THIRD AMENDMENT TO CONVERTIBLE SUBORDINATED NOTE PURCHASE AGREEMENT AND THIRD AMENDMENT TO CONVERTIBLE SUBORDINATED PROMISSORY NOTE
Exhibit 10.2
THIRD AMENDMENT TO
CONVERTIBLE SUBORDINATED NOTE PURCHASE AGREEMENT AND THIRD
AMENDMENT TO CONVERTIBLE SUBORDINATED PROMISSORY NOTE
THIS
THIRD AMENDMENT TO CONVERTIBLE SUBORDINATED NOTE PURCHASE AGREEMENT
AND THIRD AMENDMENT TO CONVERTIBLE SUBORDINATED
PROMISSORY NOTE
(this “Amendment”), effective
asof April 30, 2020, is made and entered into by and between
MobileSmith, Inc., a Delaware corporation (the “Company”), and UNION
BANCAIRE PRIVEE, UBP SA, the holder (the “Holder”) of the
Convertible Subordinated Promissory Note (the “Note”)
issued by the Company on December 11, 2014 pursuant to that certain
Convertible Subordinated Note Purchase Agreement, dated December
11, 2014 (as amended through the date hereof, the
“Note Purchase
Agreement”) between the Company and the Holder.
Capitalized terms used but not defined herein have the meanings
assigned to them in the Note Purchase Agreement and the Note, as
applicable.
WITNESSETH:
WHEREAS, the
Company and the Holder desire to amend the Note previously issued
pursuant to the Note Purchase Agreement (as amended) to provide
that the Maturity Date of the Note be extended from November 14,
2020 to November 14, 2022, and to provide that the definition of
“Maturity Date” contained in any Additional Note issued
on or after the date hereof shall be conformed to the definition
thereof contained in the Note, as hereby amended;
WHEREAS, the
Company and the Holder desire to cancel certain subordinated
promissory notes and replace them with Additional Notes of equal
principal value under the Note Purchase Agreement;
WHEREAS, Section
9(a) of the Note Purchase Agreement provides that any provision of
the Note Purchase Agreement may be amended with the written consent
of the Company and the Holders of at least a Requisite
Percentage;
WHEREAS, Section 8
of the Note provides that any provision of the Notes may be amended
with the written consent of the Company and the Holders of at least
a Requisite Percentage;
WHEREAS, the
Company wishes to cancel certain separately issued subordinated
promissory notes and replace them with Additional Notes of equal
principal value under the Note Purchase Agreement; and
WHEREAS, Holder
holds a Requisite Percentage necessary to amend the provisions of
each of the Note and the Note Purchase Agreement.
.
NOW,
THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section
1.
Amendment to Note Purchase
Agreement.
a)
Section 1(c) of the
Note Purchase Agreement shall be deleted and replaced in its
entirety with the following:
“Subsequent Closing; Delivery. Subject
to compliance with federal and
applicable state securities laws, at any time after the date of
this Agreement Company may elect to sell or offer as consideration
for the cancellation of other indebtedness and issue to the
Investors, and, upon such election, the Investors shall purchase or
receive as consideration for the cancellation of other indebtedness
of equal principal value from the Company in one or more subsequent
closings (each, a “Subsequent
Closing”), additional
Notes substantially in the form of Exhibit A
hereto (the “Additional
Notes”); provided that
the aggregate principal amount of all Additional Notes issued in
all Subsequent Closings pursuant to this Agreement does not exceed
Forty Million Dollars ($40,000,000). Should any such sales or
exchanges be made, the Company shall prepare a
revised Schedule
I to this Agreement
reflecting such sales. At each Subsequent Closing, the Company will
deliver to each of the Investors participating in such Subsequent
Closing the respective Additional Note to be purchased by such
Investor or exchanged for cancelled promissory notes of equal
principal value, against receipt by the Company of the
corresponding Purchase Price or cancelled promissory note set forth
on Schedule
I hereto. Each of the
Additional Notes will be registered in such Investor’s name
in the Company’s records. The Initial Closing and each
Subsequent Closing, if any, shall each be considered a
“Closing” for the purposes of this Agreement and the
date of each such Closing shall be a “Closing Date.”
b)
Section 1(d) of the Note Purchase
Agreement shall be deleted and replaced in its entirety with the
following:
“Use of Proceeds. The proceeds of the
sale and issuance or exchange and issuance of the Notes or
Additional Notes shall be used for ongoing working capital and
capital spending requirements.”
1
c)
Section 5(b)
of the Note Purchase Agreement shall be deleted and replaced in its
entirety with the following:
“Purchase Price. Each Investor shall
have delivered to the Company the Purchase Price or cancelled note
in respect of the Note or Additional Note being purchased or
received in exchange for a cancelled note by such
Investor.”
d)
The first
sentence of Section 9(j) of the Note Purchase Agreement shall be
deleted and replaced with the following:
“The
Company’s agreement with each of the Investors is a separate
agreement and the sale or exchange of the Notes or Additional Notes
to and with each of the Investors is a separate sale or
transaction.”
e)
All references in
the Note Purchase Agreement to “Note” or
“Notes” shall mean the form of Convertible Subordinated
Promissory Note attached hereto as Exhibit A.
Section
2.
Amendment to Note.
(a) The last sentence
of the first paragraph of the existing Note(s) shall be deleted and
the following shall be inserted in lieu thereof:
“All unpaid
principal, together with any then unpaid and accrued interest and
other amounts payable hereunder, shall be due and payable on the
earlier of (i) November 14, 2022, (ii) a Change of Control or (iii)
when, upon or after the occurrence of an Event of Default (as
defined below), such amounts are declared due and payable by
Investor or made automatically due and payable in accordance with
the terms hereof (such date upon which all amounts payable
hereunder are due is referred to herein as the “Maturity
Date”).”
(b) The Maturity Date
as defined in any Additional Note issued on the date hereof or
hereafter shall be the same as provided in the Note, as hereby
amended.
Section
2.
Ratification. Except as
specifically amended above, each of the Notes and the Note Purchase
Agreement shall continue in full force and effect in accordance
with its terms, and is hereby in all respects ratified and
confirmed.
Section
3.
Counterparts. This Amendment
may be executed in several counterparts and by facsimile or other
electronic transmission, each of which shall be an original and all
of which together shall constitute but one and the
same.
[Remainder of Page Intentionally Left Blank]
2
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered as of the date first above
written.
By:
/s/ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
UNION
BANCAIRE PRIVEE, UBP SA
UBP,
UNION BANCAIRE PRIVEE
By:
/s/ ▇▇▇▇▇▇
▇▇▇▇▇▇▇
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:Associate
By: /s/
▇▇▇▇▇▇
▇▇▇▇▇▇
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
Director
Exhibit A
THE
NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
HEREOF (THE “SECURITIES”) HAVE BEEN ISSUED
AND SOLD IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”),
AND APPROPRIATE EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES
LAWS OF OTHER APPLICABLE JURISDICTIONS. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD OR TRANSFERRED OTHER THAN PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM UNDER
THE 1933 ACT AND THE APPLICABLE SECURITIES LAWS OF ANY OTHER
JURISDICTION. THE ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE OF
THE PROPOSED SALE OR TRANSFER WITH THE REGISTRATION REQUIREMENTS OF
THE 1933 ACT OR EXEMPTION THEREFROM.
CONVERTIBLE SUBORDINATED
PROMISSORY NOTE
$_______________ ___________________,
__ 20___
FOR
VALUE RECEIVED, MobileSmith, Inc., a Delaware corporation (the
“Company”) promises to pay to _____________________
(“Investor”), or its registered assigns, in lawful
money of the United States of America the principal sum of
____________________ ($_____), or such lesser amount as shall equal
the outstanding principal amount hereof, together with interest
from the date of this Note on the unpaid principal balance at a
rate equal to 8.00% per annum, computed on the basis of the actual
number of days elapsed and a year of 360 days. All unpaid
principal, together with any then unpaid and accrued interest and
other amounts payable hereunder, shall be due and payable on the
earlier of (i) November 14, 2022, (ii) a Change of Control or (iii)
when, upon or after the occurrence of an Event of Default (as
defined below), such amounts are declared due and payable by
Investor or made automatically due and payable in accordance with
the terms hereof (such date upon which all amounts payable
hereunder are due is referred to herein as the “Maturity
Date”).
This
Note is one of a series of “Notes” issued pursuant to
the Convertible Subordinated Note Purchase Agreement, dated
December 11, 2014 (as amended, modified or supplemented, the
“Note Purchase Agreement”), between the Company and the
Investors (as defined in the Note Purchase Agreement). Capitalized
terms used herein and not otherwise defined shall have the meanings
assigned thereto in the Note Purchase Agreement. This Note and the
Investor are subject to certain restrictions, and are entitled to
certain rights and privileges, set forth in the Note Purchase
Agreement. This Note is expressly subject to Section
8, Subordination, of
the Note Purchase Agreement.
The
following is a statement of the rights of Investor and the
conditions to which this Note is subject, and to which Investor, by
the acceptance of this Note, agrees:
4
1.
Definitions. As used in this Note, the following capitalized terms
have the following meanings:
(a)
“Business Day” means any day other than a Saturday or
Sunday or other day on which the New York Stock Exchange is
permitted or required by law to close.
(b) the
“Company” includes the corporation initially executing
this Note and any Person which shall succeed to or assume the
obligations of the Company under this Note.
(c) “Conversion
Price” means One Dollar and Forty Three Cents
($1.43).
(d)
“Change of Control” means (i) any consolidation or
merger or other transaction or series of transactions to which the
Company is a party following which the “persons” that
“beneficially owned” (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly, the voting securities of the Company immediately prior
to such transaction “beneficially own”,
directly or indirectly, less than fifty percent (50%) of the voting
securities of the surviving entity (other than a financing
transaction) or (ii) the sale of all or substantially all of the
assets of the Company.
(e)
“Event of Default” has the meaning given in Section 4
hereof.
(f)
“Note Purchase Agreement” has the meaning given in the
introductory paragraph hereof.
(g)
“Obligations” means and includes all loans, advances,
debts, liabilities and obligations, howsoever arising, owed by the
Company to Investor of every kind and description (whether or not
evidenced by any note or instrument and whether or not for the
payment of money), now existing or hereafter arising under or
pursuant to the terms of this Note, the Note Purchase Agreement and
the Security Agreement, including, all interest, fees, charges,
expenses, attorneys’ fees and costs and accountants’
fees and costs chargeable to and payable by the Company hereunder
and thereunder, in each case, whether direct or indirect, absolute
or contingent, due or to become due, and whether or not arising
after the commencement of a proceeding under Title 11 of the United
States Code (11 U. S. C. Section 101 et seq.), as amended from time
to time (including post-petition interest) and whether or not
allowed or allowable as a claim in any such
proceeding.
5
(h)
“Person” means and includes an individual, a
partnership, a corporation (including a business trust), a joint
stock company, a limited liability company, an unincorporated
association, a joint venture or other entity or a governmental
authority.
(i)
“Requisite Percentage” means at least two-thirds of the
aggregate outstanding principal amount of the Notes issued pursuant
to the Note Purchase Agreement
(j)
“Transaction Documents” means this Note, each of the
other Notes issued under the Note Purchase Agreement, and the Note
Purchase Agreement.
2.
Interest. Accrued interest on this
Note shall be payable in semi-annual installments twice a year in
January and July, with the final installment payable on the
Maturity Date.
3.
Prepayment. This Note may not be prepaid without the consent of the
holders of a Requisite Percentage.
4.
Events of Default. The occurrence of any of the following shall
constitute an “Event of Default” under this Note and
the other Transaction Documents:
(a)
Failure to Pay. The Company shall fail to pay (i) when due any
principal, or interest payment or other sum on the due date
hereunder or (ii) any other payment required under the terms of
this Note or any other Transaction Document on the date due and
such failure continues for a period of five (5) business days after
the due date;
(b)
Non-Performance of Affirmative Covenants. The Company shall default
in the due observance or performance of any material covenant set
forth in the Note, the Note Purchase Agreement or the Security
Agreement, which default shall continue uncured for fifteen (15)
days after receipt of written notice to the Company
thereof;
6
(c)
Voluntary Bankruptcy or Insolvency Proceedings. The Company shall
(i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial part
of its property, (ii) be unable, or admit in writing its inability,
to pay its debts generally as they mature, (iii) make a general
assignment for the benefit of its or any of its creditors, (iv) be
dissolved or liquidated, (v) become insolvent (as such term may be
defined or interpreted under any applicable statute), (vi) commence
a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or
hereafter in effect or consent to any such relief or to the
appointment of or taking possession of its property by any official
in an involuntary case or other proceeding commenced against it, or
(vii) take any action for the purpose of effecting any of the
foregoing;
(d)
Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for
the appointment of a receiver, trustee, liquidator or custodian of
the Company or of all or a substantial part of the property
thereof, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to the
Company or the debts thereof under any bankruptcy, insolvency or
other similar law now or hereafter in effect shall be commenced and
an order for relief entered or such proceeding shall not be
dismissed or discharged within sixty (60) days of
commencement;
(e)
Judgments. One or more judgments, decrees or orders (excluding
settlement orders) for the payment of money shall be entered
against the Company or any of its subsidiaries involving in the
aggregate a liability of $1,000,000 or more, and any such judgment,
decree or order shall continue without discharge or stay for a
period of sixty (60) days; or
(f)
Cross-Defaults. The Company or any of its subsidiaries shall
default in the performance or observance of any agreement or
instrument relating to any indebtedness, or any other event shall
occur or condition exist, and the effect of such default, event or
condition is to cause or permit the holder or holders of any such
indebtedness to cause indebtedness, in excess of $500,000
individually or in the aggregate, to become due prior to its stated
maturity.
5.
Rights of Investor upon Default. Upon the occurrence or existence
of any Event of Default (other than an Event of Default described
in Sections 4(c) or 4(d)) and at any time thereafter during the
continuance of such Event of Default, a default interest rate of
fifteen percent (15%) will accrue on any overdue
Obligations. The holders of a Requisite Percentage
may, by written notice to the Company, declare all outstanding
Obligations payable by the Company hereunder to be immediately due
and payable without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived. Upon
the occurrence or existenceof any Event of Default described in
Sections 4(c) and 4(d), immediately and without notice, all
outstanding Obligations payable by the Company hereunder shall
automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived. In addition to the foregoing
remedies, upon the occurrence or existence of any Event of Default
and subject to the consent of the Agent, Investor may exercise any
other right power or remedy granted to it by the Transaction
Documents or otherwise permitted to it by law, either by suit in
equity or by action at law, or both.
6.
Conversion.
(a)
Optional Conversion. At any time on or prior to the Maturity Date
each Investor will have the option to convert all or a portion of
the entire principal amount of the Notes outstanding into Common
Stock immediately upon the Investor’s request; provided,
however, that if, at the time of any particular conversion, the
Company does not have the number of authorized shares of Common
Stock sufficient to allow for such conversion, the Investors may
only convert that portion of their Notes outstanding for which the
Company has a sufficient number of authorized shares of Common
Stock. To the extent multiple Investors, under the Note Purchase
Agreement, the 2007 Note Purchase Agreement (as defined in the Note
Purchase Agreement), or both, request conversion of their Notes on
the same date, any limitations on conversion shall be applied on a
pro rata basis. In such case, the Investors may request, in
writing, that the Company call a special meeting of the
stockholders of the Company specifically for the purpose of
increasing the number of authorized shares of Common Stock to cover
the remaining portion of the Notes outstanding, as well as the
maximum issuances contemplated pursuant to the Company’s 2004
Equity Compensation Plan, within 90 calendar days after the
Company’s receipt of the Investors’ written request.
Notwithstanding the above, the Company shall use its best efforts
to increase its number of authorized shares so as to allow for the
full conversion of any outstanding Notes on the earlier of: (1)
promptly after the date on which a request for conversion, for
which there are not sufficient shares available to effect such
conversion, is received by the Company, or (2) the time of the next
shareholder meeting. The number of shares of Common Stock that this
Note may be converted into shall be determined by dividing the
principal amount then outstanding by the Conversion Price at the
time of conversion. If the Investor elects to convert this Note on
demand, it shall provide the Company with written notice of its
election at least one (1) day prior to the date selected for
conversion, by submission of the notice of conversion attached as
Exhibit A hereto. Upon conversion, the Investor shall deliver to
the Company the original of this Note (or a notice to the effect
that the original Note has been lost, stolen or destroyed and an
agreement reasonably acceptableto the Company whereby the holder
agrees to indemnify the Company from any loss incurred by it in
connection with this Note). However, upon such conversion of this
Note, this Note shall be deemed converted and of no further force
and effect, whether or not the Note is delivered for cancellation
as set forth in the preceding sentence. If there shall occur a
Change of Control, the Company shall give written notice to the
Investor at least five (5) days prior to any closing thereof and
the Investor’s election to convert this Note shall be
conditional upon the consummation thereof.
7
(b)
Mechanics of Optional Conversion. As soon as practicable following
surrender by the Investor of the original of this Note, the Company
shall issue and deliver to Investor a certificate or certificates
for the shares of Common Stock into which the Note has been
converted (bearing such legends as may be required or advisable in
the opinion of counsel to the Company). Such conversion shall be
deemed to have been made immediately prior to the close of business
on the date selected for the conversion and the Investor shall be
treated for all purposes as the record holder or holders of such
Common Stock on such date.
(c)
Fractional Shares; Interest; Effect of Conversion. No fractional
shares shall be issued upon conversion of this Note. In lieu of the
Company issuing any fractional shares to Investor upon the
conversion of this Note, the Company shall pay to Investor an
amount equal to the product obtained by multiplying theConversion
Price by the fraction of a share not issued pursuant to the
previous sentence. Upon conversion of this Note in full and the
payment of any amounts specified in this Section 6(c), the Company
shall be released from all its obligations and liabilities under
this Note.
7.
Successors and Assigns. Subject to the restrictions on transfer
described in Sections 9 and 10 below, the rights and obligations of
the Company and Investor shall be binding upon and benefit the
successors, assigns, heirs, administrators and transferees of the
parties.
8.
Waiver and Amendment. Any provision of this Note may be amended,
waived or modified upon the written consent of the Company and the
holders of a Requisite Percentage.
9.
Transfer of this Note or Securities Issuable on Conversion Hereof.
With respect to any offer, sale or other disposition of this Note
or securities into which such Note may be converted, Investor will
give written notice to the Company prior thereto, describing
briefly the manner thereof, together with (unless waived by the
Company) a written opinion of Investor’s counsel, or other
evidence if reasonably satisfactory to the Company, to the effect
that such offer, sale or other distribution may be effected without
registration or qualification (under any federal or state law then
in effect). Upon receiving such written notice and reasonably
satisfactory opinion, if so requested, or other evidence, the
Company, as promptly as practicable, shall notify Investor that
Investor may sell or otherwise dispose of this Note or such
securities, all in accordance with the terms of the notice
delivered to the Company. If a determination has been made pursuant
to this Section 9 that the opinion of counsel for Investor, or
other evidence, is not reasonably satisfactory to the Company, the
Company shall so notify Investor promptly after such determination
has been made. Each Note thus transferred and each certificate
representing the securities thus transferred shall bear a legend as
to the applicable restrictions on transferability in order to
ensure compliance with the Securities Act, unless in the opinion of
counsel for the Company such legend is not required in order to
ensure compliance with the Securities Act. The Company may issue
stop transfer instructions to its transfer agent in connection with
such restrictions. Subject to the foregoing, transfers of this Note
shall be registered upon registration books maintained for such
purpose by or on behalf of the Company. Prior to presentation of
this Note for registration of transfer, the Company shall treat the
registered holder hereof as the owner and holder of this Note for
the purpose of receiving all payments of principal and interest
hereon and for all other purposes whatsoever, whether or not this
Note shall be overdue and the Company shall not be affected by
notice to the contrary. Notwithstanding anything in this Section 9
to the contrary, no opinion of counsel shall be required with
respect to any transfer by an Investor to its officers, directors,
partners, members or other affiliates.
10.
Assignment by the Company. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of
law or otherwise, in whole or in part, by the Company without the
prior written consent of the holders of a Requisite
Percentage.
8
11.
Notices. All notices, requests, demands, consents, instructions or
other communications required or permitted hereunder shall be in
writing and faxed, mailed or delivered to each party at the
respective addresses of the parties as set forth in the Note
Purchase Agreement, or at such other address or facsimile number as
the Company shall have furnished to Investor in writing. All such
notices and communications will be deemed effectively given the
earlier of (i) when received, (ii) when delivered personally, (iii)
one business day after being delivered by facsimile (with receipt
of appropriate confirmation), (iv) one business day after being
deposited with an overnight courier service of recognized standing
or (v) two days after being deposited in the U.S. mail, first class
with postage prepaid.
12.
Pari Passu Notes. Investor acknowledges and agrees that the payment
of all or any portion of the outstanding principal amount of this
Note and all interest hereon shall be pari passu in right of
payment and in all other respects to the other Notes issued
pursuant to the Note Purchase Agreement or pursuant to the terms of
such Notes.
13.
Usury. In the event any interest is paid on this Note which is
deemed to be in excess of the then legal maximum rate, then that
portion of the interest payment representing an amount in excess of
the then legal maximum rate shall be deemed a payment of principal
and applied against the principal of this Note.
14.
Remedies Cumulative. The remedies of Investor as provided herein
and in the Note Purchase Agreement and in any other documents
governing or securing repayment hereof shall be cumulative and
concurrent and may be pursued successively, or together, at the
sole discretion of Investor to the extent provided herein and in
the Note Purchase Agreement and may be exercised as often as
occasion therefore shall arise. No act or omission of the Investor,
including specifically, but without limitation, any failure to
exercise any right, remedy or recourse, shall be effective as a
waiver of any right of the Investor hereunder, unless set forth in
a written document executed by the Investor, and then only to the
extent specifically recited therein. A waiver or release with
reference to one event shall not be construed as continuing, as a
bar to, or as a waiver or release of any subsequent right, remedy
or recourse as to any subsequent event. All notices, waivers,
releases and/or consents by an Investor shall be directed to the
Company only through the Agent.
15. No
Rights of a Stockholder. Nothing contained in this Note shall be
construed as conferring upon the Investor or any other Person the
right to vote or consent or to receive notice as an stockholder in
respect of meetings of stockholders for the election of directors
of the Company or any other matters or any rights whatsoever as a
stockholder of the Company prior to the time that this Note is
converted pursuant to Section 6.
16.
Governing Law. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard
to the conflicts of law provisions of the State of Delaware, or of
any other state.
(Signature
Page Follows)
The
Company has caused this Note to be issued as of the date first
written above.
a
Delaware
corporation
By:
Name:
▇▇▇▇
▇▇▇▇▇▇▇▇▇
Title:
Chief Financial
Officer