Document:

ex_291476.htm

Exhibit 10.1

 

CONVERSION RIGHTS AGREEMENT

 

This Conversion Rights Agreement (the “Agreement”), dated effective as of October 14, 2021 (the “Effective Date”), is by and between Blackboxstocks, Inc., a Nevada corporation (the “Company”) and Gust Kepler, an individual resident of the State of Texas (along with any transferee of Holder Shares (hereinafter defined) that enters into a Joinder Agreement (hereinafter defined), the/a “Holder”).

 

WHEREAS, Holder is the registered beneficial owner of 3,269,998 shares (the “Holder Shares”) of Series A Convertible Preferred Stock (the “Series A Stock”) of the Company as of the Effective Date;

 

WHEREAS, the Company has requested that Holder agree to limit its right under the Certificate of Designation of the Series A Stock (the “Series A Designation”) to convert the Holder Shares (the “Designation Conversion Rights”) into common stock, par value $0.0001 per share (the “Common Stock”) of the Company as provided in this Agreement; and

 

WHEREAS, the Holder is willing to forego and limit conversion rights with respect to the Holder Shares, subject to the terms and conditions more particularly described in this Agreement;

 

NOW THEREFORE, in consideration of the foregoing recitals, the covenants and agreements contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the parties hereto agree as follows:

 

1.        Limits on Conversion of Holder Shares. Notwithstanding the Designation Conversion Rights and/or anything to the contrary in the Series A Designation, the Holder Shares may only be converted into Common Stock of the Company upon the following terms:

 

(a)          In the event that Company’s Market Capitalization is less than $150,000,000 on the last trading day of any calendar quarter, the outstanding Holder Shares shall be convertible into Common Stock on a 5-for-1 share basis;

 

(b)          In the event that Company’s Market Capitalization is equal to or greater than $150,000,000 but less than $200,000,000 on the last trading day of any calendar quarter, the outstanding Holder Shares shall be convertible into Common Stock on a 3.3-for-1 share basis;

 

(c)          In the event that Company’s Market Capitalization is equal to or greater than $200,000,000 but less than $250,000,000 on the last trading day of any calendar quarter, the outstanding Holder Shares shall be convertible into Common Stock on a 2.5-for-1 share basis;

 

(d)          In the event that Company’s Market Capitalization is equal to or greater than $250,000,000 but less than $350,000,000 on the last trading day of any calendar quarter, the outstanding Holder Shares shall be convertible into Common Stock on a 1.75-for-1 share basis; and

 

(e)          In the event that Company’s Market Capitalization is equal to or greater than $350,000,000 on the last trading day of any calendar quarter, the outstanding Holder Shares shall be thereafter convertible into Common Stock pursuant to the Designation Conversion Rights (on a 1-for-1 share basis) as provided for in the Certificate of Designation.

 

(f)         In the event that the conversion ratio for the Holder Shares increases as a result of meeting the Market Capitalization thresholds stated in section 1(b), (c), (d) or (e) above the conversion ratio shall not be reduced at a later date regardless of the Company’s Market Capitalization.

 

 

 

 

For purposes of this Agreement, “Market Capitalization” shall be calculated by multiplying the total number of issued and outstanding shares of Common Stock plus the total number of common stock equivalent shares (as calculated using the treasury stock method in the same manner as calculating earnings per share in accordance with generally accepted accounting principles) by the Current Market Price on the applicable calculation date. The “Current Market Price” shall be the volume-weighted average price of the Company’s Common Stock on each trading day during the thirty (30) consecutive days immediately preceding the price calculation date. Notwithstanding anything to the contrary in the Series A Designation, conversion of Holder Shares by the Company as provided in this Agreement shall be considered full performance of any and all Company obligations with respect to any Holder Shares tendered for conversion and the Company shall have no further obligation to Holder with respect to such Holder Shares.

 

2. Joinder of Holder Share Transferees. Prior notice shall be given to the Company by the Holder of any transfer of the Holder Shares. Prior to consummation of any transfer by the Holder of any of the Holder Shares, Holder shall cause: (i) any transferee who is not already a party to this Agreement to execute and deliver to the Company a Joinder Agreement in the form of Exhibit A hereto (a “Joinder Agreement”) and in which such transferee agrees to be bound by the terms and conditions of this Agreement; and (ii) if the transferee is an individual, any spouse of such transferee to execute and deliver to the Company a Spousal Consent. Upon any transfer of Holder Shares by any holder thereof, in accordance with this Section 2 and the other terms of this Agreement, the transferee thereof shall be substituted for, and shall assume all the rights and obligations under this Agreement of, the transferor thereof.

 

3.         Termination. This Agreement shall terminate upon the earlier of (a) the date on which all of the Holder Shares have been converted to Common Stock and (b) the date the Market Capitalization threshold stated in section 1(e) above is met.

 

4.            Miscellaneous.

 

(a)       Further Assurances. In connection with this Agreement and the transactions contemplated hereby, the Company and each holder hereby agrees, at the request of the Company, to execute and deliver such additional documents, certificates, instruments, conveyances, and assurances and to take such further actions as may be required to carry out the provisions hereof and give effect to the transactions contemplated hereby.

 

(b)         Amendment and Modification. This Agreement may only be amended, modified, or supplemented by an instrument in writing executed by the Company and the Holder (or holders) holding all of the issued and outstanding Holder Shares.

 

(c)         Waiver. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach, or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.

 

(d)       Spousal Consent. Each holder of Holder Shares who has a spouse on the date of this Agreement or a Joinder Agreement shall cause such holder’s spouse to execute and deliver to the Company a spousal consent in the form of Exhibit B hereto (a “Spousal Consent”), pursuant to which the spouse acknowledges that he or she has read and understood the Agreement and agrees to be bound by its terms and conditions. If any holder of Holder Shares should marry or engage in a marital relationship following the date of this Agreement or a Joinder Agreement, such holder of Holder Shares shall cause his or her spouse to execute and deliver to the Company a Spousal Consent within five business days thereof.

 

[The remainder of this page has intentionally been left blank]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

 

	 	
			Company:

			
	 	 
	 	
			Blackboxstocks, Inc., a Nevada corporation

			 

			
	 	
			By: ____________________________

			    Robert Winspear, Chief Financial Officer

			
	 	 
	 	
			Holder:

			
	 	 
	 	_______________________________

			Gust Kepler

 

 

 

 

 

Exhibit A

 

JOINDER AGREEMENT

 

Reference is hereby made to the Conversion Rights Agreement dated effective as of October 14, 2021 (as amended from time to time, the “Agreement”), by and by and between Blackboxstocks, Inc., a Nevada corporation (the “Company”) and Gust Kepler, an individual resident of the State of Texas (along with any transferee of Holder Shares (hereinafter defined) that enters into a Joinder Agreement (hereinafter defined), the/a “Holder”). Pursuant to and in accordance with Section 2 of the Agreement, the undersigned hereby agrees that upon the execution of this Joinder Agreement, it shall become a party to the Agreement and shall be fully bound by, and subject to, all of the covenants, terms and conditions of the Agreement as though an original party thereto and shall be deemed to be a Holder of Holder Shares of the Company for all purposes thereof.

 

Capitalized terms used herein without definition shall have the meanings ascribed thereto in the Stockholders Agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed this Joinder Agreement as of ________________________.

 

	 	
			[TRANSFEREE STOCKHOLDER]

			 

			
	 	
			By_____________________

			 

			Name:

			Title:

			

 

 

 

 

Exhibit B

 

CONSENT OF SPOUSE

 

I, _______________, spouse _______________, acknowledge that I have read the Conversion Rights Agreement Conversion Rights Agreement dated effective as of October 14, 2021, by and by and between Blackboxstocks, Inc., a Nevada corporation (the “Company”) and Gust Kepler, an individual resident of the State of Texas (along with any transferee of Holder Shares (hereinafter defined) that enters into a Joinder Agreement (hereinafter defined), the/a “Holder”), to which this form of Consent is attached as Exhibit B (as amended from time to time, the “Agreement”), and that I understand the contents of the Agreement. I am aware that my spouse is a party to the Agreement and the Agreement contains provisions regarding and limiting the conversion of shares of Series A Convertible Preferred Stock (the “Series A Stock”) of the Company of the Company which my spouse may own, including any interest I might have therein.

 

I hereby agree that I and any interest, including any community property interest, that I may have in any shares of Series A Stock of the Company subject to the Agreement shall be irrevocably bound by the Agreement, including any limitations on conversion, transfer or other obligations as set forth in the Agreement. I hereby appoint __________________ as my attorney-in-fact with respect to the exercise of any rights and obligations under the Agreement.

 

This Consent shall be binding on my executors, administrators, heirs and assigns. I agree to execute and deliver such documents as may be necessary to carry out the intent of the Agreement and this Consent.

 

I am aware that the legal, financial and related matters contained in the Agreement are complex and that I am free to seek independent professional guidance or counsel with respect to this Consent. I have either sought such guidance or counsel or determined after reviewing the Agreement carefully that I will waive such right. I am under no disability or impairment that affects my decision to sign this Consent and I knowingly and voluntarily intend to be legally bound by this Consent.

 

Dated as of __________

 

	 	
			___________________________

			(Signature)

			 

			___________________________

			(Print Name)Exhibit 10.1

 

SECURED
CONVERTIBLE CREDIT LINE PROMISSORY NOTE

  

	US
    $XXX,XXX.XX	_____________
	 	Dania
    Beach, Florida

 

FOR
VALUE RECEIVED, Veritas Farms, Inc. with a current principal office address of 1815 Griffin Road, Suite 401, Dania Beach, Florida 33004
(the “Maker”), agrees and promises to pay to the order of the ________________, its successors and/or assigns (the “Holder”)
at the Holder’s address, or such other place as designated in writing by the Holder of this Secured Convertible Credit Line Promissory
Note (“Promissory Note”), the principal sum of XXX Dollars (US $XXX,XXX.XX) (“Maximum Principal Amount Committed”)
or such lesser amount as shall equal the aggregate unpaid principal amount of all funds loaned by the Holder to the Maker in accordance
with the terms of this Promissory Note, with interest (“Interest”) on the aggregate amount loaned at a rate of 10% per annum.
The Maker may, from time to time, borrow under the terms of this Promissory Note up to but not exceeding the Maximum Principal Amount
Committed of this Promissory Note in increments of Two Hundred and Fifty Thousand Dollars ($250,000.00) at any time prior to the Maturity
Date (as defined herein), upon delivery to Holder of a Draw Notice (the form of which is attached hereto as Exhibit A) for such amount.

 

All
unpaid principal (“Principal”), together with any then unpaid and accrued Interest and other amounts payable hereunder, shall
be due and payable by Maker to Holder, if not converted pursuant to the terms and conditions of this Promissory Note, on the earlier
of (i) _________, or (ii) following an Event of Default (as defined below) (such date, the “Maturity Date”). All payments
due hereunder shall be paid in lawful money of the United States of America which shall be legal tender in payment of all debts, in immediately
available funds, without offset, deduction or recoupment. Any payment by check or draft shall be subject to the condition that any receipt
issued therefore shall be ineffective unless the amount due is actually received by the Holder. Each payment shall be applied first to
the payment of all costs, fees and expenses incurred by or payable to the Holder in connection with the collection or enforcement of
this Promissory Note; second, to the payment of all accrued and unpaid Interest hereunder; and third, to the payment of the unpaid Principal
amount.

 

The
proceeds of this Promissory Note shall be used by the Maker for working capital.

 

As
collateral security for payment of the obligations under this Promissory Note, the Maker and the Holder have agreed that all obligations
hereunder will be secured by all the assets of the Maker, and Maker hereby grants to Holder a security interest and lien in all of Maker's
assets, wherever located, whether tangible or intangible, now existing, or hereafter acquired.

 

Optional
Conversion. At any time prior to the Maturity Date, a portion or all of the outstanding Principal amount of this Promissory Note, together
with a portion or all accrued but unpaid Interest hereunder (the “Outstanding Balance”), is convertible into shares of common
stock of the Maker (“Common Stock”), at the option of the Holder at a conversion price (“Conversion Price”) of
five cents ($0.05) per share of Common Stock.

 

Mechanics
of Conversion. In order to convert the Outstanding Balance, Holder shall deliver to the Maker a written Election to Convert (the form
of which is attached hereto as Exhibit B). Upon receipt of the written Election to Convert, the Maker shall issue and cause to be delivered
with all reasonable dispatch to or upon the written order of the Holder, and in such name or names as the Holder may designate, certificate(s)
evidencing the full number of Common Stock so purchased upon conversion of the Promissory Note. Such Common Stock shall be deemed to
have been issued and any person so designated to be named therein shall be deemed to have become a holder of record of such securities
as of the date of delivery of the Election to Convert, notwithstanding that the certificate(s) representing such securities shall not
actually have been delivered or that the securities transfer books of the Maker shall then be closed.

 

     

     

    

 

In
the event that the outstanding shares of Common Stock of the Maker hereafter is restructured or revised by recapitalization, reclassification,
combination, split or split-up or dividend, the aggregate number and kind of shares of Common Stock subject to conversion under this
Promissory Note shall be adjusted appropriately, both as to the number of shares of Common Stock and the Conversion Price. No fractional
share of Common Stock will be issued upon conversion, but any fractional share of Common Stock will be rounded up to the nearest whole
share of Common Stock.

 

In
case of any sale exchange, tender offer, redemption or buyout of the Maker’s Common Stock, or any consolidation of the Maker with
or merger of the Maker into another corporation, or in case of any sale, transfer or lease to another corporation of all or substantially
all other property of the Maker, the Maker or such successor or purchasing corporation, as the case may be, shall execute with the Holder
an agreement that the Holder shall have the right thereafter, upon payment of the Conversion Price in effect immediately prior to such
action, to convert this Promissory Note, on the same basis which it would have or have been entitled to receive after the happening of
such consolidation, merger, sale, transfer or lease had such conversion been accomplished immediately prior to such action. Such agreement
shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided herein. These provisions
shall similarly apply to successive consolidations, mergers, sales, transfers or leases.

 

This
Promissory Note may be prepaid at any time prior to the Maturity Date after providing the Holder with five (5) days notice of the Maker’s
intent to process the prepayment.

 

The
occurrence of any of the following shall constitute an “Event of Default” under this Promissory Note (each, an “Event
of Default”): (a) Maker shall fail to pay any Principal or Interest when due and payable hereunder; or (b) Maker shall fail to
deliver the Common Stock or recognize the Holder as a holder of record of such shares of Common Stock as of the date of delivery of the
Election to Convert in accordance with the terms hereof; or (c) a receiver, trustee or other similar official shall be appointed over
Maker; or (d) Maker shall make a general assignment for the benefit of creditors; or (e) Maker shall file a petition for relief under
any bankruptcy, insolvency or similar law; or (f) an involuntary proceeding shall be commenced or filed against Maker; or (g) Maker shall
default or otherwise fail to observe or perform any covenant, obligation, condition or agreement of Maker contained herein; or (h) any
representation, warranty or other statement made or furnished by or on behalf of Maker to Holder herein shall be false, incorrect, incomplete
or misleading; or (i) any lawsuit, money judgment, writ or similar process shall be entered or filed against Maker or any subsidiary
of Maker or any of its property or other assets for more than $100,000.00, unless otherwise consented to by Holder.

 

While
an Event of Default exists, the Maker hereby promises to pay Interest on the unpaid balance of this Promissory Note then outstanding
at the rate representing eighteen percent (18%) per annum or the highest rate allowed by law, whichever is lower, from the date of the
Event of Default to until and including the date actually paid. It is the intent of parties hereto that in no event shall the amount
of Interest due or payment in the nature of interest payable hereunder exceed the maximum rate of interest allowed by applicable law,
as amended from time to time, and in the event any such payment is paid by the Maker or received by Holder, then such excess sum shall
be credited as a prepayment of Principal, unless the Maker shall notify the Holder, in writing, that the Maker elects to have such excess
sum returned forthwith.

 

This
Promissory Note shall not be modified except by an instrument in writing signed by the party against whom enforcements of such modification
is sought. This Promissory Note shall be governed and construed in accordance with the laws of the State of Florida, without regard to
conflict of laws or principles thereof. Any suit or proceeding relating to this Promissory Note shall be brought or instituted only in
a court of competent jurisdiction in Broward County, Florida. No waiver by the Holder of any default hereunder shall be deemed to constitute
a waiver of any subsequent default. No exercise of any right or remedy hereunder shall preclude the exercise of any other right or remedy.
The Maker agrees to pay or reimburse the Holder for all costs and expenses of enforcing and preserving its rights under this Promissory
Note or any document or instrument executed in connection herewith (including reasonable attorneys’ fees and costs, whether in
or out of court, in original or appellate proceedings or in bankruptcy).

 

    2

     

    

 

The
Maker and all others who may become liable for the payment hereof jointly and severally: (a) waive presentment for payment, demand, notice
of demand, notice of non-payment or dishonor, protest and notice of protest of this Promissory Note, and all other notices in connection
with the delivery, acceptance, performance, default, or enforcement of the payment of this Promissory Note, (b) consent to all extensions
of time, renewals, postponements of time of payment of this Promissory Note, waivers or other modifications hereof from time to time
prior to or after the Maturity Date hereof, whether by acceleration or in due course, without notice, consent or consideration to any
of the foregoing, (c) agree to any substitution, exchange, addition or release of any party or person primarily or secondarily liable
hereon, and (d) agree that, notwithstanding the occurrence of any of the foregoing (except by the express written release by Holder),
the Maker shall be and remain directly and primarily liable for all sums due under this Promissory Note.

 

All
issue taxes, documentary stamp taxes, or other taxes (if any) required by law at any time to be affixed to this Promissory Note shall
be paid by the Maker. The Maker agrees to indemnify and hold the Holder, its affiliates, successors and assigns harmless from and against
the aggregate of all expenses, losses, costs, deficiencies, liabilities, penalties, fines, fees and damages (including related reasonable
counsel and paralegal fees and expenses) incurred or suffered by the Holder arising out of or resulting from the Maker’s failure
to pay such documentary stamp or other tax.

 

IN
WITNESS WHEREOF, the Maker has duly executed this Promissory
Note as of the day and year first above written.

 

	 	Maker
	 	Veritas Farms, Inc.
	 	 	 
	 	By:	 
	 	 	Ramon A. Pino
	 	 	Chief Financial Officer

 

	 	Holder
	 	_______________________
	 	 	                              
	 	By:	 
	 	 	 

 

    3

     

    

 

Exhibit
A

 

DRAW
NOTICE

 

_______________________

Via
Email: _______________________

 

The
undersigned, Veritas Farms, Inc. (the “Maker”), pursuant to the provisions of the Secured Convertible Credit Line Promissory
Note (the “Promissory Note") dated _______________by the Maker and agreed to by the _______________________ (the “Holder”),
wherein the Holder agreed and committed to loan Maker up to XXX Dollars (US $XXX,XXX.XX) pursuant to the terms of the Promissory Note,
and to date has loaned $_____________ to the Maker, hereby exercises its right to draw down and borrow, and hereby draws down ______________________________
($____________) under the terms of the Promissory Note. Payment is requested to be received from the Holder within three (3) business
days of the date of this Draw Notice.

 

Dated:
__________________

 

Veritas
Farms, Inc.

 

By:
_______________________________

Name:_____________________________

Title:
______________________________

 

    4

     

    

 

Exhibit
B

 

FORM
OF ELECTION TO CONVERT

 

The
undersigned, __________________________ (the “Holder”), the holder of the attached Secured Convertible Credit Line Promissory
Note dated _______________(“Promissory Note”) from Veritas Farms, Inc. (“Maker”), hereby irrevocably elects to
exercise its right to convert $_____________ of the Promissory Note into shares of Common Stock of Veritas Farms, Inc. a Nevada corporation,
as more fully described in the Promissory Note, and requests that the documentation evidencing such securities be issued in the name
of, and delivered to, __________________________________________, whose address is __________________________.

 

Dated:________________________

 

Holder

 

_____________________________

 

_____________________________

Signature

_____________________________

Name

_____________________________

Title

 

(Signature
must conform in all respects to name

of
Holder as specified in the Promissory Note)

 

_____________________________ 

(Insert
Social Security or Federal Tax I.D.

Number
of Promissory Note Holder)

 

 

5

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