CONVERSION AGREEMENT
EXHIBIT VIII
EXECUTION COPY
CONVERSION AGREEMENT (this
“Agreement”), dated November 7, 2016 among iMEDICOR,
Inc., a Nevada corporation formerly known as Vemics, Inc. (the
“Company”), and the undersigned holder (the
“Holder”) of a Series A 18% Convertible Promissory Note
in the principal amount set forth below the Holder’s
signature to this Agreement, as amended by the Amendment dated
December 24, 2015 (the “Bridge Note”).
BACKGROUND
WHEREAS, the
Company issued the Bridge Note to the Holder on the Original Issue
Date.
WHEREAS, the Bridge
Note was due and payable in full on or before June 30, 2016, but
neither any of the principal nor any of the interest payable with
respect to the Bridge Note has been paid and interest on the
principal of the Bridge Note continues to accrue at the rate of 18%
per annum.
WHEREAS, the
Company has entered into a Recapitalization Agreement dated as of
November 1, 2016 (the “Recapitalization Agreement”, a
copy of which is attached to this Agreement) with persons who are
the owners of record of shares of the capital stock of the Company
and/or the holders of indebtedness convertible into shares of
capital stock of the Company, pursuant to which the Company shall
be recapitalized upon the terms and provisions of the
Recapitalization Agreement (the “Recapitalization”) on
such date as the Company in its sole discretions shall designate in
a written notice to all of the parties to the Recapitalization
Agreement (the “Recapitalization Date”).
WHEREAS, the
Company entered into a Letter Agreement dated as of October 31,
2016 with GVC Capital LLC (“GVC”) pursuant to which the
Letter Agreement between the Company and GVC dated November 12,
2015 and all of their respective obligations thereunder, including
but not limited to their respective obligations with respect to a
proposed private offering by the Company of the Company’s
securities (a “PIPE Financing”) were terminated
effective as of October 31, 2016.
WHEREAS, the Holder
desires to convert the Bridge Note into shares of Common Stock of
the Company, and the Company desires that the Holder convert the
Bridge Note into shares of Common Stock of the Company, at a price
equal to $0.45 per share of Common Stock immediately following the
Recapitalization of the Company on the Recapitalization Date and
otherwise on the terms and conditions set forth in the Bridge
Note.
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NOW,
THEREFORE, in consideration of the premises and the promises made
herein, and in consideration of the representations, warranties,
covenants and agreements herein contained, intending to be legally
bound, the parties to this Agreement hereby agree as
follows:
1. Definitions. Except as
otherwise provided in this Agreement, the terms used herein shall
have the meanings thereof as defined in the Bridge Note or the
Recapitalization Agreement, as the case may be.
2. Conversion of Bridge Note. On
the Recapitalization Date immediately following the
Recapitalization, the Bridge Note shall be converted into shares of
Common Stock of the Company at a price equal to $0.45 per share of
Common Stock, subject to adjustment as provided in the Bridge Note
(the “Conversion”). The shares of Common Stock to be
issued by the Company upon the Conversion shall be issued to the
Holder in the name of the Holder.
3. Representations
and Warranties of the Company. The Company represents and warrants to the Holder
as follows:
3.1 Power
and Authorization. The Company
is a corporation duly organized, validly existing and in good
standing under the Laws of the state of Nevada and has the
requisite power and authority necessary to enter into this
Agreement and to carry out its obligation hereunder. The execution,
delivery and performance of this Agreement and the transactions
contemplated hereby have been duly authorized by the Board of
Directors of the Company and no other corporate proceeding on the
part of the Company is necessary to authorize the execution and
delivery of this Agreement or the Conversion or any of the other
transactions contemplated hereby. This Agreement has been duly
executed and delivered on behalf of the Company and is a legal
valid and binding obligation of the Company and enforceable against
the Company in accordance with its terms.
3.2 No
Violation. Neither the
execution, delivery nor performance of this Agreement nor the
consummation of the Recapitalization or any of the transactions
contemplated hereby (i) will violate or conflict with the Articles
of Incorporation or By-Laws of the Company, (ii) will result in any
breach of or default under any provision of any contract or
agreement of any kind to which the Company is a party or by which
the Company is bound or to which any property or asset of the
Company is subject or (iii) is prohibited by or requires the
Company to obtain or make any consent, authorization, approval,
registration or filing under any statute, law, ordinance,
regulation, rule, judgment, decree or order of any court or
Government Entity or of any other person.
3.3 No
Litigation. There are no
actions, suits, proceedings or, to the best of the Company's
knowledge, investigations, either at law or in equity, or before
any commission or other administrative authority in any United
States or foreign jurisdiction, of any kind now pending or
threatened or proposed in any manner, or any circumstances which
should or could reasonably form the basis of any such action, suit,
proceeding or investigation, involving the Company or any of its
properties or assets that (i) questions the validity of this
Agreement or the Recapitalization or any of the transactions
provided for or contemplated hereby or (ii) seeks to delay,
prohibit or restrict in any manner any action taken or contemplated
to be taken by the Company under this
Agreement.
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4. Covenants,
Representations and Warranties of the Holder. The Holder hereby covenants, represents and
warrants to the Company as follows:
4.1 Power
and Authorization. The Holder,
if the Holder is an entity, is duly organized, validly existing and
in good standing under the Laws of the jurisdiction under which it
is organized or formed and has the requisite power and authority
necessary to enter into this Agreement and to carry out its
obligation hereunder. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been
duly authorized by its board of directors or other governing body,
as applicable, and no other proceeding on the part of the Holder is
necessary to authorize the execution and delivery of this Agreement
or any of the other transactions contemplated hereby. This
Agreement has been duly executed and delivered on behalf of the
Holder, and is a legal valid and binding obligation of the Holder,
and is enforceable against the Holder in accordance with its
terms.
The
Holder is not an entity, has the requisite power authority and
capacity to enter into this Agreement and to carry out its
obligations hereunder. This Agreement has been duly executed and
delivered on behalf of the Holder, and is a legal valid and binding
obligation of the Holder, and enforceable against the Holder in
accordance with its terms.
4.2 No
Violation. Neither the
execution, delivery nor performance of this Agreement nor the
consummation of any of the transactions contemplated hereby (i)
will violate or conflict with the Certificate of Incorporation or
By-Laws if the Holder is an entity, (ii) will result in any breach
of or default under any provision of any contract or agreement of
any kind to the Holder is a party or by which the Holder is bound
or to which any property or asset of the Holder is subject or (iii)
is prohibited by or requires the Holder to obtain or make any
consent, authorization, approval, registration or filing under any
statute, law, ordinance, regulation, rule, judgment, decree or
order of any court or Government Entity or of any other
person.
4.3 No
Litigation. There is no action,
suit, proceeding or, to the knowledge of the Holder, investigation,
either at law or in equity, or before any commission or other
administrative authority in any United States or foreign
jurisdiction, of any kind now pending or threatened or proposed in
any manner, or any circumstances which should or could reasonably
form the basis of any such action, suit, proceeding or
investigation, involving the Holder or any of their respective
properties or assets that (i) questions the validity of this
Agreement, the Recapitalization or any of the transactions
contemplated hereby or (ii) seeks to delay, prohibit or restrict in
any manner any action taken or contemplated to be taken by the
Company or the Holder under this Agreement.
4.4 Surrender
of Certificates. On and after
the Conversion, the Holder acknowledges and agrees that any
documentation representing the Bridge Note shall represent
thereafter only the right of the Holder to receive the number of
shares of Common Stock issuable upon the
Conversion.
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4.5 Waiver.
By signing this Agreement, the Holder
shall be deemed to have waived any and all rights, entitlements,
claims, demands or interests which the Holder may have had by
virtue of having been the beneficial owner of the Bridge Note, save
and except for the right to receive a certificate representing the
shares of Common Stock issuable upon the
Conversion.
4.6 Release.
By signing this Agreement, but
effective as of the consummation of the Conversion in accordance
with the terms hereof, the Holder shall be deemed to have
unconditionally and irrevocably released, acquitted and forever
discharged the Company together with its officers, directors,
stockholders, agents, bankers, representatives, note holders,
attorneys and investment bankers, together with their respective
affiliates and agents, both past and present, from any claim,
demand, obligation or liability, direct or indirect, known or
unknown, arising from any act or omission from the beginning of
time up to the Conversion (a "Claim") except as hereinafter
provided in this Section 4.6. Without limiting the generality of
the foregoing, it is understood that this release shall include any
Claim arising from any statement or representation, verbal or
written, and any act or omission made in connection with any offer
or sale of any security. However, notwithstanding anything in this
Agreement to the contrary, none of ▇▇▇▇▇ ▇. ▇▇▇▇▇, JD Investments,
Inc. or Sonoran Pacific Resources, Inc. or any of their affiliates
shall be deemed to have released, acquitted or discharged the
Company with respect to any claim that it may now or at any time
hereafter have, including only any claim or right under any
applicable security agreement or security interest that, as of the
date of this Agreement, relates to:
(i)
the
line of credit in the amount of $500,000 extended to the Company by
Western State Bank that has been guaranteed by ▇▇▇▇▇ ▇. ▇▇▇▇▇ and
the security agreements and other documentation executed with
respect thereto, and
(ii)
The
financing in an amount of $155,000 provided to the Company by
Genesis Finance Corporation that has been guaranteed by ▇▇▇▇▇ ▇.
▇▇▇▇▇ and the security agreements and other documentation executed
with respect thereto.
4.7 Information.
The Holder has been provided with
information and materials concerning the subject matter of this
Agreement and the transactions provided for herein or contemplated
hereby. In addition, each such person has had access to the
Company's reports and information filed with the SEC (the "SEC
Documents"). The information and materials provided by the Company
and the SEC Documents are referred to herein as the "Disclosure
Materials." Each such person has carefully reviewed and is familiar
with all of the information contained in the Disclosure Materials.
Each such person has been given access to full and complete
information regarding the Company and has utilized such access to
such person's satisfaction for the purpose of obtaining such
information regarding the Company as such person has reasonably
requested; and, particularly, each such person has been given a
reasonable opportunity to ask questions of, and receive answers
from, representatives of the Company concerning the terms and
conditions of this Agreement, including the Conversion and the
shares of Common Stock issuable upon the Conversion and to obtain
any and all additional information related thereto, to the extent
reasonably available. Each such person has relied on nothing other
than the Disclosure Materials (including any exhibits thereto) in
deciding whether to execute this Agreement. Except as set forth in
the Disclosure Materials, no representations or warranties have
been made to any such person by the Company, any selling agent of
the Company, or any agent, employee, or affiliate of the Company or
such selling agent.
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Each
such person, in reaching a decision to execute this Agreement, has
such knowledge and experience in financial and business matters
that such person is capable of reading and interpreting financial
statements and evaluating the merits and risks of the covenants,
representations and warranties contained herein and has the net
worth to undertake such risks.
4.8 Risk
Factors Applicable to the Holder. The Holder acknowledges that the Holder will be
subject to substantial risks as a result of the Conversion,
including the following:
4.8.1 The
Holder acknowledges that the Holder has certain rights as a holder
of the Bridge Note (“Bridge Note Rights"), including, without
limitation:
(i)
the
right to accrue and collect interest on the principal balance of
the Bridge Note; and
(ii)
upon
a default by the Company in its obligation to repay certain
indebtedness of the Company, the right to foreclose upon the assets
of the Company, compel a liquidation of those assets and collect
the proceeds from such liquidation senior to the holders of all
indebtedness of the Company subordinated to the Bridge Note and
preferred and common equity.
and, by agreeing to convert the Bridge Note into shares of Common
Stock in accordance with the terms of this Agreement, the Holder
will lose the Holder’s Bridge Note Rights and will possess
only those rights of all other holders of Common Stock, including,
without limitation:
(i)
Voting Rights.
The holders of Common Stock are
entitled to one vote per share on all matters. The Common Stock
does not have cumulative voting rights.
(ii)
Dividends. Each share of Common Stock has an equal and
ratable right to receive dividends to be paid from the assets
legally available therefor when, as and if declared by the Board.
The Company does not anticipate paying cash dividends on the Common
Stock in the foreseeable future.
(iii)
Liquidation.
In the event the Company is dissolved,
liquidated or wound up, the holders of Common Stock are entitled to
share equally and ratably in the assets available for distribution
after payments are made to the Company's creditors and to the
holders of any outstanding stock ranking senior to the Common
Stock, including any that the Company may designate and issue in
the future with liquidation preferences greater than those of the
Common Stock.
(iv)
Other. The holders of shares of Common Stock have no
preemptive, subscription or redemption rights and are not liable
for further calls or assessments. All of the outstanding shares of
Common Stock issued upon the Conversion will be fully paid and
non-assessable.
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4.8.2 The
Holder has certain rights and preferences applicable to the Bridge
Note, including, without limitation, the right to convert the
Bridge Note into shares of Common Stock. By executing this
Agreement and converting the Bridge Note into shares of Common
Stock, the Holder will possess only the rights of a holder of
Common Stock.
4.8.3 Implementation
of this Agreement will result in the conversion of the Bridge Note
into a substantial number of shares of Common Stock. The public
trading market for the Common Stock is sporadic and highly
illiquid. Future sales of substantial amounts of the Common Stock
in the public market, or the perception that such sales might
occur, could cause the market price of the Common Stock to decline
and could impair the value of an investment in the Common Stock and
the Company’s ability to raise equity capital in the
future.
This
Agreement will result in an immediate and substantial increase in
the number of shares of Common Stock issued and outstanding. The
sale of some portion of this additional Common Stock by the holders
thereof, or even the appearance that such holders may make such
sales, may limit the market for the Common Stock or depress any
trading market volume and price before other investors are able to
sell any of their Common Stock. There is a substantial risk that
the Holder will not be able to sell any of the Holder’s
Common Stock in a timeframe and/or at prices that would permit the
recovery of the Holder’s investment.
5.
Miscellaneous.
5.1 Assurance
of Further Action. From time to
time after the Conversion, at the Company's expense, the Holder
shall execute and deliver, or cause to be executed and delivered,
to the Company such further instruments or other documents or take
such other actions as the Company may reasonably request in order
to consummate the Conversion and the other transactions
contemplated hereby.
5.2 Expenses.
Whether or not the Conversion is
consummated, except as otherwise provided in the documents relating
to the Conversion, each of the Parties shall pay all of its own
legal and accounting fees and other expenses, taxes, debts,
liabilities and obligations incurred in the preparation of this
Agreement and the performance of the terms and provisions of this
Agreement.
5.3 Waiver.
The Parties may by written agreement,
(i) extend the time for or waive or modify the performance of any
of the obligations or other acts of the Parties or (ii) waive any
inaccuracies in the representations and warranties contained in
this Agreement or in any document delivered pursuant to this
Agreement.
5.4 Notices.
All notices, requests or other
communications hereunder shall be in writing and shall be deemed to
have been duly given if delivered or mailed first class certified
mail postage prepaid addressed as follows: if to the Company, to
iMedicor, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President and
Chief Executive Officer (with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ III,
Esq., ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 10111);
if to the Holder, to the address set forth below the signature of
the Holder on the signature page of this Agreement; or to such
other address as may have been furnished in writing to the party
giving the notice by the Party to whom notice is to be
given.
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5.5 Entire
Agreement. This Agreement
embodies the entire agreement among the Parties and there have been
and are no agreements, representations or warranties, oral or
written among the Parties other than those set forth or provided
for in this Agreement. This Agreement may not be modified or
changed, in whole or in part, except by a supplemental agreement
signed by each of the Parties.
5.6 Rights
Under this Agreement; No assignability. This Agreement shall bind and inure to the benefit
of the Parties hereto and their respective successors and assigns,
but shall not be assignable by any Party without the prior written
consent of the other Party. Nothing contained in this Agreement is
intended to confer upon any person, other than the Parties and
their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this
Agreement.
5.7 Governing
Law. This Agreement and the
rights and duties of the Parties hereto shall be governed by and
construed in accordance with the laws of the State of Florida. The
Parties hereby irrevocably submit to the jurisdictions of the
courts of the States of Arizona and Florida and the federal courts
of the United States of America located in the States of Arizona
and Florida in respect of all matters that arise out of or are
related to this Agreement or the documents referred to in or
contemplated by this Agreement and the transactions contemplated
hereby and thereby and hereby waive, and agree not to assert, as a
defense in any action for the interpretation or enforcement hereof
or of any such document, that it is not subject thereto or that
such action may not be brought or is not maintainable in said
courts or that the venue thereof may not be appropriate or that
this Agreement or any such document may not be enforced in or by
such courts, and the Parties irrevocably agree that all claims with
respect to such action shall be heard and determined in such
Arizona or Florida state or federal court. The Parties hereby
consent to and grant any such court jurisdiction over the person of
such Parties and over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such
action in the manner provided in this Section 5.7 or in such other
matter as may be permitted by law shall be valid and sufficient
service thereof.
5.8 Waiver
of Jury Trial. EACH PARTY
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMUTED BY LAW,
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
5.9 Specific
Performance. The Parties agree
that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specific terms or
were otherwise breached. It is accordingly agreed that the Parties
shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms
and provisions of this Agreement in any court of competent
jurisdiction specified in Section 5.7, this being in addition to
any other remedy to which they are entitled at law or in
equity.
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5.10 Headings:
References to Sections, Exhibits and Schedules. The headings of the Sections, paragraphs and
subparagraphs of this Agreement are solely for convenience and
reference and shall not limit or otherwise affect the meaning of
any of the terms or provisions of this Agreement. The references
herein to Sections, Exhibits and Schedules, unless otherwise
indicated, are references to sections of and exhibits and schedules
to this Agreement.
5.11 Counterparts.
This Agreement may be executed in any
number of counterparts, each of which shall be an original, but
which together constitute one and the same
instrument.
5.12 Certain
Rights. In the event the
Conversion does not occur as set forth here therein, the Holder
shall not be deemed to have waived or released any
rights.
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SIGNATURE PAGES FOLLOW
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IN
WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
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iMEDICOR,
INC.
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Date
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By:
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/s/
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ |
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President |
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HOLDER OF BRIDGE NOTE
Entity
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(Name of Entity)
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(Date)
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By:
_________________________________
Name:
Title:
Or Individual
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(Name of Entity)
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(Date)
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Bridge
Note Held:
Principal
Amount:
$____________________
Original Issue
Date:
_____________________
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