Document:

EXHIBIT 10.15

 

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 (I) 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 OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A 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.

 

	
Principal Amount: $48,000.00 

	
Issue Date: June 4, 2015

	
Purchase Price: $48,000.00

	
 

 

CONVERTIBLE PROMISSORY NOTE

 

FOR VALUE RECEIVED, FLASR, INC., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order VIS VIRES GROUP, INC., a New York corporation, or registered assigns (the “Holder”) the sum of $48,000.00 together with any interest as set forth herein, on March 8, 2016 (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 except as otherwise explicitly set forth herein. 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 commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. 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. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed. 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”).

 

	 
	
1

	

 

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) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal 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 9.99% 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, provided, further, however, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). 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 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”). 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 1.3 and 1.4(g) hereof.

 

	 
	
2

	

 

1.2  Conversion Price.

 

(a) Calculation of Conversion Price. The conversion price (the “Conversion Price”) shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings 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 58% multiplied by the Market Price (as defined herein) (representing a discount rate of 42%). “Market Price” means the average of the lowest three (3) 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 bid price on the Over-the-Counter Bulletin Board, 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.

 

(b) Conversion Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces a tender offer to purchase 50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause (i) or (ii) is hereinafter referred to as the “Announcement Date”), then the Conversion Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined as set forth in this Section 1.2(a). For purposes hereof, “Adjusted Conversion Price Termination Date” shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.

 

	 
	
3

	

 

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 eight times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes in effect from time to time)(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 Notes. 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. Subject to Section 1.1, 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.

 

(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 the entire unpaid principal amount of this Note is 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. In the event of any dispute or discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.

 

	 
	
4

	

  

(c) Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

 

(d) 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 Purchase Agreement.

 

(e) Obligation of Borrower to Deliver Common Stock. 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 under this Article I, 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. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time, on such date.

 

(f) 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 contained in Section 1.1 and in this Section 1.4, 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 Withdrawal Agent Commission (“DWAC”) system.

 

	 
	
5

	

  

(g) 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 (other than a failure due to the circumstances described in Section 1.3 above through willful or deliberate hindrances on the part of the Borrower, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock through willful or deliberate hindrances on the part of the Borrower. 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, 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(g) 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 or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) (“Rule 144”) or (iv) 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). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of this Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

 

“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE 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 (I) 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 OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A 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.”

 

	 
	
6

	

 

The legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that 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 Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold. In the event that the Company does not 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 or Regulation S, 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 either: (i) 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) or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.

 

(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 Notes, 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, thirty (30) days prior written notice (but in any event at least fifteen (15) 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 Section 1.6(b). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

 

	 
	
7

	

 

(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.

 

(d) Adjustment Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues or sells, or in accordance with this Section 1.6(d) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith) or for consideration per share which is less than the Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares of Common Stock (a “Dilutive Issuance”), then immediately upon the Dilutive Issuance, the Conversion Price will be reduced to the amount of the consideration per share received by the Borrower in such Dilutive Issuance. Notwithstanding anything contained herein to the contrary, there shall be no Dilutive Issuance for any shares of Common Stock to be issued based on agreements or arrangements entered into prior to the date hereof, including without limitation, an aggregate of 4,100,000 shares of Common Stock to be issued

 

The Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants, rights or options (not including employee stock option plans), whether or not immediately exercisable, to subscribe for or to purchase Common Stock or other securities convertible into or exchangeable for Common Stock (“Convertible Securities”) (such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as “Options”) and the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For purposes of the preceding sentence, the “price per share for which Common Stock is issuable upon the exercise of such Options” is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or granting of all such Options, plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the exercise of all such Options, plus, in the case of Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional consideration payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming full conversion of Convertible Securities, if applicable). No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon exercise of such Options.

 

	 
	
8

	

 

Additionally, the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For the purposes of the preceding sentence, the “price per share for which Common Stock is issuable upon such conversion or exchange” is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or sale of all such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.

 

(e) Purchase Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities or rights to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record holders of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

 

(f) Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of the Note.

 

1.7  Trading Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market on which the Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to this Note and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock that the Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded (the “Maximum Share Amount”), which shall be 9.99% of the total shares outstanding on the Closing Date (as defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock splits, stock dividends, combinations, capital reorganizations and similar events relating to the Common Stock occurring after the date hereof. Once the Maximum Share Amount has been issued, if the Borrower fails to eliminate any prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Borrower or any of its securities on the Borrower’s ability to issue shares of Common Stock in excess of the Maximum Share Amount, in lieu of any further right to convert this Note, this will be considered an Event of Default under Section 3.3 of the Note.

 

	 
	
9

	

 

1.8 Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower’s failure to convert this Note.

 

1.9 Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time during the periods set forth on the table immediately following this paragraph (the “Prepayment Periods”), the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to Holder, or upon the order of the Holder as specified by the Holder in writing to the Borrower, at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Optional Prepayment Amount”) equal to the percentage (“Prepayment Percentage”) as set forth in the table immediately following this paragraph opposite the applicable Prepayment Period, multiplied by 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 Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

	
Prepayment Period

	 	
Prepayment Percentage

	 
	
1. The period beginning on the Issue Date and ending on the date which is thirty (30) days following the Issue Date.

	 	 	
115

	
%

	
2. The period beginning on the date which is thirty-one (31) days following the Issue Date and ending on the date which is sixty (60) days following the Issue Date

	 	 	
120

	
%

	
3. The period beginning on the date which is sixty-one (61) days following the Issue Date and ending on the date which is ninety (90) days following the Issue Date

	 	 	
125

	
%

	
4. The period beginning on the date that is ninety-one (91) days from the Issue Date and ending one hundred twenty (120) days following the Issue Date

	 	 	
130

	
%

	
5. The period beginning on the date that is one hundred twenty-one (121) days from the Issue Date and ending one hundred fifty (150) days following the Issue Date

	 	 	
135

	
%

	
6. The period beginning on the date that is one hundred fifty-one (151) days from the Issue Date and ending one hundred eighty (180) days following the Issue Date

	 	 	
140

	
%

 

	 
	
10

	

 

After the expiration of one hundred eighty (180) days following the Issue Date, the Borrower shall have no right of prepayment.

 

ARTICLE II. CERTAIN COVENANTS

 

2.1 Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions pursuant to any shareholders’ rights plan which is approved by a majority of the Borrower’s directors.

 

2.2 Restriction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any such shares.

 

2.3 Borrowings. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, (a) create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the obligation of any other person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments for deposit or collection, or (b) suffer to exist any liability for borrowed money, except any borrowings that does not render the Borrower a "Shell" company as defined in Rule 12b-2 under the Securities Exchange Act of 1934.

 

2.4 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.

 

2.5 Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course of business or (c) not in excess of $100,000.

 

	 
	
11

	

 

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 or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise.

 

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 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 Purchase Agreement and such breach continues for a period of ten (10) 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 Purchase Agreement.

 

	 
	
12

	

 

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 Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

 

3.7 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.

 

3.8 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 Pink Sheets electronic quotation system) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.

 

3.9 Failure to Comply with 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.

 

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

 

3.11 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.

 

3.12 Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).

 

3.13 Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

 

	 
	
13

	

 

3.14 Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.

 

3.15 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.

 

3.16 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.

 

Upon the occurrence 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 Sum (as defined herein). UPON THE OCCURRENCE 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 SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence of any Event of Default, other than Section 3.2, exercisable through the delivery of written notice to the Borrower by such Holders (the “Default Notice”), 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 greater of (i) 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 Sum”) or (ii) the “parity value” of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the “Conversion Date” for purposes of determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Closing Price for the Common Stock during the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment Date (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.

 

	 
	
14

	

 

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 and to the extent that there are sufficient authorized shares, to require the Borrower, upon written notice, to convert the Default Amount into shares of Common Stock of the Borrower pursuant to Section 1.1 hereof.

 

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, to:

 

FLASR, INC.

1075 Peachtree Stre, NE - Suite 3650

Atlanta, GA 30309

Attn: EVERETT DICKSON, Chief Executive Officer

facsimile:

 

	 
	
15

	

 

 With a copy by fax only to (which copy shall not constitute notice):

 

[enter name of law firm]

Attn: [attorney name]

[enter address line 1]

[enter city, state, zip]

facsimile: [enter fax number]

 

 If to the Holder:

 

VIS VIRES GROUP, INC.

111 Great Neck Road – Suite 216,

Great Neck, NY 11021

Attn: Curt Kramer, President

e-mail: info@visviresgroup.com

 

 With a copy by fax only to (which copy shall not constitute notice):

 

Naidich Wurman LLP

111 Great Neck Road – Suite 214

Great Neck, NY 11021

Att: Judah A. Eisner, Esq.

facsimile: 516-466-3555

   

	 
	
16

	

 

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 1933 Act). 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.

 

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 New York 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 New York or in the federal courts located in the state and county of Nassau. 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 Agreement or any other Transaction Document 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 Agreement 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 Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.

 

	 
	
17

	

 

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

 

4.9 Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section 4.9.

 

4.10 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 in its name by its duly authorized officer this June 4, 2015.

 

	 	
FLASR, INC.

	
 

	 	
 

	 	
	 	
By:

	
/s/ Everett Dickson

	
 

	 	
 

	
Everett Dickson

	
 

	 	
 

	
Chief Executive Officer

	
 

 

	 
	
18

	

 

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 FLASR, INC., a Nevada corporation (the “Borrower”) according to the conditions of the convertible note of the Borrower dated as of June 4, 2015 (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:

 

VIS VIRES GROUP, INC.

 

111 Great Neck Road – Suite 216,

Great Neck, NY 11021

Attention: Certificate Delivery

e-mail: info@visviresgroup.com

 

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: ______________

 

VIS VIRES GROUP, INC.

 

By: _____________________________

Name:  Curt Kramer

Title: President

 

 

19EX-10.1

 Exhibit 10.1 

AMENDED AND RESTATED 
 CREDIT
AGREEMENT 
 THIS AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) is entered into as of July 1, 2015, by and between
PFENEX INC., a Delaware corporation (“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”). 
 RECITALS

 WHEREAS, Bank extended credit to Borrower, pursuant to that certain Credit Agreement dated as of May 1, 2012, between Borrower
and Bank, as amended by that certain First Amendment to Credit Agreement dated as of June 24, 2013, that certain Second Amendment to Credit Agreement dated as of June 24, 2014, that certain Third Amendment to Credit Agreement dated as of
December 11, 2014, and those certain letter agreements dated as of March 27, 2015 (as so amended, the “Original Credit Agreement”), and the parties hereto wish to amend, restate and supersede in its entirety the Original Credit
Agreement. 
 WHEREAS, Borrower has requested that Bank extend or continue credit to Borrower as described below, and Bank has agreed to
provide such credit to Borrower on the terms and conditions contained herein. 
 NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree as follows: 
 ARTICLE I 

CREDIT TERMS 
 SECTION 1.1.
LINE OF CREDIT. 
 (a) Line of Credit. Subject to the terms and conditions of this Agreement, Bank hereby agrees to make advances to
Borrower from time to time up to and including July 1, 2018, not to exceed at any time the aggregate principal amount of Three Million Nine Hundred Thousand Dollars ($3,900,000.00) (“Line of Credit”), the proceeds of which shall be
used to finance Borrower’s working capital requirements. Borrower’s obligation to repay advances under the Line of Credit shall be evidenced by that certain Amended and Restated Revolving Line of Credit Note dated as of July 1, 2015
(“Line of Credit Note”), all terms of which are incorporated herein by this reference. Borrower acknowledges that the aggregate amount of outstanding advances under the “Line of Credit” under the Original Credit Agreement and the
“Line of Credit A” under the Original Credit Agreement, which balance was Three Million Eight Hundred Twelve Thousand Six Hundred Seventy Four and 91/100 Dollars ($3,812,674.91) as of June 19, 2015, shall be deemed outstanding
advances under the Line of Credit hereunder. 
 (b) Borrowing and Repayment. Borrower may from time to time during the term of the
Line of Credit borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions contained herein or in the Line of Credit Note; provided however, that the total outstanding
borrowings under the Line of Credit shall not at any time exceed the maximum principal amount available thereunder, as set forth above. 

  
 -1- 

 SECTION 1.2. INTEREST. 

(a) Interest. The outstanding principal balance of each credit subject hereto shall bear interest at the rate of interest set forth in
each promissory note or other instrument or document executed in connection therewith. 
 (b) Computation and Payment. Interest shall
be computed on the basis of a 360-day year, actual days elapsed. Interest shall be payable at the times and place set forth in each promissory note or other instrument or document required hereby. 

SECTION 1.3. COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect all principal, interest and fees due under the Line of Credit by
debiting Borrower’s deposit account number *** with Bank, or any other deposit account maintained by Borrower with Bank, for the full amount thereof. Should there be insufficient funds in any such deposit account to pay all such sums when due,
the full amount of such deficiency shall be immediately due and payable by Borrower. 
 SECTION 1.4. COLLATERAL. 

As security for all indebtedness and other obligations of Borrower to Bank under the Line of Credit, Borrower hereby grants and continues to
grant to Bank a security interest of first priority in Borrower’s Money Market Account *** maintained with Bank. 
 All of the foregoing shall be
evidenced by and subject to the terms of such security agreements, financing statements, and other documents as Bank shall reasonably require, all in form and substance reasonably satisfactory to Bank. Borrower shall pay to Bank promptly within
three (3) Business Days (as defined in the Line of Credit Note) of written demand therefor the full amount of all charges, costs and expenses (to include fees paid to third parties), expended or incurred by Bank in connection with any of the
foregoing security, including without limitation, filing and recording fees and costs of appraisals and audits. 
 ARTICLE II 

REPRESENTATIONS AND WARRANTIES 

Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the execution of this
Agreement and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to this Agreement. 

SECTION 2.1. LEGAL STATUS. Borrower is a corporation, duly organized and existing and in good standing under the laws of Delaware, and is
qualified or licensed to do business (and is in good standing as a foreign corporation, if applicable) in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed could
reasonably be expected to have a material adverse effect on Borrower. 
 SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement and each
promissory note, contract, instrument and other document required hereby or by the Original Credit Agreement or at any time delivered to Bank in connection with this Agreement or the Original Credit Agreement (collectively, the “Loan
Documents”) have been duly authorized, and upon their execution and delivery in accordance with the provisions hereof will constitute legal, 

  
 -2- 

 
valid and binding agreements and obligations of Borrower or the party which executes the same, enforceable in accordance with their respective terms. 

SECTION 2.3. NO VIOLATION. The execution, delivery and performance by Borrower of each of the Loan Documents to which Borrower is party
(i) do not violate any provision of any law or regulation, (ii) contravene any provision of the Articles of Incorporation or By-Laws of Borrower, or (iii) result in any breach of or default under any contract, obligation, indenture or
other instrument to which Borrower is a party or by which Borrower may be bound, except for such violation, breach or default in clauses (i) or (iii) above that could not reasonably be expected to have a material adverse effect on
Borrower. 
 SECTION 2.4. LITIGATION. There are no pending, or to the best of Borrower’s knowledge threatened, actions, claims,
investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency which could reasonably be expected to have a material adverse effect on the financial condition or operation of Borrower other
than those disclosed by Borrower to Bank in writing prior to the date hereof. 
 SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT. The annual
financial statement of Borrower dated December 31, 2014, and the quarterly financial statement dated March 31, 2015 of Borrower, true copies of which have been delivered by Borrower to Bank prior to the date hereof, (a) are complete
and correct and present fairly in all material respects the financial condition of Borrower as of the date of such statements, (b) disclose all material liabilities of Borrower that are required to be reflected or reserved against under
generally accepted accounting principles, whether liquidated or unliquidated, fixed or contingent, and (c) have been prepared in accordance with generally accepted accounting principles consistently applied (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to normal year-end audit adjustments). Since the date of Borrower’s annual audited financial statements most recently delivered to Bank, there has been no material adverse change
in the financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in favor of Bank or as otherwise permitted by Bank in writing or in this
Agreement. 
 SECTION 2.6. INCOME TAX RETURNS. Except as disclosed to Bank in writing prior to the date of this Agreement, Borrower has no
knowledge of any pending assessments or adjustments of its income tax payable with respect to any year, other than any such assessments or adjustments that are being contested in good faith by appropriate proceedings timely instituted and diligently
conducted and for which Borrower has set aside adequate reserves, if any, on its financial statements in accordance with generally accepted accounting principles consistently applied. 

SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture, contract or instrument to which Borrower is a party or by which Borrower may
be bound that requires the subordination in right of payment of any of Borrower’s obligations to Bank under this Agreement and the other Loan Documents to any other obligation of Borrower. 

SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter possess, all permits, consents, approvals, franchises and licenses
required and rights to all trademarks, trade names, patents, and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in compliance with applicable law, except where the failure to do so could not
reasonably be expected to have a material adverse effect on Borrower. 

  
 -3- 

 SECTION 2.9. ERISA. Borrower is in compliance in all material respects with all applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended or recodified from time to time (“ERISA”); Borrower has not violated any provision of any defined employee pension benefit plan (as defined in ERISA) maintained
or contributed to by Borrower (each, a “Plan”); no Reportable Event as defined in ERISA has occurred and is continuing with respect to any Plan initiated by Borrower; Borrower has met its minimum funding requirements under ERISA with
respect to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under generally accepted accounting principles. 

SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in default on any obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation, which default could reasonably be expected to have a material adverse effect on Borrower. 

SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in writing prior to the date hereof, Borrower is in compliance in
all material respects with all applicable federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations adopted pursuant thereto, which govern or affect any of Borrower’s operations and/or properties,
including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act of 1976, and the Federal
Toxic Substances Control Act, as any of the same may be amended, modified or supplemented from time to time. None of the operations of Borrower is the subject of any federal or state investigation evaluating whether any remedial action involving a
material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into the environment. Borrower has no material contingent liability in connection with any release of any toxic or hazardous waste or substance into
the environment. 
 ARTICLE III 

CONDITIONS 
 SECTION 3.1.
CONDITIONS OF INITIAL EXTENSION OF CREDIT AND AMENDMENT AND RESTATEMENT. The obligation of Bank to extend any credit contemplated by this Agreement and the effectiveness of the amendment and restatement of the Original Credit Agreement pursuant
hereto is subject to the fulfillment to Bank’s satisfaction of all of the following conditions: 
 (a) Approval of Bank Counsel.
All legal matters incidental to the extension of credit by Bank shall be satisfactory to Bank’s counsel. 
 (b) Documentation.
Bank shall have received, in form and substance satisfactory to Bank, each of the following, duly executed (to the extent not already delivered in connection with the Original Credit Agreement): 

 

	 	(i)	This Agreement and each promissory note or other instrument or document required hereby (including, without limitation, the Line of Credit Note). 

 

	 	(ii)	Corporate Resolution: Borrowing. 

  

	 	(iii)	Certificate of Incumbency. 

  

	 	(iv)	Security Agreement: Specific Rights to Payment. 

  
 -4- 

	 	(v)	Such other documents as Bank may require under any other Section of this Agreement. 

 (c)
Financial Condition. There shall have been no material adverse change, as determined by Bank, in the financial condition or business of Borrower, nor any material decline, as determined by Bank, in the market value of any collateral required
hereunder or a substantial or material portion of the assets of Borrower. 
 (d) Insurance. Borrower shall have delivered to Bank
evidence of insurance coverage on all Borrower’s property, in form, substance, amounts, covering risks and issued by companies reasonably satisfactory to Bank, and where required by Bank, with loss payable endorsements in favor of Bank. 

SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to make each extension of credit requested by Borrower hereunder
shall be subject to the fulfillment to Bank’s satisfaction of each of the following conditions: 
 (a) Compliance. The
representations and warranties contained herein and in each of the other Loan Documents shall be true and correct in all material respects on and as of the date of the signing of this Agreement and on the date of each extension of credit by Bank
pursuant hereto (except for any such representation or warranty that is qualified by materiality or reference to a material adverse effect, which such representation and warranty shall be true and correct in all respects), with the same effect as
though such representations and warranties had been made on and as of each such date (except to the extent such representations and warranties specifically relate to an earlier date, in which case they shall be true and correct in all material
respects as of such earlier date, except for any such representation or warranty that is qualified by materiality or reference to a material adverse effect, which such representation and warranty shall be true and correct in all respects as of such
earlier date), and on each such date, no Event of Default as defined herein, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such an Event of Default (a “Potential Event of
Default”), shall have occurred and be continuing or shall exist. 
 (b) Documentation. Bank shall have received all additional
documents which Bank may reasonably require in connection with such extension of credit. 
 ARTICLE IV 

AFFIRMATIVE COVENANTS 

Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower to Bank under this Agreement and the other Loan Documents, Borrower shall,
unless Bank otherwise consents in writing: 
 SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees or other
liabilities due under any of the Loan Documents at the times and place and in the manner specified therein. 
 SECTION 4.2. ACCOUNTING
RECORDS. Maintain adequate books and records in accordance with generally accepted accounting principles consistently applied, and permit any representative of Bank, at any reasonable time and with reasonable prior notice, to inspect,

  
 -5- 

 
audit and examine such books and records, to make copies of the same, and to inspect the properties of Borrower; provided that so long as no Event of Default has occurred and is continuing,
Borrower shall not be required to reimburse Bank for the cost of more than one such audit per calendar year. 
 SECTION 4.3. FINANCIAL
STATEMENTS. Provide to Bank all of the following, in form and detail reasonably satisfactory to Bank: 
 (a) not later than each
July 15 and as of the end of each fiscal year, an audited annual financial statement of Borrower, prepared by a certified public accountant of recognized national standing, to include balance sheet, income statement and statement of cash flows;

 (b) not later than 90 days after and as of the end of the first three fiscal quarters of each fiscal year, a quarterly financial
statement of Borrower, prepared by Borrower, to include balance sheet and income statement; and 
 (c) from time to time such other
information relating to the financial condition of Borrower as Bank may reasonably request. 
 SECTION 4.4. COMPLIANCE. Preserve and
maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business, except where the failure to so preserve or maintain could not reasonably be expected to have a material adverse
effect on Borrower; and comply with the provisions of all constitutive documents of Borrower and with the requirements of all laws, rules, regulations and orders of any governmental authority applicable to Borrower and/or its business, except where
the failure to so comply could not reasonably be expected to have a material adverse effect on Borrower. 
 SECTION 4.5. INSURANCE. Maintain
and keep in force, for each business in which Borrower is engaged, insurance of the types and in amounts customarily carried by companies engaged in the same or similar lines of business in similar locations, including but not limited to fire,
extended coverage, public liability, flood, property damage and workers’ compensation, with all such insurance carried with financially sound and reputable insurance companies, and deliver to Bank from time to time at Bank’s request
schedules or certificates summarizing all insurance then in effect. 
 SECTION 4.6. FACILITIES. Keep all properties necessary in or material
to Borrower’s business in good repair and condition (ordinary wear and tear excepted), and from time to time make necessary repairs, renewals and replacements thereto so that such properties shall be fully and efficiently preserved and
maintained. 
 SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all indebtedness, obligations, assessments and
taxes, both real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments, except (a) where the failure to so pay and discharge could not reasonably be expected to have a
material adverse effect on Borrower, or (b) that are being contested in good faith by appropriate proceedings timely instituted and diligently conducted and for which Borrower has set aside adequate reserves, if any, on its financial statements
in accordance with generally accepted accounting principles consistently applied 
 SECTION 4.8. LITIGATION. Promptly after any Responsible
Officer (as defined below) of Borrower obtains knowledge thereof, give notice in writing to Bank of any litigation pending or 

  
 -6- 

 
threatened in writing against Borrower that if adversely determined could reasonably be expected to have a material adverse effect on Borrower. As used in this Agreement, “Responsible
Officer” means the chief executive officer, president, chief financial officer, controller, treasurer or assistant treasurer, secretary or general counsel of Borrower. 

SECTION 4.9. NOTICE TO BANK. Promptly (but in no event more than five (5) days after the occurrence of each such event or matter) give
written notice to Bank in reasonable detail of: (a) the occurrence of any Event of Default, or any condition, event or act which with the giving of notice or the passage of time or both would constitute an Event of Default; (b) any change
in the name or the organizational structure of Borrower; (c) the occurrence and nature of any Reportable Event or Prohibited Transaction, each as defined in ERISA, or any material funding deficiency with respect to any Plan; or (d) any
termination or cancellation of any insurance policy which Borrower is required to maintain, or any uninsured or partially uninsured loss through liability or property damage, or through fire, theft or any other cause affecting Borrower’s
property, in each case, which could reasonably be expected to have a material adverse effect on Borrower. 
 ARTICLE V 

NEGATIVE COVENANTS 

Borrower further covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether
direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower to Bank under this Agreement and the other Loan Documents, Borrower
will not without Bank’s prior written consent: 
 SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any credit extended hereunder
except for the purposes stated in Article I hereof. 
 SECTION 5.2. INTENTIONALLY OMITTED. 

SECTION 5.3. LEASE EXPENDITURES. Incur operating lease expense in any fiscal year in excess of an aggregate of One Million Dollars
($1,000,000.00). 
 SECTION 5.4. OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any indebtedness or liabilities resulting from
borrowings, loans or advances, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several (collectively, “Indebtedness”), except: 

(a) the Indebtedness of Borrower to Bank; 

(b) any other Indebtedness of Borrower existing as of, and disclosed to Bank in writing prior to, the date hereof; 

(c) trade payables arising in the ordinary course of business; 

(d) Indebtedness arising from the endorsement of instruments for deposit or collection in the ordinary course of business; 

(e) Indebtedness of Borrower owed to a Subsidiary (as defined below) of Borrower and guarantees incurred by Borrower in support of the
obligations of any Subsidiary (as defined 

  
 -7- 

 
below) of Borrower, so long as such Indebtedness and guarantees are unsecured and are subordinated in right of repayment to all indebtedness and other obligations of Borrower to Bank, as
evidenced by and subject to the terms of subordination agreements in form and substance reasonably satisfactory to Bank; 
 (f) Indebtedness
of Borrower incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including capital lease obligations, and any refinancings, renewals, refundings or extensions thereof (provided that the principal amount of
such Indebtedness is not increased at the time of any such refinancing, renewal, refunding or extension); provided that such Indebtedness is incurred concurrently with or within 270 days after the applicable acquisition, construction or improvement;
and provided further that, at the time of any such incurrence of Indebtedness and after giving pro forma effect thereto and the use of the proceeds thereof, the aggregate principal amount of Indebtedness that is outstanding in reliance on this
clause (f) shall not exceed One Million Dollars ($1,000,000.00) at any time; 
 (g) any Indebtedness incurred by Borrower that is
subordinated to the Indebtedness owing by Borrower to Bank on terms reasonably acceptable to Bank in its sole discretion, provided that no Event of Default as defined herein or Potential Event of Default shall have occurred and be continuing or
would be caused by the incurrence of such subordinated Indebtedness; 
 (h) obligations (contingent or otherwise) existing or arising under
any swap or hedging agreement, provided that such obligations are (or were) entered into by Borrower in the ordinary course of business for the purpose of directly mitigating risks associated with fluctuations in interest rates or foreign exchange
rates and not for speculative purposes; and 
 (i) other unsecured Indebtedness in an aggregate principal amount not exceeding Two Hundred
Thousand Dollars ($200,000.00) at any time outstanding, provided that no Event of Default or Potential Event of Default shall have occurred and be continuing or would be caused by the incurrence of such Indebtedness. 

As used in the Agreement, “Subsidiary” means as to any person, any corporation, partnership, limited liability company or other entity of which more
than fifty percent (50%) of the outstanding capital stock (or equivalent interests) having ordinary voting power to elect a majority of the board of directors or other managers of such corporation, partnership, limited liability company or
other entity is at the time owned by (directly or indirectly) or the management is otherwise controlled by (directly or indirectly) such person (irrespective of whether, at the time, capital stock (or equivalent interests) of any other class or
classes of such corporation, partnership, limited liability company or other entity shall have or might have voting power by reason of the happening of any contingency). 

SECTION 5.5. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Except as expressly permitted by Sections 5.7 and 5.8 of this Agreement,
(a) merge into or consolidate with any other entity (other than mergers or consolidations of any Subsidiary of Borrower into or with Borrower, provided that Borrower is the surviving entity); (b) make any substantial change in the nature
of Borrower’s business as conducted as of the date hereof unless such change is reasonably related or ancillary thereto; (c) acquire all or substantially all of the assets of any other entity; nor (d) sell, lease, transfer or
otherwise dispose of all or a substantial or material portion of Borrower’s assets (other than (x) the sale of obsolete, worn-out or surplus assets no longer used or usable in the business of Borrower, and (y) the disposition of any
Subsidiary of Borrower that does not have, at the time of any such disposition, assets or revenues with a 

  
 -8- 

 
value in excess of five (5.0%) percent of the total assets or revenues, as applicable, of Borrower and its Subsidiaries on a consolidated basis (each an “Immaterial Subsidiary”);
provided that all such Immaterial Subsidiaries, taken together, shall not have revenues or total assets in an amount that is equal to or greater than ten (10%) percent of the consolidated revenues or total assets, as applicable, of Borrower and
its Subsidiaries), except (i) in the ordinary course of Borrower’s business, and (ii) in an aggregate amount not to exceed Two Hundred Thousand Dollars ($200,000.00) in any fiscal year. 

SECTION 5.6. GUARANTIES. Guarantee or become liable in any way as surety, endorser (other than as endorser of negotiable instruments for
deposit or collection in the ordinary course of business), accommodation endorser or otherwise for, nor pledge or hypothecate any assets of Borrower as security for, any liabilities or obligations of any other person or entity, except (a) any
of the foregoing in favor of Bank, and (b) any of the foregoing permitted by Sections 5.4, 5.7 and 5.9 of this Agreement. 
 SECTION
5.7. LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to or investments in any person or entity (each of the foregoing is referred to herein as an “Investment”), except: 

(a) Investments permitted by Sections 5.5 and 5.6 of this Agreement; 

(b) Investments existing as of the date hereof and set forth on Schedule 5.7 hereto; 

(c) Deposit accounts with banks; 

(d) Investments consisting of accounts receivable of, notes receivable of, or prepaid royalties and other credit extensions, to customers and
suppliers who are not affiliates of Borrower, in the ordinary course of business; 
 (e)(i) marketable obligations issued or unconditionally
guaranteed or insured by the United States Government or any agency or any State thereof and backed by the full faith and credit of the United States or such State having maturities of not more than one (1) year from the date of acquisition;
(ii) demand deposits, certificates of deposit, time deposits, Eurodollar time deposits, or bankers’ acceptances, having in each case a tenor of not more than one (1) year issued by any nationally or state chartered commercial bank
having combined capital and surplus of not less than $1,000,000,000 whose short term securities are rated at least A-1 by Standard & Poor’s Rating Group and P-1 by Moody’s Investors Service, Inc.; (iii) commercial paper of an
issuer rated at least A-1 by Standard & Poor’s Rating Group or P-1 by Moody’s Investors Service, Inc. and in either case having a tenor of not more than one (1) year from the date of acquisition; and (iv) money market
funds that comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940; 
 (f) Investments by Borrower in
any Subsidiary of Borrower, provided that (i) no Event of Default or Potential Event of Default shall have occurred and be continuing or would be caused by the incurrence of such Investment, and (ii) the aggregate principal amount of such
Investments shall not at any time exceed One Million Dollars ($1,000,000.00); 
 (g) hedging agreements entered into in the ordinary course
of Borrower’s financial planning solely to hedge currency risks (and not for speculative purposes); 

  
 -9- 

 (h) Investments consisting of security deposits with utilities and other like entities made in
the ordinary course of business; 
 (i) employee loans, travel advances and guarantees in accordance with Borrower’s usual and
customary practices with respect thereto which in the aggregate shall not exceed Fifty Thousand Dollars ($50,000.00) outstanding at any time; 

(j) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Borrower’s business; 

(k) the formation of one or more Subsidiaries, so long as if any such Subsidiary is organized under the laws of a jurisdiction located in the
United States of America, Borrower causes such Subsidiary to become a guarantor hereunder by delivering to Bank a guaranty in form and substance reasonably satisfactory to Bank, along with any such other document as Bank shall deem appropriate for
such purpose, promptly after formation (and in any event within thirty (30) days after such formation). 
 (l) other Investments not
exceeding Two Hundred Thousand Dollars ($200,000.00) in the aggregate in any fiscal year, provided that no Event of Default or Potential Event of Default shall have occurred and be continuing or would be caused by the incurrence of such Investment.

 SECTION 5.8. DIVIDENDS, DISTRIBUTIONS. At any time that an Event of Default as defined herein or a Potential Event of Default has
occurred and is continuing or exists or would result therefrom, declare or pay any dividend or distribution in cash on Borrower’s stock now or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire for cash any shares of any
class of Borrower’s stock now or hereafter outstanding. 
 SECTION 5.9. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a
security interest in, or lien upon, all or any portion of Borrower’s assets now owned or hereafter acquired, except: 
 (a) any of the
foregoing in favor of Bank; 
 (b) any of the foregoing existing as of the date hereof and set forth on Schedule 5.9 hereto; 

(c) Liens securing Indebtedness permitted under Section 5.4(f); provided that (i) such liens attach concurrently with or within 270
days after the acquisition, construction or improvement (as applicable) of the property subject to such liens, (ii) such liens do not at any time encumber any property other than the property financed by such Indebtedness, except for accessions
to such property and the proceeds and the products thereof, and any lease of such property (including accessions thereto) and the proceeds and products thereof, and (iii) with respect to capital lease obligations, such Liens do not at any time
extend to or cover any assets (except for accessions to or proceeds of such assets) other than the assets subject to such capital lease obligations; 

(d) carrier’s, warehousemen’s, mechanic’s, materialmen’s, repairmen’s or other like security interests or liens
arising in the ordinary course of business which are not delinquent or 

  
 -10- 

 
which are being contested in good faith and by appropriate proceedings and for which Borrower maintains adequate reserves in accordance with generally accepted accounting principles; 

(e) security interests or liens to secure payment of workers’ compensation, employment insurance, old age pensions, social security or
other like obligations incurred in the ordinary course of business, in each case, so long as no foreclosure sale or similar proceeding has been commenced with respect to any portion of the assets on account thereof; 

(f) security interests and liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being
contested in good faith by appropriate proceedings and for which Borrower maintains adequate reserves in accordance with generally accepted accounting principles, consistently applied; 

(g) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial
in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of Borrower; 

(h) with respect to any real property, (i) such defects or encroachments as might be revealed by an up-to-date survey of such real
property; (ii) the reservations, limitations, provisos and conditions expressed in the original grant, deed or patent of such property by the original owner of such real property pursuant to applicable laws; and (iii) rights of
expropriation, access or user or any similar right conferred or reserved by or in applicable laws, which do not materially interfere with the ordinary conduct of the business of Borrower; 

(i) banker’s liens, rights of set-off and similar liens arising by operation of law on deposits made in the ordinary course of business;

 (j) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case. in the ordinary course of business and only so long as no foreclosure sale or similar proceeding has been commenced with respect to any portion of the assets on account thereof; 

(k) Liens securing, or otherwise arising from, judgments not constituting an Event of Default under Section 6.01(f) of this Agreement;

 (l) leases, licenses, subleases or sublicenses in each case, granted to others in the ordinary course of business; 

(m) liens (i) in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection
with the importation of goods in the ordinary course of business or (ii) on specific items of inventory or other goods and proceeds of any person securing such person’s obligations in respect of bankers’ acceptances or letters of
credit issued or created for the account of such person to facilitate the purchase, shipment or storage of such inventory or other goods in the ordinary course of business; 

(n) liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods entered into by Borrower in
the ordinary course of business permitted by this Agreement; 

  
 -11- 

 (o) liens encumbering reasonable and customary initial deposits and margin deposits and similar
liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes; 

(p) liens solely on any cash earnest money deposits made by Borrower in connection with any letter of intent or purchase agreement entered
into with respect to an acquisition permitted by Section 5.5 of this Agreement; and 
 (q) liens on insurance policies and the proceeds
thereof securing the financing of the premiums with respect thereto. 
 ARTICLE VI 

EVENTS OF DEFAULT 
 SECTION
6.1. The occurrence of any of the following shall constitute an “Event of Default” under this Agreement: 
 (a) Borrower shall
fail to pay (i) any principal when due, or (ii) any interest, fees or other amounts payable under any of the Loan Documents within three (3) Business Days (as defined in the Line of Credit Note) after the same becomes due. 

(b) Any financial statement or certificate furnished to Bank in connection with, or any representation or warranty made by Borrower or any
other party under this Agreement or any other Loan Document shall prove to be incorrect, false or misleading in any material respect when furnished or made. 

(c) Any default in the performance of or compliance with any obligation, agreement or other provision contained herein or in any other Loan
Document (other than those specifically described as an “Event of Default” in this section 6.1), and with respect to any such default that by its nature can be cured, such default shall continue for a period of thirty (30) days from
the earlier of (1) the date a Responsible Officer learns of such default, or (2) the date written notice thereof is given by Bank to Borrower. 

(d) Any default in the payment or performance of any obligation, or any defined event of default, under the terms of any contract, instrument
or document (other than any of the Loan Documents) pursuant to which Borrower or any guarantor hereunder (with each such guarantor referred to herein as a “Third Party Obligor”) has incurred any debt or other liability to any person or
entity, including Bank; provided however, that any cure period applicable thereto has expired, and in the case of a default or defined event of default to a person or entity other than Bank or an affiliate of Bank, (i) such indebtedness is in
excess of Two Hundred Thousand Dollars ($200,000.00), individually or in the aggregate for all such defaults by Borrower and each Third Party Obligor combined, and (ii) Borrower or such Third Party Obligor is not contesting the existence of any
such default in good faith by appropriate proceedings and has not established adequate reserves in respect thereof on the books of Borrower or such Third Party Obligor to the extent required by generally accepted accounting principles consistently
applied. 
 (e) Borrower or any Third Party Obligor shall become insolvent, or shall suffer or consent to or apply for the appointment of a
receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts as they become due, or shall make a general assignment for the benefit of creditors; Borrower or any Third Party Obligor shall file
a 

  
 -12- 

 
voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the
United States Code, as amended or recodified from time to time (“Bankruptcy Code”), or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or Borrower or any Third Party Obligor shall file an
answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or Borrower or any Third Party Obligor shall be adjudicated a bankrupt, or an order for relief shall be entered against Borrower or any Third
Party Obligor by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors. 

(f) The filing of a notice of judgment lien against Borrower or any Third Party Obligor; or the recording of any abstract of judgment against
Borrower or any Third Party Obligor in any county in which Borrower or such Third Party Obligor has an interest in real property; or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the
assets of Borrower or any Third Party Obligor; provided that with respect to the filing of a notice of judgment lien, or the recording of a judgment, or the service of any legal process, all as more fully enumerated herein, against either Borrower
or any Third Party Obligor, the total aggregate amount of any one or more such filings, judgments, or processes must be in excess of Two Hundred Thousand Dollars ($200,000.00) and such filing or judgment is not rescinded, satisfied or stayed for a
period of 30 consecutive days after the entry thereof. 
 (g) Any involuntary petition or proceeding pursuant to the Bankruptcy Code or any
other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower or any Third Party Obligor, and the involuntary petition or proceeding continues undismissed more than
sixty (60) days following the date of its filing. 
 (h) The dissolution or liquidation of Borrower or any Third Party Obligor if a
corporation, partnership, joint venture or other type of entity; or Borrower or any such Third Party Obligor, or any of its directors, stockholders or members, shall take action seeking to effect the dissolution or liquidation of Borrower or such
Third Party Obligor; provided that no Event of Default shall arise from the dissolution or liquidation of any Subsidiary of Borrower to the extent permitted by Section 5.5 of this Agreement. 

(i) Any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 and
the rules of the Securities Exchange Commission thereunder as in effect on the date hereof) is or shall become the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Securities Exchange Act of 1934), directly or
indirectly, of 25% or more on a fully diluted basis of the voting interests in Borrower’s capital stock. 
 SECTION 6.2. REMEDIES. Upon
the occurrence and during the continuance of any Event of Default: (a) all indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary notwithstanding, shall at Bank’s option and without notice become
immediately due and payable without presentment, demand, protest or notice of dishonor, all of which are hereby expressly waived by Borrower; (b) the obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall
immediately cease and terminate; and (c) Bank shall have all rights, powers and remedies available under each of the Loan Documents, or accorded by law, including without limitation the right to resort to any or all security for any credit
subject hereto and to exercise any or all of the rights of a beneficiary or secured party pursuant to applicable law. All rights, powers and remedies of Bank may be exercised at any time by Bank and from time to time after the occurrence of an Event
of Default, 

  
 -13- 

 
are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity. 

ARTICLE VII 

MISCELLANEOUS 
 SECTION
7.1. NO WAIVER. No delay, failure or discontinuance of Bank in exercising any right, power or remedy under any of the Loan Documents shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any
such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy. Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under
any of the Loan Documents must be in writing and shall be effective only to the extent set forth in such writing. 
 SECTION 7.2. NOTICES.
All notices, requests and demands which any party is required or may desire to give to any other party under any provision of this Agreement must be in writing delivered to each party at the following address: 

 

			
	BORROWER:		PFENEX INC.
			10790 Roselle Street
			San Diego, CA 92121
		
	BANK:		WELLS FARGO BANK, NATIONAL ASSOCIATION
			MAC E2940-015
			10421 Wateridge Circle, Suite 150
			San Diego, CA 92121

 or to such other address as any party may designate by written notice to all other parties. Each such notice, request and
demand shall be deemed given or made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage
prepaid; and (c) if sent by telecopy, upon receipt. 
 SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS’ FEES. Borrower shall pay to
Bank within twenty (20) days of written demand by Bank (which demand shall include a reasonably detailed summary of the amounts which are the subject thereof) the full amount of all payments, advances, charges, reasonable costs and expenses,
including reasonable attorneys’ fees (to include outside counsel fees but excluding allocated costs of Bank’s in-house counsel), expended or incurred by Bank in connection with (a) the negotiation and preparation of this Agreement and
the other Loan Documents, Bank’s continued administration hereof and thereof, and the preparation of any amendments and waivers hereto and thereto, (b) the enforcement of Bank’s rights and/or the collection of any amounts which become
due to Bank under any of the Loan Documents, and (c) the prosecution or defense of any action in any way related to any of the Loan Documents, including without limitation, any action for declaratory relief, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank
or any other person) relating to Borrower or any other party to any of the Loan Documents. Notwithstanding anything herein to the contrary, the prevailing party in any action to enforce this Agreement or any of the other Loan Documents shall be
entitled to recover from the non-prevailing party in such action all reasonable costs and expenses, including without 

  
 -14- 

 
limitation reasonable attorneys’ fees, expended or incurred by the prevailing party in such action. 

SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators,
legal representatives, successors and assigns of the parties; provided however, that Borrower may not assign or transfer its interests or rights hereunder without Bank’s prior written consent; provided further that Bank shall give Borrower
written notice of any assignment to any non-U.S. Person (as defined in the Internal Revenue Code of 1986, as amended) within ten (10) Business Days (as defined in the Line of Credit Note) after such assignment. Bank reserves the right to sell,
assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Bank’s rights and benefits under each of the Loan Documents. In connection therewith, Bank may disclose all documents and information which Bank now
has or may hereafter acquire relating to any credit subject hereto, Borrower or its business, any guarantor hereunder or the business of such guarantor, if any, or any collateral required hereunder, subject to the terms of Section 7.12 of this
Agreement. 
 SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other Loan Documents constitute the entire agreement between
Borrower and Bank with respect to each credit subject hereto and supersede all prior negotiations, communications, discussions and correspondence concerning the subject matter hereof. This Agreement may be amended or modified only in writing signed
by each party hereto. 
 SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered into for the sole protection and
benefit of the parties hereto and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or
any other of the Loan Documents to which it is not a party. 
 SECTION 7.7. TIME. Time is of the essence of each and every provision of this
Agreement and each other of the Loan Documents. 
 SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or any remaining provisions of this Agreement. 

SECTION 7.9. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be
deemed to be an original, and all of which when taken together shall constitute one and the same Agreement. 
 SECTION 7.10. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of the State of California. 
 SECTION 7.11. ARBITRATION. 

(a) Arbitration. The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and
controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the
Loan Documents, and their negotiation, execution, collateralization, administration, repayment, 

  
 -15- 

 
modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit. In the event of a court ordered arbitration, the
party requesting arbitration shall be responsible for timely filing the demand for arbitration and paying the appropriate filing fee within 30 days of the abatement order or the time specified by the court. Failure to timely file the demand for
arbitration as ordered by the court will result in that party’s right to demand arbitration being automatically terminated. 
 (b)
Governing Rules. Any arbitration proceeding will (i) proceed in a location in California selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United
States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the
AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the
AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”).
If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and
expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable
state law. 
 (c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration requirement does not limit the right
of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary
remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of any party to
submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph. 

(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will
be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of
three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in the State of California or a neutral retired judge of the state or
federal judiciary of California, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an issue is arbitratable and
will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator’s discretion) any pre-hearing motions which are similar to
motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of California and may grant any remedy or relief that a court of such state could
order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the

  
 -16- 

 
arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the California Rules of Civil Procedure or other applicable law. Judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any
party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief. 

(e) Discovery. In any arbitration proceeding, discovery will be permitted in accordance with the Rules. All discovery shall be
expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to
final determination by the arbitrator upon a showing that the request for discovery is essential for the party’s presentation and that no alternative means for obtaining information is available. 

(f) Class Proceedings and Consolidations. No party hereto shall be entitled to join or consolidate disputes by or against others in any
arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney
general capacity. 
 (g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs and expenses of the
arbitration proceeding. 
 (h) Real Property Collateral; Judicial Reference. Notwithstanding anything herein to the contrary, no
dispute shall be submitted to arbitration if the dispute concerns indebtedness secured directly or indirectly, in whole or in part, by any real property unless (i) the holder of the mortgage, lien or security interest specifically elects in
writing to proceed with the arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue to them by virtue of the single action rule statute of California, thereby agreeing that all indebtedness and
obligations of the parties, and all mortgages, liens and security interests securing such indebtedness and obligations, shall remain fully valid and enforceable. If any such dispute is not submitted to arbitration, the dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et seq., and this general reference agreement is intended to be specifically enforceable in accordance with said Section 638. A referee with the qualifications
required herein for arbitrators shall be selected pursuant to the AAA’s selection procedures. Judgment upon the decision rendered by a referee shall be entered in the court in which such proceeding was commenced in accordance with California
Code of Civil Procedure Sections 644 and 645. 
 (i) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators and
the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results
thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation. If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the
arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship
between the parties. 
 (j) Small Claims Court. Notwithstanding anything herein to the contrary, each party retains the right to
pursue in Small Claims Court any dispute within that court’s jurisdiction. 

  
 -17- 

 
Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the
jurisdictional limit of the Small Claims Court. 
 SECTION 7.12. CONFIDENTIALITY. Bank agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to its affiliates and to its and its affiliates’ respective partners, directors, officers, employees, agents, advisors (including, without limitation, accountants
and legal counsel) and other representatives, (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to
the extent requested by, or required to be disclosed to, any rating agency, or regulatory or similar authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies under this
Agreement or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially
the same as those of this Section 7.12, to (i) any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement, or (ii) any actual or prospective counterparty
(or its advisors) to any swap or derivative transaction relating to Borrower and its obligations, (g) with the prior written consent of Borrower, (h) to the extent such Information (x) becomes publicly available other than as a result
of a breach of this Section 7.12 or (y) becomes available to Bank or any of its affiliates on a non-confidential basis from a source other than Borrower or (i) to governmental regulatory authorities in connection with any regulatory
examination of Bank or in accordance with Bank’s regulatory compliance policy if Bank deems necessary for the mitigation of claims by those authorities against Bank or any of its subsidiaries or affiliates. For purposes of this
Section 7.12, “Information” means all information received from Borrower relating to Borrower or its business, other than any such information that is available to Bank on a non-confidential basis prior to disclosure by Borrower;
provided that, in the case of information received from Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any person required to maintain the confidentiality of Information as provided in
this Section 7.12 shall be considered to have complied with its obligation to do so if such person has exercised the same degree of care to maintain the confidentiality of such Information as such person would accord to its own confidential
information. 
 SECTION 7.13. REAFFIRMATION OF SECURITY AGREEMENT. Reference hereby is made to that certain Security Agreement: Specific
Rights to Payment, dated as of June 24, 2014 (as amended, restated, supplemented, or otherwise modified, the “Security Agreement”), executed by Borrower in favor of Bank. Borrower hereby (a) acknowledges and reaffirms its prior
grant to Bank of a first priority security interest in the Collateral (as defined in the Security Agreement) and the Proceeds (as defined in the Security Agreement) as security for all of the obligations described in Paragraph 2 of the Security
Agreement, including, without limitation, all indebtedness and other obligations of Borrower to Bank subject hereto, and (b) agrees that the Security Agreement is and shall remain in full force and effect. 

  
 -18- 

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

									
	 PFENEX INC.,
 a Delaware
corporation
				 WELLS FARGO BANK, NATIONAL ASSOCIATION

					
	 By:
		 /s/ Bertrand Liang
				By:		 /s/ Dennis Kim

			Bertrand Liang						Dennis Kim
			Chief Executive Officer						Vice President

 SIGNATURE PAGE TO 

AMENDED AND RESTATED CREDIT AGREEMENT 

 Schedule 5.7 to 

Amended and Restated Credit Agreement 

None. 

 Schedule 5.9 to 

Amended and Restated Credit Agreement 
  

			
	 Secured Party
	  	 Collateral Description

	US. Bank Equipment Finance	  	Equipment and related property as described in UCC financing statement no. 20145064001
		
	De Lage Landen Financial Services, Inc.	  	Equipment and related property as described in UCC financing statement no. 20145163985

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00247-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00247-of-00352.parquet"}]]