Document:

Exhibit 10.3

 

RESIGNATION AGREEMENT 

 

THIS RESIGNATION AGREEMENT (the “Agreement”)
is entered into as of August 17, 2015, by and between Global Future City Holding, Inc. (the “Company”) and Junfei
Ren (“Executive”) (together, the “Parties”).

 

R E C I T A L S

 

WHEREAS, Executive is employed by the
Company as its Secretary and member of the Board of Directors since Executive’s appointment to all positions on April 17,
2015; and

 

WHEREAS, Executive has decided to resign
from all of Executive’s officer and director positions with the Company, and the Parties desire to resolve, fully and finally,
all outstanding matters between them.

 

NOW THEREFORE, in consideration of the
mutual covenants and agreements set forth hereinafter, and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

 

AGREEMENT

 

1.             EXECUTIVE’S
RESIGNATION.

 

a.             Executive’s
employment with the Company and any subsidiaries and affiliated entities terminated on August 17, 2015 (the “Resignation
Date”).  As of the Resignation Date, Executive shall no longer be a member of the Board of Directors (the “Board”)
of the Company or any subsidiary or affiliated entity of the Company, Executive shall no longer have any authority to bind the
Company and Executive agrees she shall execute all documents necessary to effect such resignations and removals of authority.

 

b.             Upon
the Resignation Date, Executive shall return to the Company all files, records, credit cards, keys, equipment, and all other Company
property or documents maintained by Executive for the Company’s use or benefit.

  

2.             REPRESENTATIONS
OF EXECUTIVE.  Executive makes the following representations, each of which is an important consideration to the Company’s
willingness to enter into this Agreement:

 

 

a.             Executive
understands and agrees that she or any of her affiliates, affiliated or related entities, business partners, joint venturers, successors,
or assigns (the “Affiliated Parties”) represent and warrant to the Company that they will assume all liabilities as
it relates to the Office and any all liabilities, contracts or any other obligations incurred on behalf of the Company or any of
its subsidiaries not previously disclosed to the Company and further agree to indemnify the Company, its officer, directors, employees,
attorneys, accountants and agents in connection with this representation.

 

b.             Executive
understands and agrees that she has been advised to consult with an attorney of her choice concerning the legal consequences of
this Agreement.  Executive hereby acknowledges that prior to signing this Agreement, she had the opportunity to consult, and
did consult, with an attorney of her choosing regarding the effect of each and every provision of this Agreement.

 

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c.             Executive
acknowledges and agrees that she knowingly and voluntarily entered into this Agreement with complete understanding of all relevant
facts, and that she was neither fraudulently induced nor coerced to enter into this Agreement.

 

d.             Executive
represents and warrants to the Company that she has the capacity and authority to enter into this Agreement and be bound by its
terms and that, when executed, this Agreement will constitute a valid and binding agreement of Executive enforceable against Executive
in accordance with its terms.

 

3.             REPRESENTATIONS
OF COMPANY.  Company represents and warrants to Executive that it has the capacity and authority to enter into this Agreement
and be bound by its terms and that, when executed, this Agreement will constitute a valid and binding agreement of Company enforceable
against Company in accordance with its terms.

 

4.             CONTINUING
OBLIGATIONS OF PARTIES POST-CLOSING. 

 

a.Executive and the Affiliated Parties agree
that they will not disclose or use any information the Company has made available to Executive and the Affiliated Parties related
to the business plans of the Company, financial information, and information about the Company’ business practices and plans,
including, but not limited to, product research, business strategies, marketing strategies, marketing research, technical information,
systems information, customer information, consumer research information, and production information (collectively, the “Confidential
Information”).

 

b.Executive and the Affiliated Parties understand
and agree that they may not assert any rights whatsoever to the use, ownership or any claim of any nature or kind to the name “GLOBAL
FUTURE CITY” or its related logos including in the use of their respective businesses inside or outside the United States.
The Executive and Affiliated Parties further represent and warrant that any existing use of the GLOBAL FUTURE CITY marks or logos
must terminate upon the execution of this agreement, including but not limited to the use of the GLOBAL FUTURE CITY marks or logos
on the internet, in connection with EGD online or off-line, including the website www.futurecity4u.com, or in connection with the
existing office building at 301 Brea Canyon Rd., Walnut, California 91789 (the “Office”).

 

5.             MUTUAL
NON-DISPARAGEMENT.  Executive (i) will not, and will cause her relatives, agents, and representatives to not, knowingly
disparage or make any derogatory statements regarding the Company, its directors, or its officers, and (ii) the Company will
not knowingly disparage or make any derogatory statements regarding Executive; provided, however, that the Company’s obligations
under this Section 5 shall be limited to communications by its senior corporate executives having the rank of Senior Vice
President or above and members of the Board; provided, further, that the foregoing restrictions shall not apply to any statements
by Executive or the Company that are made truthfully in response to a subpoena or as otherwise required by applicable law or other
compulsory legal process.

 

6.             INDEMNIFICATION. 

 

a.                  
Subject to the provisions of this Section 6, Executive and Affiliated Parties agree to indemnify, hold harmless, and defend
the Company and its officers, directors, employees, accountants, attorneys and agents against any damages, liabilities, costs,
claims, proceedings, investigations, penalties, judgments, deficiencies, including taxes, expenses (including, but not limited
to, any and all interest, penalties, and expenses whatsoever reasonably incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever) and losses (each, a “Claim” and collectively, “Claims”)
to which the Company and/or its officers, directors, employees, accountants, attorneys and agents may become subject arising out
of or based on any breach of or inaccuracy in any of the representations and warranties or covenants or conditions made by Executive
and Affiliated Parties.

 

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b.                 
Subject to the provisions of this Section 6, the Company agrees to indemnify, hold harmless, and defend Executive against
any damages, liabilities, costs, claims, proceedings, investigations, penalties, judgments, deficiencies, including taxes, expenses
(including, but not limited to, any and all interest, penalties, and expenses whatsoever reasonably incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever) and losses (each, a “Claim”
and collectively, “Claims”) to which the Executive may become subject arising out of or based on any breach of or inaccuracy
in any of the representations and warranties or covenants or conditions made by the Company in this Agreement or arising out of
or related to Executive’s service as officer or director of the Company (except as to Claims relating to Executive being
affiliated or having control or ownership in EGD, but will indemnify Executive as it relates to the Company’s ownership of
4,000,000 EGD it acquired pursuant to the First Amendment to Stock Purchase Agreement, dated as of February 17, 2015, by and between
Global Future City Holding Inc., and Sky Rover Holdings, Ltd.) to the maximum extent permitted by the Company’s Bylaws and
Certificate of Incorporation.   

 

7.             ARBITRATION. 
The Parties agree that any and all disputes arising out of the terms of this Agreement, Executive’s employment by the Company,
Executive’s service as an officer or director of the Company, will be subject to binding arbitration in Los Angeles, California,
before the Judicial Arbitration and Mediation Services, Inc. (“JAMS”), supplemented by the California Rules of
Civil Procedure.  The Parties agree that the prevailing party in any arbitration will be entitled to injunctive relief in
any court of competent jurisdiction to enforce the arbitration award.  The Parties agree to waive their right to have any
dispute between them resolved in a court of law by a judge or jury.  This paragraph will not prevent either party from seeking
injunctive relief (or any other provisional remedy) from any court having jurisdiction over the Parties and the subject matter
of their dispute relating to Executive’s obligations under this Agreement.

 

8.          GOVERNING
LAW.  This Agreement and all rights, duties, and remedies hereunder shall be governed by and construed and enforced in
accordance with the laws of the State of California, without reference to its choice of law rules, except as preempted by federal
law.

 

9.          SUCCESSORS
AND ASSIGNS.  This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors, and legal
representatives of Executive upon Executive’s death, and (b) any successor of the Company.  Any such successor
of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes.  For this purpose,
“successor” means any person, firm, corporation, or other business entity which at any time, whether by purchase, merger,
or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. 

 

10.          AMENDMENTS. 
This Agreement may not be amended or modified other than by a written instrument signed by an authorized representative of the
Company and Executive.

 

 

11.          DESCRIPTIVE
HEADINGS.  The section headings contained herein are for reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement.

 

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12.          COUNTERPARTS. 
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute
one and the same instrument.  Facsimile and .pdf signatures will suffice as original signatures.

 

13.          NOTICES.  All
notices hereunder shall be in writing and delivered personally or sent by United States registered or certified mail, postage prepaid
and return receipt requested:

 

If to the Company:

 

Global Future City Holding Inc.

c/o Michael R. Dunn

Executive Vice President of Finance

26381 Crown Valley Parkway, Suite 230

Mission Viejo, CA 92691

 

If to Executive:

 

Junfei Ren

301 Brea Canyon Road

Walnut, CA  91789

 

14.          ENTIRE
AGREEMENT.  This Agreement sets forth the entire agreement and understanding of the Parties relating to the subject matter
hereof and merges and supersedes all prior discussions, agreements, and understandings of every kind and nature between the Parties
hereto, and neither Party shall be bound by any term or condition other than as expressly set forth or provided for in this Agreement. 

 

15.          WAIVER
OF BREACH.  The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate
as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.

 

16.          SEVERABILITY. 
If any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable, or void, this
Agreement will continue in full force and effect without said provision.

 

[Signatures on following page]

 

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IN WITNESS WHEREOF, the Parties have
executed this Agreement as of the date first written above.

 

	COMPANY	 	JUNFEI REN
	GLOBAL FUTURE CITY HOLDING, INC.	 	 
	 	 	 
	 	 	 
	By:	/s/ Ning Liu	 	/s/ Junfei Ren
	 	 	 
	Name: Ning Liu	 	 
	Title: President	 	 
	 	 	 
	 	 	 	 

 

    	5ex10-12.htm

EXHIBIT 10.12

 

THIS NOTE AND THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.  THIS NOTE AND THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO RUBICON FINANCIAL INCORPORATED THAT SUCH REGISTRATION IS NOT REQUIRED.

 

CONVERTIBLE TERM NOTE

 

DATED: August 18, 2015

 

FOR VALUE RECEIVED, RUBICON FINANCIAL INCORPORATED, a Nevada corporation (the “Borrower”), hereby promises to pay to Eric Petersen or Meghan Petersen (the “Holder”) or its registered assigns or successors in interest, on order, the sum of Two Hundred Fifty Thousand Dollars and no cents ($250,000.00)(the “Principal Amount”) together with any accrued and unpaid interest hereon, on December 16, 2015 (the “Maturity Date”) if not sooner paid.

 

The following terms shall apply to this Note:

 

1. Interest Rate.  Interest payable on this Note shall accrue at a rate per annum (the “Interest Rate”) equal to ten percent (10%) per annum.  Interest on the Principal Amount shall be payable in full on the Maturity Date, whether by acceleration or otherwise.  In the event of the redemption or conversion of all or any portion of the Principal Amount, accrued interest on the amount so redeemed or converted shall be paid on the date of redemption or conversion, as the case may be.

 

2. Payment of Principal Amount.   The Borrower shall pay the Holder the entire Principal Amount of this Note, if not earlier converted or redeemed, on the Maturity Date in one lump sum payment.

 

3. Optional Redemption of Principal Amount.  The Borrower will have the option of prepaying the outstanding Principal Amount (“Optional Amortizing Redemption”), in whole or in part, by paying to the Holder a sum of money equal to one hundred percent (100%) of the Principal Amount to be redeemed, together with accrued but unpaid interest thereon and any and all other sums due, accrued or payable to the Holder arising under this Note (the “Redemption Amount”) on the Redemption Payment Date (as defined below).  The Borrower shall deliver to the Holder a notice of redemption (the “Notice of Redemption”) specifying the date for such Optional Redemption (the “Redemption Payment Date”), which date shall be not less than seven (7) business days after the date of the Notice of Redemption (the “Redemption Period”).  On the Redemption Payment Date, the Redemption Amount shall be paid in good funds to the Holder.  In the event the Borrower fails to pay the Redemption Amount on the Redemption Payment Date as set forth herein, then such Notice of Redemption will be null and void.

 

4. Holder’s Conversion Rights.  At any time the Holder shall have the right, but not the obligation, to convert all or any portion of the then aggregate outstanding Principal Amount of this Note, together with interest due hereon, into shares of restricted common stock in the Borrower (the “Shares”), subject to the terms and conditions set forth herein.  The Holder may exercise such right by delivery to the Borrower of a written Notice of Conversion (as set forth below).  The Shares to be issued upon such conversion are herein referred to as the “Conversion Shares.”

 

  

1

  

 

	
  

	
(a)   

	
In the event that the Holder elects to convert any amounts outstanding under this Note into Shares, the Holder shall give notice of such election by delivering an executed and completed notice of conversion (a “Notice of Conversion”) to the Borrower, which Notice of Conversion shall provide a breakdown in reasonable detail of the Principal Amount and accrued interest being converted.  On each Conversion Date (as hereinafter defined) and in accordance with its Notice of Conversion, the Holder shall make the appropriate reduction to the Principal Amount and accrued interest as entered in its records and shall provide written notice thereof to the Borrower within two (2) business days after the Conversion Date.  Each date on which a Notice of Conversion is delivered or faxed to the Borrower in accordance with the provisions hereof shall be deemed a “Conversion Date”.  A form of Notice of Conversion to be employed by the Holder is annexed hereto as Exhibit A.

 

	
(b)  

	
Pursuant to the terms of a Notice of Conversion, the Borrower shall deliver to the Holder a certificate representing the Conversion Shares within three (3) business days after the expiration of the period set forth in Section 4(d) below (the “Delivery Date”).  In the case of the exercise of the conversion rights set forth herein the conversion privilege shall be deemed to have been exercised and the Conversion Shares issuable upon such conversion shall be deemed to have been issued upon the date of receipt by the Borrower of the Notice of Conversion.  The Holder shall be treated for all purposes as the record holder of such Shares, unless the Holder provides the Borrower written instructions to the contrary.

 

	
(c)  

	
The number of Shares to be issued upon each conversion of this Note shall be determined by dividing that portion of the Principal Amount and interest to be converted, if any, by 0.20.

 

	
(d)  

	
Upon the receipt of a Conversion Notice from Holder, the Borrower shall have fifteen (15) days to redeem the Principal Amount and accrued interest specified in the Conversion Notice. If upon expiration of the period specified above, the Borrower does not redeem the amount specified in the Conversion Notice, the Borrower shall deliver the Shares to the Holder as specified herein.

 

5. Issuance of Replacement Note.  Upon any partial conversion of this Note, a replacement Note containing the same date and provisions of this Note shall, at the written request of the Holder, be issued by the Borrower to the Holder for the outstanding Principal Amount of this Note and accrued interest which shall not have been converted or paid.

 

6. Warrant. The Borrower shall issue the Holder a five-year warrant to purchase 1,250,000 shares of common stock at $0.20 per share, as further described and subject to the terms and conditions of the Warrant Agreement attached hereto as Exhibit B.

 

7. Events of Default. Upon the occurrence and continuance of an Event of Default beyond any applicable grace period, the Holder may make all sums of principal, interest and other fees then remaining unpaid hereon and all other amounts payable hereunder immediately due and payable.  In the event of such an acceleration, the amount due and owing to the Holder shall be 100% of the outstanding principal amount of the Note (plus accrued and unpaid interest and fees, if any) (the “Default Payment”).  The Default Payment shall be first applied to accrued and unpaid interest due on the Note and then to outstanding principal balance of the Note. Further, in the Event of Default, the Borrower shall issue and deliver to the Holder 2,500,000 shares of common stock, $0.001 par value per share, as liquidated damages, which such shares of common stock shall be validly issued and duly authorized.

 

  

2

  

 

The occurrence of any of the following events is an “Event of Default”:

 

	
i.  

	
Failure to Pay Principal, Interest or other Fees.  The Borrower fails to pay when due any installment of principal or interest hereon in accordance herewith, and such failure shall continue for a period of thirty (30) days following the date upon which any such payment was due.

 

	
ii.  

	
Receiver or Trustee.  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.

 

	
iii.  

	
Judgments.  Any money judgment, writ or similar final process shall be entered or filed against the Borrower or its property or other assets for more than $500,000, and shall remain unvacated, unbonded or unstayed for a period of thirty (30) days.

 

	
iv.  

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

 

8. Failure or Indulgence Not Waiver.  No failure or delay on the part of the Holder hereof 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 privilege.  All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

9. Notices.  Any notice herein required or permitted to be given shall be in writing and shall be deemed effectively given:  (a) upon personal delivery to the party notified, (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent to the Borrower at: Rubicon Financial Incorporated, 18872 MacArthur Boulevard, First Floor, Irvine, California  92612, facsimile number (949) 333-1526 and to the Holder at the address and facsimile number set forth on the signature page of this Note, or at such other address as the Borrower or the Holder may designate by ten days advance written notice to the other parties hereto.

 

10. Amendment Provision.  The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented, and any successor instrument issued hereunder, as it may be amended or supplemented.

 

11. Assignability.  This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns, and may not be assigned by the Borrower without the consent of the Holder.

 

12. Governing Law.  This Note shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to principles of conflicts of laws.  Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of Nevada or in the federal courts located in the State of Nevada.  Both parties agree to submit to the jurisdiction of such courts.  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 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 unenforceability of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Borrower in any other jurisdiction to collect on the Borrower’s obligations to Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court in favor of the Holder.

 

13. Construction.  Each party acknowledges that its legal counsel participated in the preparation of this Note and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Note to favor any party against the other.

 

IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in its name effective as of this 18th day of August, 2015.

 

RUBICON FINANCIAL INCORPORATED

 

	
  

	
By: /s/ Joseph Mangiapane, Jr.

	
  

	
Joseph Mangiapane, Jr., CEO/President

 

HOLDER:

Eric Petersen

By: /s/ Eric Petersen                                                      

 

 

Address: 1660 Hotel Circle N. #616 San Diego, CA  92108

Facsimile Number: 888-344-0423

 

 

  

3

  

 

EXHIBIT A

 

NOTICE OF CONVERSION

 

(To be executed by the Holder in order to convert all or part of the Note into Shares)

 

[Name and Address of Holder]

 

 

The Undersigned hereby converts  $_________ of the principal due on [________ __, 2015] under the Convertible Term Note issued by Rubicon Financial Incorporated dated __________ __, 2015 by delivery of Shares in Rubicon Financial Incorporated on and subject to the conditions set forth in the Note.

 

1.           Date of Conversion                                           _______________________

 

2.           Shares To Be Delivered:                                   _______________________

 

 

By:_______________________________

 

 

Name:_____________________________

 

 

Title:______________________________

 

 

 

  

A-1

  

 

EXHIBIT B

 

[FORM OF]

 

 

WARRANT

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES, OR DELIVERY OF AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER OF THESE SECURITIES THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE SECURITIES ACT, OR UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144 UNDER THE SECURITIES ACT.

 

RUBICON FINANCIAL INCORPORATED

 

COMMON STOCK WARRANT

 

No:                                                      

 

Date of Issuance:                                                      

 

FOR VALUE RECEIVED, Rubicon Financial Incorporated, a Nevada corporation (the “Company”), hereby grants to _____________________________________________________ (“Holder”), as of the Date of Issuance indicated above.  The amount and kind of securities obtainable pursuant to the rights granted hereunder and the exercise price for such securities are subject to adjustment pursuant to the provisions contained in this Warrant.

This Warrant is subject to the following provisions:

	
1.  

	
Exercise of Warrant.

 

1.1. Purchase of Shares.  Subject to the terms and conditions hereinafter set forth, Holder is entitled, upon surrender of this Warrant at the principal office of the Company (or at such other place as the Company shall notify Holder in writing), to purchase from the Company up to One Million Two Hundred Fifty Thousand (1,250,000) shares of the Company’s restricted Common Stock (the “Warrant Shares”) for $0.20 per share (the “Exercise Price”).

 

1.2. Exercise Period.  Holder may exercise this Warrant for a period (“Exercise Period”) commencing on the date hereof and terminating on [fifth anniversary from issuance].

 

  

B-1

  

 

1.3. Exercise Procedure.

 

(a) This Warrant shall be deemed to have been exercised at such time when the Company has received all of the following items (the “Exercise Time”):

 

i. a completed Exercise Notice, as described in Section 1.5, executed by Holder exercising all or part of the purchase rights represented by this Warrant;

 

ii. this Warrant; and

 

iii. payment to the Company of an amount equal to the Exercise Price multiplied by the number of Warrant Shares being purchased, at the election of Holder, by wire transfer or certified check payable to the order of the Company, except in cases where the Holder indicates in the Exercise Notice that it intends to exercise this Warrant in the manner specified in Section 1.4.  The person or persons in whose name(s) any certificate(s) representing Warrant Shares shall be issuable, upon exercise of this Warrant, shall be deemed to have become the holders(s) of record of, and shall be treated for all purposes as the record holder(s) of, the Warrant Shares represented.

 

(b) Certificates for Warrant Shares purchased upon exercise of this Warrant shall be delivered by the Company to Holder as soon as practicable after the date of the Exercise Time.  Unless this Warrant has expired or all of the purchase rights represented hereby have been exercised, the Company shall prepare a new Warrant, substantially identical hereto, representing the rights formerly represented by this Warrant which have not expired or been exercised and shall as soon as practicable deliver such new Warrant to the person designated for delivery in the Exercise Notice.

 

(c) The Warrant Shares issuable upon the exercise of this Warrant shall be deemed to have been issued to Holder at the Exercise Time, and Holder shall be deemed for all purposes to have become the record holder of such Common Stock at the Exercise Time.

 

(d) The issuance of certificates for Warrant Shares upon exercise of this Warrant shall be made without charge to Holder for any issuance tax in respect thereof or other cost incurred by the Company in connection with such exercise and the related issuance of Warrant Shares (other than any transfer taxes resulting from the issuance of Warrant Shares to any person other than Holder).

 

(e) The Company shall not close its books against the transfer of this Warrant or of any Warrant Shares issued or issuable upon the exercise of this Warrant in any manner which interferes with the timely exercise of this Warrant.

 

(f) During the Exercise Period, the Company shall reserve and keep available out of its authorized but unissued Common Stock such number of Warrant Shares issuable upon the full exercise of this Warrant.  All Warrant Shares which are so issuable shall, when issued and upon the payment of the applicable Exercise Price, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges and not subject to the pre-emptive rights of any holder of Common Stock or any other class or series of stock of the Company.  During the Exercise Period, the Company shall not take any action which would cause the number of authorized but unissued Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon exercise of this Warrant.

 

  

B-2

  

 

1.4. Cashless Exercise. Notwithstanding the provisions of Section 1.3(a)(iii) requiring payment by wire transfer or check, the Company agrees that, unless otherwise prohibited by law, Holder shall have the right at any time and from time to time to exercise this Warrant in full or in part on a cashless basis, computed using the following formula:

X = Y (A - B)

A

Where:

X = The number of Warrant Shares to be issued to the Holder pursuant to this cashless exercise;

Y = The number of Warrant Shares in respect of which the net issue election is made;

A = The Fair Market Value  (as defined below) of one Warrant Share at the time the cashless exercise election is made; and

B = The Exercise Price (as adjusted to the date of the cashless exercise).

 

The term “Fair Market Value” shall mean  (A) if the class of Warrant Shares is exchange-traded, the closing sale or last sale price per share of the class of Warrant Shares, (B) if the class of Warrant Shares is regularly traded in any over-the-counter market, the average of the bid and asked prices per share of the class of Warrant Shares, and (C) if the class of Warrant Shares is not traded as described in clause (A) or (B), the per share fair market value of the class of Warrant Shares as determined in good faith by the Company’s Board of Directors.  Fair Market Value as of a given date with respect to clauses (A) and (B) shall be determined as of the close of business on the day prior to the date of determination, or if no trading in the class of Warrant Shares takes place on such date, on the next preceding trading day on which there has been such trading.

 

1.5. “Easy Sale” Exercise.  In lieu of the payment methods set forth above, when permitted by law and applicable regulations, the Holder may pay the Exercise Price through a “same day sale” commitment from the Holder (and if applicable a broker-dealer that is a member of the Financial Industry Regulatory Authority (a “FINRA Dealer”)), whereby the Holder irrevocably elects to exercise this Warrant and to sell at least that number of Warrant Shares so purchased to pay for the Exercise Price (and up to all of the Warrant Shares so purchased) and the Holder (or, if applicable, the FINRA Dealer) commits upon sale (or, in the case of the FINRA Dealer, upon receipt) of such Warrant Shares to forward the Exercise Price directly to the Company, with any sale proceeds in excess of the Exercise Price being for the benefit of the Holder.

 

  

B-3

  

 

1.6. Exercise Notice.  Upon any exercise of this Warrant, Holder shall deliver to the Company an Exercise Notice in substantially the form set forth in Exhibit A hereto.

 

1.7. No Fractional Shares.  If a fractional share of Warrant Shares would, but for the provisions of this Section 1.7, be issuable upon exercise of the rights represented by this Warrant, the Company shall round up the number of shares delivered to Holder to the nearest whole share.

2.  Adjustments to Warrant Shares.

 

2.1 Capital Reorganizations and Other Reclassifications.  In case of any capital reorganization of the Company, or of any reclassification of the Common Stock, or in case of the consolidation of the Company with, or the merger of the Company with, or merger of the Company into, any other corporation (other than a consolidation or merger which does not result in any reclassification or change of the outstanding Common Stock) or of the sale of the properties and assets of the Company as, or substantially as, an entirety to any other corporation or entity, this Warrant shall, after such capital reorganization, reclassification of the Common Stock, consolidation, merger, or sale, be exercisable, upon the terms and conditions specified in this Warrant, for the kind, amount and number of shares or other securities, assets, or cash to which a holder of the number of Common Stock purchasable (at the time of such capital reorganization, reclassification of the Common Stock, consolidation, merger or sale) upon exercise of such Warrant would have been entitled to receive upon such capital reorganization, reclassification of the Common Stock, consolidation, merger, or sale; and in any such case, if necessary, the provisions set forth in this Section 2 with respect to the rights and interests thereafter of Holder shall be appropriately adjusted so as to be applicable, as nearly equivalent as possible, to any shares or other securities, assets, or cash thereafter deliverable on the exercise of this Warrant.  The Company shall not effect any such consolidation, merger, or sale, unless prior to or simultaneously with the consummation thereof the successor corporation or entity (if other than the Company) resulting from such consolidation or merger or the corporation or entity purchasing such assets or other appropriate corporation or entity shall assume, by written instrument, the obligation to deliver to Holder such shares, securities, assets, or cash as, in accordance with the foregoing provisions, such holders may be entitled to purchase and other obligations hereunder.

 

2.2 Notice of Record Date, etc.  In the event the Company shall propose to take any action of the types requiring an adjustment pursuant to this Section 2 or a dissolution, liquidation or winding up of the Company shall be proposed, the Company shall give notice to Holder as provided in Section 8, which notice shall specify the record date, if any, with respect to any such action and the date on which such action is to take place.  Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action (to the extent such effect may be known at the date of such notice) on the Exercise Price and the number, kind or class of shares or other securities or property which shall be deliverable or purchasable upon the occurrence of such action or deliverable upon the exercise of the Warrants.  In the case of any action which will require the fixing of a record date, unless otherwise provided in this Warrant, such notice shall be given at least twenty (20) days prior to the date so fixed, and in case of all other action, such notice shall be given at least thirty (30) days prior to the taking of such proposed action.

 

  

B-4

  

 

3. No Voting Rights.  This Warrant shall not entitle Holder to any voting rights or other rights as a stockholder of the Company.

 

4. Transfer of Warrant.   The securities represented hereby and the Warrant Shares issuable upon exercise hereof have not been registered under the Securities Act and may not be offered, sold or otherwise transferred, pledged or hypothecated in the absence of a registration statement in effect with respect to such securities, or delivery of an opinion of counsel in form and substance satisfactory to the Company that such offer or sale or transfer, pledge or hypothecation is in compliance with the Securities Act, or unless sold in full compliance with Rule 144 under the Securities Act.

 

5. Representations and Warranties of the Company.  The Company represents and warrants to Holder as follows:

 

(a) This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms; and

 

(b) The Warrant Shares, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable.

 

  

B-5

  

6. Representations and Warranties by Holder.  Holder represents and warrants to the Company as follows:

(a) This Warrant is being acquired for its own account, for investment and not with a view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act.  Upon exercise of this Warrant, Holder shall, if so requested by the Company, confirm in writing, in a form reasonably satisfactory to the Company, that the Warrant Shares issuable upon exercise of this Warrant are being acquired for investment and not with a view toward distribution or resale;

(b) Holder understands that this Warrant and the Warrant Shares have not been registered under the Securities Act by reason of their issuance in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act pursuant to Section 4(2) thereof and that this Warrant and the Warrant Shares may be resold without registration under the Securities Act only in certain limited circumstances;

(c) Holder has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the purchase of this Warrant and the Warrant Shares purchasable pursuant to the terms of this Warrant and of protecting its interest in connection therewith;

(d) Holder is able to bear the economic risk of the purchase of the Warrant Shares pursuant to the terms of this Warrant; and

(e) Holder is an accredited investor within the meaning of Regulation D promulgated under the Securities Act.

7. Replacement.  Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of Holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of this Warrant, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company or, in the case of any such mutilation upon surrender of such Warrant, the Company shall execute and deliver in lieu of such Warrant a new Warrant of like kind representing the same rights represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate.

8. Notices.  Except as otherwise expressly provided herein, all notices and deliveries referred to in this Warrant shall be in writing and shall be delivered personally, sent by reputable overnight courier service (charges prepaid) or sent by registered or certified mail, return receipt requested, postage prepaid and shall be deemed to have been given when so delivered (or when received, if delivered by any other method) if sent (i) to the Company, at its principal executive offices and (ii) to Holder, at Holder’s address as it appears in the records of the Company.

9. Amendment and Waiver.  The provisions of this Warrant contain the entire understanding between the parties hereto with respect to the subject matter hereof and may be amended and waived only if such amendment or waiver is set forth in writing executed by the Company and the Holder.

 

  

B-6

  

10. Descriptive Headings; Governing Law.  The descriptive headings of the several Sections of this Warrant are inserted for convenience only and do not constitute a part of this Warrant.  This Warrant shall be construed in accordance with the laws of the State of California applicable to contracts made and performed within such State, without regard to principles of conflicts of law.

11. Benefits of Agreement; Successors.  This Warrant shall be binding and inure to the benefit of the parties and their respective successors and assigns hereunder; provided that this Warrant may be assigned by Holder only in compliance with the conditions specified in and in accordance with all of the terms of this Warrant.  This Warrant does not create and shall not be construed as creating any rights enforceable by any other person or corporation.

12. Severability.  If any provision of this Warrant shall be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions of this Warrant.

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested by its duly authorized officers and to be dated the Date of Issuance hereof.

RUBICON FINANCIAL INCORPORATED

By:                                                                      

      Joseph Mangiapane, Jr., CEO/President

 

  

B-7

  

 

EXHIBIT A                                                    

EXERCISE NOTICE

 

RUBICON FINANCIAL INCORPORATED

 

Attention:  Chief Executive Officer

 

The undersigned hereby elects to purchase, pursuant to the provisions of the Common Stock Warrant issued by Rubicon Financial Incorporated and held by the undersigned, the original of which is attached hereto, and (check the applicable box):

 

	
 ̈

	
Tenders herewith payment of the exercise price in full in the form of cash or check in the amount of $____________ for _________ of such securities.

 

	
 ̈

	
Elects the Net Issue Exercise option pursuant to Section 1.4 of the Warrant, and accordingly requests delivery of a net of ______________ of such securities, according to the following calculation:

 

X = Y (A-B)                         (       ) = (____) [(_____) - (_____)]

            A                                                              (_____)

 

Where X = the number of shares of Common Stock to be issued to Holder.

 

Y =  the number of shares of Common Stock purchasable under the amount of the Warrant being exchanged (as adjusted to the date of such calculation).

 

A = the Fair Market Value of one share of the Company’s Common Stock.

 

B = Exercise Price (as adjusted to the date of such calculation).

 

 ̈           Elects the Easy Sale Exercise option pursuant to Section 1.5 of the Warrant, and accordingly requests delivery of a net of ______________ of such securities.

 

The undersigned hereby represents and warrants that the undersigned is acquiring such shares for its own account for investment purposes only, and not for resale or with a view to distribution of such shares or any part thereof.

 

HOLDER:

 

                                                                                                                Name in which shares should be registered:

 

Name:                                                                                                                                                                                   

Title:                                                        

 

Date:                                                        

 

Address:

                                                                  

                                                                  

 

  

B-A-1

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