EXHIBIT 10.1

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
AND APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF CORPORATE
COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY.

 

THIS NOTE IS NOT TRANSFERABLE WITHOUT THE PRIOR WRITTEN CONSENT OF THE ISSUER
HEREOF.

 

Original Issue Date: March 29, 2019

$2,000,000

 

CONVERTIBLE DEMAND NOTE

 

THIS CONVERTIBLE DEMAND NOTE is a duly authorized and validly issued Convertible
Demand Note of CURE Pharmaceutical Holding Corp., a Nevada corporation (the
“Company”), having its principal place of business at 1620 Beacon Place, Oxnard,
California 93033 (this “Note”).

 

FOR VALUE RECEIVED, the Company promises to pay to Chemistry Holdings, Inc., a
Delaware corporation (the “Holder”), the principal amount of $2,000,000 on
demand at any time after the earlier of (i) an Event of Default (as defined
below), (ii) the closing of a proposed merger (the “Merger”) of a wholly-owned
subsidiary of the Company with and into Chemistry Holdings, Inc., a Delaware
corporation, and (iii) April 1, 2019 if a binding definitive agreement and plan
of merger with respect to the Merger has not be executed by that date, in each
case if this Note has not previously converted into Common Stock (defined below)
in accordance with Section 1 hereof. This Note is subject to the following
additional provisions:

 

Section 1. Conversion.

 

(a) Conversion. If the Merger has not been consummated by April 30, 2019, the
outstanding principal balance of this Note (the “Outstanding Balance”) shall
automatically be converted (the “Conversion”) into shares of common stock, par
value $0.001 per share, of the Company (“Common Stock”) at a price per share
equal to $3.34 (the “Conversion Price”) effective as of May 1, 2019 (the
“Conversion Date”), and the Outstanding Balance shall thereafter be considered
repaid in full.

 

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(b) Adjustments to Conversion Price.

 

(i) In the event the Company (i) subdivides outstanding Common Stock into a
larger number of Common Stock, (ii) combines (including by way of a reverse
split) outstanding Common Stock into a smaller number of Common Stock or (iii)
issues, in the event of a reclassification of Common Stock, any Common Stock of
the Company, then the Conversion Price shall be adjusted by multiplying the
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding immediately before such event, and of which
the denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

 

(ii) If at any time or from time to time after the issuance date of this Note
and prior to its repayment or conversion there shall be a capital reorganization
of the Company (other than in an event described in Section 1(b)(i)), or a
merger or consolidation of the Company with or into another corporation where
the holders of the Company’s outstanding voting securities prior to such merger
or consolidation do not own over fifty percent (50%) of the outstanding voting
securities of the merged or consolidated entity, immediately after such merger
or consolidation, or the sale of all or substantially all of the Company’s
properties or assets to any other person (an “Organic Change”), then as a part
of such Organic Change an appropriate revision to the Conversion Price shall be
made if necessary and provision shall be made if necessary (by adjustments of
the Conversion Price or otherwise) so that, upon any subsequent conversion of
this Note, the Holder shall have the right to receive, in lieu of Common Stock,
the kind and amount of shares of stock and other securities or property of the
Company or any successor corporation resulting from the Organic Change that the
Holder would have received if this Note had been converted into Common Stock
immediately prior to such Organic Change. In any such case, appropriate
adjustment shall be made in the application of the provisions of Section 1(a)
with respect to the rights of the Holder after the Organic Change to the end
that the provisions of Section 1(a) (including any adjustment in the Conversion
Price then in effect and the number of shares of stock or other securities
deliverable upon conversion of this Note) shall be applied after that event in
as nearly an equivalent manner as may be practicable.

 

(c) Mechanics of Conversion.

 

(i) Shares Issuable Upon Conversion of Outstanding Balance. The number of shares
of Common Stock issuable upon a Conversion hereunder shall be determined by the
quotient obtained by dividing (x) the Outstanding Balance by (y) the Conversion
Price.

 

(ii) Mechanics of Conversion. Upon a Conversion, the Outstanding Balance shall
automatically, and without any further action on the part of the Holder and
whether or not the Note is surrendered to the Company, be converted into shares
of Common Stock at the Conversion Price and as of the Conversion Date. The
Company shall not be obligated to issue certificates evidencing the shares of
Common Stock issuable upon such Conversion unless this Note is either delivered
to the Company or the Holder notifies the Company that this Note been lost,
stolen or destroyed and executes an agreement satisfactory to the Company to
indemnify the Company from any loss incurred by it in connection with such loss,
theft or destruction. Upon receipt by the Company of this Note or an agreement
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection with such loss, theft or destruction, the Company at its
expense shall, as soon as practicable thereafter, issue and deliver at such
office to such Holder a certificate or certificates for the shares of Common
Stock to which such Holder shall be entitled as aforesaid. The Holder shall be
treated for all purposes as the record holder of such shares of Common Stock as
of the Conversion Date

 

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(iii) Fractional Common Shares. No fractional shares of Common Stock shall be
issued upon the conversion of this Note. As to any fraction of a share which the
Holder would otherwise be entitled to receive upon such conversion, the Company
shall at its election, either pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the Conversion Price
or round up to the next whole share of Common Stock.

 

(iv) Authorization. Upon issuance to Holder pursuant to the terms hereof, the
Common Stock issued to Holder hereunder shall be duly authorized, validly
issued, fully paid and non-assessable

 

Section 2. Event of Default; Remedies.

 

(i) An “Event of Default” means (a) the Company or any of its subsidiaries shall
be subject to a Bankruptcy Event (as defined below), or (b) the Company’s Common
Stock ceases to be listed on the OTC Market. If an Event of Default occurs, this
Note and the Outstanding Balance shall accelerate and be immediately due and
payable without notice or demand.

 

(ii) For purposes of this Section 2, a “Bankruptcy Event” means (a) the Company
or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of
Regulation S-X) thereof commences a case or other proceeding under any
bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
relating to the Company or any Significant Subsidiary thereof, (b) the Company
or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or
any order of relief or other order approving any such case or proceeding is
entered, (c) the Company or any Significant Subsidiary thereof makes a general
assignment for the benefit of creditors, (d) the Company or any Significant
Subsidiary thereof calls a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts or (e) the Company or any
Significant Subsidiary thereof, by any act or failure to act, expressly
indicates its consent to, approval of or acquiescence in any of the foregoing or
takes any corporate or other action for the purpose of effecting any of the
foregoing.

 

Section 3. Non-Transferability of Note. Neither this Note nor any interest
herein may be transferred, pledged or assigned in whole or in part by either
party without the prior written consent of the other party (which may be
withheld in such party’s sole and absolute discretion). Any such transfer,
pledge or assignment done without the other party’s prior written consent shall
be void ab initio.

 

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Section 4. Demand and Piggyback Registration. If the Company proposes to
register (including, for this purpose, a registration effected by the Company
for stockholders other than Holder) any of its Common Stock under the Securities
Act of 1933, as amended (the “Securities Act”) in connection with the public
offering of such securities solely for cash (other than in an Excluded
Registration (as defined below)), the Company shall, at such time, promptly give
Holder notice of such registration. Upon the request of Holder at any time after
the date hereof or upon request of Holder given within twenty (20) days after
such notice is given by the Company, the Company shall cause to be registered
all of the Shares (collectively, the “Registrable Securities”) that Holder has
requested to be included, if a demand registration, on a newly filed
registration statement for such shares, or in the case of a piggyback
registration, in such registration; provided, however, if at the time of a
demand registration the Company’s Form S-1 currently on file with the Securities
and Exchange Commission (the “SEC”) has not yet been declared effective, Holder
may request that the Registrable Shares shall be included on that registration
statement; provided, further, that in the event of a demand registration, the
Holder shall pay the costs and expenses of the Company, including without
limitation filing fees and legal expenses, up to $50,000. The Company shall have
the right to terminate or withdraw any registration initiated by it before the
effective date of such registration, whether or not Holder has elected to
include Registrable Securities in such registration. For purposes of this
Section 4, “Excluded Registration” means (a) a registration relating to the sale
of securities to employees of the Company or a subsidiary pursuant to a stock
option, stock purchase, or similar plan; (b) a registration relating to an SEC
Rule 145 transaction; or (iii) a registration on any form that does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities.

 

Section 5. Investor Representations.

 

(a) The Holder has full legal capacity, power and authority to execute and
deliver this Note and to perform its obligations hereunder. This Note
constitutes valid and binding obligation of the Holder, enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency or other
laws of general application relating to or affecting the enforcement of
creditors’ rights generally and general principles of equity.

 

(b) The Holder is an “accredited investor” as such term is defined in Rule 501
of Regulation D under the Securities Act. The Holder has been advised that this
Note and the underlying securities have not been registered under the Securities
Act, or any state securities laws and, therefore, cannot be resold unless they
are registered under the Securities Act and applicable state securities laws or
unless an exemption from such registration requirements is available. The Holder
is purchasing this Note and the securities to be acquired by the Holder
hereunder for its own account for investment, not as a nominee or agent, and not
with a view to, or for resale in connection with, the distribution thereof, and
the Holder has no present intention of selling, granting any participation in,
or otherwise distributing the same. The Holder has such knowledge and experience
in financial and business matters that the Holder is capable of evaluating the
merits and risks of such investment, is able to incur a complete loss of such
investment without impairing the Holder’s financial condition and is able to
bear the economic risk of such investment for an indefinite period of time.

 

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Section 6. Miscellaneous.

 

(a) Prepayment. At the discretion of the Company, the Outstanding Balance may be
prepaid at any time, in whole or in part.

 

(b) Governing Law. This Note shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to the conflict of laws
provisions thereof. In any action between or among any of the parties, whether
rising out of this Note or otherwise, each of the parties irrevocably consents
to the exclusive jurisdiction of the United States District Court for the
District of Delaware and the jurisdiction of any other competent court in the
State of Delaware.

 

(c) Amendment. This Note may only be modified or amended in a writing signed by
the Company and the Holder.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a
duly authorized officer as of the date first above indicated.

 

 

CURE PHARMACEUTICAL HOLDING CORP.

        By: /s/ Robert Davidson

 

Name:

Robert Davidson     Title: Chief Executive Officer          

 

Acknowledge and agreed:

 

 

CHEMISTRY HOLDINGS, INC.

 

 

 

 

 

 

By:

/s/ Joshua Held

 

 

Name:

Joshua Held

 

 

Title:

Chief Executive Officer

 

 

[Signature Page to Convertible Demand Note]

 

 

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