Document:

awsm-ex42_7.htm

 

Exhibit 4.2

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THESE WARRANTS MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON UNLESS THIS SECURITY AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS SECURITY HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LEGISLATION OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY AND ANY SECURITY ISSUED ON THE EXERCISE HEREOF MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF (I) SEPTEMBER [    ], 2019, AND (II) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.

COMMON STOCK PURCHASE WARRANT 

COOL HOLDINGS, INC.

	
 
	
 
	
 

	
 
	
 
	
Issue Date: September [   ], 2019

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [                    ] (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the Approval Date (as defined below) (the “Exercisability Date”) and on or prior to the close of business on the third anniversary of the Original Issue Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Cool Holdings, Inc., a Maryland corporation (the “Company”), up to a specified number of shares (the “Warrant Shares”) of common stock, par value $0.001 (the “Common Stock”), of the Company. This Warrant is issued in connection with the issuance of a $[             ] unsecured convertible note (the “Note”) in favor of Holder.  The Company intends to seek shareholder and other required regulatory approval to enable the conversion price of the Warrant (the “Conversion Price”) to be set at the amount that is 30% below the twenty-day volume weighted average price of the Common Stock immediately prior to the date such approvals are obtained (the “Approval Date”).  On the Approval Date, the Company will set the number of Warrant Shares at the number that is equal to the principal amount of the Note divided by the Conversion Price.

Section 1. Definitions. Capitalized terms used herein shall have the meanings given to them herein. As used herein, “Original Issue Date” means September [   ], 2019 and “business day” means any day on which NASDAQ, Inc. is open for trading.

Section 2. Exercise.

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Exercisability Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto; and, within three (3) business days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) business days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares 

 

 

 

purchased and the date of such purchases. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

b) Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be the Conversion Price (the “Exercise Price”). 

c) Mechanics of Exercise. 

i. Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the transfer agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective Registration Statement covering the issuance of the Warrant Shares to the Holder or (B) otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise, in either case, by the date that is three (3) business days after the delivery to the Company of the Notice of Exercise Form (such date, the “Warrant Share Delivery Date”). This Warrant shall be deemed to have been exercised on the first date on which all of the foregoing have been delivered to the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been properly exercised, with payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(c)(vi) prior to the issuance of such shares, having been paid. 

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of the Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. 

iii. Rescission Rights. If the Company fails to cause the transfer agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then, the Holder will have the right to rescind such exercise. 

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

v. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. 

vi. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof. 

d) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s affiliates, and any other Persons acting as a group together 

 

 

 

with the Holder or any of the Holder’s affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company including, without limitation, any other securities of the Company or any Company subsidiary consolidated in the Company’s financial statements which would entitle the holder thereof to acquire at any time Common Stock (“Common Stock Equivalents”) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination and shall have no liability for exercises of the Warrant that are in non-compliance with the Beneficial Ownership Limitation. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Securities and Exchange Commission (the “Commission”), as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two (2) business days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding as established by (A), (B) or (C) above, as applicable. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(d) shall continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company and shall only be effective with respect to such Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

Section 3. Certain Adjustments. 

a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant or any 

 

 

 

other warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. 

b) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as provided for under Section 3(a)), or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(d) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(d) on the exercise of this Warrant). For purposes of clarity, no bona fide underwritten offering of the Company’s securities will be deemed to be a Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.

The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder 

 

 

 

to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein. 

(c) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding. 

(d) Notice to Holder. 

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. 

ii. Notice to Allow Exercise by Holder. If during the term in which this Warrant may be exercised by the Holder (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least ten (10) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein. 

Section 4. Transfer of Warrant. 

a) Transferability. Subject to compliance with applicable securities laws, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form 

 

 

 

attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued. 

b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall include reference to the initial issuance date set forth on the first page of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto and the Warrant number. 

c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual written notice to the contrary. 

Section 5. Miscellaneous. 

a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i). 

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor, in lieu of such Warrant or stock certificate. 

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a business day, then, such action may be taken or such right may be exercised on the next succeeding business day. 

d) Authorized Shares. The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. “Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing). The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

 

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be necessary to enable the Company to perform its obligations under this Warrant. 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. 

e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the laws of the State of New York. 

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws. 

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company or the Holder willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the other party, then such party shall pay to the other party such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by such party in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder. 

h) Notices. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant.  Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in writing, will be mailed (a) if within the domestic United States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or by facsimile or (b) if delivered from outside the United States, by International Federal Express or facsimile, and (c) will be deemed given (i) if delivered by first-class registered or certified mail domestic, three business days after so mailed, (ii) if delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed and (iv) if delivered by facsimile, upon electronic confirmation of receipt, and will be delivered and addressed as follows:

(i) if to the Company, to:

Cool Holdings, Inc.
4445 Eastgate Mall, Suite 200
San Diego, CA 92121
Attention:  Vernon A. LoForti

with a copy to:

Dorsey & Whitney LLP

TD Canada Trust Tower

Brookfield Place, 161 Bay Street, Suite 4310

Toronto, Ontario M5J 2S1 Canada

Attention: Richard Raymer

 

 

 

 

(ii) if to the Holder, at the address of the Holder appearing on the books of the Company. 

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. 

j) Remedies. The Holder and the Company, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. 

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

l) Amendment. This Warrant is one of a series of Warrants of like tenor issued by the Company. Any term of this Warrant may be amended or waived upon the written consent of the Company and the holders of Warrants representing at least 66 2/3% of the number of shares of Common Stock then subject to all outstanding August Warrants (the “Required Holders”).

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant. 

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. 

******************** 

(Signature Page Follows)

 

 

 

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

	
 
	
 
	
 
	
 
	
 

	
COOL HOLDINGS, INC.

	
 
	
 

 

 

	
By:
	
 
	
 

	
 
	
 
	
Name:
	
 
	
 Vernon A. LoForti

	
 
	
 
	
Title:
	
 
	
Chief Financial Officer

 

 

 

 

NOTICE OF EXERCISE 

TO: COOL HOLDINGS, INC. 

(1) The undersigned hereby elects to purchase __________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any. By executing this notice, the undersigned Holder represents that it has complied with the Holder’s Exercise Limitations set forth in Section 2(d) of this Warrant. 

(2) Payment shall be in lawful money of the United States.

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below: 

 

____________________________________________________

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to: 

____________________________________________________

____________________________________________________

____________________________________________________

[SIGNATURE OF HOLDER] 

	
 
	
 
	
 

	
Name of Investing Entity:
	
 
	
 

 

	
 
	
 
	
 

	
Signature of Authorized Signatory of Investing Entity:
	
 
	
 

 

	
 
	
 
	
 

	
Name of Authorized Signatory:
	
 
	
 

 

	
 
	
 
	
 

	
Title of Authorized Signatory:
	
 
	
 

 

	
 
	
 
	
 

	
Date:
	
 
	
   

 

 

 

 

ASSIGNMENT FORM 

(To assign the foregoing warrant, execute this form and supply required information. Do not use this form to exercise the warrant.) 

FOR VALUE RECEIVED, [   ] all of or [                   ] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to __________________________

whose address is 

 

. 

Dated: ________ __, ____

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
Holder’s Signature:
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
Holder’s Address:
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Signature Guaranteed:
	
 
	
 
	
 
	
 

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.awsm-ex101_8.htm

 

 

Exhibit 10.1

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, OR (B) IF SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER AND ANY APPLICABLE STATE SECURITIES LAWS.

promissory note, REIMBURSEMENT AND INDEMNIFICATION AGREEMENT AND SECURITY AGREEMENT

 

September [  ], 2019

This PROMISSORY NOTE, REIMBURSEMENT AND INDEMNIFICATION AGREEMENT AND SECURITY AGREEMENT (this “Agreement”) dated as of September [  ], 2019, is made jointly and severally by Cool Holdings, Inc., a Maryland corporation (“Cool Holdings”) and each of the other parties identified as “Obligors” on the signature pages hereto (with Cool Holdings, collectively, the “Obligors” and each, an “Obligor”) to GAMESTOP CORP., a Delaware corporation (“Payee”).

In consideration of the premises and the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be bound hereby, the parties agree as follows:

1.Defined Terms. 

A.When used herein, the terms Account, Account Debtor, Chattel Paper, Deposit Account, Document, Electronic Chattel Paper, Financial Asset, Goods, Inventory, Instrument, Investment Property, Letter of Credit Rights, General Intangibles, Proceeds, Security, Security Entitlement, Supporting Obligations and Uncertificated Security have the respective meanings assigned thereto in the UCC.

B.The following terms have the following meanings (such definitions to be applicable to both the singular and plural forms of such terms):

“Apple Guarantee” means that certain Corporate Guarantee, dated as of August 28, 2014, made by Payee for the benefit of Simply Mac and Computer Marketing Corporation (dba MacAuthority) and in favor of Apple, Inc., as the same may be amended, amended and restated, supplemented or modified from time to time.

“Collateral” is defined in Section 10 hereof.

“Cool Holdings” is defined in the introductory paragraph hereto.

“Change of Control” means the time at which (i) any Person (including a Person’s Affiliates and associates) or group (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the beneficial owner (as defined in Rule 13d 3 under the Securities Exchange Act of 1934) of more than 50% of any class of the equity interests of any Obligor, (ii) all or substantially all of the assets of any Obligor shall be sold, leased, 

 

 

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conveyed or otherwise disposed of as an entirety or substantially as an entirety to any Person (including any affiliate or associate of any Obligor) in one or a series of transactions, or (iii) any Obligor (other than Cool Holdings) ceases to be a direct or indirect wholly-owned Subsidiary of Cool Holdings.

“Event of Default” is defined in Section 13 hereof.

“Excluded Property” shall mean (a) any lease, license, contract, permit or agreement to which any Obligor is a party or any of its rights or interests thereunder and any assets of such Obligor subject thereto if and for so long as and to the extent that the grant of such security interest shall constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of any Obligor therein, (ii) a breach or termination pursuant to the terms of, or a default under, any such lease, license, contract, permit or agreement, provided, however, that the foregoing exclusions shall not apply in any case if (x) such prohibition has been waived or the creation hereunder of a lien and security interest in such assigned contract, general intangible, instrument, license, chattel paper, property or asset has been otherwise consented to, or (y) such prohibition, or the term that relates or gives rise thereto, would be rendered ineffective pursuant to any of Sections 9-406, 9-407, 9-408 or 9-409 of Article 9 of the Uniform Commercial Code, as applicable and as then in effect in any relevant jurisdiction, or any other applicable law (including the U.S. Bankruptcy Code) or principles of equity; (b) any equity interests in an issuer organized under the laws of a jurisdiction not located in the United States (a “Foreign Subsidiary”) (i) in excess of 65% of the equity interests of such Foreign Subsidiary or (ii) to the extent that the pledge thereof is limited by the laws of the jurisdiction of such Foreign Subsidiary’s organization; (c) any intent-to-use trademark application prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto; (d) those assets as to which a Obligor reasonably determines, in consultation with the Payee, that the burden or cost of obtaining such a security interest, pledge or perfection thereof outweighs the benefit to the Payee of the security to be afforded thereby; (e) Deposit Accounts consisting of trust accounts, payroll accounts, custodial accounts, escrow accounts and other similar Deposit Accounts; and (f) motor vehicles; provided, that Excluded Property shall not include Proceeds (as such term is defined in the UCC), substitutions or replacements of any Excluded Property referred to in the foregoing clauses (a) through (f) unless such Proceeds, substitutions or replacements would otherwise constitute Excluded Property referred to in the foregoing clauses (a) through (f).

“GAAP” means generally accepted accounting principles in the United States of America, consistently applied, which are in effect as of the date of this Note.  

“Indebtedness” is defined in the Purchase Agreement.

“Inventory” is defined in Section 10(B) hereof.

“Inventory Note Amount” means, initially, $7,529,492, provided that if the Final Inventory (as defined in the Purchase Agreement) is determined in accordance with Section 1.3(e)(v) of the Purchase Agreement prior to the Maturity Date, then upon such determination of the Final Inventory Amount, the Inventory Note Amount shall be decreased or increased, as applicable, to equal the Final Inventory Amount.

“Lien” means any lien, pledge, charge, claim, mortgage, assessment, hypothecation, deed of trust, lease, option, right of first refusal, preemptive right, easement, 

 

 

 

 

covenant, right of way, servitude, transfer restriction, security interest or other encumbrance of any kind or character whatsoever.

“Loan” is defined in the introductory paragraph hereto.

“Maturity Date” is defined in Section 4 hereof.

“Note” is defined in the introductory paragraph hereto.

“Obligor” is defined in the introductory paragraph hereto.

“Organizational I.D. Number” means the organizational identification number assigned to any Obligor by the applicable governmental unit or agency of the jurisdiction of organization for such Obligor.

“Payee” is defined in the introductory paragraph hereto.

“Permitted Debt” means (i) Indebtedness outstanding on the date hereof, (ii) Subordinated Debt, and (iii) Indebtedness incurred to fund the purchase price or the cost of construction or improvement of fixed or capital assets provided that such Indebtedness is incurred within 90 days of such purchase, construction or improvement and does not exceed the fair market value thereof.

“Permitted Liens” means: (i) Liens for taxes, assessments and other government charges not yet due and payable or which are being contested in good faith by appropriate proceedings, (ii) Liens imposed by law, such as mechanic’s, materialmen’s, and similar Liens, (iii) Liens arising under worker’s compensation, unemployment insurance, social security, retirement, and similar legislation, (iv) workmen’s, repairmen’s, warehousemen’s, carriers’ or other similar Liens, (v) Liens arising solely by virtue of any statutory or common law provision relating to bankers’ liens, rights of set-off or similar rights and remedies as to deposit accounts, securities accounts or other funds maintained with a creditor depository institution, (vi) 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, (vii) judgment and attachment liens not giving rise to an Event of Default or Liens created by or existing from any litigation or legal proceeding that are currently being contested in good faith by appropriate proceedings diligently conducted, (viii) Liens securing Indebtedness incurred pursuant to clause (iii) of the definition of Permitted Debt, provided that such Liens do not extend to any assets other than those purchased, acquired, constructed or improved with the proceeds of such Indebtedness.

“Person” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof.

“Purchase Agreement” means that certain Stock Purchase Agreement, made and entered into as of May 9, 2019, by and among Cool Holdings, Payee and Simply Mac, as amended.

 

 

 

 

“Receivable(s)” means all Accounts and all right, title and interest in any returned goods, together with all right, title, securities and guarantees with respect thereto, including any rights to stoppage in transit, replevin, reclamation and re-sales, and all related security interests, liens, charges, encumbrances and pledges, whether voluntary or involuntary, in each case whether now existing or owned or hereafter arising or acquired.

“Simply Mac” means Simply Mac, Inc., a Utah corporation.

“Simply Mac Inventory Value” means the value of the Product Inventory (as defined in the Purchase Agreement) determined in accordance with the methodology set forth on Schedule 6.11 of the Purchase Agreement.

“Subordinated Debt” means Indebtedness that is subordinated to the obligations of the Obligors hereunder on terms satisfactory to Payee in its absolute discretion.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, trust or other entity (whether now existing or hereafter organized or acquired) of which such Person or one or more Subsidiaries of such Person at the time owns or controls directly or indirectly more than 50% of the shares of stock or partnership or other ownership interest having general voting power under ordinary circumstances to elect a majority of the board of directors, managers or trustees or otherwise exercising control of such corporation, limited liability company, partnership, trust or other entity (irrespective of whether at the time stock or any other form of ownership of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

“Term” is defined in Section 4 hereof.

“Type of Organization” means the kind or type of entity of any Obligor, such as a corporation, limited partnership or limited liability company.

“UCC” means the Uniform Commercial Code as in effect in the State of New York on the date of this Note, as it may be amended or modified from time to time hereafter; provided, however, that, when the laws of any other jurisdiction govern the perfection or enforcement of any Lien, UCC shall mean the Uniform Commercial Code as in effect from time to time in such jurisdiction.

2.Promise to Pay. FOR VALUE RECEIVED,  each Obligor hereby jointly and severally promises to pay to the order of Payee the principal amount equal to the Inventory Note Amount (as defined below), in lawful money of the United States of America (the “Loan”), together with interest thereon as hereinafter provided in this Note.

3.Interest.  The principal balance outstanding from time to time hereunder shall bear interest until such amounts are paid, at a rate equal to 12% per annum.  The annual interest rate shall be calculated for the actual days elapsed on the basis of a 365-day year.  In the event of any adjustment to the Inventory Note Amount pursuant to Section 1.3(e)(v) of the Purchase Agreement and the terms hereof, interest shall be recalculated on the adjusted Inventory Note Amount as the amount outstanding hereunder from the date of this Note (giving effect to any repayments that have been made hereunder).

4.Term.  The term of the Loan issued under this Note (the “Term”) shall commence on the date hereof and continue until the earlier of (a) September 25, 2020 (b) the acceleration of the maturity of the Loan pursuant to Section 12 of this Note or (c) a Change of Control (the “Maturity Date”). For the avoidance of doubt, the occurrence of the Maturity Date and/or repayment or prepayment 

 

 

 

 

of the Loan shall not terminate this Note unless all other obligations of the Obligors under this Note have been paid in full and satisfied and the Apple Guarantee has been terminated.

5.Payments.  

A.On each 3 month anniversary of the date of this Note (each, a “Payment Date”), Obligors shall make payments of principal equal to 25% of the Inventory Note Amount (each, an “Amortization Payment”) plus all accrued and unpaid interest through such date; provided that, in the event of any adjustment to the Inventory Note Amount pursuant to Section 1.3(e)(v) of the Purchase Agreement and the terms hereof, the remaining Amortization Payments shall be adjusted to repay the remaining outstanding balance of the Inventory Note Amount (as adjusted) in equal installments over the remaining quarterly payment dates.

B.In the event that the outstanding principal balance hereunder on any Payment Date, after giving effect to the quarterly payment on such date pursuant to Paragraph (A) above, is more than 65% of the Simply Mac Inventory Value as of the prior month end, then Obligors shall make an additional payment on such Payment Date in the amount of such excess.  Such payment shall reduce the final payment due hereunder on the Maturity Date.

C.On the Maturity Date, all outstanding principal and interest due under this Note shall be immediately due and payable in full.

6.Method of Payments.  Obligors shall make all payments to be made on or pursuant to this Note in lawful money of the United States of America by company check, cashier’s check, or wire transfer of immediately available funds.  If any payment date shall fall on a date which is not a Business Day, payment may be made on the next succeeding Business Day.

7.No Deductions.  All amounts due hereunder shall be paid without deduction for any taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any national, state or local taxing authority, or shall be grossed up by Obligors for such amounts, and shall not be subject to reduction on account of, or be otherwise affected by, any other circumstances, including any right of set off, counterclaim, recoupment, defense or other right with any Obligor may have against Payee (including for the avoidance of doubt, any such rights arising under the Purchase Agreement).

8.Prepayments.  Obligors may prepay at any time and from time to time all or any portion of the principal sum hereunder without penalty or premium; provided that such prepayment shall be applied first to any accrued and unpaid interest hereunder up to the date of such prepayment, then to any other amounts which may be payable to Payee hereunder, and then to the principal balance outstanding hereunder in the inverse order of maturity.

9.Reimbursement and Indemnification Under Apple Guarantee. Obligors hereby jointly and severally agree to reimburse, defend, indemnify and hold harmless Payee for, from and against any and all indemnifiable Losses (as defined in the Purchase Agreement) suffered by any of the Seller Indemnified Parties (as defined in the Purchase Agreement) under Section 9.3(a)(iv) of the Purchase Agreement with respect to the Apple Guarantee, treating all of the Obligors as the “Purchaser” for the purpose of Section 9.3(a)(iv) and the related provisions of Article IX of the Purchase Agreement.

10.Security.  As security for the payment and performance of all the obligations of Obligors hereunder, each Obligor hereby assigns to Payee, and grants to Payee a continuing security interest in, the following (collectively, the “Collateral”): 

A.all of the Accounts, Receivables, Deposit Accounts, Chattel Paper (including Electronic Chattel Paper), Instruments, Documents, Financial Assets, General Intangibles, Letter of Credit Rights, money (of any jurisdiction whatsoever), Supporting Obligations and all other rights to payment now existing or at any time hereafter, and prior to the termination hereof, arising 

 

 

 

 

(whether they arise from the sale, lease or other dispositions of Inventory or from performance of contracts for services, manufacture, construction, repair or otherwise or from any other source whatsoever), including all securities, guaranties, warranties, indemnity agreements, insurance policies and other agreements pertaining to the same or the property described therein, and all Goods returned by or repossessed from any Obligor’s customers;

B.all inventory, Goods held for sale or lease or to be furnished under contracts for service, Goods so leased or furnished, raw materials, component parts and embedded software, work in process or materials used or consumed in any Obligor’s business, and all warehouse receipts, bills of landing and other documents evidencing goods owned or acquired by such Obligor, and all Goods covered thereby, now or at any time hereafter, and prior to termination hereof, owned or acquired by any Obligor, wherever located, and all products thereof whether in possession of an Obligor, warehousement, bailees or any other Person, or in process of delivery and whether located at an Obligor’s place of business or elsewhere (collectively, the “Inventory”); and

C.all books, records, writings, databases, information and other property of each Obligor relating to, used or useful in connection with, or evidencing, embodying, incorporating or referring to any of the foregoing, and all Proceeds, products, offspring, rents, issues, profits and returns of and from any of the foregoing;

provided, however, that the Collateral shall not include any Excluded Property.

11.Covenants. 

A.Concurrently with the execution of this Note, each Obligor shall deliver to Payee, in form and substance reasonably satisfactory to Payee, a certificate of the Secretary (or similar officer) of each Obligor, dated as of the date hereof, certifying (i) the incumbency and signatures of the officers who are executing this Note on behalf of such Obligor; (ii) the bylaws or operating agreement (or similar document), as applicable, of such Obligor and all amendments thereto as being true, correct and complete and in full force and effect; (iii) the certificate of formation, certificate of incorporation (or similar document), as applicable, of such Obligor; (iv) the resolutions of the managing body of such Obligor authorizing the execution and delivery of this Note the transactions contemplated hereunder, as being true, correct and complete and in full force and effect, and (v) a certificate of status and/or good standing (or similar document) for each Obligor, dated a recent date prior to the hereof, showing that such Obligor is in good standing under the laws of the state of its formation or incorporation, as applicable.

B.Obligors, at Payee’s request, at any time and from time to time, shall execute and deliver to Payee such financing statements, amendments and any other documents, including Instruments, and do such acts as Payee reasonably deems necessary in order to establish and maintain valid, attached and perfected security interests in the Collateral in favor of Payee, free and clear of all Liens and claims and rights of third parties whatsoever except Permitted Liens; provided, however, that no such actions shall be required to be taken under the laws of any jurisdiction other than the United States or any State thereof, or any political subdivision of the United States or a State thereof.  Each Obligor hereby irrevocably authorizes Payee at any time, and from time to time, to file in the appropriate jurisdiction any initial financing statements and amendments thereto that (i) indicate the Collateral (A) as “all assets” or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC of the jurisdiction wherein such financing statement or amendment is filed, or (B) as being of an equal or lesser scope or with greater detail, and (ii) contain any other information required by Article 9 of the UCC of the jurisdiction wherein such financing statement or amendment is filed regarding the sufficiency or filing office acceptance of any financing statement or amendment, including, without limitation, whether any Obligor is an organization, the Type of Organization and the Organization ID Number issued to such Obligor. 

 

 

 

 

C. Each Obligor agrees to:

i.keep its records concerning the Collateral in such a manner as will enable Payee or its designees to determine at any reasonable time the status of the Collateral;

ii.maintain a current record of the location of all Collateral and furnish Payee such information concerning Obligor, the Collateral and any Account Debtor as Payee may from time to time reasonably request;

iii.permit Payee and its designees, from time to time, on reasonable notice and at reasonable times and intervals during normal business hours (or at any time without notice during the existence and continuance of an Event of Default at Obligor’s sole expense) to inspect Obligor’s Inventory and other Goods, and to inspect, audit and make copies of and extracts from all records and other papers in the possession of Obligor pertaining to the Collateral and the Account Debtors, and will, upon request of Payee during the existence and continuance of an Event of Default, deliver to Payee all of such records and papers; provided, however, that so long as no Event of Default exists and is continuing, such inspections, examinations, and audits shall not be conducted more than once in any fiscal year of Obligor;

iv.upon request of Payee, stamp on its records concerning the Collateral, and add on all Chattel Paper and Instruments constituting a portion of the Collateral, a notation, in form and substance reasonable satisfactory to Payee, of the security interest of Payee hereunder;

v.promptly notify Payee in writing of any change in any material fact or circumstance represented or warranted by Obligor with respect to any of the Collateral, and promptly notify Payee in writing of any claim, action or proceeding challenging the security interest or affecting title to all or any material portion of the Collateral or the security interest and, at Payee’s reasonable request, appear in and defend any such action or proceeding at Obligor’s expense;

vi.keep all of its Inventory and other Goods insured under policies maintained with reputable, financially sound insurance companies against loss, damage, theft and other risks to such extent as is customarily maintained by companies similarly situated, and such policies or certificates thereof shall, if Payee so requests, be deposited with or furnished to Payee;

vii.take such actions as are reasonably necessary to keep its material Goods in good repair and condition and in good working order (ordinary wear and tear and casualty or condemnation excepted);

viii.take commercially reasonable steps necessary to protect, preserve and maintain all of its rights in the Collateral;

ix.take other action reasonably requested by Payee to ensure the attachment, perfection and, first priority (subject to Permitted Liens) of, and the ability of Payee to enforce, the security interests in any and all of the Collateral including, without limitation:

a.executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC, to the extent, if any, that Obligor’s signature thereon is required therefor;

b.complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Payee to enforce, the security interests in such Collateral; 

 

 

 

 

c.at Payee’s request, obtaining deposit account control agreements with respect to the Deposit Accounts constituting Collateral of any Obligor; 

d.at Payee’s request, using commercially reasonable efforts to obtain collateral access agreements or waivers from mortgagees and landlords in form and substance reasonably satisfactory to Payee; and

e.taking all actions required by the UCC in effect from time to time or by other law, as applicable in any relevant UCC jurisdiction, or by other law as applicable in any foreign jurisdiction;

x.not change its state of formation or organization or Type of Organization without providing Payee with at least 30 days’ prior written notice; and

xi.not change its legal name without providing Payee with at least 30 days’ prior written notice.

D.Any expenses incurred in protecting, preserving or maintaining any Collateral shall be borne by Obligors.

E.No Obligor shall (i) incur or permit to exist any Indebtedness of the Obligors, other than Permitted Debt, (ii) incur or permit to exist any Liens on any Collateral of the Obligors other than Permitted Liens, (iii) sell all or substantially all of its assets (other than sales of assets among Obligors), or merge or consolidate with any other person (other than mergers or consolidations among Obligors, or mergers or consolidations with any Person where an Obligor is the surviving entity), (iv) pay any dividend or distribution or payment on account of, or purchase or redeem or otherwise retire for value, any equity interests in Cool Holdings, or (v) enter into any transaction with any affiliate of such Obligor (other than another Obligor) other than on terms no less favorable to such Obligor than would be obtained in a bona fide third-party transaction.

12.Representations and Warranties. Each Obligor, jointly and severally, represents and warrants to Payee on the date hereof as follows:

A.No financing statement (other than any which may have been filed on behalf of Payee or relating to a Permitted Lien) with respect to the Collateral is on file in any public office. 

B.Each Obligor is and will be the lawful owner of the Collateral owned by it, free of all Liens, claims, security interests and encumbrances whatsoever, other than the liens granted hereunder or Permitted Liens.

C.All information with respect to Collateral and Account Debtors set forth in any schedule, certificate or other writing at any time heretofore or hereafter furnished by such Obligor to Payee pursuant to this Note is and will be true and correct in all material respects as of the date furnished.

D.The execution and delivery of this Note and the performance by each Obligor of its obligations hereunder (i) are within such Obligor’s powers, (ii) have been duly authorized by all necessary corporate, company or partnership action, as applicable, (iii) have received all necessary governmental approval (if any shall be required), and (iv) do not and will not contravene or conflict with (x) any provision of law or (y) of the articles of incorporation, certificate of formation, by-laws, limited liability company agreement, limited partnership agreement or any similar governing documents of such 

 

 

 

 

Obligor or (z) any material agreement, indenture, instrument or other document, or any judgment, order or decree, which is binding upon such Obligor.

E.This Note is a legal, valid and binding obligation of each Obligor, enforceable in accordance with its terms, except that the enforceability of this Note may be limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

F.The security interest in the Collateral created by this Note will be duly perfected upon filing of the financing statements attached hereto as Annex A to the extent a security interest in the Collateral may be perfected under the UCC by filing financing statements.  The creation, attachment and perfection of the security interest do not require the consent of any third party (other than with respect to the attachment and perfection of any security interest which requires control under the UCC (including deposit and securities accounts)).  Once perfected, the security interest will constitute a first priority Lien on the Collateral except for Permitted Liens. 

G.Cool Holdings does not have any direct or indirect Subsidiary and does not, directly or indirectly, own, of record or beneficially, any outstanding voting securities or other equity interests in, or control, any Person in each case except as set forth in the SEC Reports (as defined below) and Simply Mac. Obligors have not agreed and are not obligated to make any future investment in or capital contribution to any other Person.

H.Except as set forth on Schedule 4.6 of the Purchaser Disclosure Schedule (as defined in the Purchase Agreement), immediately after giving effect to the Purchase (as defined in the Purchase Agreement) and immediately following the Closing (as defined in the Purchase Agreement), the Obligors shall be solvent and shall: (a) be able to pay their debts as they become due; (b) own property that has a fair saleable value greater than the amounts required to pay its debts (including a reasonable estimate of the amount of all contingent liabilities); and (c) have adequate capital to carry on their business. No transfer of property is being made and no obligation is being incurred in connection with the transactions contemplated hereby with the intent to hinder, delay or defraud either present or future creditors of the either of the Obligors. In connection with the transactions contemplated hereby, no Obligor has incurred, and no Obligor has any plans to incur and does not have any plans to cause the Company to incur Indebtedness beyond any Obligor’s ability to pay as such Indebtedness becomes absolute and matured.

I. Except as set forth on Schedule 4.7 of the Purchaser Disclosure Schedule, Cool Holdings has filed, or furnished, each report and definitive proxy statement (together with all amendments thereof and supplements thereto) required to be filed by Cool Holdings pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”) with the Securities and Exchange Commission on or after December 31, 2018 (the “SEC Reports”).  As of their respective dates, after giving effect to any amendments, updates, restatements, corrections or supplements thereto filed or furnished prior to the date hereof, the SEC Reports (a) complied in all material respects with the requirements of the Exchange Act and (b) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not materially misleading.

J.Each Obligor’s chief executive office and principal place of business (together with the name and address of any landlord if such locations are leased real property) are as set forth on Schedule [        ] hereto.  Schedule [        ] also sets forth each location where each Obligor maintains a place of business, maintains any Inventory with an aggregate fair market value in excess of $50,000, or owns or leases any real property (together with the name and address of any landlord if such 

 

 

 

 

locations are leased real property).  The failure of the description of locations of Collateral on Schedule [        ] to be accurate or complete will not impair the security interest in such Collateral.

K.Each Obligor is duly organized, validly existing and in good standing under the laws of the state set forth on Schedule [        ] hereto; Schedule [        ] sets forth the Type of Organization, Organizational I.D. Number and federal taxpayer identification number of each Obligor.  

L.Each Obligor’s exact legal name is as set forth on the signature pages of this Note and on Schedule [        ]; Schedule [        ] sets forth all of such Obligor’s prior legal names and prior Types of Organizations, and lists all mergers or other reorganizations to which such Obligor has been subject, in each case, within the five (5) year period immediately preceding the date hereof.

M.Schedule [        ] hereto contains a complete listing of all of Obligors’ Deposit Accounts and other bank accounts, including locations and applicable account numbers.

N.The amounts due to Obligor under the Collateral are not subject to any setoff, counterclaim, defense, allowance or adjustment (other than discounts for prompt payment shown on the invoice) or to any dispute, objection or complaint by any Account Debtor, other than those occurring in the ordinary course of business.

O.Schedule [        ] of the Purchaser Disclosure Schedule sets forth all Indebtedness of each Obligor, the amount of such Indebtedness and the Person to whom such Indebtedness is owed (the “Obligor Indebtedness”).  Cool Holdings has delivered to the Payee true, correct and complete copies of all Contracts (as defined in the Purchase Agreement), including all amendments thereto, evidencing the Obligor Indebtedness.  No Obligor is in breach or default under any such Contract.  No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to:  (a) result in a material violation or breach of any of the provisions of any such Contract; (b) give any Person the right to exercise any remedy under any such Contract; (c) give any Person the right to accelerate the maturity or performance of any such Contract; or (d) give any Person the right to cancel or terminate any such Contract.  No Obligor has received any written (or, to the Knowledge of Cool Holdings, oral) notice or other written (or, to the Knowledge of Cool Holdings, oral) communication regarding any actual or possible violation or breach of, or default under, any such Contract.  No Person is currently renegotiating, or has a right pursuant to the terms of any such Contract to renegotiate, any amount paid or payable to or by any Obligor under any such Contract or any other material term or provision of any such Contract.  No Person has threatened in writing (or, to the Knowledge of Cool Holdings, orally) to terminate or refuse to perform its obligations under any such Contract (regardless of whether such Person has the right to do so under such Contract).

P.Each Obligor has good and valid title to, or, in the case of leased properties and assets of such Obligor, valid leasehold interests in, all of such Obligor’s properties and assets, real, personal and mixed, used or held for use in its business, free and clear of any Liens, except (a) as reflected in the most recent balance sheet included in the SEC Reports and (b) the Permitted Liens.  

Q.Except as set forth on Schedule 4.8 of the Purchaser Disclosure Schedule, there is no Action (as defined in the Purchase Agreement) of any nature pending or, to the Knowledge (as defined in the Purchase Agreement) of Cool Holdings, threatened against any Obligor or its properties and assets (tangible or intangible) or any of its officers or directors (in their capacities as such).  No Governmental Entity (as defined in the Purchase Agreement) is currently challenging or questioning the legal right of any Obligor to conduct its operations as presently conducted.  There is no Action of any nature pending or, to the Knowledge of Cool Holdings, threatened against any Person who 

 

 

 

 

has a contractual right or a right pursuant to Maryland law or other applicable law to indemnification from an Obligor related to facts and circumstances existing prior to the Closing.

R.Except as set forth on Schedule 4.8 of the Purchaser Disclosure Schedule, there are no outstanding judgments, orders, injunctions, decrees, citations, stipulations or awards (whether rendered by a court, administrative agency, arbitral body or governmental authority) against or pertaining to any Obligor or any assets of any Obligor.

Any reference to the Purchaser Disclosure Schedule contained in this Section 12 shall mean the Purchaser Disclosure Schedule inclusive of all updates made thereto pursuant to Section 6.4 of the Purchase Agreement after the date thereof an up through and including the Closing.

13.Events of Default.  The occurrence of one or more of the following events shall constitute an event of default hereunder (an “Event of Default”):

A.Any Obligor shall fail to make any payment due to Payee under this Note within 3 days after the same shall become due and payable, whether at maturity, by acceleration or otherwise.  

B.Any Obligor shall fail to perform any covenant, agreement or obligation set forth in this Note (other than to the extent described in Section 13(A)) and such failure continues for 30 days after the earlier to occur of (i) any Obligor obtaining knowledge of such failure or (ii) Payee’s delivery of notice to Cool Holdings of such failure.

C.So long as the Apple Guarantee remains in effect, at any time after the date falling 30 days after the date of this Note, Simply Mac makes a direct purchase of Inventory or any other product or item from Apple, Inc.

D.Any representation, warranty or certification made by any Obligor or any officer or employee of any Obligor in this Note, in any certificate, or other document delivered pursuant to this Note, or in the Purchase Agreement, proves to have been misleading or untrue in any material respect when made.

E.Any Obligor becomes insolvent, bankrupt or generally fails to pay its debts as such debts become due; is adjudicated insolvent or bankrupt; admits in writing its inability to pay its debts; or shall suffer a custodian, receiver or trustee for it or substantially all of its property to be appointed and if appointed without its consent, not be discharged within 60 days; makes an assignment for the benefit of creditors; or suffers proceedings under any law related to bankruptcy, insolvency, liquidation or the reorganization, readjustment or the release of debtors to be instituted against it and if contested by it not dismissed or stayed within 60 days; if proceedings under any law related to bankruptcy, insolvency, liquidation, or the reorganization, readjustment or the release of debtors is instituted or commenced by any Obligor; or if any order for relief is entered relating to any of the foregoing proceedings.

F.Any one or more Obligors suffers (i) one or more judgments which are not otherwise covered by insurance in the aggregate amount in excess of $50,000 and any such judgment has not been paid, discharged or vacated or had execution thereof stayed pending appeal within 30 days after entry or filing of such judgment, or (ii) one or more material writs, warrant of attachment, or similar process which are not released, vacated or fully bonded within 15 days of its issue or levy;

G.Any order, judgment or decree is entered decreeing the dissolution of any Obligor.

H.Any Obligor fails to pay when due any of its Indebtedness (other than Indebtedness arising under this Note), or any interest or premium thereon, when due (whether by 

 

 

 

 

scheduled maturity, acceleration, demand, or otherwise) and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness and the effect of which is to cause such Indebtedness to be demanded or to become due prior to its stated maturity, or such guarantee to become payable or cash collateral in respect thereof to be demanded.

14.Remedies.

A.If an Event of Default exists under Section 13(E) hereof, the entire unpaid principal balance outstanding hereunder plus any and all interest accrued and unpaid thereon shall become due and payable immediately without presentment, demand notice of nonpayment, protest, or other notice of dishonor, all of which are hereby expressly waived by Obligors.

B.If an Event of Default other than an Event of Default under Section 13(E) exists, Payee may, at its option, do any one or more of the following: (i) declare the entire unpaid balance of all or any part of the obligations hereunder immediately due and payable; (ii) reduce any claim to judgment; and (iii) exercise any and all other legal or equitable rights, in equity or otherwise, afforded by this Note, the laws of the State of New York or the laws of any other applicable jurisdiction.

C.Upon the occurrence and continuance of an Event of Default, Payee may request that Obligors direct that all Receivables be paid directly to a lock box account established with, or for the benefit of, Payee.

D.Upon the occurrence and continuance of an Event of Default, each Obligor shall hold in trust (and not commingle with its other assets) for Payee all Collateral that is Chattel Paper, Instruments or Documents at any time received by it and promptly deliver same to Payee, unless Payee at its option gives such Obligor written permission to retain such Collateral; at Payee’s reasonable request, each contract, Chattel Paper, Instrument or Document so retained shall be marked to state that it is assigned to Payee and each instrument shall be endorsed to the order of Payee (but failure to so mark or endorse shall not impair the security interest of Payee created hereunder);

E.For the purpose of enabling Payee to exercise rights and remedies under this Section 14 (including in order to take possession of, collect, receive, assemble, process, appropriate, remove, realize upon, sell, assign, convey, transfer or grant options to purchase any Collateral) at such time as Payee shall be lawfully entitled to exercise such rights and remedies after the occurrence and continuance of an Event of Default, each Obligor hereby grants to Payee (i) a nonexclusive, worldwide license (exercisable without payment of royalty or other compensation to such Obligor), including in such license the right to sublicense, to use and practice any intellectual property now owned or hereafter acquired by such Obligor and access to all media in which any of the licensed items may be recorded or stored and to all software and programs used for the compilation or printout thereof and (ii) a license (without payment of rent or other compensation to such Obligor) to use, operate and occupy all real estate of such Obligor, in each case, until this Note is paid in full or otherwise terminated.

F.Each Obligor appoints Payee its true and lawful attorney until this Note is paid in full or otherwise terminated with full power of substitution, in the name of such Obligor, for the sole use and benefit of Payee, but at Obligors’ expense, to the extent permitted by law, to exercise all or any of the following powers following the occurrence and during the continuance of an Event of Default: to file claims under any insurance policies of such Obligor, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies;

G.Each Obligor appoints Payee its true and lawful attorney until this Note is paid in full or otherwise terminated with full power with full power of substitution, in the name of such Obligor, for the sole use and benefit of Payee, but at Obligor’s expense, to the extent permitted by law, to 

 

 

 

 

exercise, all or any of the following powers with respect to all or any of such Obligor’s Collateral (to the extent necessary to cause the obligations of such Obligor hereunder to be paid in full) following the occurrence and during the continuance of an Event of Default: 

i.to demand, sue for, collect, receive and give acquittance for any and all monies due or to become due upon or by virtue thereof;

ii.to settle, compromise, compound, prosecute or defend any action or proceeding with respect thereto;

iii.to take control of, sell, lease, license or otherwise dispose of the same or the Proceeds thereof, as fully and effectually as if Payee were the absolute owner thereof; 

iv.to sign or endorse Obligor’s name on (A) any original certificate of title in respect of any Collateral that is subject to certificate of title statutes, or (B) any application for a new or a replacement certificate of title or other document or instrument to be filed in any official filing, recording, registration or certificate-of-title system covering any of the Collateral; 

v.to extend the time of payment of any or all thereof and to make any allowance or other adjustment with reference thereto;

vi.to endorse Obligor’s name on any notes, acceptances, checks, drafts, money orders or other evidences of payment on Collateral that may come into Payee’s possession;

vii.to sign Obligor’s name on any invoice or bill of lading relating thereto, on any drafts against Account Debtors or other Persons making payment with respect thereto, on assignments and verifications of accounts or other Collateral and on notices to Account Debtors or other Persons making payment with respect thereto; 

viii.to send requests for verification of obligations to any Account Debtor;

ix.grant or issue any exclusive or non-exclusive irrevocable or revocable, royalty-bearing or royalty-free license under any intellectual property used on or in connection with the sale of any Inventory to anyone, including the Payee itself, including but not limited to a license or other right to use such Obligors’ labels, advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale and selling any Inventory or other Collateral, and such Obligors’ rights under all contracts, licenses, approvals, permits, leases and franchise agreements, to the extent assignable, shall inure to the Payee’s benefit, and

x.to do all other acts and things reasonably necessary to carry out the intent of this Note;

provided, however, that except in the case of Collateral that is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market Payee will give Obligors at least 10 days’ prior written notice of the time and place of any public sale thereof or the time after which any private sale or other intended disposition thereof will be made.  If, following the occurrence and continuance of an Event of Default, any Account Debtor fails to make payment on any Collateral when due, Payee is authorized, in its sole discretion, either in its own name or in any Obligor’s name, to take such action as Payee reasonably shall deem necessary for the collection of any amounts owed with respect to Collateral or upon which a delinquency exists.  Regardless of any other provision of this Note, however, Payee shall not be liable for its failure to collect, or for its failure to exercise diligence in the collection of, any amounts owed with respect to Collateral except for its own gross negligence or willful 

 

 

 

 

misconduct, nor shall it be under any duty to anyone except any Obligor to account for funds that it shall actually receive under this Note.  A receipt given by Payee to Account Debtor shall be a full and complete release, discharge, and acquittance to such Account Debtor, to the extent of any amount so paid to Payee.  Payee may apply or set off amounts paid and the deposits against any liability of any Obligor to Payee.

H.Payee’s sale of less than all the Collateral shall not exhaust Payee’s rights under this Note and Payee is specifically empowered, after the occurrence and continuance of an Event of Default, to make successive sales until all the Collateral is sold.  If the proceeds of a sale of less than all the Collateral shall be less than the outstanding obligations of Obligors hereunder, this Note and the security interest shall remain in full force and effect as to the unsold portion of the Collateral just as though no sale had been made.  In the event any sale under this Note is not completed or is, in Payee’s opinion, defective, such sale shall not exhaust Payee’s rights under this Note and Payee shall have the right to cause a subsequent sale or sales to be made.  Any and all statements of fact or other recitals made in any bill of sale or assignment or other instrument evidencing any foreclosure sale under this Note as to nonpayment of the obligations of Obligors hereunder, or as to the occurrence of any Event of Default, or as to Payee’s having declared all of such obligations to be due and payable, or as to notice of time, place and terms of sale and the properties to be sold having been duly given, or as to any other act or thing having been duly done by Payee, shall be taken as prima facie evidence of the truth of the facts so stated and recited. Payee may appoint or delegate any one or more Persons as agent to perform any act or acts necessary or incident to any sale held by Payee, including the sending of notices and the conduct of sale, but such acts must be done in the name and on behalf of Payee.  

I.In addition to any and all other rights afforded to Payee in this Section 14, Payee may exercise all the rights of a Payee under the UCC (whether or not in effect in the jurisdiction where such rights are exercised) with respect to any Collateral and, if cash shall be insufficient to pay all of the obligations of Obligors hereunder in full, sell, lease, license or otherwise dispose of the Collateral or any part thereof in accordance with the provisions of the UCC.  Notice of any such sale or other disposition shall be given to Obligors as required under this Section 14.

J.No right or remedy conferred upon or reserved to Payee hereunder or now or hereafter existing at law or in equity is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and concurrent, and in addition to every other such right or remedy, and may be pursued singly, concurrently, successively or otherwise, at the sole discretion of Payee, and shall not be exhausted by any one exercise thereof but may be exercised as often as occasions therefore shall occur.

15.Assignment.  This Note may be freely assigned by Payee.  The obligations of Obligors under this Note may not be assigned without the prior written consent of Payee.

16.Notices.  All notices required to be given to any of the parties hereunder shall be in writing and shall be deemed to have been sufficiently given for all purposes when delivered in person or upon confirmation of receipt when transmitted by facsimile transmission (but only if followed by transmittal by national overnight courier or hand for delivery on the next Business Day) or on receipt after dispatch by registered or certified mail, postage prepaid, addressed, or on the next business day if transmitted by national overnight courier, in each case as follows:

	
 
	
Obligors:
	
[        ]

 

 

 

 

with a copy (which shall not constitute notice) to:

[        ]

 

Payee:[        ]

 

with a copy (which shall not constitute notice) to:

[        ]

 

Any notice of any change in such address shall also be given in the manner set forth above.  Whenever the giving of notice is required the giving of such notice may be waived in writing by the party entitled to receive such notice.

17.Severability.  In any event that any provision of this Note is held to be invalid, illegal or unenforceable in any respect or to any extent, such provision shall nevertheless remain valid, legal and enforceable in all such other respects and to such extent as may be permissible.  Any such invalidity, illegality or unenforceability shall not affect any other provisions of this Note, but this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 

18.Successor and Assigns.  This Note inures to the benefit of Payee and binds Obligors, and their respective permitted successors and assigns, and the words “Payee” and “Obligors” whenever occurring herein shall be deemed and construed to include such respective permitted successors and assigns.

19.Amendment; Waiver.  No amendment of this Note shall be effective unless such amendment is made in a writing executed by each of Obligor and Payee.  No waiver of any term or condition herein shall constitute a general, further or continuing waiver of such term or condition for future purposes.

20.Governing Law.  This Note shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the principles of conflict of laws.

 

 

 

 

 

IN WITNESS WHEREOF, each of the Obligors has duly executed this Note on the day and year first above written.

 

		
	
 
	
OBLIGORS:

[        ]

 

By:  _______________________________

	
 
	
Name: 

	
 
	
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Acknowledged and Agreed:

 

	
	
PAYEE:

GAMESTOP CORP.

 

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#53078770 v10

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