ex10-38





 







Exhibit 10.38

 

 



FORBEARANCE AGREEMENT

 

 


This
FORBEARANCE AGREEMENT (this “Agreement”) is entered
into as of May 20, 2020, by and between Exactus, Inc., a Nevada
corporation, (the “Company”), and 3i, LP, a
Delaware limited partnership, (“Holder”). Capitalized
terms used but not otherwise defined herein shall have the
respective meanings ascribed to such terms in that certain
Securities Purchase Agreement, dated as of November 27, 2019, by
and between the Company and Holder.

 



RECITALS

 



A. The Company issued
to Holder that certain 8% Senior Secured Convertible Promissory
Note, in the original principal amount of $833,333.33, dated
November 27, 2019 (the “Note”).

 


B. 
The
Company is currently in arrears in payments required under the
Note, having paid $50,000 of the required $110,000 payment due
February 25, 2020, and having paid $0 of the payments due April 1,
2020 and May 1, 2020. Such failures to make the payments required
under the Note each constitute an Event of Default (the
“Specified
Defaults”) under the Transaction
Documents.

 


C. As a result of the
Specified Defaults, the indebtedness evidenced by the Transaction
Documents is due and payable immediately, and Holder has the right,
among other things, pursuant to the terms of the Transaction
Documents and applicable law, to collect the indebtedness due to
Holder under the Note.

 


D. The Company has
requested that during the Forbearance Period (as hereinafter
defined), Holder forbear from exercising its rights and remedies
against Company with
respect to the Specified Defaults, notwithstanding the existence of
the Specified Defaults.

 


E. Subject to the
terms and conditions set forth herein, and without prejudice to
anything contained in Section 2(b) below, Holder has agreed to
forbear from exercising any default-related rights and remedies
against the Company for a limited period of time in accordance with
this Agreement.

 


NOW, THEREFORE, in consideration of the
foregoing, the terms, covenants and conditions contained herein and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as
follows:

 


SECTION
1. Confirmation
of Principal and Specified Defaults.

 


(a) The Company
acknowledges and agrees that as of the close of business on May 15,
2020, the aggregate principal balance of the outstanding amount
under the Note (the “Principal”) was not less
than $791,245.79. The foregoing amount does not include interest,
fees, expenses and other amounts which are chargeable or otherwise
reimbursable under the Transaction Documents (together with the
Principal, the “Obligations”).

 


(b) The Company
acknowledges and agrees that ((i) the Specified Defaults constitute
an Event of Default and that there are no disputes as to the
occurrence and continued existence of the Specified Defaults; (ii)
the Specified Defaults are not curable; (iii) Holder has the
right to payment of the Obligations, to immediately enforce its
right to payment of the Obligations, to immediately enforce its
security interests in the collateral securing the Note, and to
exercise all other rights, powers and remedies provided to Holder
under the Transaction Documents; and (iii) the Company has no
defenses, offsets and/or counterclaims against Holder and/or its
agents in connection with the Note or against the enforcement of
the Note.

 


 




 








 






 


SECTION
2. Forbearance.

 


(a) Effective as of the
date hereof, Holder agrees that until the expiration or termination
of the Forbearance Period (as hereinafter defined), it will
temporarily forbear from exercising any Default-related rights and
remedies against the Company, in each case solely with respect to
the Specified Defaults; provided, however, that:

 


(i) except as otherwise
expressly provided herein, the Specified Defaults shall each
continue to constitute an actionable Event of Default for the
purpose of triggering all limitations, restrictions or prohibitions
on certain actions that may be taken or omitted or otherwise
acquiesced to by or on behalf of Company pursuant to the
Transaction Documents, including, without limitation, any
limitations, restrictions or prohibitions with respect to any
distribution, advance or other payment directly or indirectly from
or for the benefit of Company to any direct or indirect owner of an
equity interest in Company; and any actions or inactions taken or
omitted or otherwise acquiesced to by or on behalf of Company in
violation of such provisions, in each case while any Default or
Event of Default (including the Specified Defaults) exists, will
constitute additional Events of Default under the Transaction
Documents, as well as a Forbearance Default (as hereinafter
defined) under this Agreement; and

 


(ii) default
and/or other notices and correspondence to Company may be delivered
in accordance with the terms of this Agreement.

 


                        (b)
As used herein, the term “Forbearance Period” shall
mean the period beginning on the date hereof and ending on the
earliest to occur of: (i) the date on which Holder delivers to the
Company a written notice terminating the Forbearance Period, which
notice may be delivered at any time upon or after the occurrence of
any Forbearance Default (as hereinafter defined), and (ii) the date the Company
repudiates or asserts any defense to any Obligation or other
liability under or in respect of this Agreement or the Transaction
Documents or applicable law, or makes or pursues any claim or cause
of action against Holder; (the occurrence of any of the foregoing
clauses (i) and (ii), a “Termination Event”). As
used herein, the term “Forbearance Default”
shall mean the occurrence of any Default or Event of Default other
than the Specified Defaults or the failure of Company to timely
comply with any material term, condition, or covenant set forth in
this Agreement. Any Forbearance
Default will not be effective until five (5) Business Days after
receipt by Company of written notice from Holder of such
Forbearance Default. Any effective Forbearance Default shall
constitute an immediate Event of Default under the Transaction
Documents.

 


                       (c)
Upon the occurrence of a Termination Event, the agreement of Holder
hereunder to forbear from exercising any default-related rights and
remedies shall immediately terminate without the requirement of any
demand, presentment, protest, or notice of any kind, all of which
the Company waives. The Company agrees that Holder may at any time
thereafter proceed to exercise any and all of its rights and
remedies under any or all of the Transaction Document and/or
applicable law, including, without limitation, its rights and
remedies with respect to any of the Specified Defaults that are
continuing at such time.

 


                 (d)
Any agreement to extend the Forbearance Period, if any, must be set
forth in writing and signed by a duly authorized signatory of
Holder, and the Company acknowledges that Holder has not made any
assurances concerning any possibility of an extension of the
Forbearance Period.

 


 


 


 




 








 






 


SECTION
3. Transaction
Documents.

 


(a) Except as expressly
modified hereby, all terms, conditions, covenants, representations
and warranties contained in the Transaction Documents, and all
rights of Holder and all of the Obligations, shall remain in full
force and effect.

 


(b) Except as expressly
set forth herein, the execution, delivery and effectiveness of this
Agreement shall not directly or indirectly (i) create any
obligation to defer any enforcement action after the occurrence and
continuance of any Default or Event of Default (including, without
limitation, any Forbearance Default), (ii) constitute a consent or
waiver of any past, present or future violations of any provisions
of the Transaction Documents, or (iii) amend, modify or
operate as a waiver of any provision of the Transaction Documents
or any right, power or remedy of Holder. Except as expressly set
forth herein, Holder reserves all of its respective rights, powers,
and remedies under the Agreement, the Transaction Documents and
applicable law.

 


(c) From and after the
Forbearance Effective Date, the term “Transaction
Documents” in the Transaction Documents shall include,
without limitation, this Agreement and any agreements, instruments
and other documents executed and/or delivered in connection
herewith.

 


(d) This Agreement
shall not be deemed or construed to be a satisfaction,
reinstatement, novation or release of the Transaction Documents or
any obligations arising thereunder.

 


SECTION
4. Additional
Covenants.

 


(a) The Company shall
issue to Holder 500,000 shares of its common stock pursuant to Rule
506 under Regulation D on or prior to May 22, 2020.

 


(b) Unless or until a
Forbearance Default occurs, interest under the Note shall continue
to accrue at the non-default rate of 8% per annum as stated
therein.

 


(c) Unless or until a
Forbearance Default occurs or as otherwise specified in the Note,
the Fixed Conversion Price under the note shall remain at
$0.50.

 


(d) Unless or until a
Forbearance Default occurs, the Company shall be permitted to issue
shares of Common Stock or options to employees, officers,
directors. consultants, advisors or contractors of the Company
during the period commencing on the Original Issuance Date and
ending on the date on which no Notes are outstanding, in an amount
not to exceed ten (10%)
percent of the number of issued and outstanding shares of
Common Stock of the Company.


 


(e)   
The Company shall pay Holder $60,000 in cash on or before July 1,
2020. Additional monthly payments
required under the Amortization Schedule shall continue to be due
on or before the first day of each calendar month thereafter,
commencing with the $110,000 payment originally due April 1, 2020
now being due on or before August 1, 2020, and the subsequent
monthly payments listed on the Amortization Schedule to be paid
monthly in the sequence listed. Interest shall continue to
accrue on the principal balance of the Note at the rate(s) stated
therein, with all additional accrued interest resulting from this
extension of payment deadlines to be paid as part of the last
monthly payment. For the
avoidance of doubt, payments that are in arrears from February,
April and May can be paid in whole or in part at any time at the
sole election of the Holder in shares of Common Stock at the
Amortization Conversion Price.

 


 




 








 






 


SECTION
5. Construction.

 


The
Company and Holder have participated jointly in the negotiating and
drafting of this Agreement and agree that any rule of construction
to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in the construction or
interpretation of this Agreement, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of
the authorship of any provision of this Agreement.

 


SECTION
6. Counterparts.

 


This
Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed an original, but all such
counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart.

 


SECTION
7. Governing
Law.

 


The law
of the State of New York shall govern all matters arising out of,
in connection with or relating to this Agreement, including,
without limitation, its validity, interpretation, construction,
performance and enforcement.

 


SECTION
8. Severability.

 


The
invalidity, illegality, or unenforceability of any provision in or
obligation under this Agreement in any jurisdiction shall not
affect or impair the validity, legality, or enforceability of the
remaining provisions or obligations under this Agreement or of such
provision or obligation in any other jurisdiction. If feasible, any
such offending provision shall be deemed modified to be within the
limits of enforceability or validity; however, if the offending
provision cannot be so modified, it shall be stricken and all other
provisions of this Agreement in all other respects shall remain
valid and enforceable.

 


SECTION
9. Final
Agreement.

 


This
Agreement, the Transaction Documents, and the other written
agreements, instruments, and documents entered into in connection
therewith set forth in full the terms of agreement between the
parties hereto and thereto and are intended as the full, complete,
and exclusive contracts governing the relationship between such
parties, superseding all other discussions, promises,
representations, warranties, agreements, and understandings between
the parties with respect thereto. Holder’s exercise or
failure to exercise any rights or remedies in a particular instance
shall not operate as a waiver of its right to exercise the same or
different rights and remedies in any other instances. No course of
dealing between Holder, on one hand, and the Company, on the other
hand, is established by virtue of the Company’s
non-compliance therewith. The Company understands that
Holder’s failure to insist on strict performance as of such
date shall not be interposed as a defense to Holder’s
exercise of its legal rights, nor shall it constitute a waiver of
any thereof.

 

 



[Signature Page Follows]

 


 




 








 






 


 


 



            

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





 

 




	
 

	
COMPANY:
 


EXACTUS, INC., as
Company


 


 


By:
/s/ Emiliano
Aloi


Name:
Emiliano Aloi


Title:
Interim Chief Executive Officer

 


 





HOLDER:


 


3i, LP,
as Holder


 


 


By:
/s/ Maier
Tarlow


Name:
Maier Tarlow



Title:
General Partner