Document:

Membership interest purchase agreement

 

EXHIBIT 10.19

ROCKSTAR MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

THIS AGREEMENT (“Agreement”) is made effective the 17th day of February, 2017, among PAYMEON, INC., a Nevada corporation (“PAYM” or the “Buyer”), Rockstar Acquisitions, LLC, a Florida limited liability company (“RSA”), VCVC, LLC, a Florida limited liability company (“VCVC”), EAC Management, LLC, a Florida limited liability company (“EAC”), JJM3, LLC, a Florida limited liability company “(JJM3”), RAW LLC, a Florida limited liability company (“RAW”), YellowTurtle Design, LLC, a Florida limited liability company (“YellowTurtle”), Erica Corkum, an individual (“Erica C”), Eric Corkum, an individual (“Eric C”), Jeannie Corkum, an individual (“Jeannie C”), Richard Laurin, an individual (“Laurin”), RVRM Holdings, LLC, a Connecticut limited liability company (“RVRM”) and Robert Ludwig, an individual (“Ludwig”).  Together RSA, VCVC, EAC, JJM3, RAW, YellowTurtle, Erica C, Eric C, Jeannie C, Laurin, RVRM and Ludwig are known as “Sellers.” The Buyer and the Sellers (including each legal entity and individual comprising the Sellers) are each a “Party” and both together are the “Parties.”

 

B AC K G R O U N D:

 

A.

The Buyer desires to acquire one hundred percent (100%) of the Membership Interests of Rockstar Acquisitions, LLC, a Florida limited liability company (the “RSA Membership Interests”).  The Sellers together own one hundred percent (100%) of the Membership Interests of RSA and desire to sell all right, title and interest to the RSA Membership Interests to Buyer in exchange for the Purchase Consideration (see Section 2 below) and the Buyer wishes to accept all right, title and interest to the RSA Membership Interests from Sellers.

B.

RSA is the holder of an exclusive License Agreement, as may be amended from time to time (collectively, the “License Agreement”) with Raw Energy Materials, Corp., a Florida corporation (“RAW Energy”).  Global Energy Sciences, LLC, a Florida limited liability company (“Global Energy”), is now the Licensor under the License Agreement based on a total assignment from RAW Energy to Global Energy.

C.

The License Agreement provides for, among other things, RSA’s exclusive license to use certain Intellectual Property and any related product names, trade dress, designs, logos and artwork owned by Global Energy, in connection with certain Licensed Products in a certain Licensed Territory (as the foregoing terms in this recital are defined in the License Agreement), subject to the terms and conditions set forth in the License Agreement.

D.

RSA owns a ten percent (10%) common stock interest in Raw Materials Corp, a Florida corporation (“RAW Materials), a related company of Global Energy.

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.

Sale Agreement.  Subject to the terms and conditions of this Agreement and the RSA operating agreement, the Buyer agrees to purchase from the Sellers and the Sellers agree to sell the RSA Membership Interests to Buyer.  One hundred percent (100%) ownership of the RSA Membership Interests will be transferred by the Sellers to the Buyer on the Closing Date (defined below) free and clear of all liens, claims and encumbrances.  

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2.

Purchase Consideration.  The total Purchase Consideration to be paid by the Buyer to the Sellers for the purchase of the RSA Membership Interests is NINETY-FIVE MILLION FIVE HUNDRED THOUSAND (95,500,000) shares of PAYM restricted common stock.  The Purchase Consideration will be immediately and unconditionally issued to the Sellers in proportion to their pro rata membership interests in RSA, as shown on an Exhibit to this Agreement.

3.

Representations and Warranties of Sellers.  As an inducement to the Buyer to enter into this Agreement, the Sellers, to the best knowledge of the Sellers, represent and warrant to the Buyer that as of the date of this Agreement and the Closing Date [All representations and warranties from RSA are solely from its managing members on the date of this Agreement and the Closing Date]:

 

3.1.

Absence of Liabilities.  Except as detailed on Schedule 1, RSA currently has no debt, liability, obligation or commitment, absolute or contingent, known or unknown, relating to or connected with its operations or the License Agreement, which are due.  

 

3.2.

Title to Membership Interests.  The Sellers own, possess and have good and marketable title to the RSA Membership Interests free and clear of all liens, leases, pledges, charges, encumbrances, equities, covenants, conditions, restrictions or claims of every nature and kind whatsoever.  

 

3.3.

Legal Requirements.  The Sellers have all requisite power, authority and approvals to transfer ownership of the RSA Membership Interests.  RSA is in good standing with the State of Florida and has complied and will continue to comply with all applicable federal, state and local statutes, laws and regulations.

 

3.4.

Consents and Approvals.  Other than in compliance with the provisions of applicable laws, statutes and regulations, no notice to, filing with, or authorization, consent or approval of, any domestic or foreign public body or authority is necessary for the consummation of the transactions contemplated by this Agreement.  The execution, delivery, performance and consummation of this Agreement does not and will not:  (a) violate, conflict with or constitute a default or an event that, with notice or lapse of time or both, would be a default, breach or violation under any term or provision of any instrument, agreement, contract, commitment, license, promissory note, conditional sales contract, indenture, mortgage, deed of trust, lease or other agreement, instrument or arrangement to which Sellers are a party or by which the Sellers are bound; (b) violate, conflict or constitute a breach of any law, statute, regulation or judicial or administrative order, award, judgment or decree to which the Sellers are a party or to which the Sellers are bound or subject; or (c) result in the creation or imposition of any adverse claim or interest, or any lien, encumbrance, charge, equity or restriction of any nature whatever, upon or affecting the Sellers.  The Sellers have consented to the sale of the RSA Membership Interests to Buyer and this Agreement, subject to the terms contained in this Agreement and the RSA operating agreement.  

 

3.5.

Litigation.  There is no:  (a) action, suit or proceeding pending or threatened against the Sellers, RSA, or the RSA Membership Interests; or (b) proceeding, investigation, charges, audit or inquiry threatened or pending before or by any federal, state, municipal or other governmental court, department, commission, board, bureau, agency or instrumentality which might result in an adverse effect on the Sellers, RSA or the RSA Membership Interests. 

3.6.

Taxes.  There is no pending or known threatened claim against RSA for payment of any taxes arising from RSA’s operations.  RSA has not executed any waiver of any statute of limitations against assessments of taxes.

 

3.7.

Authority.  The Sellers have taken all necessary action(s) to authorize the execution, delivery and performance of this Agreement and have adequate power, authority and legal right to enter into, execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby.  This Agreement is legal, valid and binding with respect to each of the Sellers and RSA, and is enforceable in accordance with its terms.  On execution, delivery and performance of this Agreement in accordance with its terms, the Buyer will own one hundred percent (100%) of the RSA Membership Interests free of all claims, liens, encumbrances and liabilities.

 

3.8.

Full Disclosure.  This Agreement, any schedule referenced in or attached to this Agreement, any document furnished by Sellers to the Buyer under this Agreement or any certification furnished by Sellers to the Buyer under this Agreement does not contain any untrue statement of a material fact and does not omit to state a material fact necessary to make such statement, in the circumstances under which it was made, not misleading.  All of the representations, warranties and covenants in this Agreement from Sellers:  (a) are true and correct as of the date made; (b) will be true and correct as of the Closing Date; and (c) will survive and not be waived, discharged, released, modified, terminated or affected by any due diligence by the Buyer.  For purposes of this Agreement, when a statement is qualified by the phrase “to the best knowledge of the Seller(s),” such phrase means: (y) the actual knowledge of the Seller(s); and (z) the knowledge which the Seller(s), in the exercise of reasonable diligence, could obtain.

3.9

Due Diligence:  The Sellers are Accredited Investors (as such term is defined under the Securities Act of 1933, as amended) and have reviewed the public filings of PAYM, including PAYM’s annual report on Form 10-K for the year ended December 31, 2015 and PAYM’s most recent quarterly report on Form 10-Q for the period ended September 30, 2016.  The Seller(s) and their representatives, if any, have been given the opportunity to conduct satisfactory due diligence of PAYM, and have been given the opportunity to speak with PAYM management during their due diligence.

 

4.

Representations and Warranties of PAYM.  As an inducement to the Sellers to enter into this Agreement, the Buyer, to the best knowledge of the Buyer, represents and warrants to the Sellers that as of the date of this Agreement and the Closing Date:

4.1

Legal Requirements.

The Buyer has all requisite power, authority and approvals to purchase and acquire ownership of the RSA Membership Interests.  Buyer is in good standing with the State of Nevada and has complied and will continue to comply with all applicable federal, state and local statutes, laws and regulations.

4.2

Consents and Approvals.  Other than in compliance with the provisions of applicable laws, statutes and regulations, no notice to, filing with, or authorization, consent or approval of, any domestic or foreign public body or authority is necessary for the consummation of the transactions contemplated by this Agreement.  The execution, delivery, performance and consummation of this Agreement does not and will not:  (a) violate, conflict with or constitute a default or an event that, with notice or lapse of time or both, would be a default, breach or violation under any term or provision of any instrument, agreement, contract, commitment, license, promissory note, conditional sales contract, indenture, mortgage, deed of trust, lease or other agreement, instrument or arrangement to which the Buyer is a party or by which the Buyer is bound; (b) violate, conflict or constitute a breach of any law, statute, regulation or judicial or administrative order, award, judgment or decree to which the Buyer is a party or to which the Buyer is bound or subject; or (c) result in the creation or imposition of any adverse claim or interest, or any lien, encumbrance, charge, equity or restriction of any nature whatever, upon or affecting the Buyer.  The Buyer has consented to the purchase and acquisition of the RSA Membership Interests from Sellers and this Agreement, subject to the terms contained in this Agreement and the RSA operating agreement.  

4.3

Litigation.  There is no:  (a) action, suit or proceeding pending or threatened against the Buyer; or (b) proceeding, investigation, charges, audit or inquiry threatened or pending before or by any federal, state, municipal or other governmental court, department, commission, board, bureau, agency or instrumentality which might result in an adverse effect on the Buyer. 

4.4

Authority.  PAYM has taken all necessary action(s) to authorize the execution, delivery and performance of this Agreement and has adequate power, authority and legal right to enter into, execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby.  This Agreement is legal, valid and binding with respect to PAYM and is enforceable in accordance with its terms.

4.5

Full Disclosure.  This Agreement, any schedule referenced in or attached to this Agreement, any document furnished by Buyer to the Sellers under this Agreement or any certification furnished by Buyer to the Sellers under this Agreement does not contain any untrue statement of a material fact and does not omit to state a material fact necessary to make such statement, in the circumstances under which it was made, not misleading.  All of the representations, warranties and covenants in this Agreement from Buyer:  (a) are true and correct as of the date made; (b) will be true and correct as of the Closing Date; and (c) will survive and not be waived, discharged, released, modified, terminated or affected by any due diligence by the Sellers.  For purposes of this Agreement, when a statement is qualified by the phrase “to the best knowledge of the Buyer,” such phrase means: (y) the actual knowledge of the Buyer; and (z) the knowledge which the Buyer, in the exercise of reasonable diligence, could obtain.

5.

Conditions to Closing.  Prior to the Closing Date, the Buyer and Sellers will take all necessary steps to ensure the proper transfer of the RSA Membership Interests at closing in compliance with the operating agreement of RSA.  

6.

The Closing.  This Agreement will be consummated at 12:00 Noon local time at the offices of PayMeOn, Inc. or such other mutually agreeable location in Fort Lauderdale, Florida on the later of the following dates (the “Closing Date”):  the first business day following the day on which the last of the conditions set forth in paragraph 5 hereof is satisfied or waived which in no event shall be later than February 17, 2017.

 

6.1.

The Buyer’s Deliveries.  On the Closing Date, the Buyer will deliver or cause to be delivered to the Sellers the following items (all documents will be duly executed and acknowledged where required):

 

6.1.1.

Payment.  The Purchase Consideration.

 

6.1.2.

Evidence of Authority.  Such corporate resolutions and other evidence of authority with respect to the Buyer as might be reasonably requested by the Sellers; and

 

6.1.3.

Additional Documents.  Such additional documents as might be reasonably requested by the Sellers to consummate this Agreement.

6.2.

Seller’s Deliveries.  On the Closing Date, the Sellers will deliver or cause to be delivered to the Buyer the following items (all documents will be duly executed and acknowledged where required):

 

6.2.1.

Assignment.  Bills of sale, assignments and conveyances reasonably acceptable to the Buyer necessary to convey to the Buyer all of the Sellers; right, title and interest in and to all of the RSA Membership Interests; 

6.2.2.

Consent and Approval.  RSA’S managing members shall provide written consent and/or approval of the transfer of the RSA Membership Interests to Buyer; and

 

6.2.3.

Additional Documents.  Such additional documents as might be reasonably requested by the Buyer to consummate this Agreement.

 

7.

 Indemnification.  The Parties agree to indemnify each other as follows:

 

7.1

Each Party agrees to indemnify, defend and hold harmless the other Party, and its parent company, affiliates, subsidiaries, officers, employees, directors, shareholders, members, representatives, agents, successors and permitted assigns (collectively, the “Indemnified Parties”) from and against any claims, litigation, liabilities, losses, damages (including, without limitation, incidental, consequential, special and punitive), expenses (including, without limitation, reasonable attorney and paralegal fees and costs at all judicial levels including appellate proceedings), whether in tort, negligence, contract, strict liability or under any other legal theory, that may arise or be asserted against the Indemnified Parties based on the other Party’s breach of this Agreement, a violation of applicable laws and regulations, or fraud or misrepresentation, except such indemnity shall not apply if caused by the negligence, willful misconduct or omission of the Indemnified Parties.

 

7.2.

Limitation on Indemnification Obligations.  The Parties’ indemnification obligations pursuant to the provisions of this paragraph 7 are subject to the following limitations:

 

7.2.1.

Survival of Representations and Warranties.  No Party can recover under paragraph 7 unless a claim has been asserted by written notice, delivered to the other Party on or prior to the date that is 6 months after the Closing Date.

 

7.2.2.

Indemnification Cap.  No Party can recover under paragraph 7 an amount in excess of Twenty-Five Thousand Dollars ($25,000).  The foregoing limitation shall not apply to recovery for a breach under paragraphs 3 and 4 of this Agreement, fraud, misrepresentation, or any intentional or willful misconduct or omission by a Party.

 

7.3.

Other Remedies.  The remedies provided by this paragraph 7 are in addition to, and not in lieu of, such other remedies as may be available under applicable laws.  Without limitation, the Buyer and Sellers are entitled to enforce this Agreement by specific enforcement without the necessity of demonstrating inadequacy of damages or irreparable harm.

 

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7.4.

Payment.  Claims for indemnification involving the payment of money will be paid within ninety (90) calendar days after written notification thereof.  Claims for indemnification involving amounts due to third parties will be promptly paid when due, subject to the right to contest the same in good faith.  Unpaid claims will incur interest at a floating rate of interest equal to the prime rate published from time to time in The Wall Street Journal.

 

8.

Termination.  This Agreement may be terminated if an event of default under paragraph 9 below occurs which remains uncured after the curative period has expired.  In the event of termination, written notice thereof will be given to the other Party or Parties specifying the provision pursuant to which such termination is made.  Termination of this Agreement shall not relieve either Party of its liabilities accruing up to the time of termination and shall not prejudice the right of either Party to recover all monies then due, to enforce this Agreement, and to seek all remedies and damages, at law or in equity, under applicable law. 

 

9.

Default.  If a Party fails to perform any obligation contained in this Agreement, the Party claiming default will serve written notice to the other Party specifying the nature of such default and demanding performance.  If such default shall continue for more than ten (10) calendar days after notice from the non-breaching Party, then the non-breaching Party may, at its option, terminate this Agreement by notice to that effect, but if that default cannot reasonably be cured within that cure period and a diligent effort has been commenced by the breaching Party within that cure period which is diligently prosecuted to completion, no default shall be deemed to exist; provided, however, if no cure has occurred,  the non-breaching Party will be entitled to exercise all remedies arising at law or in equity by reason of such default, including, without limitation, specific performance of this Agreement or any one or more of the provisions herein contained since money damages at law may not be an adequate remedy for a Party’s violation of this Agreement.

10.

Miscellaneous.  It is further agreed as follows:

 

10.1.

Time.  Time is of the essence of this Agreement.

 

10.2.

Notices.  Any notice, demand or communication required or permitted to be given by any provision of this Agreement will be in writing and will be deemed to have been given and received when delivered personally or by electronic mail to the Party designated to receive such notice, or on the date following the day sent by overnight courier, or on the third (3rd) calendar day after the same is sent by certified mail, postage and charges prepaid, directed to the following addresses or to such other or additional addresses as any Party might designate by written notice to the other Parties:

 

			
	 

	If to PAYM:

	 

	 

	Attention:  Chief Executive Officer

2599 N. FEDERAL HIGHWAY

Fort Lauderdale, Fl  33305

	 

	 

	 

	 

	 

	 
	 

	 

	 

	 

	 

	 

	 

 

3

 

 

			
	 
	To the Sellers:

	 

	 

	 
	 

	 

	 SEE EXHIBIT A

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 
	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

 

10.3.

Representations and Warranties.  The respective representations and warranties of the Parties contained herein or in any certificates or other documents delivered on the Closing Date will not be deemed waived or otherwise affected by any investigation made by any Party hereto.  Each and every such representation and warranty will survive the Closing Date and will not be terminated or extinguished for a period of six months after the Closing Date notwithstanding any contrary provision in this Agreement or elsewhere, including any of the Other Documents (defined below). 

 

10.4.

Cooperation.  Prior to and at all times following the execution of this Agreement the Parties agree to execute and deliver, or cause to be executed and delivered, such documents and do, or cause to be done, such other acts and things as might reasonably be requested by any Party to this Agreement to assure that the benefits of this Agreement are realized by the Parties.

 

10.5.

Headings.  The paragraph headings contained in this Agreement are for reference purposes only and are not intended to affect in any way the meaning or interpretation of this Agreement.

 

10.6.

Entire Agreement.  This Agreement and any document executed in connection herewith on or after the date of this Agreement (the “Other Documents”) constitute the entire agreement between the Parties with respect to the subject matter hereof; totally replace any and all prior and contemporaneous understanding, representations, warranties or promises among the Parties; and there are no agreements, understandings, promises, warranties or representations except as set forth herein or in the Other Documents.

 

10.7.

Assignment.  It is agreed that the Parties may not assign, in whole or in part, such Party’s rights nor delegate such Party’s duties under this Agreement without the express prior written consent of the other Parties to this Agreement.  Notwithstanding the foregoing, the Buyer will be permitted to assign this Agreement for all or part of the RSA Membership Interests to a wholly owned subsidiary provided the Buyer remains fully liable for the performance of this Agreement.

 

10.8.

Amendment.  Neither this Agreement, nor any of the provisions hereof can be changed, waived, discharged or terminated, except by an instrument in writing signed by the Party against whom enforcement of the change, waiver, discharge or termination is sought.

 

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10.9.

Severability.  If any clause or provision of this Agreement is illegal, invalid or unenforceable under any present or future law, the remainder of this Agreement will not be affected thereby.  It is the intention of the Parties that if any such provision is held to be illegal, invalid or unenforceable, there will be added in lieu thereof a provision as similar in terms to such provisions as is possible and to be legal, valid and enforceable.

 

10.10.

Governing Law.  This Agreement will be interpreted, construed and enforced in accordance with the laws of the State of Florida, regardless of any applicable principles of conflicts of law.

 

10.11.

Attorney Fees.  If any Party institutes an action or proceeding against any other Party arising from or relating to the provisions of this Agreement, the Party to such action or proceeding which does not prevail will reimburse the prevailing Party therein, as determined by a court of competent jurisdiction, for the reasonable expenses of attorneys’ fees, court costs and disbursements incurred by the prevailing Party, at all judicial levels. The Parties agree that such litigation shall only be heard in state or federal court located in Broward County, Florida and each Party accepts that venue and waives any objections to that venue; and each Party further waives its right to a trial by jury. 

 

10.12.

Waiver.  Waiver of performance of any obligation or term contained in this Agreement by any Party, or waiver by one Party of the other’s default hereunder will not operate as a waiver of performance of any other obligation or term of this Agreement or a future waiver of the same obligation or a waiver of any future default.

 

10.13.

Counterpart Execution.  This Agreement may be executed in counterparts, including by electronic mail, each of which will be deemed an original document but all of which will constitute a single document. An electronic signature shall constitute an original.

10.14.

Binding Agreement.  This Agreement shall be binding upon and shall inure to the benefit of the legal representatives, heirs, successors and permitted assigns of the Parties. 

10.15.

Construction.  This Agreement shall not be construed against the Party who drafted it since both Parties have substantially contributed to its content before it was executed by the Parties.

 

[Signature Pages Follow]

 

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SIGNATURE PAGE TO MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

IN WITNESS WHEREOF, this Agreement has been executed by the Parties effective the date first above written.

 

			
	 
	PAYMEON, INC.

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	By:

	 

	 
	Name:

	 

	 
	Its:

	 

SELLERS:

	
	MANAGING MEMBERS:

	 

	 

	 

	VCVC, LLC

	Vincent L. Celentano, Manager

	 

	 

	 

	EAC Management, LLC

	Edward A. Cespedes, Manager

	 

	MEMBERS:

	 

	 

	 

	RVRM HOLDINGS, LLC, RONALD LORICCO, R., Authorized Member

	 

	 

	 

	RAW LLC, DONALD SMITH, MANAGER

	 

	 

	 

	YELLOWTURTLE DESIGN, LLC, ELINA JENKINS, MANAGER

	 

	 

	 

	RICHARD LAURIN

	 

	 

6

 

	
	 

	ROBERT LUDWIG

	 

	 

	 

	ERICA CORKUM

	 

	 

	 

	ERIC CORKUM

	 

	 

	 

	JEANNIE CORKUM

	 

	 

	 

	JJM3, LLC

	JAMES J. McCABE, MANAGER

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SCHEDULE I

NONE.

8FORM OF CONVERTIBLE PROMISSORY NOTE

 

EXHIBIT 10.23

ANY SHARES ACQUIRED UPON CONVERSION OF THIS NOTE OR ANY PORTION THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE “ACT”) OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL ACCETABLE TO COUNSEL FOR THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED AND THAT THE PROPOSED TRANSFER MAY BE MADE WITHOUT VIOLATION OF THE ACT AND ANY APPLICABLE STATE SECURITIES LAW.

No. PAYMEON _________

$_________________

Note Date: _______________

PAYMEON, INC.

(a Nevada corporation)

7% CONVERTIBLE PROMISSORY NOTE

Due On or Before ___________

PAYMEON, INC., a Nevada corporation (the “Company”), for value received and intending to be legally bound, hereby promises to pay to the order of _________________ (“Holder”), the principal amount of ___________________ Dollars (the “Principal Amount”) on or before Mmmm DD, YYYY (the “Maturity Date”), together with interest thereon at the rate of 7% per annum (the “Interest”), as set forth herein (the “Note”). 

1.

Convertible Note:  By accepting this Note, the Holder hereby acknowledges that this Note has not been registered under the Securities Act of 1933, as amended, or any state securities laws and Holder represents for himself and his legal representative that he is acquiring this Note and will acquire any shares issued upon conversion hereof, for his own account, for investment purposes only and not with a view to, or for sale in connection with, any distribution of such securities and Holder agrees to reaffirm, in writing, this investment representation at the time of exercise of the conversion right set forth herein. 

2.

Principal and Interest Payment:  The Company shall pay (or cause to be paid) interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note at the rate of 7% per annum, accrued monthly and payable on the Maturity Date of ___________, unless the Note is converted or prepaid prior to the Maturity Date, in which case all accrued interest through the conversion or prepayment date shall become payable. 

3.

Interest Rate Protection:  Should the Company issue any new or additional promissory notes that pay an interest rate that exceeds 7% per annum, then Holder shall be entitled to request an increase in the Interest rate payable on this Note to an amount equal to the rate being paid on the new or additional notes.  Any increase in the Interest rate shall be payable from the date of the increase forward and shall not be applied in arrears.

 

4.

Unsecured Obligation:  The obligations of the Company under this Note are unsecured.

5.

Conversion of Note:  This Note may be converted into shares of Common Stock of the Company (the “Common Stock”), at any time, at the option of the Holder as follows:

(a)

Conversion:  Subject to and upon compliance with the provision of this Section 4, at the option of the Holder, at any time on or before the Maturity Date the unpaid principal and interest balance of the Note may be converted in whole or in part, into fully-paid and non-assessable shares of Common Stock, par value $0.001 per share, of the Company (the “Shares”) at the conversion rate equal to $_______ per share, except as otherwise adjusted below (the “Conversion Price”). The conversion date shall be the date that such Notice of Conversion is deemed delivered hereunder. Upon conversion of the entire principal balance, the principal represented thereby shall be canceled. Such conversion shall be effectuated by the Holder submitting to the Company a notice of conversion attached hereto as Exhibit “1” (the “Conversion Notice”). The Conversion Notice shall state the dollar amount thereof to be so converted and shall include or be accompanied by representations as to the Holder’s investment intent substantially similar to those contained in this Note. Shares issuable upon conversion of the Note shall be issued in the name of the Holder and shall be transferrable only in accordance with all of the terms and restrictions contained herein. 

(b)

Fractional Shares:   No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.

(c)

Holder’s Conversion Limitations:  The Company shall not effect any conversion of this Note, and Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any persons acting as a group together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of this Note beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(c) applies, the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of 

 

a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation to other securities owned by the Holder together with any affiliates) and which principal amount of this Note is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4(c), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written request of Holder, the Company shall within two trading days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 4(c). Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(c) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Note. For purposes of this Section “Affiliate” means any person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a person, as such terms are used in and construed under Rule 405 under the Securities Act of 1933, as amended (the “Act”).

(d)

Subdivision or Combination:  Whenever the Company shall subdivide or combine the outstanding shares of Common Stock issuable upon conversion of this Note, the Conversion Price in effect immediately prior to such subdivision or combination shall be proportionately decreased in the case of subdivision or increased in the case of combination effective at the time of such subdivision or combination.

(e)

Reclassification or Change:  Whenever any reclassification or change of the outstanding shares of Common Stock shall occur (other than a change in par value, or from par value to no par, or from no par to par value, or as a result of a subdivision or combination), effective provision shall be made whereby the Holder shall have the right, at any time thereafter, to receive upon conversion of the Note the kind of stock, other securities or property receivable upon such reclassification by a holder of the number of share of Common Stock issuable upon conversion of this Note immediately prior to such 

 

reclassification. Thereafter, the rights of the parties hereto with respect to the adjustments of the amount of securities or other property obtainable upon conversion of this Note shall be appropriately continued and preserved, so as to afford as nearly as may be possible protection of the nature afforded by this subparagraph (e). 

(f)

Merger:  If, prior to repayment of the obligations relevant hereto, or prior to conversion of this Note into equity in the Company, the Company shall be consolidated or merged with another company, or substantially all of its assets shall be sold to another company in exchange for stock wit the view to distributing such stock to its shareholders, each share of stock into which this Note is convertible shall be replaced for the purposes hereof by a pro rata amount of the securities or property issuable or distributable, based upon percentage of the Company’s common stock which a Holder would have owned had there been a conversion herein after consummation of such merger, consolidation or sale and adequate provision to that effect shall be made at the time thereof. The Company will provide the Holder at least thirty (30) days prior written notice of any event described in this subsection (f).

6.

Company Right to Require Conversion:  After 180 days from the date of issuance of this Note, the Company shall have the right to require Holder to convert all or any part of the Note if the closing share price of Paymeon common stock as quoted on any public exchange or quotation system shall be equal to or greater than $0.70 per share for 20 consecutive trading days, such consecutive trading days being exclusive of the first 180 days post issuance of this Note.

7.

Reservation of Common Shares:  The Company shall take or has taken all steps necessary to reserve a number of its authorized but unissued Common Stock sufficient for issuance upon conversion of this Note pursuant to the provisions included hereinabove.

8.

Securities Laws and Restrictions:  This Note and the Common shares issuable upon conversion have not been registered for sale under the Act, and neither this Note nor those shares nor any interest in this Note nor those shares may be sold, offered for sale, pledged or otherwise disposed of without compliance with applicable securities laws, including, without limitation, an effective registration statement relating thereto or delivery of an opinion of counsel acceptable to the Company that such registration is not required under the Act. Holder has reviewed the Company’s periodic and annual reports as filed with the Securities and Exchange Commission (the “SEC Reports”) and has based its investment decision solely on the information contained in the SEC Reports.  Holder represents and warrants that it is an “accredited investor” as defined under the Act.

9.

Redemption/Prepayment of Note:  This Note is subject to redemption at the option of the Company upon thirty (30) days prior written notice (subject to the Holder’s prior exercise of its right of conversion as set forth above), as a whole at any time, or in part from time to time, upon payment by the Company of 100% of the unpaid principal amount or such portion thereof so redeemed, plus accrued interest thereon through the date of redemption. 

10.

Events of Default:  If any of the following conditions or events (“Events of Default”) shall occur and shall be continuing:

(i)

if the Company shall default in the payment of principal and/or interest accruing herein when the same becomes due and payable, whether at maturity or by declaration of acceleration or otherwise, and shall fail to cure such 

 

default within fifteen days after written notice thereof from the Holder to the Company, if the Company fails to tender any payment due hereunder when the same becomes due; and shall fail to cure such default within fifteen days after written notice thereof from the Holder to the Company; or

(ii)

if the Company shall materially default in the performance of or compliance with any material term contained herein and such default shall not have been remedied within fifteen days after written notice thereof from the Holder to the Company; or

(iii)

if the Company shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts as they become due, or a voluntary petition for reorganization under Title 11 of the Unites States Code (“Title 11”) shall be filed by the Company or an order shall be entered granting relief to the Company under Title 11 or a petition shall be filed by the Company in bankruptcy, or the Company shall be adjudicated a bankrupt or insolvent, or shall file any petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statue, law or regulation, or shall file any answer admitting or not contesting the material allegations of a petition filed against the Company any such proceeding, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver or liquidator of the Company or of all or any substantial part of the properties of the Company or if the Company or its directors or majority shareholders shall take any action looking to the dissolution or liquidation of the Company; or

(iv)

if within 120 days after the commencement of an action against the Company seeking a reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statue, law or regulation, such action shall not have been dismissed or nullified or all orders or proceedings thereunder affecting the operations or the business of the Company stayed, or if the stay of any such order or proceeding shall thereafter be set aside, or if, within 120 days after the appointment without the consent or acquiescence of the Company of any trustee, receiver or liquidator of the Company or of all or any substantial part of the properties of the Company such appointment shall not have been vacated; 

then, and in any such event, the Holder may at any time (unless such Event of Default shall theretofore have been remedied) at its option, by written notice to the Company, declare the Note to be due and payable, whereupon the Note shall forthwith mature and become due and payable, together with interest accrued thereon, and thereafter interest shall be due, at the rate per annum hereinabove provided, on the entire principal balance until the same is fully paid, and on any overdue interest (but only to the extent permitted by law), without presentment, demand, protest or notice, all of which are hereby waived, subject however, to the other terms, including those relating to subordination, of this Note. No course of dealing and no delay on the part of Holder in exercising any right shall operate as a waiver thereof or otherwise prejudice such Holder’s rights, powers or remedies. No right, power or remedy conferred by this Note upon Holder shall be exclusive of any 

 

other right, power or remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.

11.

Notice:  All notices required or permitted to be given under this Note, including, without limitation, any Notice of Conversion, shall be in writing (delivered by hand or sent certified or registered mail, return receipt requested, or by nationally recognized overnight courier service) addressed to the respective party at the address indicated on the signature page of this Note. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the second business day following the date of mailing, if sent by nationally recognized overnight courier service or (ii) upon actual receipt by the party to whom such notice is required to be given.

12.

Governing Law and Jurisdiction:  The Note shall be governed by the laws of the State of Florida. This Note and all issues arising out of this Note will be governed by and construed solely and exclusively under and pursuant to the laws of the State of Florida. Each of the parties hereto expressly and irrevocably agrees that any legal suit, action or proceeding arising out of or relating to this Agreement will be instituted exclusively in Broward County, Florida.

13.

Severability:  If any provision, paragraph or subparagraph of this Note is adjudged by any court to be void or unenforceable in whole or in part, this adjudication shall not affect the validity of the remainder of the Note, including any other provision, paragraph or subparagraph. Each provision, paragraph or subparagraph of this Note is separable from every other provision, paragraph and subparagraph and constitutes a separate and distinct covenant. 

14.

Amendment:  This Note may only be amended in writing, duly endorsed by the parties hereto. 

15.

Heading:  The headings in this Note are solely for convenience of reference and shall not affect its interpretation.

		
	 
	PAYMEON, INC.

	 
	 

	 
	 

	 
	 

	 
	 

	 
	 

	 
	 

	 
	HOLDER:

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