Blueprint





 





 



SECOND AMENDMENT TO

 



CONVERTIBLE SUBORDINATED NOTE PURCHASE AGREEMENT

 



AND SECOND AMENDMENT TO

 



CONVERTIBLE SUBORDINATED PROMISSORY NOTE


 

 


 


THIS
SECOND AMENDMENT TO CONVERTIBLE SUBORDINATED NOTE PURCHASE
AGREEMENTAND SECOND AMENDMENT TO CONVERTIBLE
SUBORDINATED  PROMISSORY NOTE
(this “Amendment”), effective as
of May 25, 2018, is made and entered into by and between
MobileSmith, Inc., a Delaware corporation (the “Company”), and the holder
(the “Holder”) of the
Convertible Subordinated Promissory Note (the “Note”)
issued by the Company on December 11, 2014 pursuant to that certain
Convertible Subordinated Note Purchase Agreement, dated December
11, 2014 (as amended through
the date hereof, the “Note Purchase Agreement”)
between the Company and the Holder. Capitalized
terms used but not defined herein have the meanings assigned to
them in the Note Purchase Agreement.


 

 


WITNESSETH:

 


 


WHEREAS, The
Company and the Holder desires to amend the Note previously issued
pursuant to the Note Purchase Agreement to provide that the
Maturity Date of the Note be extended from November 14, 2018 to
November 14, 2020, and to provide that the definition of
“Maturity Date” contained in any Additional Note issued
on or after the date hereof shall be conformed to the definition
thereof contained in the Note, as hereby amended;


 

 


WHEREAS, Section
9(a) of the Note Purchase Agreement provides that any provision of
the Note Purchase Agreement may be amended with the written consent
of the Company and the Holders of at least a Requisite
Percentage;

 


 

 


WHEREAS, Section 8
of the Note provides that any provision of the Notes may be amended
with the written consent of the Company and the Holders of at least
a Requisite Percentage;


 

 


WHEREAS, the Holder
listed on the signature page to this Amendment holds a Requisite
Percentage necessary to amend the provisions of each of the Note
and the Note Purchase Agreement;

 


 


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


 

 

Section
1.                              
Amendment to Note Purchase
Agreement. All references in the Note Purchase Agreement to
“Note” or “Notes” shall mean the form of
Convertible Subordinated Promissory Note attached hereto as
Exhibit
1.

 


 

Section
2.                              
Amendment to
Note.

 


 

(a) The last sentence
of the first paragraph of the Note shall be deleted and the
following shall be inserted in lieu thereof:


 


   
           
            “All
unpaid principal, together with any then unpaid and accrued
interest and other amounts payable hereunder, shall be due and
payable on the earlier of (i) November 14, 2020, (ii) a Change of
Control or (iii) when, upon or after the occurrence of an Event of
Default (as defined below), such amounts are declared due and
payable by            
           
            Investor
or made automatically due and payable in accordance with the terms
hereof (such date upon which all amounts payable hereunder are due
is referred to herein as the “Maturity
Date”).”


 

(b) The Maturity Date
as defined in any Additional Note issued on the date hereof or
hereafter shall be the same as provided in the Note, as hereby
amended.


 

 

Section
3.                              
Ratification.
Except as specifically amended above, each of the Note and the Note
Purchase Agreement shall continue in full force and effect in
accordance with its terms, and is hereby in all respects ratified
and confirmed.




 








 





 

Section
4.                              
Counterparts. This
Amendment may be executed in several counterparts and by facsimile
or other electronic transmission, each of which shall be an
original and all of which together shall constitute but one and the
same.


 

 



[Remainder of Page Intentionally Left Blank]


 


 


 

 


 




 








 





 


IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered as of the date first above
written.


 

 


 

 


MOBILESMITH,
INC.


 


By:
/s/ Gleb
Mikhailov



Name:
Gleb Mikhailov

   
             
Title: Chief Financial Officer


 


 


UBP,
UNION BANCAIRE PRIVEE


 


By:
/s/ Jean-Batiste
Erath



Name: 
Jean-Batiste Erath



Title:
Director



 


 


 


 


 


 


 

 



[Signature Page to Second Amendment to Convertible Subordinated
Note Purchase Agreement, and Second Amendment to Convertible
Subordinated Promissory Note]

 


 


2

 


 




 








 





 



EXHIBIT 1

 


 

 


THE
NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF
(THE “SECURITIES”) HAVE BEEN ISSUED AND SOLD IN
RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “1933 ACT”), AND APPROPRIATE
EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES LAWS OF OTHER
APPLICABLE JURISDICTIONS. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD OR TRANSFERRED OTHER THAN PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM UNDER THE 1933 ACT
AND THE APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION. THE
ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE OF THE
PROPOSED SALE OR TRANSFER WITH THE REGISTRATION REQUIREMENTS OF THE
1933 ACT OR EXEMPTION THEREFROM.


 

 


CONVERTIBLE
SUBORDINATED PROMISSORY NOTE

 


 

$500,000                                                                                                           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
        December 11,
2014


 


 

 


 


FOR
VALUE RECEIVED, MobileSmith, Inc., a Delaware corporation (the
“Company”) promises to pay to Union Bancaire
Privée, UBP SA (“Investor”), or its registered
assigns, in lawful money of the United States of America the
principal sum of Five Hundred Thousand Dollars ($500,000), or such
lesser amount as shall equal the outstanding principal amount
hereof, together with interest from the date of this Note on the
unpaid principal balance at a rate equal to 8.00% per annum,
computed on the basis of the actual number of days elapsed and a
year of 360 days. All unpaid principal, together with any then
unpaid and accrued interest and other amounts payable hereunder,
shall be due and payable on the earlier of (i) November 14, 2018,
(ii) a Change of Control or


(iii)
when, upon or after the occurrence of an Event of Default (as
defined below), such amounts are declared due and payable by
Investor or made automatically due and payable in accordance with
the terms hereof (such date upon which all amounts payable
hereunder are due is referred to herein as the “Maturity
Date”).

 


 

 


This
Note is one of a series of “Notes” issued pursuant to
the Convertible Subordinated Note Purchase Agreement, dated
December 11, 2014 (as amended, modified or supplemented, the
“Note Purchase Agreement”), between the Company and the
Investors (as defined in the Note Purchase Agreement). Capitalized
terms used herein and not otherwise defined shall have the meanings
assigned thereto in the Note Purchase Agreement. This Note and the
Investor are subject to certain restrictions, and are entitled to
certain rights and privileges, set forth in the Note Purchase
Agreement. This Note is expressly subject to Section 8,
Subordination, of the Note Purchase Agreement.


 

 


The
following is a statement of the rights of Investor and the
conditions to which this Note is subject, and to which Investor, by
the acceptance of this Note, agrees:

 


 

 

1. Definitions. As
used in this Note, the following capitalized terms have the
following meanings:


 

   
    (a) “Business
Day” means any day other than a Saturday or Sunday or other
day on which the New York Stock Exchange is permitted or required
by law to close.


 

   
    (b) the
“Company” includes the corporation initially executing
this Note and any Person which shall succeed to or assume the
obligations of the Company under this Note.


 

   
    (c) “Conversion Price” means One
Dollar and Forty Three Cents ($1.43).


 

   
    (d) “Change of
Control” means (i) any consolidation or merger or other
transaction or series of transactions to which the Company is a
party following which the “persons” that
“beneficially owned” (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly, the voting securities of the Company immediately prior
to such transaction “beneficially own”, directly or
indirectly, less than fifty percent (50%) of the voting securities
of the surviving entity (other than a financing transaction) or
(ii) the sale of all or substantially all of the assets of the
Company.

 

   
    (e) “Event of Default” has the
meaning given in Section 4 hereof.




 








 





 

   
    (f) “Note Purchase Agreement” has
the meaning given in the introductory paragraph
hereof.

    
   


   
    (g) “Obligations”
means and includes all loans, advances, debts, liabilities and
obligations, howsoever arising, owed by the Company to Investor of
every kind and description (whether or not evidenced by any note or
instrument and whether or not for the payment of money), now
existing or hereafter arising under or pursuant to the terms of
this Note, the Note Purchase Agreement and the Security Agreement,
including, all interest, fees, charges, expenses, attorneys’
fees and costs and accountants’ fees and costs chargeable to
and payable by the Company hereunder and thereunder, in each case,
whether direct or indirect, absolute or contingent, due or to
become due, and whether or not arising after the commencement of a
proceeding under Title 11 of the United States Code (11 U. S. C.
Section 101 et seq.), as amended from time to time (including
post-petition interest) and whether or not allowed or allowable as
a claim in any such proceeding.

 

   
    (h) “Person”
means and includes an individual, a partnership, a corporation
(including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture
or other entity or a governmental authority.


 

   
    (i) “Requisite
Percentage” means at least two-thirds of the aggregate
outstanding principal amount of the Notes issued pursuant to the
Note Purchase Agreement

 

   
    (j) “Transaction
Documents” means this Note, each of the other Notes issued
under the Note Purchase Agreement, and the Note Purchase
Agreement.

 

2. Interest. Accrued
interest on this Note shall be payable in cash in quarterly
installments commencing on the third month anniversary of the date
of issuance of this Note with the final installment payable on the
Maturity Date.


 

3.
    Prepayment. This Note may not be prepaid without
the consent of the holders of a Requisite Percentage.

 

4. Events of Default.
The occurrence of any of the following shall constitute an
“Event of Default” under this Note and the other
Transaction Documents:


 

   
    (a) Failure to Pay. The
Company shall fail to pay (i) when due any principal, or interest
payment or other sum on the due date hereunder or (ii) any other
payment required under the terms of this Note or any other
Transaction Document on the date due and such failure continues for
a period of five (5) business days after the due date;

 

  
    (b) Non-Performance of
Affirmative Covenants. The Company shall default in the due
observance or performance of any material covenant set forth in the
Note, the Note Purchase Agreement or the Security Agreement, which
default shall continue uncured for fifteen (15) days after receipt
of written notice to the Company thereof;

 

  
    (c) Voluntary
Bankruptcy or Insolvency Proceedings. The Company shall (i) apply
for or consent to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial part
of its property,


(ii) be
unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the
benefit of its or any of its creditors, (iv) be dissolved or
liquidated, (v) become insolvent (as such term may be defined or
interpreted under any applicable statute), (vi) commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or
hereafter in effect or consent to any such relief or to the
appointment of or taking possession of its property by any official
in an involuntary case or other proceeding commenced against it, or
(vii) take any action for the purpose of effecting any of the
foregoing;

 

   
    (d) Involuntary
Bankruptcy or Insolvency Proceedings. Proceedings for the
appointment of a receiver, trustee, liquidator or custodian of the
Company or of all or a substantial part of the property thereof, or
an involuntary case or other proceedings seeking liquidation,
reorganization or other relief with respect to the Company or the
debts thereof under any bankruptcy, insolvency or other similar law
now or hereafter in effect shall be commenced and an order for
relief entered or such proceeding shall not be dismissed or
discharged within sixty


(60)
days of commencement;

 

   
    (e) Judgments. One or
more judgments, decrees or orders (excluding settlement orders) for
the payment of money shall be entered against the Company or any of
its subsidiaries involving in the aggregate a liability
of


$1,000,000 or more,
and any such judgment, decree or order shall continue without
discharge or stay for a period of sixty (60) days; or




 








 





 

   
    (f) Cross-Defaults. The
Company or any of its subsidiaries shall default in the performance
or observance of any agreement or instrument relating to any
indebtedness, or any other event shall occur or condition exist,
and the effect of such default, event or condition is to cause or
permit the holder or holders of any such indebtedness to cause
indebtedness, in excess of $500,000 individually or in the
aggregate, to become due prior to its stated maturity.

 

5. Rights of Investor
upon Default. Upon the occurrence or existence of any Event of
Default (other than an Event of Default described in Sections 4(c)
or 4(d)) and at any time thereafter during the continuance of such
Event of Default, a default interest rate of fifteen percent (15%)
will accrue on any overdue Obligations. The holders of a Requisite
Percentage may, by written notice to the Company, declare all
outstanding Obligations payable by the Company hereunder to be
immediately due and payable without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly
waived. Upon the occurrence or existence of any Event of Default
described in Sections 4(c) and 4(d), immediately and without
notice, all outstanding Obligations payable by the Company
hereunder shall automatically become immediately due and payable,
without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived. In addition to the
foregoing remedies, upon the occurrence or existence of any Event
of Default and subject to the consent of the Agent, Investor may
exercise any other right power or remedy granted to it by the
Transaction Documents or otherwise permitted to it by law, either
by suit in equity or by action at law, or both.

 

6.
    Conversion.


 

   
    (a) Optional
Conversion. At any time on or prior to the Maturity Date each
Investor will have the option to convert all or a portion of the
entire principal amount of the Notes outstanding into Common Stock
immediately upon the Investor’s request; provided, however,
that if, at the time of any particular conversion, the Company does
not have the number of authorized shares of Common Stock sufficient
to allow for such conversion, the Investors may only convert that
portion of their Notes outstanding for which the Company has a
sufficient number of authorized shares of Common Stock. To the
extent multiple Investors, under the Note Purchase Agreement, the
2007 Note Purchase Agreement (as defined in the Note Purchase
Agreement), or both, request conversion of their Notes on the same
date, any limitations on conversion shall be applied on a pro rata
basis. In such case, the Investors may request, in writing, that
the Company call a special meeting of the stockholders of the
Company specifically for the purpose of increasing the number of
authorized shares of Common Stock to cover the remaining portion of
the Notes outstanding, as well as the maximum issuances
contemplated pursuant to the Company’s 2004 Equity
Compensation Plan, within 90 calendar days after the
Company’s receipt of the Investors’ written request.
Notwithstanding the above, the Company shall use its best efforts
to increase its number of authorized shares so as to allow for the
full conversion of any outstanding Notes on the earlier of: (1)
promptly after the date on which a request for conversion, for
which there are not sufficient shares available to effect such
conversion, is received by the Company, or (2) the time of the next
shareholder meeting. The number of shares of Common Stock that this
Note may be converted into shall be determined by dividing the
principal amount then outstanding by the Conversion Price at the
time of conversion. If the Investor elects to convert this Note on
demand, it shall provide the Company with written notice of its
election at least one (1) day prior to the date selected for
conversion, by submission of the notice of conversion attached as
Exhibit A hereto. Upon conversion, the Investor shall deliver to
the Company the original of this Note (or a notice to the effect
that the original Note has been lost, stolen or destroyed and an
agreement reasonably acceptable to the Company whereby the holder
agrees to indemnify the Company from any loss incurred by it in
connection with this Note). However, upon such conversion of this
Note, this Note shall be deemed converted and of no further force
and effect, whether or not the Note is delivered for cancellation
as set forth in the preceding sentence. If there shall occur a
Change of Control, the Company shall give written notice to the
Investor at least five (5) days prior to any closing thereof and
the Investor’s election to convert this Note shall be
conditional upon the consummation thereof.


 

 
    (b) Mechanics of
Optional Conversion. As soon as practicable following surrender by
the Investor of the original of this Note, the Company shall issue
and deliver to Investor a certificate or certificates for the
shares of Common Stock into which the Note has been converted
(bearing such legends as may be required or advisable in the
opinion of counsel to the Company). Such conversion shall be deemed
to have been made immediately prior to the close of business on the
date selected for the conversion and the Investor shall be treated
for all purposes as the record holder or holders of such Common
Stock on such date.

 

   
(c) Fractional Shares;
Interest; Effect of Conversion. No fractional shares shall be
issued upon conversion of this Note. In lieu of the Company issuing
any fractional shares to Investor upon the conversion of this Note,
the Company shall pay to Investor an amount equal to the product
obtained by multiplying the Conversion Price by the fraction of a
share not issued pursuant to the previous sentence. Upon conversion
of this Note in full and the payment of any
amounts specified in this Section 6(c), the Company shall be
released from all its obligations and liabilities under this
Note.



 







 





 

7. Successors and
Assigns. Subject to the restrictions on transfer described in
Sections 9 and 10 below, the rights and obligations of the Company
and Investor shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the
parties.

 

8. Waiver and
Amendment. Any provision of this Note may be amended, waived or
modified upon the written consent of the Company and the holders of
a Requisite Percentage.


 

9. Transfer of this
Note or Securities Issuable on Conversion Hereof. With respect to
any offer, sale or other disposition of this Note or securities
into which such Note may be converted, Investor will give written
notice to the Company prior thereto, describing briefly the manner
thereof, together with (unless waived by the Company) a written
opinion of Investor’s counsel, or other evidence if
reasonably satisfactory to the Company, to the effect that such
offer, sale or other distribution may be effected without
registration or qualification (under any federal or state law then
in effect). Upon receiving such written notice and reasonably
satisfactory opinion, if so requested, or other evidence, the
Company, as promptly as practicable, shall notify Investor that
Investor may sell or otherwise dispose of this Note or such
securities, all in accordance with the terms of the notice
delivered to the Company. If a determination has been made pursuant
to this Section 9 that the opinion of counsel for Investor, or
other evidence, is not reasonably satisfactory to the Company, the
Company shall so notify Investor promptly after such determination
has been made. Each Note thus transferred and each certificate
representing the securities thus transferred shall bear a legend as
to the applicable restrictions on transferability in order to
ensure compliance with the Securities Act, unless in the opinion of
counsel for the Company such legend is not required in order to
ensure compliance with the Securities Act. The Company may issue
stop transfer instructions to its transfer agent in connection with
such restrictions. Subject to the foregoing, transfers of this Note
shall be registered upon registration books maintained for such
purpose by or on behalf of the Company. Prior to presentation of
this Note for registration of transfer, the Company shall treat the
registered holder hereof as the owner and holder of this Note for
the purpose of receiving all payments of principal and interest
hereon and for all other purposes whatsoever, whether or not this
Note shall be overdue and the Company shall not be affected by
notice to the contrary. Notwithstanding anything in this Section 9
to the contrary, no opinion of counsel shall be required with
respect to any transfer by an Investor to its officers, directors,
partners, members or other affiliates.


 

10. Assignment by the
Company. Neither this Note nor any of the rights, interests or
obligations hereunder may be assigned, by operation of law or
otherwise, in whole or in part, by the Company without the prior
written consent of the holders of a Requisite
Percentage.


 

11.    
Notices. All notices, requests, demands, consents, instructions or
other communications required or


permitted hereunder
shall be in writing and faxed, mailed or delivered to each party at
the respective addresses of the parties as set forth in the Note
Purchase Agreement, or at such other address or facsimile number as
the Company shall have furnished to Investor in writing. All such
notices and communications will be deemed effectively given the
earlier of (i) when received, (ii) when delivered personally, (iii)
one business day after being delivered by facsimile (with receipt
of appropriate confirmation), (iv) one business day after being
deposited with an overnight courier service of recognized standing
or (v) two days after being deposited in the


U.S.
mail, first class with postage prepaid.

 

12. Pari Passu Notes.
Investor acknowledges and agrees that the payment of all or any
portion of the outstanding principal amount of this Note and all
interest hereon shall be pari passu in right of payment and in all
other respects to the other Notes issued pursuant to the Note
Purchase Agreement or pursuant to the terms of such
Notes.

 

13. Usury. In the event
any interest is paid on this Note which is deemed to be in excess
of the then legal maximum rate, then that portion of the interest
payment representing an amount in excess of the then legal maximum
rate shall be deemed a payment of principal and applied against the
principal of this Note.


 

14. Remedies
Cumulative. The remedies of Investor as provided herein and in the
Note Purchase Agreement and in any other documents governing or
securing repayment hereof shall be cumulative and concurrent and
may be pursued singly, successively, or together, at the sole
discretion of Investor to the extent provided herein and in the
Note Purchase Agreement and may be exercised as often as occasion
therefore shall arise. No act or omission of the Investor,
including specifically, but without limitation, any failure to
exercise any right, remedy or recourse, shall be effective as a
waiver of any right of the Investor hereunder, unless set forth in
a written document executed by the Investor, and then only to the
extent specifically recited therein. A waiver or release with
reference to one event shall not be construed as continuing, as a
bar to, or as a waiver or release of any subsequent right,
remedy or recourse as to any subsequent event. All notices,
waivers, releases and/or consents by an Investor shall be directed
to the Company only through the Agent.  




 








 





 

15. No Rights of a
Stockholder. Nothing contained in this Note shall be construed as
conferring upon the Investor or any other Person the right to vote
or consent or to receive notice as an stockholder in respect of
meetings of stockholders for the election of directors of the
Company or any other matters or any rights whatsoever as a
stockholder of the Company prior to the time that this Note is
converted pursuant to Section 6.


 

16. Governing Law. This
Note and all actions arising out of or in connection with this Note
shall be governed by and construed in accordance with the laws of
the State of Delaware, without regard to the conflicts of law
provisions of the State of Delaware, or of any other
state.


 


 


(Signature Page
Follows)


 



 







 





 


 


The
Company has caused this Note to be issued as of the date first
written above.

 


 


MOBILESMITH,
INC.


a
Delaware corporation


 


By:

   
             
Name: Gleb Mikhailov

   
             
Title: Chief Financial Officer




 








 





 


EXHIBIT
A


 

 


FORM OF
NOTICE OF CONVERSION


(To be
executed by the Registered Holder in order to Convert the
Note)

 


 

 

The undersigned
hereby irrevocably elects to convert $___________ of the principal
amount of the above Note No. ___ into shares of Common Stock of
MobileSmith, Inc., (the “Company”) according to the
conditions hereof, as of the date written below.

 

Date of Conversion
___________________________________________________________
                                                                                                        

Applicable
Conversion Price
____________________________________________________


Number of shares of
the Company’s Common Stock beneficially owned or deemed
beneficially owned by the Holder on the Date of Conversion:
_______________________________________________


Signature
___________________________________________________________________
                                                                                                         

[Name]



Address:
___________________________________________________________________