page 1