Exhibit 10.1

NOTE AND ACCOUNT PAYABLE CONVERSION AGREEMENT

This NOTE AND ACCOUNT PAYABLE CONVERSION AGREEMENT (this “Agreement”) is dated
as of January 31, 2018 by and between J3E2A2Z LP, a Washington limited
partnership (“J3E2A2Z”), and Visualant, Incorporated, a Nevada corporation (the
“Company”).

RECITALS

A.        The Company has issued certain Promissory Notes payable to J3E2A2Z, as
follows:

i.

 

Promissory Note originally dated March 31, 2014, as amended through the date of
this Agreement, in the principal amount of $300,000 (the “March 31, 2014 Note”);
and

 

 

 

ii.

 

Promissory Note originally dated July 17, 2014, as amended through the date of
this Agreement in the principal amount of $300,000 (the “July 17, 2014 Note”);

 

 

 

iii.

 

The March 31, 2014 Note and the July 17, 2014 Note are referred to in this
Agreement collectively as the “J3E2A2Z Notes.”

B.        In addition to the aggregate principal amount of $600,000, there is
$34,545 in accrued interest under the March 31, 2014 Note and $29,688 in accrued
interest under the July 17, 2014 Note, for a total of $64,233 in accrued
interest under the J3E2A2Z Notes. The aggregate amount owed to J3E2A2Z under the
J3E2A2Z Notes is therefore $664,233 as of the date of this Agreement.

C.        Separately, J3E2A2Z, at the request of the Company, has made advances
totaling $519,833 to the Company as of the date of this Agreement (the “J3E2A2Z
Account Payable”), which are reflected on the Company’s books and records, but
which have not been formally documented to date. No interest has been paid on
the J3E2A2Z Account Payable.

D.        The parties have agreed that J3E2A2Z Notes will be converted into a
convertible redeemable promissory note in the amount of $664,233.

E.        The parties have further agreed that the J3E2A2Z Account Payable will
be converted into a convertible redeemable promissory note in the amount of
$519,833, together with a warrant to purchase up to 1,039,666 shares of common
stock of the Company for a period of five years.

F.         Ronald P. Erickson (“Erickson”) is an officer and director of the
Company and has a controlling interest in J3E2A2Z.

G.        As required by Nevada law, a majority of the disinterested directors
of the Company have approved the transactions contemplated by this Agreement
after full disclosure of Erickson’s interest in such transactions.

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AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:

1.         Conversion of Indebtedness.  All $664,233 currently owing under the
J3E2A2Z Notes is hereby converted to a Convertible Redeemable Promissory Note of
even date herewith in the principal amount of $664,233, substantially in the
form attached hereto as Exhibit A (the “J3E2A2Z Convertible Note”), and all
$519,833 of the J3E2A2Z Account Payable is hereby converted into a Convertible
Redeemable Promissory Note of even date herewith in the principal amount of
$519,833, substantially in the form attached hereto as Exhibit B (the “Account
Payable Convertible Note”) together with a warrant to purchase up to 1,039,666
shares of common stock of the Company for a period of five years in
substantially the form attached hereto as Exhibit C (the “J3E2A2Z Warrant”). The
J3E2A2Z Convertible Note and the Account Payable Convertible Note are referred
to herein collectively as the “Convertible Notes.”

2.         Closing.  The issuance of the Convertible Notes shall occur at a
closing (the “Closing”) to be held on the date of this Agreement, or at any
other time mutually agreed upon by the parties to this Agreement.  The Closing
will take place at the principal office of the Company or at such other place as
shall be agreed by the parties.  At the Closing, (a) the Company shall issue the
Convertible Notes the J3E2A2Z Warrant and (b) J3E2A2Z shall surrender the
J3E2A2Z Notes to the Company for cancellation.

3.         Restrictions on Transfer.

a.         Investment Representations.  J3E2A2Z hereby represents that it is an
“accredited investor” as defined in SEC Regulation D, by virtue of, among other
things, Erickson’s net worth, income and status as an office and director of the
Company and as the controlling party of J3E2A2Z.

b.         Legend Requirements.  J3E2A2Z understands and agrees that the Company
shall cause the legend set forth below, or a substantially equivalent legend, to
be placed upon the Convertible Notes, together with any other legends that may
be required by the Company or by applicable state or federal securities laws:

“THE SECURITIES EVIDENCED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE. THE HOLDER HEREOF AGREES FOR THE BENEFIT OF THE
COMPANY THAT THIS NOTE MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO
THE COMPANY, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION
FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE
144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE

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WITH ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF
SECURITIES, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE
U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE
OFFER AND SALE OF SECURITIES, AND THE SELLER, IF SO REQUESTED, FURNISHES TO THE
COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE COMPANY TO SUCH EFFECT”

4.         General Provisions.

a.         Choice of Law.  This Agreement shall be governed by the internal
substantive laws, but not the choice of law rules, of Washington.

b.         Integration.  This Agreement, together with the Convertible Notes and
the J3E2A2Z Warrant, represents the entire agreement between the parties with
respect to the issuance of the Convertible Notes and the J3E2A2Z Warrant, and
supersedes and replaces any and all prior written or oral agreements regarding
the subject matter of this Agreement.

c.         Notices.  All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed effectively given upon
personal delivery; upon confirmed transmission by electronic mail; or upon
deposit with the United States Post Office, by first-class mail, postage
prepaid, or otherwise delivered by hand or by messenger, addressed (i) if to
J3E2A2Z c/o Visualant, Incorporated at 500 Union Street, Suite 810, Seattle, WA
98101 or email ron@ronerickson.com or (ii) if to the Company, at 500 Union
Street, Suite 810, Seattle, WA 98101, to the attention of the Chief Financial
Officer, email mark@visualant.net, or at such other address as either party
shall have furnished to the other.

d.         Successors.  This Agreement shall be binding upon the parties hereto
and their respective heirs, executors, administrators, successors and assigns.

e.         Waiver.  Any party’s failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
nor prevent that party from thereafter enforcing any other provision of this
Agreement.  The rights granted all parties hereunder are cumulative and shall
not constitute a waiver of any party’s right to assert any other legal remedy
available to it.

f.         Further Documents.  The parties agree upon request to execute any
further documents or instruments necessary or reasonably desirable in the view
the other party or parties to carry out the purposes or intent of this
Agreement.

g.         Severability.  Should any provision of this Agreement be found to be
unlawful or unenforceable, the other provisions shall nevertheless remain
effective and shall remain enforceable to the greatest extent permitted by law.

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h.         Counterparts.  This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.

The undersigned represent that they have read this Agreement in its entirety,
have had an opportunity to obtain the advice of counsel prior to executing this
Agreement and fully understand this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
date first above written.

VISUALANT, INCORPORATED

By

/s/ Jon Pepper

 

Jon Pepper

 

Director

J3E2A2Z LP

By

/s/ Ronald P. Erickson

 

Ronald P. Erickson

 

Managing Director

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EXHIBIT A

J3E2A2Z Convertible Note

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EXHIBIT B

Account Payable Convertible Note

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EXHIBIT C

J3E2A2Z Warrant

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