Document:

ex_218069.htm

 

EXHIBIT 4.4

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

 

 

	
			Amount Note : $573,232.00

				
			Issue Date: December 16, 2020

			
	 	
			 

			

 

CONVERTIBLE PROMISSORY NOTE

 

FOR VALUE RECEIVED, W TECHNOLOGIES, INC., a Delaware corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of Mid Atlantic Capital Associates Inc, a Canadian corporation, or registered assigns (the “Holder”) the sum of $573,232.00 together with any interest as set forth herein, on December 16, 2023 (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the “Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in part. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall be computed on the basis of a 365 day year and the actual number of days elapsed. Interest shall commence accruing on the Issue Date but shall not be payable until the Note becomes payable (whether at Maturity Date or upon acceleration or by prepayment). All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).

 

This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.

 

The following terms shall apply to this Note:

 

ARTICLE I.     CONVERSION RIGHTS

  

1.1      Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III), each in respect of the remaining outstanding amount of this Note to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”); provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion

 

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Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.4 hereof.

 

1.2     Conversion Price.   The conversion price (the “Conversion Price”) shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean by the Market Price (as defined herein). “Market Price” means the average of the lowest two (2) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the closing price on the OTCQB, OTCQX, Pink Sheets electronic quotation system or applicable trading market (the “OTC”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if the OTC is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets”. If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.

 

1.3     Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved seven times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Note in effect from time to time initially 2,500,000 shares)(the “Reserved Amount”). The Reserved Amount shall be increased from time to time in accordance with the Borrower’s obligations hereunder. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Note. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Note.

 

If, at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.

 

1.4     Method of Conversion.

 

(a)     Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, this Note may be converted by the Holder in whole or in part at any time from time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower (upon payment in full of any amounts owed hereunder).

 

(b)     Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless in the case of a Mandatory Conversion or the entire unpaid principal amount of this Note is otherwise so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. 

 

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(c)     Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Agreement. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations hereunder, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion.

 

(d)     Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions set forth herein, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit and Withdrawal at Custodian (“DWAC”) system.

 

(e)     Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $100 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, and interference with such conversion right are difficult if not impossible to qualify. Accordingly, the parties acknowledge that the liquidated damages provision contained in this Section 1.4(e) are justified.

 

1.5      Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration (such as Rule 144 or a successor rule) (“Rule 144”); or (iii) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement).

 

Any restrictive legend on certificates representing shares of Common Stock issuable upon conversion of this Note shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if the Borrower or its transfer agent shall have received an opinion of counsel from Holder’s counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that (i) a public sale or transfer of such Common Stock may be made without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected; or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the Act; or otherwise may be sold pursuant to an exemption from registration. In the event that the Company does not reasonably accept the opinion of counsel provided by the Holder with respect to the transfer of Securities pursuant to an exemption from registration (such as Rule 144), at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

 

1.6     Effect of Certain Events.

 

(a)     Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article III). “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.

 

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(b)     Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of the Note, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, ten (10) days prior written notice (but in any event at least five (5) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Note. The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

 

(c)     Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.

 

1.7     Prepayment. This Note may not be prepaid by the Holder without the prior written consent of the Borrower.

 

ARTICLE II.      CERTAIN COVENANTS

 

2.1     Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.

 

ARTICLE III.      EVENTS OF DEFAULT

 

If any of the following events of default (each, an “Event of Default”) shall occur:

 

3.1     Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.

 

3.2     Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written

 

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announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order to process a conversion such advanced funds shall be paid by the Borrower to the Holder within forty-eight (48) hours of a demand from the Holder.

 

3.3     Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents including but not limited to the Agreement and such breach continues for a period of twenty (20) days after written notice thereof to the Borrower from the Holder.

 

3.4     Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Agreement.

 

3.5     Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.

 

3.6     Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.

 

3.7     Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.

 

3.8     Failure to Comply with the Exchange Act. If Borrower becomes subject to the Exchange Act, the Borrower shall fail to comply with the reporting requirements of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.

 

3.9     Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

 

3.10   Cessation of Operations.     Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

 

3.11    Financial Statement Restatement.     The restatement of any financial statements filed by the Borrower with the SEC at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

 

3.12     Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.

 

3.13     Cross-Default.  Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. “Other Agreements” means, collectively, all agreements and instruments between, among or by: (1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided, however, the term “Other Agreements” shall not include the related or companion documents to this Note. Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder.

 

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Upon the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Amount (as defined herein).  UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT AMOUNT (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation of any Event of Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due on this Note upon a Trading Market Prepayment Event pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or 3.14 exercisable through the delivery of written notice to the Borrower by such Holders (the “Default Notice”), and upon the occurrence of an Event of Default specified the remaining sections of Articles III (other than failure to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to 150% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment Date”) plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity. 

 

If the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.

 

ARTICLE IV.     MISCELLANEOUS

 

4.1     Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

4.2     Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

 

If to the Borrower:

 

W TECHNOLOGIES, INC.

9440 Santa Monica Boulevard, Suite 301

Beverly Hills, CA 90210

 

Attn: Mikael Lundgren, Chief Executive Officer

Email:      mg.l.@me.com

 

               If to the Holder

:      

MID ATLANTIC CAPITAL ASSOCIATES, INC.

405 Kings Road

London U.K. SW100BB

 

Attn: Charles Flynn, Executive Officer

E-mail: cdflynn@hotmail.com

 

 

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4.3     Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.

 

4.4     Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement; and may be assigned by the Holder without the consent of the Borrower.

 

4.5     Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.

 

4.6     Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the state courts of California or in the federal courts located in the Central District of California. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Note, any agreement or any other document delivered in connection with this Note 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 other manner permitted by law.

 

4.7     Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.

 

4.8     Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required.

  

 

IN WITNESS WHEREOF, Borrower has caused this Note to be signed as of the date above written.

 

W TECHNOLOGIES, INC.

 

 

By: /s/ Mikael Lundgren                        

Mikael Lundgren

Chief Executive Officer

 

7

 

 

EXHIBIT A -- NOTICE OF CONVERSION

 

The undersigned hereby elects to convert $_________________ principal amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of W TECHNOLOGIES, INC., a Delaware corporation (the “Borrower”) according to the conditions of the convertible note of the Borrower dated as of December 16, 2020 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.

 

Box Checked as to applicable instructions:

 

	
			 

				
			[ ]

				
			The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).

			

 

Name of DTC Prime Broker:

Account Number:

 

	
			 

				
			[ ]

				
			The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:

			

 

_______________________________________________

________________________________

________________________________

Attention: Certificate Delivery

E-mail: __________________________

 

Date of conversion:      _____________

Applicable Conversion Price:      $____________

Number of shares of common stock to be issued

     pursuant to conversion of the Notes:      ______________

Amount of Principal Balance due remaining

     under the Note after this conversion:         ____________

 

________________________________________________

 

By: _____________________________

Name: __________________________

Title:    Chief Executive Officer

Date: ____________________

 

 

8ex_218070.htm

 

EXHIBIT 10.1

 

CONFIDENTIAL 

 

Revised Letter of Intent

 

 

November 4, 2019

 

Mr. Serge Mersilian, President

W. TECHNOLOGIES, INC.

5122 Bolsa Avenue, Suite 109

Huntington Beach, CA 92649

 

Re: Acquisition Offer for Purchase and of Notes Series E Preferred Stock of W. Technologies, Inc. (the “Company”)

 

Dear Mr. Mersilian:

 

This Letter of Intent will evidence our intent in respect of the proposed acquisition (“Acquisition”) by Mid Atlantic Capital Associates, Inc. (“MACA”) of two convertible promissory notes of the Company, dated September 11, 2006 and September 21, 2006 (collectively “Notes”), currently owned by Sarkis Sarkissian (“Sarkissian”) and of all of the outstanding shares of the Series E Preferred Stock (“Preferred”) owned by the C.H. Mornas Foundation (“Mornas”). The principal terms and conditions of the Acquisition are as follows:

 

	 	
			1.

				
			Transfer of Ownership and Consideration. Pursuant to the Acquisition, Sarkissian shall assign the Notes to MACA and Mornas shall assign the Preferred to MACA in exchange for [a] a three (3) year promissory notes (“Closing Note”) in the aggregate amount of $250,000, and [ii] restricted shares of the common stock of the Company valued at $125, 000 [“Shares”], all at the Closing, as defined below. The Closing Note will be due 90 days from the Closing unless extended for an additional 90 days (“New Due Date”) by MACA for the payment of an extension fee of $25,000 [“Extension Fee”]. The Extension Fee shall be paid on the New Due Date when the Closing Note is paid.

			

 

	 	
			2.

				
			Escrow. Upon execution of the Purchase Agreement (as defined below), Sarkissian and Mornas shall deposit all of [a] the Notes will assignment documents attached, [b] the certificate[s] for the Mornas Preferred with stock powers attached, and [c] the executed issuance documents for the Shares, into the escrow to be described in the Purchase Agreement. Concurrently therewith, MACA shall deliver the Closing Note into such escrow. Once MACA is satisfied that all such documents are in escrow, MACA will deliver $5,000 US directly to Sarkissian for legal expenses.

			

 

	 	
			3.

				
			Closing Conditions. The proposed Acquisition is subject to and conditioned upon each of the following:

			

 

	 	
			(a)

				
			Due Diligence Period. MACA shall have, in its judgment, satisfactorily completed its due diligence review of the Company, the Notes, the Preferred and the Certificate of Incorporation as amended. MACA will begin due diligence until upon full execution of the LOI.

			

 

 

 

 

	 	
			(b)

				
			Purchase Agreement. MACA, the Company and each of Sarkisian and Mornas shall have negotiated and executed a binding purchase agreement (the “Purchase Agreement”) in respect of the proposed Acquisition prior to November 15, 2019. The Purchase Agreement and other ancillary transaction documents will be drafted by counsel to MACA and will be in a form acceptable to the Company, Sarkissian and to Mornas. The Purchase Agreement will contain customary representations, warranties and indemnities of the parties.

			

 

	 	
			(c)

				
			Audited Financial Statements [“AFS”]. Within 45 days after the Closing date which is to be selected by all Parties, the Company shall deliver to MACA the AFS of the Company for the two (2) fiscal years ended July 31, 2019 [“Audit”] and an unaudited financial statements as October 31, 2019 and as of the date of Closing, MACA will be responsible for the full payment of all cost of the Audit except for costs for the participation of personnel of the Company. The Audit shall begin when this LOI has been executed in full by the Parties. Except for the Notes, the Preferred and the Series A Preferred Stock [“Series A PS”], any other Convertible Securities with voting and/or conversion rights shall be terminated voided or all the provisions for voting and/or conversion rights shall be removed from the Convertible Securities.

			

 

	 	
			(d)

				
			Approvals. All necessary governmental and other material third-party approvals, consents and waivers shall have been obtained. In addition, the closing of the transaction shall be subject to receipt of the final approval of the MACA Board of Directors.

			

 

	 	
			(e)

				
			Prior to the execution of the Purchase Agreement. MACA shall have determined to its sole satisfaction that except for the Series A PS, there are no other notes, preferred shares, warrants, rights or any other securities of the Company outstanding which have any conversion rights whatsoever. With respect to the Series A PS, we are relying on the statements of Sarkissian and another Company representative, that the Series A PS will never cause MACA any problems.

			

 

	 	
			(f)

				
			Within five (5) days of the execution of the Letter of Intent, the Company shall appoint a new Board of Directors, of three people, two of which shall be persons designated by MACA. The new Board shall be kept fully informed about the status of any and all shares of Convertible Securities and the Series A Preferred to ensure the provisions of paragraph 3(e) are implemented. Control and ownership of all of the Notes, the Series E Preferred, the Series A Preferred and all Convertible Securities is a condition precedent to the Closing of this transaction.

			

 

	 	
			4.

				
			Payment of Liabilities. After the Closing, the current officers and directors of the Company shall continue to be responsible for all liabilities of the Company set forth in or disclosed in the Audit which were not otherwise known by or disclosed to MACA [“Undisclosed liabilities”] or listed in the unaudited statement delivered after the Closing and dated as of the date of the Closing. Undisclosed Liabilities not set forth on any such books and records or otherwise described in writing to MACA or which became known to MACA for any reason after the Closing, shall be deducted by MACA from the proceeds from the Closing Note described in paragraph 2 above.

			

 

2

 

 

	 	
			5.

				
			Pre-Closing Covenants. The parties hereto will use their reasonable best efforts to obtain all necessary third-party and governmental consents, approvals and waivers (including all certificates, permits, licenses and approvals required in connection with the Acquisition). The Company will operate its business in the ordinary course of business consistent with past practice.

			

 

	 	
			6.

				
			Closing. The closing (“Closing”) of the transactions contemplated by the Purchase Agreement will occur on or before December 15, 2019.

			

 

	 	
			7.

				
			Exclusivity. MACA and the Sellers shall in good faith endeavor to negotiate the terms of the definitive Purchase Agreement during the period of exclusive negotiations to expire on the Termination Date (as defined below) (The “Exclusivity Period”). The Exclusivity Period will note commence upon execution of the LOI. Once the Exclusivity Period begins until it terminates, Sellers will negotiate exclusively with MACA and will note (whether directly or indirectly through any other person or entity) solicit, encourage, engage in any discussion with, or provide any information to any person or entity (other than the Sellers and or the Company or its representatives) concerning any merger, sale of substantial assets of the Company or purchase or sale of any capital stock of the Company or any similar transaction involving the Company or any portion thereof. As the term “Termination Date” means March 1st, 2020 or such earlier or later date as may be mutually agreed upon by the Company and the Parties in writing.

			

 

	 	
			8.

				
			Confidentiality. Each of the Sellers and Buyer will keep confidential all information (i) related to a potential transaction or (ii) obtained by it in respect of the other in connection with this Letter of Intent, and will use such information solely in connection with the transactions contemplated hereby and if the transactions contemplated hereby are not consummated, each will destroy, without retaining a copy thereof, any schedules, documents, or other written information obtained from the other in connection with this Letter of Intent and the transactions contemplated hereby. Notwithstanding the foregoing provisions of this paragraph, no party hereto shall be required to keep confidential or destroy any information which (i) is known or available through other lawful sources not bound by a confidentiality agreement with the disclosing party, (ii) is or becomes publicly known through no fault of the receiving party or its agents, (iii) is required to be disclosed pursuant to an order or request of a judicial authority or governmental entity (provided the disclosing party is given reasonable prior notice) or (iv) is developed by the receiving party independently of the disclosure by the disclosing party.

			

 

	 	
			9.

				
			Expenses. Sellers shall each bear the fees and expenses incurred by them, and MACA shall bear the fees and expenses incurred by it, including the Company Audit expenses and expenses in connection with the negotiation, preparation, execution, and delivery of this Letter of Intent and the Purchase Agreement and the consummation of the transactions contemplated thereby.

			

 

	 	
			10.

				
			Public Announcements. There will be no disclosure of the Acquisition or this Letter of Intent until the Closing has occurred. Thereafter, all press releases and public announcements relating to the Acquisition will be agreed to and prepared jointly by the Company and MACA.

			

 

3

 

 

	 	
			11.

				
			Counterparts. This Letter of Intent may be executed in multiple counterparts which, when taken together, shall represent a fully executed Letter of Intent.

			

 

	 	
			12.

				
			Expiration. This Letter of Intent will expire at 5:00 P.M. Los Angeles, CA time on October 31, 2019 if not executed by Sellers and the Company and delivered to MACA prior to such time.

			

 

	 	
			13.

				
			Letter of Intent. It is understood and agreed that this Letter of Intent is not a binding or legally enforceable agreement and imposes no obligations upon the parties hereto and that the rights and obligations of the parties hereto in respect of the proposed Acquisition will be set forth only if and when an Acquisition Agreement in mutually acceptable form is executed and delivered by the parties hereto. Notwithstanding the preceding sentence the parties intend that the covenants contained in this Letter of Intent in Sections (Sec. 9 – Expenses: Expense Reimbursement), (Sec. 10 – Public Announcements), (Sec. 13 – Letter of Intent), (Sec. 14 – Governing Law), and (Sec. 15 – Prior Communications; No Oral Modifications), shall be enforceable and biding.

			

 

	 	
			14.

				
			Governing Law. This Letter of Intent shall be governed by and construed in accordance with the laws of the State of California without regard to the conflicts-of laws rules thereof.

			

 

 

[The remainder of this page intentionally left blank]

 

 

4

 

 

	 	
			15.

				
			Prior Communications; No Oral Modifications. This Letter of Intent supersedes all prior understandings, agreements, and representations between the seller of the Company and MACA, whether written or oral in respect of the subject matter hereof. This Letter of Intent may not be modified other than in a writing executed by all parties and stating its intent to modify or supersede this Letter of Intent.

			

 

	 	
			16.

				
			Expiration. This Letter of Intent shall expire at 5pm PST on Friday, November 1, 2019.

			

 

If the foregoing accurately sets forth our understanding, please so indicate by signing and dating this Letter of Intent in the space provided below and returning an executed copy of this Letter of Intent to the undersigned.

 

MID ATLANTIC CAPITAL ASSOCIATES, INC. 

 

By: /s/ Charles Flynn                                     

Charles Flynn, President

 

AGREED AND ACCEPTED

(As of the date first written above):

 

W. TECHNOLOGY, INC. 

 

 

By:                                                                 

       Serge Mersilian, President and CEO

 

 

                                                                       

     Sarkis Sarkissian, Individually

 

 

C.H. MORNAS FOUNDATION

 

 

 

 

5

 

 

	 	
			15.

				
			Prior Communications; No Oral Modifications. This Letter of Intent supersedes all prior understandings, agreements, and representations between the seller of the Company and MACA, whether written or oral in respect of the subject matter hereof. This Letter of Intent may not be modified other than in a writing executed by all parties and stating its intent to modify or supersede this Letter of Intent.

			

 

	 	
			16.

				
			Expiration. This Letter of Intent shall expire at 5pm PST on Friday, February 7th, 2020.

			

 

 

Signature page follows.

 

The remainder of this page intentionally left blank.

 

If the foregoing accurately sets forth our understanding, please so indicate on behalf of COMPANY by signing and dating this Letter of Intent in the space provided below and returning an executed copy of this Letter of Intent to the undersigned.

 

 

MID ATLANTIC CAPITAL ASSOCIATES, INC. 

 

By: /s/ Charles Flynn                                     

Charles Flynn, President

 

AGREED AND ACCEPTED

(as of the date first written above):

 

 

 

 

W. TECHNOLOGY, INC. 

 

By: /s/ Serge Mersilian                                  

       Serge Mersilian, President and CEO

 

 

/s/ Sarkis Sarkissian                                       

     Sarkis Sarkissian, Individually

 

C.H. MORNAS FOUNDATION

 

By:

 

6

 

 

	 	
			14.

				
			Governing Law. This Letter of Intent shall be governed by and construed in accordance with the laws of the State of California without regard to the conflicts-of laws rules thereof.

			

 

	 	
			15.

				
			Prior Communications; No Oral Modifications. This Letter of Intent supersedes all prior understandings, agreements, and representations between the seller of the Company and MACA, whether written or oral in respect of the subject matter hereof. This Letter of Intent may not be modified other than in a writing executed by all parties and stating its intent to modify or supersede this Letter of Intent.

			

 

	 	
			16.

				
			Expiration. This Letter of Intent shall expire at 5pm PST on Friday, November 1, 2019.

			

 

 

Signature page follows.

 

The remainder of this page intentionally left blank.

 

If the foregoing accurately sets forth our understanding, please so indicate on behalf of COMPANY by signing and dating this Letter of Intent in the space provided below and returning an executed copy of this Letter of Intent to the undersigned.

 

 

MID ATLANTIC CAPITAL ASSOCIATES, INC. 

 

By: /s/ Charles Flynn                                     

Charles Flynn, President

 

AGREED AND ACCEPTED

(as of the date first written above):

 

 

W. TECHNOLOGY, INC. 

 

By: /s/ Serge Mersilian                                  

       Serge Mersilian, President and CEO

 

 

                                                                       

     Sarkis Sarkissian, Individually

 

C.H. MORNAS FOUNDATION

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