Exhibit 10.1

 

THIS 10% Secured Convertible Promissory Note (THE “NOTE”) HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”), OR THE
SECURITIES LAWS OF ANY STATE. THIS NOTE MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR DELIVERY TO ECOARK HOLDINGS, INC. OF AN OPINION OF LEGAL
COUNSEL SATISFACTORY TO ECOARK HOLDINGS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE ACT OR ANY APPLICABLE STATE SECURITIES LAWS.

 

10% Secured Convertible Promissory Note

OF ECOARK HOLDINGS, INC.

 

NOTE NO. __________, 2017

 

FOR VALUE RECEIVED, ECOARK HOLDINGS, INC., a Nevada corporation with its
principal office located at 3333 Pinnacle Hills Parkway, Suite 220, Rogers, AR
72758 (the “Company” or “Debtor”), unconditionally promises to pay to
____________ whose address is ____________________________, or the registered
assignee, upon presentation of this 10% Secured Convertible Promissory Note (the
“Note”) by the registered holder hereof (the “Registered Holder” or “Holder”) at
the office of the Company, the principal amount of $____________ (“Principal
Amount”), together with the accrued and unpaid interest thereon and other sums
as hereinafter provided, subject to the terms and conditions as set forth below.
The effective date of execution and issuance of this Note is ____________, 2017
(“Original Issue Date”).

 

1.       Series. This Note is one of a series of duly authorized and issued
promissory notes of the Company designated as its 10% Secured Convertible
Promissory Notes in an aggregate principal face value for all Notes of this
Series of up to a maximum of $5,000,000 (each, a “Series Note,” and
collectively, the “Series Notes”). Each of the Series Notes is being issued in
accordance with that certain Subscription Agreement between the Company and the
Registered Holder, and is subject to the terms and conditions set forth in the
Subscription Agreement. Each of the Series Notes is being secured by the same
collateral property (as described below in Section 6). The Holder of this Note
with the holders of all of the Series Notes are sometimes hereinafter
collectively referred to as “Series Holders.”

 

2.       Schedule for Payment of Principal and Interest. The Principal Amount
outstanding hereunder shall be paid in one lump sum payment of $__________ on or
before _______, 2018 (the “Maturity Date”), and the interest on the Principal
Amount outstanding hereunder shall be payable at the rate of 10% per annum and
shall be due and payable quarterly, in arrears, with the initial interest
payment due March 31, 2017, and continuing thereafter on each successive June
30, September 30, December 31, and March 31, of each year during the term of
this Note and on the Maturity Date. Accrual of interest on the outstanding
Principal Amount, payable in cash, shall commence on the date of receipt of
funds by the Company and shall continue until payment in full of the outstanding
Principal Amount has been made hereunder. The interest so payable will be paid
to the person whose name this Note is registered on the records of the Company
regarding registration and transfers of the Note (the “Note Register”). Payments
made by the Company shall be made to all Series Holders at the same time.

 

3.       Payment. Payment of any sums due to the Holder under the terms of this
Note shall be made in United States Dollars by check or wire transfer at the
option of the Company. Payments made by the Company shall be made to all Series
Holders at the same time. Payment shall be made at the address last appearing on
the Note Register of the Company as designated in writing by the Holder hereof
from time to time. If any payment hereunder would otherwise become due and
payable on a day on which commercial banks in New York, New York, are permitted
or required to be closed, such payment shall become due and payable on the next
succeeding day on which commercial banks in New York, New York, are not
permitted or required to be closed ("Business Day") and, with respect to
payments of Principal Amount, interest thereon shall be payable at the then
applicable rate during such extension, if any. The forwarding of such funds
shall constitute a payment of outstanding principal and interest hereunder and
shall satisfy and discharge the liability for principal and interest on this
Note to the extent of the sum represented by such payment. Except as provided in
Section 4 hereof, this Note may not be prepaid without the prior written consent
of the Holder.

 

  

 

 

4.       Mandatory Conversion by Company. The Company may require Holders to
convert 100%, but not less than 100%, of Holders’ unconverted portion of the
Note, upon condition and written notice that (i) the last reported sale price of
the Company’s Common Stock (as defined in Section 5) on the prior 30 consecutive
trading days exceed $9.00 and (ii) that the average daily trading volume (as
reported on Bloomberg) of the Common Stock over the prior 30 consecutive trading
days was not less than 90,000 shares on the trading market on which the Common
Stock is listed or designated for quotation (the “Mandatory Conversion”). In the
event that the Holder does not convert Note, the Holder shall be repaid for
Holder’s unconverted portion of the Note in cash (the “Redemption”).

 

The Company shall deliver to the Holder a written Notice of Mandatory Conversion
(the “Notice of Mandatory Conversion”) specifying the date for the Mandatory
Conversion or Redemption if the Holder chooses not to convert Holder’s Note (the
“Mandatory Conversion Date”), which date shall be at least 10 but not more than
30 days after the date of the Notice of Mandatory Conversion (the “Mandatory
Conversion Period”). The redemption Amount shall be the remaining balance of the
Holder’s Note (the “Redemption Amount”). On the Mandatory Conversion Date, the
Redemption Amount must be paid in good funds to the Holder. After the Mandatory
Conversion Date, interest will cease to accrue on the Note or the portion
thereof called for Redemption.

 

5.       Conversion Rights.

 

(a)       Conversion. On or after the Original Issue Date, the Holder of this
Note will have the right, at the Holder's option, except to the extent provided
in Section 4, to convert all or any portion of the Principal Amount hereof and
any accrued but unpaid interest thereon into shares of common stock, par value
$0.01 per share, of the Company (“Common Stock”) in a manner and in accordance
with Section 5(b) below (unless earlier paid or redeemed) at the Conversion
Price as set forth below in Section 5(c) (subject to adjustment as described
herein). The right to convert the Principal Amount or interest thereon of this
Note called for redemption will terminate at the close of business on the
Business Day prior to the Mandatory Conversion Date for such Note, unless the
Company subsequently fails to pay the applicable Redemption Amount. The shares
of Common Stock to be issued upon such conversion are hereinafter referred to as
the “Conversion Shares”.

 

(b)       Mechanics of Holder’s Conversion. In the event that the Holder elects
to convert any portion of this Note into Common Stock, the Holder shall give
notice of such election by delivering an executed and completed notice of
conversion (“Notice of Conversion”) to the Company. The Notice of Conversion
shall (i) provide a breakdown in reasonable detail of the Principal Amount
and/or accrued interest that is being converted, (ii) state the denominations in
which such Holder wishes the certificate or certificates for the Conversion
Shares to be issued and (iii) surrender this Note to the Company. On each
Conversion Date (as hereinafter defined) and in accordance with its Notice of
Conversion, the Company shall make the appropriate reduction to the Principal
Amount and/or accrued interest as entered in its records and shall provide
written notice thereof to the Holder within five (5) Business Days after the
Conversion Date. Each date on which a Notice of Conversion is delivered or
telecopied to the Company in accordance with the provisions hereof shall be
deemed a Conversion Date (the “Conversion Date”). Pursuant to the terms of the
Notice of Conversion, the Company will issue instructions to its transfer agent
as soon as practicable thereafter, to cause to be issued and delivered to the
Holder certificates for the number of full shares of Conversion Shares to which
such Holder shall be entitled as aforesaid and, if necessary, the Company shall
cause to be issued and delivered to the Holder a new promissory note
representing any unconverted portion of this Note. The Company shall not issue
fractional Conversion Shares upon conversion, but the number of Conversion
Shares to be received by any Holder upon conversion shall be rounded down to the
next whole number and the Holder shall be entitled to payment of the remaining
principal amount by a Company check. In the case of the exercise of the
conversion rights set forth herein the conversion privilege shall be deemed to
have been exercised and the Conversion Shares issuable upon such conversion
shall be deemed to have been issued upon the date of receipt by the Company of
the Notice of Conversion. The Holder shall be treated for all purposes as the
record holder of the Conversion Shares, unless the Holder provides the Company
written instructions to the contrary.

 

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(c)       Conversion Price. The Conversion Price of the Common Stock into which
the Principal Amount, or the then outstanding interest due thereon, of this Note
is convertible shall be $4.50 per share (subject to adjustment as described
herein).

 

(d)       Adjustment Provisions. The Conversion Price and number and kind of
shares or other securities to be issued upon conversion pursuant to this Note
shall be subject to adjustment from time to time upon the happening of certain
events while this conversion right remains outstanding, as follows:

 

(i)       Reclassification. In case of any reclassification, consolidation or
merger of the Company with or into another entity or any merger of another
entity with or into the Company, or in the case of any sale, transfer or
conveyance of all or substantially all of the assets of the Company (computed on
a consolidated basis), each Note then outstanding will, without the consent of
any Holder, become convertible only into the kind and amount of securities, cash
or other property receivable upon such reclassification, consolidation, merger,
sale, transfer or conveyance by a Holder of the number of shares of Common Stock
into which such Note was convertible immediately prior thereto, after giving
effect to any adjustment event.

 

(ii)      Stock Split, Dividend. If the number of shares of Common Stock
outstanding at any time after the date hereof is increased by a subdivision or
split of Common Stock, or by the declaration of a dividend on the Common Stock,
which dividend is wholly or partially in the form of additional shares of Common
Stock or any other securities of the Company, then immediately after the
effective date of such subdivision or split-up, or the record date with respect
to such dividend, as the case may be, the Conversion Price shall be
appropriately reduced so that the holder of this Note thereafter exchanged shall
be entitled to receive the percentage of shares of Common Stock which such
holder would have owned immediately following such action had this Note been
exchanged immediately prior thereto;

 

(iii)     Reverse Split. If the number of Common Stock outstanding at any time
after the date hereof is decreased by a combination of the outstanding Common
Stock or reverse split, then, immediately after the effective date of such
combination, the Conversion Price shall be appropriately increased so that the
holder of this Note thereafter exchanged shall be entitled to receive the
percentage of shares of Common Stock which such holder would have owned
immediately following such action had this Note been exchanged immediately prior
thereto.

 

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(e)       Issuance of New Note. Upon any partial conversion of this Note, a new
promissory note containing the same date and provisions of this Note shall be
issued by the Company to the Holder for the principal balance of this Note and
interest which shall not have been converted or paid. The Holder shall not pay
any costs, fees or any other consideration to the Company for the production and
issuance of a new promissory note.

 

(f)       Reservation of Shares. The Company shall at all times reserve for
issuance and maintain available, out of its authorized but unissued Common
Stock, solely for the purpose of effecting the full conversion of the Note, the
full number of shares of Common Stock deliverable upon the conversion of the
Note from time to time outstanding. The Company shall from time to time (subject
to obtaining necessary director and stockholder action), in accordance with the
laws of the State of Nevada, increase the authorized number of shares of its
Common Stock if at any time the authorized number of shares of its Common Stock
remaining unissued shall not be sufficient to permit the conversion of the Note.

 

6.       Collateral. As security for the prompt performance, observance and
payment in full of the entire indebtedness evidenced by this Note, including the
Principal Amount, interest thereon, fees and other charges, undertakings,
covenants and duties owing or to be performed or observed by the Company to the
Holder, of every kind and description, whether joint or several, direct or
indirect, absolute or contingent, due or to become due, now existing or
hereinafter arising (collectively, the “Obligations”), the Company hereby grants
to the Holder a security interest, and lien for the Holders’ ratable share of
the Series Notes, in the Company’s ownership interest in Eco3D, LLC (the
“Collateral”).

 

7.       Representations and Warranties of the Company. The Company represents
and warrants to the Holder that:

 

(a)       Organization. The Company is validly existing and in good standing
under the laws of the state of Nevada and has the requisite power to own, lease
and operate its properties and to carry on its business as now being conducted.
The Company is duly qualified to do business and is in good standing in each
jurisdiction in which the character or location of the properties owned or
leased by the Company or the nature of the business conducted by the Company
makes such qualification necessary or advisable, except where the failure to do
so would not have a material adverse effect on the Company.

 

(b)       Power and Authority. The Company has the requisite power to execute,
deliver and perform this Note, and to consummate the transactions contemplated
hereby. The execution and delivery of this Note by the Company and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company. This Note has been
duly executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company and is enforceable against the Company in
accordance with its terms except (i) that such enforcement may be subject to
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
and (ii) that the remedy of specific performance and injunctive and other forms
of equitable relief are subject to certain equitable defenses and to the
discretion of the court before which any proceedings therefor may be brought.

 

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8.       Events of Defaults and Remedies. The following are deemed to be an
event of default ("Event of Default") hereunder: (i) the failure by the Company
to pay any installment of interest on this Note or any other Series Notes as and
when due and payable and the continuance of any such failure for 10 days; (ii)
the failure by the Company to pay all or any part of the principal on this Note
or any other Series Notes when and as the same become due and payable as set
forth above, at maturity, by acceleration or otherwise; (iii) the failure of the
Company to perform any conversion of Notes required under this Note or any other
Series Notes and the continuance of any such failure for 10 days; (iv) the
failure by the Company to observe or perform any covenant or agreement contained
in this Note or any other Series Notes and the continuance of such failure for a
period of 30 days after the written notice is given to the Company; (v) the
assignment by the Company for the benefit of creditors, or an application by the
Company to any tribunal for the appointment of a trustee or receiver of a
substantial part of the assets of the Company, or the commencement of any
proceedings relating to the Company under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debts, dissolution or other liquidation
law of any jurisdiction; or the filing of such application, or the commencement
of any such proceedings against the Company and an indication of consent by the
Company to such proceedings, or the appointment of such trustee or receiver, or
an adjudication of the Company bankrupt or insolvent, or approval of the
petition in any such proceedings, and such order remains in effect for 60 days;
and (vi) final unsatisfied judgments not covered by insurance aggregating in
excess of $1,000,000, at any one time rendered against the Company and not
stayed, bonded or discharged within 75 days.

 

9.       Consent of Series Holders.

 

(a)       Consent of All Series Holders. Notwithstanding anything to the
contrary contained herein, no amendment, modification, change or waiver shall be
effective without the consent of all of the Series Holders to:

 

(i)       extend the maturity of the principal of, or interest on, any Note or
of any of the other Obligations;

 

(ii)       reduce the Principal Amount of any Note or of any of the other
Obligations, or the rate of interest thereon due to the Series Holders, except
as expressly permitted herein or therein;

 

(iii)       change the date of payment of principal of, or interest on, any Note
or of any of the other Obligations;

 

(iv)       modify this Section 9; or

 

(v)       release or agree to subordinate any material portion of any Collateral
or financing document.

 

(b)       Consent of Less than All Series Holders. Any decision other than as
set forth in Section 9(a) above that shall be made by the Series Holders herein,
shall be made by the Requisite Holders of the Series Notes outstanding at such
time.

 

10.     Limitation on Merger, Sale or Consolidation. The Company may not,
directly or indirectly, consolidate with or merge into another person or sell,
lease, convey or transfer all or substantially all of its assets (computed on a
consolidated basis), whether in a single transaction or a series of related
transactions, to another person or group of affiliated persons, unless either
(i) in the case of a merger or consolidation, the Company is the surviving
entity or (ii) the resulting, surviving or transferee entity expressly assumes
by supplemental agreement all of the obligations of the Company in connection
with the Notes. Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company in accordance with the foregoing,
the successor entity formed by such consolidation or into which the Company is
merged or to which such transfer is made, shall succeed to, and be substituted
for, and may exercise every right and power of the Company under the Note with
the same effect as if such successor entity had been named therein as the
Company, and the Company will be released from its obligations under the Series
Notes, except as to any obligations that arise from or as a result of such
transaction.

 

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11.     Corporate Obligation. No recourse shall be had for the payment of the
principal or the interest on this Note, or for any claim based thereon, or
otherwise in respect thereof, or based on or in respect of any Note supplemental
thereto, against any incorporator, stockholder, officer, or director (past,
present, or future) of the Company, whether by virtue of any constitution,
statute, or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being by the acceptance hereof, and as part of the
consideration for the issue hereof, expressly waived and released.

 

12.     Listing of Registered Holder of Note. This Note will be registered as to
principal amount in the Holder’s name on the books of the Company at its
principal office (the “Note Register”), after which no transfer hereof shall be
valid unless made on the Company’s books at the office of the Company, by the
Holder hereof, in person, or by attorney duly authorized in writing, and
similarly noted hereon.

 

13.     Registered Holder Not Deemed a Stockholder. No Holder, as such, of this
Note shall be entitled to vote or receive dividends or be deemed the holder of
shares of the Company for any purpose, nor shall anything contained in this Note
be construed to confer upon the Holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise.

 

14.     Waiver of Demand, Presentment, Etc. The Company hereby expressly waives
demand and presentment for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, notice of acceleration or intent to accelerate,
bringing of suit 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 hereunder, regardless of and without any notice,
diligence, act or omission as or with respect to the collection of any amount
called for hereunder.

 

15.     Attorney’s Fees. The Company agrees to pay all costs and expenses,
including without limitation reasonable attorney's fees, which may be incurred
by the Holder in collecting any amount due under this Note or in enforcing any
of Holder’s conversion rights as described herein.

 

16.     Enforceability. 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.

 

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17.     Intent to Comply with Usury Laws. In no event will the interest to be
paid on this Note exceed the maximum rate provided by law. It is the intent of
the parties to comply fully with the usury laws of the State of New York;
accordingly, it is agreed that notwithstanding any provisions to the contrary in
this Note, in no event shall such Note require the payment or permit the
collection of interest (which term, for purposes hereof, shall include any
amount which, under New York law, is deemed to be interest, whether or not such
amount is characterized by the parties as interest) in excess of the maximum
amount permitted by the laws of the State of New York. If any excess of interest
is unintentionally contracted for, charged or received under this Note, or in
the event the maturity of the indebtedness evidenced by the Note is accelerated
in whole or in part, or in the event that all of part of the Principal Amount or
interest of this Note shall be prepaid, so that the amount of interest
contracted for, charged or received under this Note, on the amount of the
Principal Amount actually outstanding from time to time under this Note shall
exceed the maximum amount of interest permitted by the applicable usury laws,
then in any such event (i) the provisions of this paragraph shall govern and
control, (ii) neither the Company nor any other person or entity now or
hereafter liable for the payment thereof, shall be obligated to pay the amount
of such interest to the extent that it is in excess of the maximum amount of
interest permitted by such applicable usury laws, (iii) any such excess which
may have been collected shall be either applied as a credit against the then
unpaid principal amount thereof or refunded to the Company at the Holder’s
option, and (iv) the effective rate of interest shall be automatically reduced
to the maximum lawful rate of interest allowed under the applicable usury laws
as now or hereafter construed by the courts having jurisdiction thereof. It is
further agreed that without limitation of the foregoing, all calculations of the
rate of interest contracted for, charged or received under the Note which are
made for the purpose of determining whether such rate exceeds the maximum lawful
rate of interest, shall be made, to the extent permitted by applicable laws, by
amortizing, prorating, allocating and spreading in equal parts during the period
of the full stated term of the Note evidenced thereby, all interest at any time
contracted for, charged or received from the Company or otherwise by the Holders
in connection with this Note.

 

18.     Governing Law; Consent to Jurisdiction. This Note shall be governed by
and construed in accordance with the laws of the State of New York 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 and venue of the
federal and/or state courts located in New York, New York.

 

19.     Amendment and Waiver. Any waiver or amendment hereto shall be in writing
signed by the Holder. No failure on the part of the Holder to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise by the Holder of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
rights. The remedies herein provided are cumulative and not exclusive of any
other remedies provided by law.

 

20.     Restrictions Against Transfer or Assignment. Neither this Note nor the
shares issuable upon conversion of this Note may be sold, transferred, assigned,
pledged, hypothecated or otherwise disposed of by the Registered Holder hereof,
in whole or in part, unless and until either (i) the Note or the shares issuable
upon conversion of the Note have been duly and effectively registered for resale
under the Securities Act of 1933, as amended, and under any then applicable
state securities laws; or (ii) the Registered Holder delivers to the Company a
written opinion acceptable to the Company’s counsel that an exemption from such
registration requirements is then available with respect to any such proposed
sale or disposition. Any transfer of this Note otherwise permissible hereunder
shall be made only at the principle office of the Company upon surrender of this
Note for cancellation and upon the payment of any transfer tax or other
government charge connected therewith, and upon any such transfer a new Series
Note will be issued to the transferee in exchange therefor.

 

21.     Entire Agreement; Headings. This Note constitutes the entire agreement
between the Holder and the Company pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, representations and
understandings, written or oral, of such parties. The headings are for reference
purposes only and shall not be used in construing or interpreting this Note.

 

22.     Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if in writing and delivered in person, or
sent by registered or certified mail (return receipt requested) or recognized
overnight delivery service, postage pre-paid, or sent by email addressed as
follows, or to such other address as such party may notify to the other parties
in writing:

 

(a)       If to the Company, to it at the following address:

 

3333 Pinnacle Hills Parkway, Suite 220

Rogers, AR 72758

Attn: Randy May, CEO and President

Email: rmay@ecoarkusa.com

 

(b)       If to Registered Holder, then to the address listed on the front of
this Note, unless changed, by notice in writing as provided for herein.

 

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IN WITNESS WHEREOF, Ecoark Holdings, Inc. has caused this Note to be duly
executed in its corporate name by the manual signature of its President.

 

  ECOARK HOLDINGS, INC.         By:       Randy May, CEO and President

 

  Agreed to by Holder:             Print Name:  

 

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ANNEX A

NOTICE OF CONVERSION

 

The undersigned hereby elects to convert principal and/or accrued interest under
the 10% Secured Convertible Promissory Note due __________ of Ecoark Holdings,
Inc., a Nevada corporation (the “Company”), into shares of common stock, par
value $0.01 per share (the “Common Stock”) of the Company, according to the
conditions hereof, as of the date written below. If shares of Common Stock are
to be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company
in accordance therewith. No fee will be charged to the Holder for any
conversion, except for such transfer taxes, if any.

 

Conversion Calculations:

 

Date to Effect Conversion: ___________________________________________________

 

Principal Amount of 10% Secured Convertible

Promissory Note to be Converted: _____________________________________________

 

Accrued Interest Amount of 10% Secured

Convertible Promissory Note to be Converted:
____________________________________

 

Number of Shares of Common Stock to be Issued: _________________________________

 

Signature: ________________________________________

 

Name: ___________________________________________

 

Address: _________________________________________

 

 

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