Document:

ex10-1

 

Exhibit 10.1

 

 

SECURED PROMISSORY NOTE

 

 

$750,000.00                                                                                                                      

April 8,
2020

 

THIS
SECURED PROMISSORY NOTE (this "Note") is a duly authorized and
validly issued joint and several promissory note of Charlie's
Holdings, Inc., a Nevada corporation ("Holdings"), Charlie's Chalk
Dust, LLC, a Delaware limited liability company ("Chalk Dust"), and Don Polly
LLC, a Nevada limited liability company ("Don Polly" and together with
Holdings and Chalk Dust, individually and collectively, the
“Company”), each of which
have a principal place of business located at 1007 Brioso Drive,
Costa Mesa CA 92627.

 

FOR
VALUE RECEIVED, the Company hereby promises to pay to the order of
Red Beard Holdings, LLC, a Delaware limited liability company
("Red Beard"), or
its successors and assigns (together with Red Beard, the
“Holder”), the principal
sum of Seven Hundred Fifty Thousand Dollars ($750,000.00) (the
“Principal
Amount”), together with interest thereon and other
amounts payable hereunder at the times and on the dates set forth
herein and in any event no later than the Maturity
Date.

 

Capitalized terms
used herein without definition have the meanings set forth on
Exhibit A hereto, which is incorporated herein by this reference as
though set forth herein in full. This Note is subject to the
following additional provisions:

 

Section
1.                        Advance
of Funds: Conditions to Advance.

 

(a) On or substantially
concurrently with the Effective Date, the Holder shall advance to
the Company by wire of immediately available funds the Principal
Amount less any
amounts that may be deducted therefrom by agreement between the
Holder and the Company or otherwise pursuant to the terms of this
Note. The entire Principal Amount shall be deemed to have been
advanced on the Effective Date.

 

(b) Prior to the Holder
having the obligation of making the foregoing advance, the
following shall have occurred to the satisfaction of the Holder in
its sole discretion (such date being the "Effective Date"): (i) this
Note shall have been duly executed and delivered by the Company to
the Holder; (ii) the Security Agreement shall have been duly
executed and delivered by the Company to the Holder; and
(iii) if requested by the Holder, the Company shall have
delivered to the Holder true and correct copies of the
Company’s organizational documents, resolutions approving the
transactions contemplated hereby and under the other Transaction
Documents, and current good standing certificates from each
jurisdiction requested by the Holder.

 

Section
2.                        Payment
of Principal and Interest; Security.

 

(a) Payment of Principal. The
Principal Amount shall be due and payable in full by the Company to
the Holder on the Maturity Date or, if earlier, upon acceleration
of this Note in accordance with the terms hereof. Any amount of
principal repaid hereunder may not be reborrowed.

 

(b) Payment of Interest. From the
Effective Date until paid in full, interest on the aggregate
outstanding Principal Amount shall be equal to at least $75,000
(the "Guaranteed Minimum
Interest"), which amount shall be the minimum amount due and
owing regardless of the duration of the loan evidenced by this
Note. The Guaranteed Minimum Interest shall accrue and be fully
earned upon the advance by Holder of the loan evidenced by this
Note on or substantially concurrently with the Effective Date. The
Guaranteed Minimum Interest and any additional accrued interest
shall be due and payable by the Company to the Holder on the
Maturity Date or, if earlier, upon acceleration of this Note in
accordance with the terms hereof. Upon and after the occurrence of
an Event of Default (as defined below), then, in addition to the
Guaranteed Minimum Interest, the principal and unpaid interest and
unpaid other amounts under this Note shall, at the election of the
Holder in its sole and absolute discretion, bear interest at the
lesser of a rate equal to 20% per annum or the Maximum Rate (as
defined below) (the "Default Rate"). Such interest
shall accrue daily commencing on occurrence of such Event of
Default until payment in full of the Principal Amount, together
with all accrued and unpaid interest and other amounts which may
become due hereunder, has been made.

 

	
 

	

	
 

	
 

	
 

	
 

 

 

(c) Prepayment. The Company may
prepay all or any portion of the Principal Amount, together with
the Guaranteed Minimum Interest.

 

(d) Payments. Notwithstanding
anything to the contrary contained herein or in any other
Transaction Document, all payments made by the Company shall be
applied to principal, interest, fees and other charges due the
Holder hereunder in such order of priority as the Holder shall
elect.

 

(e) Security. The obligations of
the Company under this Note are secured by the collateral
identified in the Security Agreement.

 

(f) Use of Proceeds. The proceeds
of this Note shall be used by the Company for working capital and
for general corporate purposes. Notwithstanding the foregoing, the
proceeds of this Note shall not in any event be used to make or pay
any dividend or distribution or to redeem any equity of the Company
or securities convertible, exercisable or exchangeable into equity
of the Company, to settle any outstanding litigation or to make any
payment or prepayment on any existing indebtedness for borrowed
money.

 

Section
3.                        Representations
and Warranties. The Company hereby represents and warrants
to the Holder as follows:

 

(a) The Company has
been duly formed, is validly existing and is in good standing under
the laws of its jurisdiction of formation, is in good standing or
duly qualified as a foreign corporation in all jurisdictions where
the conduct of its business so requires and where the failure to so
qualify could reasonably be expected to have a Material Adverse
Effect, and has all requisite power and authority to execute,
deliver and perform its obligations under this Note and all other
Transaction Documents to which it is a party. Each of this Note and
all other Transaction Documents have been duly authorized, executed
and delivered by the Company and constitute its legal, valid and
binding obligation, enforceable against it in accordance with the
terms hereof and thereof except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally. The
execution, delivery and performance by the Company of this Note and
all other Transaction Documents to which it is a party, and the
incurrence by it of obligations hereunder and thereunder, do not
(i) contravene or conflict with the Company’s certificate of
formation, operating agreement or similar governing documents or
any law applicable to the Company or other instrument binding on or
otherwise affecting the Company, or (ii) give rise to any lien,
security interest or other charge or encumbrance (other than in
favor of the Holder) upon any of the Company’s properties. No
consent or approval of or notice to or filing with any governmental
authority or other third party is or will be required on the part
of the Company as a condition to the validity or enforceability of
this Note or the other Transaction Documents, other than such
consents which have been obtained and are in full force and effect,
true and complete copies of which have been previously provided to
the Holder.

 

(b) The Company is in
compliance in all material respects with all laws and regulatory
requirements to which it or its properties are subject. There is no
litigation pending or, to the knowledge of the Company, threatened
against the Company. The Company’s principal place of
business is at the address set forth at the beginning of this Note.
The Company has paid all federal, foreign, state and local taxes
required to be paid by it on or prior to the date they were due.
All documents, instruments and other written material heretofore or
hereafter furnished to the Holder pursuant to the terms of any
Transaction Document contain no misstatements of a material fact
and do not fail to disclose any material fact and the Company has
not failed to disclose to the Holder any material
information.

 

	
 

	

	
 

	
 

	
 

	
 

 

 

(c) All financial
statements of the Company delivered to Holder, if any, fairly
present in all material respects the financial position of the
Company as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, immaterial, year-end
audit adjustments. None of such financial reports, as of their
date, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not
misleading.

 

Section
4.                        Covenants.
As long as any portion of this Note remains outstanding, the
Company agrees as follows:

 

(a) the Company shall
not enter into, create, incur, assume or suffer to exist any Lien
on or with respect to any of its assets now owned or hereafter
acquired or any interest therein or any income or profits
therefrom;

 

(b) the Company shall
not amend its constitutional documents, including without
limitation, its certificate of formation, operating agreement or
similar governing documents, in any manner that adversely affects
any rights of the Holder;

 

(c) the Company shall
not enter into, create, incur, assume or suffer to exist any
Indebtedness, other than Indebtedness existing on the date hereof
in the amount in effect on the date hereof that has been previously
disclosed to Holder in writing;

 

(d) the Company shall
comply with its obligations under this Note and the other
Transaction Documents;

 

(e) the Company shall
comply with all applicable laws and duly observe and conform in all
material respects to all valid requirements of governmental
authorities relating to the conduct of its business or to its
properties or assets;

 

(f) the Company shall
not engage in any transactions with any officer, director,
employee, stockholder or any affiliate of the Company, including
any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee, stockholder or, to the
knowledge of the Company, any entity in which any officer,
director, or any such employee has a substantial interest or is an
officer, director, stockholder, trustee or partner, other than any
transactions in which the terms of such transaction are, in all
material respects, no less favorable to the Company than would
likely apply if such transaction was negotiated on an arms’
length basis between unrelated parties;

 

(g) the Company shall
not declare or pay any dividends or make any distributions to any
holder(s) of equity interests or other equity security of the
Company, or purchase or otherwise acquire for value, directly or
indirectly, any equity interests or other equity security of the
Company; except that Holdings may pay the one-time dividend equal
to the eight percent (8%) Dividend Amount (as defined in the Series
A Certificate) as contemplated by Section 3 of the Series A
Certificate so long as (a) Holdings shall have used its best
efforts to satisfy the Equity Conditions (as defined in the Series
A Certificate), (b) if the Equity Conditions have been satisfied,
such dividend payment shall be paid in shares of common stock of
Holdings and (c) in the event that Holdings has failed to satisfy
the Equity Conditions and such dividend is required the be paid in
cash, the aggregate amount of all such cash distributions shall not
exceed $1,650,000.

 

	
 

	

	
 

	
 

	
 

	
 

 

 

(h) the Company shall
not (i) merge or consolidate with any other Person (regardless
of which Person is the surviving entity); (ii) sell or dispose of
any of its assets other than immaterial dispositions in the
ordinary course of business and for fair equivalent value or
(iii) in any way or manner alter its organizational structure
or effect a change of entity;

 

(i) the Company shall
promptly pay and discharge, or cause to be paid and discharged,
when due and payable, all lawful taxes, assessments and
governmental charges or levies imposed upon the income, profits,
property or business of the Company; provided, however, that any
such tax, assessment, charge or levy need not be paid if the
validity thereof shall currently be contested in good faith by
appropriate proceedings and if the Company shall have set aside on
its books adequate reserves with respect thereto, and provided,
further, that the Company will pay all such taxes, assessments,
charges or levies forthwith upon the commencement of proceedings to
foreclose any Lien which may have attached as security
therefor;

 

(j) the Company shall
maintain in full force and effect its corporate existence, rights
and franchises and all licenses and other rights to use property
owned or possessed by it and reasonably deemed to be necessary to
the conduct of its business;

 

(k) the Company shall
keep its properties in good repair, working order and condition,
reasonable wear and tear excepted, and from time to time make all
necessary and proper repairs, renewals, replacements, additions and
improvements thereto; and the Company shall at all times comply
with each provision of all leases to which it is a party or under
which it occupies property;

 

(l) the Company shall
not make any payment on any indebtedness owed to officers,
directors or affiliates except with the prior written consent of
the Holder;

 

(m) the Company shall
maintain with financially sound and reputable insurance companies
not affiliates of the Company, insurance with respect to its
properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or
similar business, of such types and in such amounts as are
customarily carried under similar circumstances by such other
Persons and providing for not less than 30 days’ prior notice
to the Holder of termination, lapse or cancellation of such
insurance;

 

(n) If, notwithstanding
any prohibitions in this Note on the incurrence of Indebtedness,
(i) any Indebtedness shall be incurred by any Company or any of its
subsidiaries or (ii) any equity interests shall be issued by any
Company or any of its subsidiaries, then, in each case, unless
Holder otherwise provides its prior written consent, Company shall
immediately prepay the obligations owing with respect to this Note
in an amount equal to the net cash proceeds received from such
incurrence or issuance.

 

(o) the Company shall
deliver to the Holder or provide access to the Holder, (i) promptly
upon the Holder’s request, such books, records, financial
statements, tax returns, investment statements, lists of property
and accounts, budgets, forecasts or reports as to the Company as
the Holder may request; and (ii) immediately upon knowledge of
the same, notice of the occurrence of any Event of
Default.

 

Section
5.                        Events
of Default.

 

(a) “Event of Default” means,
wherever used herein, any of the following events (whatever the
reason for such event and whether such event shall be voluntary or
involuntary or effected by operation of law or pursuant to any
judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental
body):

 

 

	
 

	

	
 

	
 

	
 

	
 

 

 

i. any default in the
payment of (A) the principal amount of this Note or
(B) interest or other amounts owing to the Holder on this
Note, as and when the same shall become due and payable (whether on
the Maturity Date or by acceleration or otherwise);

 

ii. the Company shall
fail to observe or perform any other covenant or agreement
contained in this Note or any other Transaction
Document;

 

iii. a
default or event of default shall occur under any of the
Transaction Documents, or the failure or invalidity of any of the
Transaction Documents;

 

iv. any representation
or warranty made in this Note, any other Transaction Documents, any
written statement pursuant hereto or thereto or any other report,
financial statement or certificate made or delivered to the Holder
shall be untrue or incorrect in any respect as of the date when
made or deemed made;

 

v. the Company shall
be subject to a Bankruptcy Event;

 

vi. the Company shall
default on any other obligations under any promissory note,
mortgage, credit agreement or other facility, indenture agreement,
factoring agreement or other instrument under which there may be
issued, or by which there may be secured or evidenced, any
indebtedness for borrowed money or money due under any long term
leasing or factoring arrangement, whether such indebtedness now
exists or shall hereafter be created;

 

vii. any
monetary judgment, writ or similar final process in excess of
$100,000 shall be entered or filed against the Company or its
property or other assets, and such judgment, writ or similar final
process shall remain unvacated, unbonded or unstayed for a period
of 10 calendar days; or

 

viii. a
Material Adverse Effect occurs.

 

(b) Remedies Upon Event of Default.
If any Event of Default occurs, the entire unpaid principal amount
of this Note plus all accrued interest and other amounts owing
under this Note through the date of acceleration, shall become, at
the Holder’s election in its sole and absolute discretion,
immediately due and payable upon written notice to the Company,
except that, with respect to a default under Section 5(a)(v)
above, no such notice shall be required and such acceleration shall
be automatic and immediate. In connection with such acceleration
described herein, the Holder need not provide, and the Company
hereby waives, any presentment, demand or protest of any kind, and
the Holder may immediately and without expiration of any grace
period enforce any and all of its rights and remedies hereunder and
all other remedies available to it under applicable law and the
Transaction Documents. Such acceleration may be rescinded and
annulled by the Holder at any time prior to payment hereunder and
the Holder shall have all rights as the holder of the Note until
such time, if any, as the Holder receives full payment pursuant to
this Section 5(b). No such rescission or annulment shall
affect any subsequent Event of Default or impair any right
consequent thereon.

 

Section
6.                        Miscellaneous.

 

(a) Notices. Any and all notices or
other communications or deliveries to be provided by the Holder to
the Company hereunder shall be delivered to the address of the
Company set forth in the first paragraph of this Note. Notices to
the Holder shall be delivered to its address at 2525 Main Street,
Suite 400, Irvine CA 92614 or such other address as may be
designated by the Holder from time to time.

 

	
 

	

	
 

	
 

	
 

	
 

 

 

(b) Absolute Obligation. No
provision of this Note shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal
of, and accrued interest, as applicable, on this Note at the time,
place, and rate, and in the coin or currency, herein prescribed.
This Note is a direct, unconditional and secured debt obligation of
the Company. All payments to be made by the Company hereunder and
under the other Transaction Documents shall be made, in lawful
money of the United States of America, and without condition or
deduction for any counterclaim, defense, recoupment or
setoff.

 

(c) Lost or Mutilated Note. If this
Note shall be mutilated, lost, stolen or destroyed, then the
Company shall execute and deliver, in exchange and substitution for
and upon cancellation of a mutilated Note, or in lieu of or in
substitution for a lost, stolen or destroyed Note, a new Note for
the principal amount of this Note so mutilated, lost, stolen or
destroyed.

 

(d) Governing Law. All questions
concerning the construction, validity, enforcement and
interpretation of this Note or any other Transaction Document shall
be governed by and construed and enforced in accordance with the
internal laws of the State of California, without regard to the
principles of conflict of laws thereof. The Company hereby agrees
that it will commence any and all legal proceedings under, with
respect to or related to any of the Transaction Documents (whether
brought against a party hereto or its respective affiliates,
directors, officers, members, employees or agents) only in the
state and federal courts sitting in the County of Orange, State of
California (the “California Courts”). The
Company hereby irrevocably submits to the nonexclusive jurisdiction
of the California Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such California Court, or that such California
Court is an improper or inconvenient venue for such proceeding.
Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such
party at the address in effect for notices to it under this Note
and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in
any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS NOTE, THE OTHER TRANSACTION DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. If either party shall
commence an action or proceeding to enforce any provisions of this
Note, then the prevailing party in such action or proceeding shall
be reimbursed by the other party for its reasonable
attorneys’ fees and other reasonable costs and expenses
incurred with the investigation, preparation and prosecution of
such action or proceeding. Nothing in this Note or any other
Transaction Document shall affect any right that the Holder may
otherwise have to bring any action or proceeding relating to this
Note or any other Transaction Document against the Company or its
properties in the courts of any jurisdiction.

 

(e) Costs and Expenses. The Company
agrees to pay all costs and expenses, including the fees and
expenses of any attorneys, accountants and other experts retained
by the Holder, which are expended or incurred by the Holder in
connection with (i) the preparation, negotiation, modification
and/or enforcement of this Note or any other Transaction Document,
or the collection of any sums due hereunder or thereunder, whether
or not suit is commenced; (ii) any actions for declaratory relief
in any way related to this Note or any other Transaction Document;
(iii) the protection or preservation of any rights of the
Holder under this Note or any other Transaction Document; (iv) any
actions taken by the Holder in negotiating any amendment, waiver,
consent or release of or under this Note or any other Transaction
Document; (v) any actions taken in reviewing the Holder’s
financial affairs if an Event of Default has occurred or the Holder
has determined in good faith that an Event of Default may likely
occur; (vi) the Holder’s participation in any refinancing,
restructuring, bankruptcy or insolvency proceeding involving the
Company; (vii) verifying, maintaining, or perfecting any security
interest or other lien granted to the Holder in any collateral;
(viii) any effort by the Holder to protect, assemble, complete,
collect, sell, liquidate or otherwise dispose of any collateral,
including in connection with any action or proceeding; or (ix) any
refinancing or restructuring of this Note, including, without
limitation, any restructuring in the nature of a “work
out” or in any insolvency or bankruptcy proceeding. All sums
due to the Holder pursuant to this clause (f) shall be due and
payable immediately on demand and shall bear interest at the same
rate as then applicable to the Principal Amount.

 

	
 

	

	
 

	
 

	
 

	
 

 

 

(f) Waiver. Any waiver by the
Holder of a breach of any provision of this Note or any other
Transaction Document shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of
any other provision of this Note or any other Transaction Document.
The failure of the Holder to insist upon strict adherence to any
term of this Note or any other Transaction Document on one or more
occasions shall not be considered a waiver or deprive that party of
the right thereafter to insist upon strict adherence to that term
or any other term of this Note or such Transaction Document, as
applicable. Any waiver by the Holder must be in
writing.

 

(g) Severability. If any provision
of this Note or any other Transaction Document is invalid, illegal
or unenforceable, the balance of this Note or other Transaction
Document, as applicable, shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and
circumstances.

 

(h) Next Business Day. Whenever any
payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next
succeeding Business Day.

 

(i) Headings. The headings
contained herein are for convenience only, do not constitute a part
of this Note and shall not be deemed to limit or affect any of the
provisions hereof.

 

(j) Usury.

 

i. To the extent it
may lawfully do so, the Company hereby agrees not to insist upon or
plead or in any manner whatsoever claim, and will resist any and
all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force,
in connection with any claim, action or proceeding that may be
brought by the Holder in order to enforce any right or remedy under
any Transaction Document; provided that, notwithstanding any
provision to the contrary contained in any Transaction Document, it
is expressly agreed and provided that the total liability of the
Company under the Transaction Documents for payments in the nature
of interest shall not exceed the maximum lawful rate authorized
under applicable law (taking into account any usury exception or
exemption available to the Holder, the “Maximum Rate”), and,
without limiting the foregoing, in no event shall any rate of
interest or default interest, or both of them, when aggregated with
any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such
Maximum Rate. It is agreed that if the maximum contract rate of
interest allowed by law and applicable to the Transaction Documents
is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to
the Transaction Documents from the effective date forward, unless
such application is precluded by applicable law. If under any
circumstances whatsoever, interest in excess of the Maximum Rate is
paid by the Company to the Holder with respect to indebtedness
evidenced by the Transaction Documents, such excess shall be
applied by the Holder to the unpaid principal balance of any such
indebtedness or be refunded to the Company, the manner of handling
such excess to be at the Holder’s election.

 

ii. Without limiting
the generality of; the foregoing, it is the intent of Holder and
Company that the loan evidenced by this Note comply with the usury
exemption set forth in California Corporations Code §
25118(b). In accordance with such Section, Company hereby
represents and warrants to Holder the following:

 

(1)

Holder and Company,
or any of their respective officers, directors, members, managers
or other controlling persons, have a preexisting personal or
business relationship.

 

(2)

Holder and Company,
by reason of their own business and financial experience or that of
their professional advisers, have the capacity to protect their own
interests in connection with the transaction.

 

 

	
 

	

	
 

	
 

	
 

	
 

 

 

(k) Indemnification. The Company
will indemnify and hold the Holder harmless from any loss,
liability, damages, judgments, and costs of any kind
(“Liabilities”) relating to
or arising directly or indirectly out of (i) this Note or any
other Transaction Document, (ii) any credit extended or
committed by the Holder to the Company hereunder, and
(iii) any litigation or proceeding related to or arising out
of this Note, any such Transaction, Document, or any such credit;
provided, however that the Company shall have no obligation to
indemnify the Holder for any Liabilities that have arisen as a
result of the Holder’s gross negligence or willful misconduct
as determined by a final non-appealable judgment of a court of
competent jurisdiction.. This indemnity includes but is not limited
to attorneys’ fees and expenses. This indemnity extends to
the Holder, its affiliates, partners, directors, officers,
employees, agents, successors, attorneys, and assigns. This
indemnity will survive repayment of the Company’s obligations
to the Holder. All sums due to the Holder hereunder shall be due
and payable immediately without demand and shall bear interest at
the same rate as then applicable to the Principal
Amount.

 

(l) Joint and Several Liability.
Each of Holdings, Chalk Dust and Don Polly acknowledge that each of
the undersigned are parties to this note as the "Company" as joint
and several co-borrowers hereunder. Any references in this Note to
the "Company" shall refer to any of Holdings, Chalk Dust or Don
Polly, or both such Persons as the context may require. Each of
Holdings, Chalk Dust and Don Polly accept joint and several
liability for the payment and performance of all of the obligations
of the Company hereunder, and each of such obligations constitute
the absolute and unconditional full recourse obligations of each
such Person enforceable against each such Person to the full extent
of its properties and assets. Each of Holdings, Chalk Dust and Don
Polly hereby waive, to the fullest extent permitted by law, any and
all defenses or benefits that may be derived from or afforded by
applicable law limiting the liability of or exonerating guarantors
or sureties (including co-borrowers to the extent applicable),
including , including but not limited to any rights and defenses
that are or may become available to any such Person by reason of
Sections 2787 to 2855, inclusive, 2899 and 3433 of the California
Civil Code.

 

(m) Successors and Assigns; Assignments
and Participations. This Note shall be binding upon and
inure to the benefit of the Company and the Holder and their
respective successors and assigns, except that the Company may not
assign or transfer any of its rights or obligations under this Note
or any other Transaction Document without the express written
consent of the Holder.

 

(n) Counterparts; Electronic
Execution. This Note may be executed in any number of
counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall
constitute but one and the same Note. Delivery of an executed
counterpart of this Note by telefacsimile or other electronic
method of transmission (including without limitation a PDF
attachment) shall be equally as effective as delivery of an
original executed counterpart of this Note. The foregoing shall
apply to each other Transaction Document mutatis mutandis.

 

	
 

	

	
 

	
 

	
 

	
 

 

 

 

IN
WITNESS WHEREOF, the Company has caused this Note to be duly
executed by its duly authorized officer as of the date first above
indicated.

 

	
 

	

"Company"

 

CHARLIE'S
HOLDINGS, INC.,

a
Nevada corporation

 

 

By:
Brandon Stump
                                                                

Name:
Brandon
Stump
                                                                

Title:
Chief Executive Officer 
                                                                

 

 

CHARLIE'S
CHALK DUST, LLC,

a
Delaware limited liability company

 

 

By:
Brandon Stump
                                                                

Name:
Brandon
Stump
                                                                

Title:
Chief Executive Office

                                                                  

 

DON
POLLY LLC,

a
Nevada limited liability company

 

 

By:
Brandon Stump
                                                                

Name:
Brandon
Stump
                                                                

Title:
Chief Executive Officer

                                                           

 

 

AGREED AND ACKNOWLEDGED:

 

RED
BEARD HOLDINGS, LLC,

a
Delaware limited liability company

 

 

 

By: Vinny Smith

Name: 
Vinny
Smith

Title: General
Partner

 

 

 

 

 

	
 

	

	
 

	
 

	
 

	
 

 

 

EXHIBIT
A

 

(Certain
Defined Terms)

 

“Bankruptcy Event” means
any of the following events: (a) the Company commences a case
or other proceeding under any Debtor Relief Laws; (b) there is
commenced against the Company any case or proceeding under Debtor
Relief Laws that is not dismissed within 30 calendar days after
commencement; (c) the Company is adjudicated insolvent or
bankrupt or any order of relief or other order approving any such
case or proceeding is entered; (d) the Company suffers any
appointment of any custodian or the like for it or any substantial
part of its property that is not discharged or stayed within 30
calendar days after such appointment; (e) the Company makes a
general assignment for the benefit of creditors; (f) the
Company calls a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or
(g) the Company, by any act or failure to act, expressly
indicates its consent to, approval of or acquiescence in any of the
foregoing or takes any corporate or other action for the purpose of
effecting any of the foregoing.

 

“Business Day” means any
day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close under the laws of, or are in fact
closed in, Orange County, California.

 

“Debtor Relief Laws” means
the Bankruptcy Code of the United States, and all other
liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar debtor relief laws of the
United States or other applicable jurisdictions from time to time
in effect and affecting the rights of creditors
generally.

 

“Indebtedness” means
(a) all obligations for borrowed money; (b) all
obligations evidenced by bonds, debentures, notes, or other similar
instruments and all reimbursement or other obligations in respect
of letters of credit, bankers acceptances, current swap agreements,
interest rate hedging agreements, interest rate swaps, or other
financial products; (c) all capital lease obligations;
(d) all obligations or liabilities secured by a lien or
encumbrance on any asset of the Company, irrespective of whether
such obligation or liability is assumed; (e) all obligations
for the deferred purchase price of assets; (f) all synthetic
leases; and (g) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted or sold with recourse) any of the foregoing
obligations of any other person; provided, however, Indebtedness
shall not include (x) usual and customary trade debt incurred
in the ordinary course of business and (y) endorsements for
collection or deposit in the ordinary course of
business.

 

“Lien” means any mortgage,
pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement in
the nature of a security interest of any kind or nature whatsoever
(including any conditional sale or other title retention agreement,
any easement, right of way or other encumbrance on title to real
property, and any financing lease having substantially the same
economic effect as any of the foregoing).

 

"Liquidity Event" means any of
the following, in each case with respect to either Company (or
both) or any of their respective subsidiaries and/or affiliates:
(a) the raising of any additional capital by any Company, whether
in the form of debt, equity or otherwise, in which Company receives
aggregate net cash proceeds therefrom of at least $1,000,000,
including, without limitation, the anticipated investment, whether
in the form of equity, debt or otherwise, by United Capital
Partners LLC and/or any of its affiliates, (b) any merger or
consolidation in which any Company is a constituent party, or (c)
the sale, transfer, pledge or other disposition of any equity
interests of any Company and/or any of their respective
subsidiaries and/or affiliates, or (d) the sale, lease, transfer,
exclusive license or other disposition, in a single transaction or
series of related transactions, by the Company or any subsidiary or
affiliate of the Company of all or substantially all the assets of
the Company and its subsidiaries and/or affiliates.

 

	
 

	
	
 

	
 

	
 

	
 

 

 

“Material Adverse Effect”
means (a) a material adverse change in, or a material adverse
effect upon, the operations, business, properties, liabilities
(actual or contingent), condition (financial or otherwise) or
prospects of the Company; (b) a material impairment of the rights
and remedies of the Holder under any Transaction Document or of the
ability of Company to perform its obligations under any Transaction
Document; (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against the Company of
any Transaction Document; or (d) the issuance by any third party
lender to the Company of a notice of default on
Indebtedness.

 

"Maturity Date" means the
earlier to occur of (a) a Liquidity Event or (b) October 1,
2020.

 

“Note” means this Secured
Promissory Note, as amended, restated, supplemented, extended or
otherwise modified from time to time.

 

“Person” means any
individual, firm, corporation, partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company,
limited liability company, governmental authority or other entity
of any kind.

 

“Security Agreement” means
the Security Agreement of even date herewith made by Company in
favor of the Holder, as amended, restated, supplemented, extended
or otherwise modified from time to time.

 

"Series A Certificate" means
that certain Certificate of Designations, Preferences and Rights of
the Series A Convertible Preferred Stock of True Drinks Holdings,
Inc. (now known as Charlie's Holdings, Inc.) as in effect as of the
date of this Agreement.

 

“Transaction Documents”
means this Note, the Security Agreement, each guaranty entered into
in connection herewith, if any, and each other instrument, document
or agreement now or hereafter executed by the Company in favor of
the Holder in connection with this Note, in each case as amended,
restated, supplemented, extended or otherwise modified from time to
time.saex-ex420_238.htm

 

Exhibit 4.20

 

Description of Registrant’s Securities Registered under Section 12 of the Securities Exchange Act of 1934

The following description sets forth certain material terms and provisions of the common stock, par value $0.0001 per share (the “Common Stock”), of SAExploration Holdings, Inc., which is registered under Section 12 of the Securities Exchange Act of 1934, as amended. This description also summarizes relevant provisions of the General Corporation Law of the State of Delaware (the “DGCL”). The following description is a summary and does not purport to be complete. It is subject to, and qualified in its entirety by reference to, the applicable provisions of the DGCL, our Third Amended and Restated Certificate of Incorporation (as amended, the “Certificate of Incorporation”), our Second Amended and Restated By–Laws (as amended, the “Bylaws”), the Indenture (as defined below) with respect to the Convertible Notes (as defined below) and the Conversion Warrants (as defined below), the Series A & B Warrant Agreement (as defined below) with respect to our Series A Warrants (as defined below) and Series B Warrants (as defined below), the Series C Warrant Agreement (as defined below) with respect to our Series C Warrants (as defined below), the Series D Warrant Agreement (as defined below) with respect to our Series D Warrants (as defined below), the Series E Warrant Agreement (as defined below) with respect to our Series E Warrants (as defined below) and the Series F Warrant Agreement (as defined below) with respect to our Series F Warrants (as defined below). The Certificate of Incorporation, Bylaws, Indenture, Series A & B Warrant Agreement, Series C Warrant Agreement, Series D Warrant Agreement, Series E Warrant Agreement and Series F Warrant Agreement, which are filed as Exhibit 3.1, Exhibit 3.2, Exhibit 3.3, Exhibit 3.4, Exhibit 3.5. Exhibit 3.6, Exhibit 3.7, Exhibit 4.5, Exhibit 4.6, Exhibit 4.7, Exhibit 4.8, Exhibit 4.9, Exhibit 4.10, Exhibit 4.11, Exhibit 4.12, Exhibit 4.13, and Exhibit 4.14, respectively, to the Annual Report on Form 10-K of which this Exhibit 4.20 is a part, are incorporated by reference herein. We encourage you to read the Certificate of Incorporation, Bylaws, Indenture, Series A & B Warrant Agreement, Series C Warrant Agreement, Series D Warrant Agreement, Series E Warrant Agreement and Series F Warrant Agreement, and the applicable provisions of the DGCL for additional information. Unless the context requires otherwise, all references to “we,” “us,” “our” and the “Company” in this Exhibit 4.20 refer solely to SAExploration Holdings, Inc. and not to our subsidiaries.

Authorized Capital Stock

As of March 17, 2020, we are authorized to issue 40,000,000 shares of Common Stock, and 1,000,000 shares of preferred stock, par value $0.0001 per share (the “Preferred Stock”). As of March 17, 2020, 4,436,292 shares of our Common Stock are outstanding and no shares of our Preferred Stock are outstanding.

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Common Stock

Under the Certificate of Incorporation, each holder of our Common Stock will be entitled to one vote for each share of Common Stock, subject to any rights granted to any future holders of Preferred Stock and any effect of Section 2.9 of our Bylaws. Section 2.9 of our Bylaws prevents any investment entity that is not a “United States person,” as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, and that is managed by BlueMountain Capital Management, LLC or its affiliates (a “Non-U.S. Blue Mountain Investment Fund”), from possessing 10% or greater of the votes applicable to the outstanding Common Stock. The effect of this will be to eliminate the voting power of any Non-U.S. Blue Mountain Investment Fund’s Common Stock to the extent it provides 10% or greater of the voting power of our outstanding Common Stock. If this were to occur, the other stockholders would possess greater voting power due to the reduction in the total shares able to vote.

Pursuant to the Certificate of Incorporation, all directors are elected on an annual basis. In addition, the Certificate of Incorporation states that any vacancies on the board of directors may be filled by an affirmative vote of a majority of the remaining members; provided, that for so long as any Principal Stockholder (as defined in the Certificate of Incorporation) holds (together with its affiliates, excluding us and our other affiliates) at least nine percent (9%) of the outstanding Common Stock, if there is a vacancy of a director nominated by one of the Principal Stockholders, then the nominating Principal Stockholder is entitled to nominate a successor to such director, and we and our board of directors must take all actions necessary to ensure that person is appointed to the board of directors as promptly as practicable.

Upon the dissolution, liquidation or winding up of the Company, subject to the rights, if any, of the holders of our Preferred Stock, our common stockholders shall be entitled to receive the assets of the Company available for distribution to our common stockholders ratably in proportion to the number of shares held by them. Our common stockholders have no conversion, preemptive, or other subscription rights and there are no sinking fund or redemption provisions applicable to the shares of Common Stock.

Unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf; (b) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders; (c) any action asserting a claim arising pursuant to any provisions of the DGCL, the Certificate of Incorporation, or the Bylaws; or (d) any action asserting a claim governed by the internal affairs doctrine shall, in each case, be the Court of Chancery of the State of Delaware. If the Court of Chancery of the State of Delaware lacks jurisdiction over such action or proceeding, the sole and exclusive forum for such action or proceeding shall be another court of the State of Delaware or, if no court of the State of Delaware has jurisdiction, then the federal district court for the District of Delaware. This exclusive forum provision would not apply to suits brought under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or any other claim for which the federal courts have exclusive jurisdiction.

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Preferred Stock

There are no shares of our Preferred Stock outstanding. The Certificate of Incorporation authorizes the issuance of 1,000,000 shares of Preferred Stock with such designations, rights and preferences as may be determined from time to time by our board of directors. Accordingly, our board of directors is empowered, without stockholder approval, to issue Preferred Stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of our Common Stock. We may issue some or all of the Preferred Stock to effect a business combination. In addition, the Preferred Stock could be utilized as a method of discouraging, delaying or preventing a change in control of us. Although we do not currently intend to issue any shares of Preferred Stock, we cannot assure you that we will not do so in the future.

Convertible Notes

We issued the 6.00% Senior Secured Convertible Notes due 2023 (the “Convertible Notes”) under an Indenture, dated as of September 26, 2018 (as amended, the “Indenture”), by and among us, as issuer, the guarantors party thereto, and Wilmington Savings Fund Society, FSB, as trustee and collateral trustee, establishing the terms and providing for the issuance of the Convertible Notes. We sold the Convertible Notes pursuant to that certain Note Purchase Agreement, dated as of September 26, 2018, by and among us, the guarantors party thereto and the purchasers thereto.

Subject to and upon compliance with the Indenture, each holder of a Convertible Note has the right, at such holder’s option, at any time prior to the close of business on the second business day preceding September 26, 2023 (the “Maturity Date”), to convert all or a portion of such Convertible Note, at an initial conversion rate of 173.91304 shares of Common Stock (subject to customary adjustment as provided in the Indenture) (the “Conversion Rate”) per $1,000 principal amount of Convertible Notes into shares of Common Stock (such shares, the “Conversion Shares”) or, for certain Permitted Holders (as defined in the Indenture), warrants (the “Conversion Warrants”) to purchase an equal number of shares of Common Stock (the “Conversion Obligation”). The initial conversion price was approximately $5.75 per share of Common Stock as of the date of issuance. There are 10,434,783 shares of Common Stock initially issuable upon full conversion of the Convertible Notes and/or exercise of the Conversion Warrants (or up to 15,000,000 shares of Common Stock issuable upon a Make-Whole Fundamental Change (as defined in the Indenture)).

The Conversion Rate is subject to adjustment upon the occurrence of certain events. In addition, following certain corporate events that occur prior to the Maturity Date, we will increase, in certain circumstances, the Conversion Rate for a holder who elects to convert its Convertible Notes in connection with such a corporate event. Upon conversion, we may settle our Conversion Obligation in cash; the Conversion Shares (or, if applicable, Conversion Warrants), together with cash, if applicable, in lieu of delivering any fractional Conversion Share (or, if applicable, Conversion Warrant); or a combination of cash and Conversion Shares (or, if applicable, Conversion Warrants), at our election.

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If a holder of Convertible Notes elects to convert such holder’s Convertible Notes into Conversion Warrants, the Conversion Warrants will be issued pursuant to an agreed form of warrant agreement with Continental Stock Transfer & Trust Company (“CST”), as warrant agent. Such Conversion Warrants will be exercisable at an exercise price of $0.0001 per share, subject to adjustment pursuant to customary anti-dilution provisions and will be generally exercisable at any time and from time to time.

We may not redeem the Convertible Notes prior to October 1, 2021. On or after October 1, 2021, we may redeem all or part of the Convertible Notes, at our option, if the last reported sale price of the Common Stock has been at least 150% of the conversion price then in effect (i) on the trading day immediately preceding the date on which we provide notice of redemption and (ii) for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, payable in cash, plus accrued and unpaid interest, if any, to, but excluding, such date of redemption, and any make whole premium (as described in the Indenture).

If a Fundamental Change (as defined in the Indenture) occurs, then holders of the Convertible Notes may, subject to certain restrictions, require us to repurchase for cash all or part of the Convertible Notes in principal amounts of $1,000 or an integral multiple thereof at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest thereon to, but excluding, such date of repurchase.

Warrants

Series A & B Warrants

On July 27, 2016, we entered into a warrant agreement (the “Series A & B Warrant Agreement”) with CST, as warrant agent. Pursuant to the Series A & B Warrant Agreement, we issued two series of warrants (the “Series A Warrants” and “Series B Warrants” and, together, the “Series A & B Warrants”) to the holders of our Common Stock as of July 26, 2016. On July 27, 2016, we issued 154,108 Series A Warrants and 154,108 Series B Warrants. Each Series A Warrant gives the holder thereof the right to purchase 0.05 of a share of Common Stock at a current exercise price of $10.30 per share, subject to further adjustment pursuant to customary anti-dilution provisions. Each Series B Warrant gives the holder thereof the right to purchase 0.05 of a share of Common Stock at a current exercise price of $12.88 per share, subject to further adjustment pursuant to customary anti-dilution provisions. The Series A & B Warrants expire at the close of business on July 27, 2021. The Series A & B Warrants may only be exercised within 30 days prior to the expiration date. As of March 17, 2020, there were 154,376 Series A Warrants and 154,376 Series B Warrants outstanding.

Series C Warrants

On January 29, 2018, we entered into a warrant agreement (the “Series C Warrant Agreement”) with CST, as warrant agent. Pursuant to the Series C Warrant Agreement, we issued 8,286,061 warrants (the “Series C Warrants”) to certain eligible holders of our 10.00% 

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Senior Secured Second Lien Notes due 2019 and eligible holders of our 10.00% Senior Secured Notes due 2019. Each Series C Warrant gives the holder thereof the right to purchase 0.05 of a share of Common Stock at an initial exercise price of $0.0001 per share, subject to further adjustment pursuant to customary anti-dilution provisions. The Series C Warrants may generally be exercised at any time and from time to time. As of March 17, 2020, there were 124,275 Series C Warrants outstanding.

Series D Warrants

On March 8, 2018, we entered into a warrant agreement (the “Series D Warrant Agreement”) with CST, as warrant agent, in connection with the mandatory conversion of the Company’s Mandatorily Convertible Series B Preferred Stock. Pursuant to the Series D Warrant Agreement, we issued 14,098,370 warrants (the “Series D Warrants”). Each Series D Warrant gives the holder thereof the right to purchase up 0.05 of a share of Common Stock at an initial exercise price of $0.0001 per share, subject to further adjustment pursuant to customary anti-dilution provisions. The Series D Warrants may generally be exercised at any time and from time to time. As of March 17, 2020, there were 11,094,844 Series D Warrants outstanding.

Series E Warrants

On September 6, 2018, the Company entered into a warrant agreement (the “Series E Warrant Agreement”) with CST, as warrant agent, in connection with the conversion of the Company’s 8.0% Cumulative Perpetual Series A Preferred Stock. Pursuant to the Series E Warrant Agreement, we initially issued 94,813,594 warrants (the “Series E Warrants”). Each Series E Warrant gives the holder thereof the right to purchase 0.05 of a share of Common Stock, subject to further adjustment pursuant to customary anti-dilution provisions, at an exercise price of $0.0001 per share. The Series E Warrants may generally be exercised at any time and from time to time. As of March 17, 2020, there were 54,552,934 Series E Warrants outstanding.

Series F Warrants

On December 11, 2019, the Company entered into a warrant agreement (the “Series F Warrant Agreement”) with CST, as warrant agent. Pursuant to the Series F Warrant Agreement, we issued 429,537 warrants (the “Series F Warrants”) on December 11, 2019 and 429,967 Series F Warrants on January 14, 2020 to certain lenders under our Third Amended and Restated Credit and Security Agreement, dated as of September 26, 2018. The remaining 1,180,926 Series F Warrants will be issued upon receipt by the Company of the approval of its shareholders of the issuance of the underlying shares of Common Stock. Each Series F Warrant gives the holder thereof the right to purchase one share of Common Stock, subject to further adjustment pursuant to customary anti-dilution provisions, at an exercise price of $0.0001 per share. The Series F Warrants may generally be exercised at any time and from time to time. As of March 17, 2020, there were 859,504 Series F Warrants outstanding.

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Conversion Warrants

See the above description under “Convertible Notes.”

Anti-Takeover Effects of Delaware and the Certificate of Incorporation and Bylaws

General. Certain provisions of the Certificate of Incorporation and Bylaws, and certain provisions of the DGCL could make our acquisition by a third party, a change in our incumbent management, or a similar change of control more difficult. These provisions, which are summarized below, are likely to reduce our vulnerability to an unsolicited proposal for the restructuring or sale of all or substantially all of our assets or an unsolicited takeover attempt. The summary of the provisions set forth below does not purport to be complete and is qualified in its entirety by reference to the Certificate of Incorporation and the Bylaws and the relevant provisions of the DGCL.

Preferred Stock. The authorization of undesignated (blank check) Preferred Stock makes it possible for our Board of Directors to issue Preferred Stock with voting or other rights or preferences that could impede the success of any attempt to acquire control of the Company.

Advance Notice Requirements. Stockholders wishing to nominate persons for election to our Board of Directors at a meeting or to propose any business to be considered by our stockholders at a meeting must comply with certain advance notice and other requirements set forth in our Bylaws.

Special Meetings. Our Bylaws provide that special meetings of stockholders may only be called by a majority of the Board of Directors, or by the Secretary at the request in writing of holders of at least a majority of the Company’s outstanding capital stock.

Board Vacancies. Our Certificate of Incorporation provides that any vacancy on our Board of Directors, howsoever resulting, may be filled by a majority vote of the remaining directors, subject to the right of any Principal Stockholder with respect to board nominees discussed above. 

Removal of Directors. Our Bylaws provide that any director may be removed from office with or without cause by a majority vote of the holders of the outstanding shares then entitled to vote at an election of directors.

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Section 203 of the DGCL

We are subject to the provisions of Section 203 of the DGCL regulating corporate takeovers. In general, those provisions prohibit a Delaware corporation from engaging in any business combination with any “interested stockholder” (as defined in the DGCL) for a period of three years following the date that the stockholder became an interested stockholder, unless:

	
 
	
•
	
the transaction is approved by the board of directors before the date the interested stockholder attained that status;

	
 
	
•
	
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or

	
 
	
•
	
on or after such time the business combination is approved by the board of directors and authorized at a meeting of stockholders by at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

Section 203 defines “business combination” to include the following:

	
 
	
•
	
any merger or consolidation involving the corporation and the interested stockholder;

	
 
	
•
	
any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;

	
 
	
•
	
subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

	
 
	
•
	
any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned, directly or indirectly, by the interested stockholder; or

	
 
	
•
	
the receipt by the interested stockholder of the benefit, directly or indirectly, of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by any of these entities or persons.

A Delaware corporation may “opt out” of Section 203 with an express provision in its original certificate of incorporation or an express provision in its certificate of incorporation or bylaws resulting from amendments approved by the holders of at least a majority of the corporation’s outstanding voting shares. We have not opted out of the provisions of Section 203. The statute could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire us.

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Stock Exchange Listing

Our Common Stock trades on the Nasdaq Capital Market under the symbol “SAEX.” Our Series A & B Warrants trade on the OTCQB market under the shared symbol “SXPLW.”

Transfer Agent

The transfer agent for our Common Stock is Continental Stock Transfer & Trust Company, 1 State Street, 30th Floor, New York, New York 10004.

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