UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 19, 2022 (July 14, 2022)
Singlepoint Inc. |
(Exact name of registrant as specified in its charter) |
Nevada |
| 000-53425 |
| 26-1240905 | ||
(State or other jurisdiction of Incorporation) |
| (Commission File Number) |
| (IRS Employer Identification No.) | ||
2999 North 44th Street, Suite 530 Phoenix, AZ |
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85018 | ||||
(Address of principal executive offices) |
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Registrant's telephone number, including area code: (888)-682-7464
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8 K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a 12 under the Exchange Act (17 CFR 240.14a 12) |
☐ | Pre commencement communications pursuant to Rule 14d 2(b) under the Exchange Act (17 CFR 240.14d 2(b)) |
☐ | Pre commencement communications pursuant to Rule 13e 4(c) under the Exchange Act (17 CFR 240.13e 4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On July 12, 2022 the Board of Directors of Singlepoint Inc. (the “Company”) awarded a bonus to its each of its Chief Executive Officer and President 10 million shares of Class A Preferred Stock (the “Preferred Stock”). On July 15, 2022 the Company entered into an agreement with its CEO and President whereby the CEO and President agreed to certain restrictive covenants relating to these shares of Preferred Stock including but not limited to: agreeing to a three year restriction on the ability to sell the Preferred Stock, and a reduction of the conversion ratio under certain circumstances.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On July 14, 2022 the Company filed with the State of Nevada an Amended Certificate of Designation for its Class A Preferred Stock of the Company which provided for an increase of the number of authorized shares of Class A Preferred Stock to 80 million.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following documents are filed as Exhibits:
Exhibit No. |
| Description |
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| Amended Certificate of Designation for the Class A Convertible Preferred Stock. | |
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| Agreement between Singlepoint Inc. and William Ralston dated July 15, 2022. | |
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| Agreement between Singlepoint Inc. and Corey Lambrecht dated July 15, 2022. | |
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| Cover Page Interactive Data File (embedded within the Inline XBRL Document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SinglePoint Inc. |
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Dated: July 19, 2022 | By: | /s/ William Ralston |
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| William Ralston, Chief Executive Officer |
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EXHIBIT 3.1
AMENDED
CERTIFICATE OF DESIGNATION
OF
CLASS A CONVERTIBLE PREFERRED STOCK
OF
SINGLEPOINT INC.
Section 1. Designation and Number of Shares. There is hereby designated out of the authorized and unissued shares of preferred stock of the Company a series of preferred stock designated as the “Class A Convertible Preferred Stock” (the “Class A Convertible Preferred Stock”). The authorized number of shares of Class A Convertible Preferred Stock shall be Eighty Million (80,000,000), which authorized number shall not be affected by any subdivision or combination of the Common Stock. Each share of Class A Convertible Preferred Stock shall be identical in all respects to every other share of Class A Convertible Preferred Stock. The Class A Convertible Preferred Stock shall be senior to Junior Stock with respect to the payment of dividends and the distribution of assets in the event of any dissolution, liquidation or winding up of the Company.
Section 2. Definitions. All capitalized terms not defined in this Section 2 shall have the meanings set forth elsewhere in this Certificate of Designation. As used herein with respect to Class A Convertible Preferred Stock:
(a) “Certificate of Designation” means this Certificate of Designation or comparable instrument relating to the Class A Convertible Preferred Stock, as it may be amended from time to time.
(b) “Class A Original Issue Date” shall mean the date on which such share of Class A Convertible Preferred Stock was issued.
(c) “Common Stock” means the common stock, par value $0.0001 per share, of the Company.
(d) “Junior Stock” means the Common Stock and any other class or series of stock of the Company the terms of which expressly provide that it ranks junior to Class A Convertible Preferred Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Company. The term “Junior Stock” shall exclude the Class A Convertible Preferred Stock.
(d) “Parity Stock” means any class or series of stock of the Company (other than Class A Convertible Preferred Stock) the terms of which do not expressly provide that such class or series will rank senior or junior to Class A Convertible Preferred Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Company (in each case without regard to whether dividends accrue cumulatively or non-cumulatively).
(e) “Preferred Stock” means any and all series of preferred stock of the Company, including the Class A Convertible Preferred Stock.
Section 3. Dividends. The holders of the Class A Convertible Preferred Stock shall be entitled to receive Common Stock dividends when, as, if and in the amount declared by the directors of the Company to be paid in cash or in the then current market value of the Company’s common stock.
Without prior written consent of the majority of the Class A Convertible Preferred Stock, so long as any shares of Class A Convertible Preferred Stock shall be outstanding, the Company shall not declare or pay on any Junior Stock any dividend whatsoever, whether in cash, property or otherwise, nor shall the Company make any distribution on any Junior Stock, nor shall any Junior Stock be purchased or redeemed by the Company or any of its subsidiaries of which it owns not less than 51% of the outstanding voting stock, nor shall any monies be paid or made available for a sinking fund for the purchase or redemption of any Junior Stock, unless all dividends to which the holders of Class A Convertible Preferred Stock shall have been entitled for all previous dividend periods, if any, shall have been paid or declared.
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Section 4. Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales.
4.1 Payments to Holders of Class A Convertible Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Class A Convertible Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment shall be made to the holders of Common Stock and Junior Stock by reason of their ownership thereof, an amount per share equal to any dividends declared but unpaid thereon.
4.2 Payments to Holders of Common Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, after the payment of all preferential amounts required to be paid to the holders of shares of the Class A Convertible Preferred Stock, the remaining assets of the Company available for distribution to its stockholders shall be distributed among the holders of shares of Junior Stock and Common Stock, pro rata based on the number of shares held by each such holder.
Section 5. Voting.
5.1 General. On any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Class A Convertible Preferred Stock shall be entitled to cast the number of votes equal to the number of Class A Convertible Preferred Stock held by such holder as of the record date for determining stockholders entitled to vote on such matter multiplied by fifty (50). Except as provided by law or by the other provisions of the Articles of Incorporation, holders of Class A Convertible Preferred Stock shall vote together with the holders of Common Stock as a single class.
5.2 Class A Convertible Preferred Stock Protective Provisions. At any time when shares of Class A Convertible Preferred Stock are outstanding, the Company shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Articles of Incorporation) the written consent or affirmative vote of the holders of at least majority of the then outstanding shares of Class A Convertible Preferred Stock or all the holders of the Class A Convertible Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class:
5.2.1. amend, alter or repeal any provision of the Articles of Incorporation or Bylaws of the Company in a manner that adversely affects the powers, preferences or rights of the Class A Convertible Preferred Stock;
5.2.2. purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of capital stock of the Company other than (i) redemptions of or dividends or distributions on the Class A Convertible Preferred Stock as expressly authorized herein, (ii) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock and (iii) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Company or any subsidiary in connection with the cessation of such employment or service at the lower of the original purchase price or the then-current fair market value;
Section 6. Conversion.
The Class A Convertible Preferred Stock shall have the following conversion rights (the “Conversion Rights”):
A. Holder's Optional Right to Convert. Each share of Class A Convertible Preferred Stock shall be convertible, at the option of the holder(s), on the Conversion Basis (as set forth below) in effect at the time of conversion. Such right to convert shall commence as of the Class A Convertible Preferred Stock Original Issue Date. In the event that the holder(s) of the Class A Convertible Preferred Stock elect to convert such shares into Common Stock, the holder(s) shall have sixty (60) days from the date of such notice in which to tender their shares of Class A Convertible Preferred Stock to the Company.
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B. Conversion Basis. Each share of Class A Convertible Preferred Stock shall be convertible into twenty five (25) shares of the Company’s Common Stock.
C. Mechanics of Conversion. Before any holder of Class A Convertible Preferred Stock shall be entitled to convert the same into shares of Common Stock, such holder shall (i) give written notice to the Company, at the office of the Company or of its transfer agent for the Common Stock or the Preferred Stock, that he/she elects to convert the same and shall state therein the number of shares of Class A Convertible Preferred Stock being converted; and (ii) surrender the certificate or certificates therefor, duly endorsed. Thereupon the Company shall promptly issue and deliver to such holder of Class A Convertible Preferred Stock a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled. The conversion shall be deemed to have been made and the resulting shares of Common Stock shall be deemed to have been issued immediately prior to the close of business on the date of such notice and surrender of the shares of Class A Convertible Preferred Stock.
D. Adjustments to the Conversion Basis.
(i) Stock Splits and Combinations. The Conversion Basis of the Class A Convertible Preferred Stock shall not be adjusted pursuant to any subdivision or combination of the Common Stock.
(ii) Reclassification, Exchange or Substitution. At any time after the Company first issues the Class A Convertible Preferred Stock and while any of the shares of Class A Convertible Preferred Stock remain outstanding, if the Common Stock issuable upon the conversion of the Class A Convertible Preferred Stock shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets), then and in each such event the holder of each share of Class A Convertible Preferred Stock shall have the right thereafter to convert such shares into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such shares of Class A Convertible Preferred Stock might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustments as provided herein.
(iii) Reorganization, Mergers, Consolidations or Sales of Assets. At any time after the Company first issues the Class A Convertible Preferred Stock and while any of such shares remain outstanding, if there shall be a capital reorganization of the Common Stock (other than a subdivision, combination, reclassification, or exchange of shares), or a merger or consolidation of the Company with or into another Company, or the sale of all or substantially all of the Company's assets to any other person, then as a part of such reorganization, merger, consolidation, or sale, provision shall be made so that the holders of the Class A Convertible Preferred Stock thereafter shall be entitled to receive upon conversion of the Class A Convertible Preferred Stock, the number of shares of stock or other securities or property of the Company, or of the successor Company resulting from such merger or consolidation or sale, to which a holder of Class A Convertible Preferred Stock deliverable upon conversion would have been entitled on such capital reorganization, merger, consolidation, or sale.
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E. Notices of Record Date. In the event of any reclassification or recapitalization of the capital stock of the Company, any merger or consolidation of the Company, or any transfer of all or substantially all of the assets of the Company to any other Company, entity, or person, or any voluntary or
involuntary dissolution, liquidating, or winding up of the Company, the Company shall mail to each holder of Class A Convertible Preferred Stock at least 30 days prior to the record date specified therein, a notice specifying the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation, or winding up is expected to become effective, and the time, if any is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation, or winding up.
F. Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Class A Convertible Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Company shall pay cash equal to the product of such fraction multiplied by the fair market value of one share of the Company's Common Stock on the date of conversion, as determined in good faith by the Company’s directors.
G. Reservation of Stock Issuable Upon Conversion. The Company shall reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Class A Convertible Preferred Stock, a number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Class A Convertible Preferred Stock.
Section 7. Waiver. Any of the rights, powers, preferences and other terms of the Class A Convertible Preferred Stock set forth herein may be waived on behalf of all holders of Class A Convertible Preferred Stock by the affirmative written consent or vote of the holders of at least a majority of the shares of Class A Convertible Preferred Stock then outstanding.
Section 8. Notices. Any notice required or permitted by the provisions of this Certificate of Designation to be given to a holder of shares of Class A Convertible Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Company, or given by electronic communication, and shall be deemed sent upon such mailing or electronic transmission.
Section 9. Other Rights. The shares of Class A Convertible Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Articles of Incorporation or as provided by applicable law.
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IN WITNESS WHEREOF, Singlepoint Inc. has caused this Amended Certificate of Designation of Class A Convertible Preferred Stock to be signed by its Chief Executive Officer, this 14th day of July, 2022.
| Singlepoint Inc. | |||
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| By: | /s/ Wil Ralston |
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| Name: | Wil Ralston | |
| Title: | Chief Executive Officer | ||
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EXHIBIT 10.1
AGREEMENT
This Agreement is dated as of the 15th day of July, 2022, by and between Singlepoint Inc. (the “Company”), located at 2999 North 44th Street Suite 530 Phoenix AZ 85018, and Corey Lambrecht (“Lambrecht”).
WHEREAS, Lambrecht is currently serving as the President and a member of the Board of Directors of the Company;
WHEREAS, the Company recently granted Lambrecht 10 million shares of Class A Preferred Stock of the Company (the “Preferred Stock,” such shares of Preferred Stock shall not include any other shares of preferred stock of the Company owned by Lambrecht) as a performance bonus award for meeting milestones and for his services to the Company. The Preferred Stock are subject to certain restrictions on voting rights, conversion and restriction on resale for three years as more specifically set forth herein. The issuance of the Preferred Stock was based in part on the acquisition of BOX Pure Air, LLC, The Boston Solar Company, LLC (“Boston Solar”) and EcoDaptive, LLC, and the related revenue growth associated with these acquisitions; engaging an investment banking firm for services including an uplisting of the Company’s common stock to the Nasdaq Stock Market, and completion of a capital raise facilitating the purchase of Boston Solar; and
WHEREAS, as a condition of the issuance of the Preferred Stock Lambrecht has agreed to certain restrictions relating to his ownership of the Preferred Stock.
NOW THEREFORE, Company, and Lambrecht, his heirs, executors, administrators, successors, and assigns, enter into this Agreement and agree that:
1. Preferred Stock. Lambrecht represents that he is the sole legal, beneficial and registered owner of the Preferred Stock, free and clear of any liens, security interests, charges or other encumbrances of any nature whatsoever.
2. Voting Agreement. To the extent any vote or consent of the Board of Directors of the Company is taken during the three years following the date of this Agreement, and such action is put to a vote of the shareholders of the Company, then Lambrecht shall vote all shares of Preferred Stock of the Company then owned by Lambrecht for such action(s). To secure Lambrecht’s obligations to vote the Preferred Stock in accordance with this Agreement, Lambrecht hereby appoints the President of the Company, or his designees, as Lambrecht’s true and lawful proxy and attorney, with the power to act alone and with full power of substitution, to vote all of Preferred Stock as set forth in this Agreement and to execute all appropriate instruments consistent with this Agreement on behalf of Lambrecht if, and only if, Lambrecht fails to vote all of Preferred Stock or execute such other instruments in accordance with the provisions of this Agreement within five (5) days of the Company’s or any other party’s written request for Lambrecht’s written consent or signature. The proxy and power granted by Lambrecht pursuant to this Section are coupled with an interest and are given to secure the performance of such party’s duties under this Agreement. Each such proxy and power will be irrevocable for the term hereof. The proxy and power, will survive the death, incompetency and disability of Lambrecht or any other individual holder of the Preferred Stock.
3. Conversion Limitations. Notwithstanding the terms of the Certificate of Designation for the Preferred Stock Lambrecht agrees to the following:
(i) The Company shall not affect any conversion of the Preferred Stock, and Lambrecht shall not have the right to convert any portion of the Preferred Stock, to the extent that after giving effect to the conversion, Lambrecht would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). Beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. 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 conversion of the Preferred Stock. The limitations contained in this paragraph shall apply to a successor holder of the Preferred Stock.
(ii) Lambrecht also agrees to the following reduction in the conversion ratio (as set forth in the Certificate of Designation) of the Preferred Stock in the event Lambrecht were to terminate his employment with the Company for no reason (i.e. not due to “Good Cause” as defined in the Employment Agreement between Lambrecht and the Company):
Month (following the Date of this Agreement) Reduction (%) # Shares Class A Conversion to Common (Ratio) Reduction to Conversion Ratio Effective Conversion Common Stock due if Converted 0 to 3 99% 10,000,000.00 25 99% 0.25 2,500,000 4 to 6 98% 10,000,000.00 25 98% 0.5 5,000,000 7 to 12 97% 10,000,000.00 25 97% 0.75 7,500,000 13 to 18 96% 10,000,000.00 25 96% 1 10,000,000 19 to 24 95% 10,000,000.00 25 95% 1.25 12,500,000 25 to 30 94% 10,000,000.00 25 94% 1.5 15,000,000 31 to 36 93% 10,000,000.00 25 93% 1.75 17,500,000 37 0% 10,000,000.00 25 0% 25 250,000,000
4. Transfer Limitation Lambrecht agrees that for a period of three years following the date of this Agreement, Lambrecht will not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) of the Preferred Stock by Lambrecht, directly or indirectly.
5. Representations. Lambrecht: (i) has had the opportunity to consult with counsel as to the terms of this Agreement, (ii) Lambrecht understands and has taken cognizance of all risks involved in entering into this Agreement, and (iii) at the time of this Agreement, Lambrecht is sophisticated and or has experience in agreements such as this. Lambrecht understands and agrees there is a risk involved in agreeing to the restrictions contained herein that will prevent any liquidation of the Preferred Stock. Lambrecht agrees to hold harmless the Company from any liability Lambrecht may sustain due to the non-liquidation of the Preferred Stock. In order to enforce this Agreement Lambrecht acknowledges and agrees that the shares of Preferred Stock shall contain a legend referencing this Agreement and the Company shall impose irrevocable stop-transfer instructions preventing the transfer agent of the Company from effecting any actions in violation of this Agreement.
6. Severability. If any term or provision of this Agreement or any portion thereof is declared illegal or unenforceable by any court of competent jurisdiction, such provision or portion thereof shall be deemed modified so as to render it enforceable, and to the extent such provision or portion thereof cannot be rendered enforceable, excluding the general release language, this Agreement shall be considered divisible as to such provision which shall become null and void, leaving the remainder of this Agreement in full force and effect.
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7. Governing Law and Choice of Forum. This Agreement shall be governed and construed in accordance with the laws of the state of Arizona without regard to its conflict of laws provision. In the event Lambrecht or the Company breaches any provision of this Agreement, Lambrecht and the Company affirm that Lambrecht or the Company may institute an action to specifically enforce any term or terms of this Agreement. The parties being desirous of having any disputes resolved in a forum having a substantial body of law and experience with the matters contained herein, the parties agree that any action or proceeding with respect to this Agreement shall be brought exclusively in the Supreme Court of the State of Arizona, or in the United States District Court for the Phoenix District of Arizona and the parties agree to the exclusive jurisdiction thereof. The parties hereby irrevocably waive any objection they may now or hereafter have to the laying of venue of any such action in the said court(s), and further irrevocably waive any claim they may now or hereafter have that any such action brought in said court(s) has been brought in an inconvenient forum.
8. Amendment. This Agreement may not be modified, altered or changed except upon express written consent of both parties wherein specific reference is made to this Agreement.
9. Entire Agreement. This Agreement sets forth the entire agreement between the parties hereto, and fully supersedes any prior agreements or understandings between the parties. Lambrecht acknowledges that he has not relied on any representations, promises, or agreements of any kind made to him in connection with his decision to accept this Agreement, except for those set forth in this Agreement.
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IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this Agreement as of the date set forth below:
LAMBRECHT COMPANY Singlepoint Inc. By: Corey Lambrecht William Ralston, CEO
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EXHIBIT 10.2
AGREEMENT
This Agreement is dated as of the 15th day of July, 2022, by and between Singlepoint Inc. (the “Company”), located at 2999 North 44th Street Suite 530 Phoenix AZ 85018, and William Ralston (“Ralston”).
WHEREAS, Ralston is currently serving as the Chief Executive Officer and a member of the Board of Directors of the Company;
WHEREAS, the Company recently granted Ralston 10 million shares of Class A Preferred Stock of the Company (the “Preferred Stock,” such shares of Preferred Stock shall not include any other shares of preferred stock of the Company owned by Ralston) as a performance bonus award for meeting milestones and for his services to the Company. The Preferred Stock are subject to certain restrictions on voting rights, conversion and restriction on resale for three years as more specifically set forth herein. The issuance of the Preferred Stock was based in part on the acquisition of BOX Pure Air, LLC, The Boston Solar Company, LLC (“Boston Solar”) and EcoDaptive, LLC, and the related revenue growth associated with these acquisitions; engaging an investment banking firm for services including an uplisting of the Company’s common stock to the Nasdaq Stock Market, and completion of a capital raise facilitating the purchase of Boston Solar; and
WHEREAS, as a condition of the issuance of the Preferred Stock Ralston has agreed to certain restrictions relating to his ownership of the Preferred Stock.
NOW THEREFORE, Company, and Ralston, his heirs, executors, administrators, successors, and assigns, enter into this Agreement and agree that:
1. Preferred Stock. Ralston represents that he is the sole legal, beneficial and registered owner of the Preferred Stock, free and clear of any liens, security interests, charges or other encumbrances of any nature whatsoever.
2. Voting Agreement. To the extent any vote or consent of the Board of Directors of the Company is taken during the three years following the date of this Agreement, and such action is put to a vote of the shareholders of the Company, then Ralston shall vote all shares of Preferred Stock of the Company then owned by Ralston for such action(s). To secure Ralston’s obligations to vote the Preferred Stock in accordance with this Agreement, Ralston hereby appoints the President of the Company, or his designees, as Ralston’s true and lawful proxy and attorney, with the power to act alone and with full power of substitution, to vote all of Preferred Stock as set forth in this Agreement and to execute all appropriate instruments consistent with this Agreement on behalf of Ralston if, and only if, Ralston fails to vote all of Preferred Stock or execute such other instruments in accordance with the provisions of this Agreement within five (5) days of the Company’s or any other party’s written request for Ralston’s written consent or signature. The proxy and power granted by Ralston pursuant to this Section are coupled with an interest and are given to secure the performance of such party’s duties under this Agreement. Each such proxy and power will be irrevocable for the term hereof. The proxy and power, will survive the death, incompetency and disability of Ralston or any other individual holder of the Preferred Stock.
3. Conversion Limitations. Notwithstanding the terms of the Certificate of Designation for the Preferred Stock Ralston agrees to the following:
(i) The Company shall not affect any conversion of the Preferred Stock, and Ralston shall not have the right to convert any portion of the Preferred Stock, to the extent that after giving effect to the conversion, Ralston would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). Beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. 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 conversion of the Preferred Stock. The limitations contained in this paragraph shall apply to a successor holder of the Preferred Stock.
(ii) Ralston also agrees to the following reduction in the conversion ratio (as set forth in the Certificate of Designation) of the Preferred Stock in the event Ralston were to terminate his employment with the Company for no reason (i.e. not due to “Good Cause” as defined in the Employment Agreement between Ralston and the Company):
Month (following the Date of this Agreement) Reduction (%) # Shares Class A Conversion to Common (Ratio) Reduction to Conversion Ratio Effective Conversion Common Stock due if Converted 0 to 3 99% 10,000,000.00 25 99% 0.25 2,500,000 4 to 6 98% 10,000,000.00 25 98% 0.5 5,000,000 7 to 12 97% 10,000,000.00 25 97% 0.75 7,500,000 13 to 18 96% 10,000,000.00 25 96% 1 10,000,000 19 to 24 95% 10,000,000.00 25 95% 1.25 12,500,000 25 to 30 94% 10,000,000.00 25 94% 1.5 15,000,000 31 to 36 93% 10,000,000.00 25 93% 1.75 17,500,000 37 0% 10,000,000.00 25 0% 25 250,000,000
4. Transfer Limitation Ralston agrees that for a period of three years following the date of this Agreement, Ralston will not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) of the Preferred Stock by Ralston, directly or indirectly.
5. Representations. Ralston: (i) has had the opportunity to consult with counsel as to the terms of this Agreement, (ii) Ralston understands and has taken cognizance of all risks involved in entering into this Agreement, and (iii) at the time of this Agreement, Ralston is sophisticated and or has experience in agreements such as this. Ralston understands and agrees there is a risk involved in agreeing to the restrictions contained herein that will prevent any liquidation of the Preferred Stock. Ralston agrees to hold harmless the Company from any liability Ralston may sustain due to the non-liquidation of the Preferred Stock. In order to enforce this Agreement Ralston acknowledges and agrees that the shares of Preferred Stock shall contain a legend referencing this Agreement and the Company shall impose irrevocable stop-transfer instructions preventing the transfer agent of the Company from effecting any actions in violation of this Agreement.
6. Severability. If any term or provision of this Agreement or any portion thereof is declared illegal or unenforceable by any court of competent jurisdiction, such provision or portion thereof shall be deemed modified so as to render it enforceable, and to the extent such provision or portion thereof cannot be rendered enforceable, excluding the general release language, this Agreement shall be considered divisible as to such provision which shall become null and void, leaving the remainder of this Agreement in full force and effect.
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7. Governing Law and Choice of Forum. This Agreement shall be governed and construed in accordance with the laws of the state of Arizona without regard to its conflict of laws provision. In the event Ralston or the Company breaches any provision of this Agreement, Ralston and the Company affirm that Ralston or the Company may institute an action to specifically enforce any term or terms of this Agreement. The parties being desirous of having any disputes resolved in a forum having a substantial body of law and experience with the matters contained herein, the parties agree that any action or proceeding with respect to this Agreement shall be brought exclusively in the Supreme Court of the State of Arizona, or in the United States District Court for the Phoenix District of Arizona and the parties agree to the exclusive jurisdiction thereof. The parties hereby irrevocably waive any objection they may now or hereafter have to the laying of venue of any such action in the said court(s), and further irrevocably waive any claim they may now or hereafter have that any such action brought in said court(s) has been brought in an inconvenient forum.
8. Amendment. This Agreement may not be modified, altered or changed except upon express written consent of both parties wherein specific reference is made to this Agreement.
9. Entire Agreement. This Agreement sets forth the entire agreement between the parties hereto, and fully supersedes any prior agreements or understandings between the parties. Ralston acknowledges that he has not relied on any representations, promises, or agreements of any kind made to him in connection with his decision to accept this Agreement, except for those set forth in this Agreement.
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IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this Agreement as of the date set forth below:
RALSTON COMPANY Singlepoint Inc. William Ralston By: Corey Lambrecht, President
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