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
September 8, 2016
Date of
Report (Date of earliest event reported)
Friendable, Inc.
(Exact
name of registrant as specified in its charter)
Nevada
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000-52917
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98-0546715
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(State
or other jurisdiction
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(Commission
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(IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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1821 S Bascom Ave., Suite 353, Campbell, California
95008
(Address
of principal executive offices) (Zip Code)
(855) 473-7473
Registrant’s
telephone number, including area code
Check
the appropriate box below if the Form 8-K is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐
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))
Item 1.01 Entry into a Material Definitive Agreement.
The Coventry Agreement
On
September 8, 2016, Friendable, Inc. (the
“Company”
) entered into a
Securities Purchase Agreement with Coventry Enterprises, LLC
(
“Coventry”
),
(the
“Coventry Securities
Purchase Agreement”
), pursuant to which the Company
sold and issued to Coventry a $80,000 face value 8% Convertible
Redeemable Note (the
“Coventry Note”
) with a
maturity date of September 8, 2017 (the
“Coventry Maturity Date”
).
The transaction closed on September 9, 2016.
Pursuant
to the terms of the Coventry Note, interest accrues daily on the
outstanding principal amount at a rate per annum of 8% on the basis
of a 365-day year. The principal amount of the Coventry Note and
interest is payable on the Coventry Maturity Date. The Coventry
Note is convertible into common stock at any time after the issue
date at 50% of the lowest closing bid price (subject to a $0.004
per share ceiling price) for the common stock during the twenty
(20) consecutive trading days immediately preceding the conversion
date, including the date upon which the Company receives a
conversion notice from Coventry. Coventry does not have the right
to convert the note to the extent that it would beneficially own in
excess of 9.9% of the Company’s outstanding common stock. The
Company does not have the right to prepay the Coventry Note. In the
event of default, the Coventry Note becomes immediately due and
payable and the balance of principal and interest shall bear
default interest at the rate of 24% per annum.
The above description of the Coventry Securities Purchase Agreement
and the Coventry Note is intended as a summary only and is
qualified in its entirety by the terms and conditions set forth
therein, and may not contain all information that is of interest to
the reader. For further information regarding the terms and
conditions of the Coventry Securities Purchase Agreement and the
Coventry Note, this reference is made to such agreements,
which are filed hereto as Exhibit 10.1 and Exhibit 10.2
and incorporated herein by this reference.
The Alpha Capital Anstalt Agreement and Coventry
Agreement
On March 8, 2016, the Company entered into a Securities Purchase
Agreement with two purchasers, Alpha Capital Anstalt
(
“Alpha”
)
and Coventry, (the
“March 2016
SPA”
), pursuant to which
the Company issued a $110,000 7% interest note to Alpha with a
maturity date of September 8, 2017 (the
“Alpha
Note”
). After the
requisite Rule 144 holding period, the Alpha Note is convertible
into common shares of the Company at an initial price of $0.0025
(subject to certain adjustments). On the same date, pursuant to the
March 2016 SPA, the Company also issued a $90,000 note to Coventry
(the
“March 2016 Coventry
Note”
) and a $5,000 note
to Palladium Capital Advisors, LLC (
“Palladium”
),
(the
“Palladium
Note”
), with identical
terms (the Alpha Note, the March 2016 Coventry Note and the
Palladium Note are hereinafter collectively referred to as
the
“Initial Closing
Notes”
).
On September 12, 2016, pursuant to the Eighth Amendment and Closing
Agreement of the March 2016 SPA (the
“Eighth
Amendment and Closing Agreement”
), the Company,
Coventry and Alpha agreed to increase the principal amount of the
Initial Closing Notes from $965,425 to $1,050,500. Pursuant to the
Eighth Amendment and Closing Agreement, the Company issued an
Allonge No. 8 to the Alpha Note, increasing the principal amount of
the Alpha Note by $83,000 over and above any amounts outstanding
immediately prior to the date of Allonge No. 8, such that the
resulting principal amount of the Alpha Note is $930,000. Pursuant
to the Eighth Amendment and Closing Agreement, as payment for
Palladium’s services as placement agent, the Company also
issued an Allonge No. 8 to the Palladium Note, increasing the
principal amount of the Palladium Note by $2,075 over and above any
amounts outstanding prior to the date of Allonge No. 8, such that
the resulting principal amount of the Palladium Note is $25,500. In
connection with the Eighth Amendment and Closing Agreement, the
Company also issued to Alpha Capital warrants to purchase
33,200,000 shares of common stock of the Company with an exercise
price of $0.0030 (the
“Warrant
Agreement”
).
The above description of the Eighth Amendment and Closing Agreement
and the Warrant Agreement is intended as a summary only and is
qualified in its entirety by the terms and conditions set forth
therein, and may not contain all information that is of interest to
the reader. For further information regarding the terms and
conditions of the Eighth Amendment and Closing Agreement and the
Warrant Agreement, this reference is made to such agreements, which
are filed hereto as Exhibit 10.3 and Exhibit 10.4
and incorporated herein by this reference.
Item 3.02 Unregistered Sales of Equity Securities.
Reference
is made to the disclosure set forth under Item 1.01 of this Report,
which disclosure is incorporated herein by reference.
The
foregoing securities under Securities Purchase Agreement were
offered and sold without registration under the Securities Act of
1933 (the “Securities Act”) in reliance on the
exemptions provided by Section 4(a)(2) of the Securities Act and/or
Regulation D promulgated thereunder and in reliance on similar
exemptions under applicable state laws.
Item 9.01 Financial Statement and Exhibit
Exhibit
Number
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Description
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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.
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FRIENDABLE, INC.
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Date:
September 15, 2016
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By:
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/s/
Robert
Rositano
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Robert
Rositano
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CEO
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SECURITIES PURCHASE AGREEMENT
This
SECURITIES PURCHASE
AGREEMENT
(the
“Agreement”), dated as of September 8, 2016, by and
between
Friendable,
Inc
, a Nevada corporation, with
headquarters located at 125 E. Campbell Ave, Campbell CA 95008 (the
“Company”), and
Coventry Enterprises,
LLC.
, a Limited Liability
Company, with its address at
80 S.W. 8
th
Street, Suite 2000,
Miami, FL 33130
(the
“Buyer”).
WHEREAS
:
A.
The
Company and the Buyer are executing and delivering this Agreement
in reliance upon the exemption from securities registration
afforded by the rules and regulations as promulgated by the United
States Securities and Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended (the “1933
Act”);
B.
Buyer
desires to purchase and the Company desires to issue and sell, upon
the terms and conditions set forth in this Agreement an 8%
convertible note of the Company, in the form attached hereto as
Exhibit A in the aggregate principal amount of $80,000.00 (together
with any note(s) issued in replacement thereof or as a dividend
thereon or otherwise with respect thereto in accordance with the
terms thereof, the “Note”), convertible into shares of
common stock, of the Company (the “Common Stock”), upon
the terms and subject to the limitations and conditions set forth
in such Note.
C.
The
Buyer wishes to purchase, upon the terms and conditions stated in
this Agreement, such principal amount of Note as is set forth
immediately below its name on the signature pages hereto;
and
NOW
THEREFORE
, the Company and the
Buyer severally (and not jointly) hereby agree as
follows:
1.
Purchase
and Sale of Note.
a.
Purchase
of Note
. On the Closing Date
(as defined below), the Company shall issue and sell to the Buyer
and the Buyer agrees to purchase from the Company such principal
amount of Note as is set forth immediately below the Buyer’s
name on the signature pages hereto.
b.
Form
of Payment
. On the Closing Date
(as defined below), the Buyer shall pay the purchase price for the
Note to be issued and sold to it at the Closing (as defined below)
(the “Purchase Price”) by wire transfer of immediately
available funds to the Company, or by the issuance of a full
recourse collateralized promissory note, in accordance with the
Company’s written wiring instructions, against delivery of
the Note in the principal amount equal to the Purchase Price as is
set forth immediately below the Buyer’s name on the signature
pages hereto, and the Company shall deliver such duly
executed Note on behalf of the Company, to the Buyer, against
delivery of such Purchase Price.
c.
Closing
Date
. The date and time of the first issuance and sale of
the Note pursuant to this Agreement (the “Closing
Date”) shall be on or about September 8, 2016 or such other
mutually agreed upon time. The closing of the transactions
contemplated by this Agreement (the “Closing”) shall
occur on the Closing Date at such location as may be agreed to by
the parties.
2.
Buyer’s
Representations and Warranties.
The Buyer represents and warrants to the Company
that:
a.
Investment
Purpose
. As of the date hereof,
the Buyer is purchasing the Note and the shares of Common Stock
issuable upon conversion of or otherwise pursuant to the Note, such
shares of Common Stock being collectively referred to herein as the
“Conversion Shares” and, collectively with the Note,
the “Securities”) for its own account and not with a
present view towards the public sale or distribution thereof,
except pursuant to sales registered or exempted from registration
under the 1933 Act;
provided
,
however
,
that by making the representations herein, the Buyer does not agree
to hold any of the Securities for any minimum or other specific
term and reserves the right to dispose of the Securities at any
time in accordance with or pursuant to a registration statement or
an exemption under the 1933 Act.
b.
Accredited
Investor Status
. The Buyer is
an “accredited investor” as that term is defined in
Rule 501(a) of Regulation D (an “Accredited
Investor”).
c.
Reliance
on Exemptions
. The Buyer
understands that the Securities are being offered and sold to it in
reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the
Buyer’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Buyer set
forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the
Securities.
d.
Information
.
The Buyer and its advisors, if any, have been, and for so long as
the Note remain outstanding will continue to be, furnished with all
materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the
Securities which have been requested by the Buyer or its advisors.
The Buyer and its advisors, if any, have been, and for so long as
the Note remain outstanding will continue to be, afforded the
opportunity to ask questions of the Company. Notwithstanding the
foregoing, the Company has not disclosed to the Buyer any material
nonpublic information and will not disclose such information unless
such information is disclosed to the public prior to or promptly
following such disclosure to the Buyer. Neither such inquiries nor
any other due diligence investigation conducted by Buyer or any of
its advisors or representatives shall modify, amend or affect
Buyer’s right to rely on the Company’s representations
and warranties contained in Section 3 below. The Buyer understands
that its investment in the Securities involves a significant degree
of risk. The Buyer is not aware of any facts that may constitute a
breach of any of the Company's representations and warranties made
herein.
e.
Governmental
Review
. The Buyer understands
that no United States federal or state agency or any other
government or governmental agency has passed upon or made any
recommendation or endorsement of the
Securities.
f.
Transfer
or Re-sale
. The Buyer
understands that the sale or re-sale of the Securities has not been
and is not being registered under the 1933 Act or any applicable
state securities laws, and the Securities may not be transferred
unless the Securities are sold pursuant to an effective
registration statement under the 1933 Act, the Buyer shall
have delivered to the Company, at the cost of the Buyer, an opinion
of counsel that shall be in form, substance and scope customary for
opinions of counsel in comparable transactions to the effect that
the Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration, which opinion
shall be accepted by the Company, the Securities are sold or
transferred to an “affiliate” (as defined in Rule 144
promulgated under the 1933 Act (or a successor rule) (“Rule
144”) of the Buyer who agrees to sell or otherwise transfer
the Securities only in accordance with this Section 2(f) and who is
an Accredited Investor, the Securities are sold pursuant to
Rule 144, or the Securities are sold pursuant to Regulation S
under the 1933 Act (or a successor rule) (“Regulation
S”), and the Buyer shall have delivered to the Company, at
the cost of the Buyer, an opinion of counsel that shall be in form,
substance and scope customary for opinions of counsel in corporate
transactions, which opinion shall be accepted by the Company; (ii)
any sale of such Securities made in reliance on Rule 144 may be
made only in accordance with the terms of said Rule and further, if
said Rule is not applicable, any re-sale of such Securities under
circumstances in which the seller (or the person through whom the
sale is made) may be deemed to be an underwriter (as that term is
defined in the 1933 Act) may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person
is under any obligation to register such Securities under the 1933
Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder (in each case).
Notwithstanding the foregoing or anything else contained herein to
the contrary, the Securities may be pledged as collateral in
connection with a
bona
fide
margin account or other lending
arrangement.
g.
Legends
.
The Buyer understands that the Note and, until such time as the
Conversion Shares have been registered under the 1933 Act may be
sold pursuant to Rule 144 or Regulation S without any restriction
as to the number of securities as of a particular date that can
then be immediately sold, the Conversion Shares may bear a
restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the
certificates for such Securities):
“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES
ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE
SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.”
The
legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Security
upon which it is stamped, if, unless otherwise required by
applicable state securities laws, (a) such Security is registered
for sale under an effective registration statement filed under the
1933 Act or otherwise may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities
as of a particular date that can then be immediately sold, or (b)
such holder provides the Company with an opinion of counsel, in
form, substance and scope customary for opinions of counsel in
comparable transactions, to the effect that a public sale or
transfer of such Security may be made without registration under
the 1933 Act, which opinion shall be accepted by the Company so
that the sale or transfer is effected. The Buyer agrees to sell all
Securities, including those represented by a certificate(s) from
which the legend has been removed, in compliance with applicable
prospectus delivery requirements, if any. In the event that the
Company does not accept the opinion of counsel provided by the
Buyer with respect to the transfer of Securities pursuant to an
exemption from registration, such as Rule 144 or Regulation S,
within 2 business days, it will be considered an Event of Default
under the Note.
h.
Authorization;
Enforcement
. This Agreement has
been duly and validly authorized. This Agreement has been duly
executed and delivered on behalf of the Buyer, and this Agreement
constitutes a valid and binding agreement of the Buyer enforceable
in accordance with its terms.
i.
Residency
.
The Buyer is a resident of the jurisdiction set forth immediately
below the Buyer’s name on the signature pages
hereto.
3.
Representations
and Warranties of the Company
.
The Company represents and warrants to the Buyer
that:
a.
Organization
and Qualification
. The Company
and each of its subsidiaries, if any, is a corporation duly
organized, validly existing and in good standing under the laws of
the jurisdiction in which it is incorporated, with full power and
authority (corporate and other) to own, lease, use and operate its
properties and to carry on its business as and where now owned,
leased, used, operated and conducted.
b.
Authorization;
Enforcement
. (i) The Company
has all requisite corporate power and authority to enter into and
perform this Agreement, the Note and to consummate the transactions
contemplated hereby and thereby and to issue the Securities, in
accordance with the terms hereof and thereof, (ii) the execution
and delivery of this Agreement, the Note by the Company and the
consummation by it of the transactions contemplated hereby and
thereby (including without limitation, the issuance of the Note and
the issuance and reservation for issuance of the Conversion Shares
issuable upon conversion or exercise thereof) have been duly
authorized by the Company’s Board of Directors and no further
consent or authorization of the Company, its Board of Directors, or
its shareholders is required, (iii) this Agreement has been duly
executed and delivered by the Company by its authorized
representative, and such authorized representative is the true and
official representative with authority to sign this Agreement and
the other documents executed in connection herewith and bind the
Company accordingly, and (iv) this Agreement constitutes, and upon
execution and delivery by the Company of the Note, each of such
instruments will constitute, a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with
its terms.
c.
Issuance
of Shares
. The Conversion
Shares are duly authorized and reserved for issuance and, upon
conversion of the Note in accordance with its respective terms,
will be validly issued, fully paid and non-assessable, and free
from all taxes, liens, claims and encumbrances with respect to the
issue thereof and shall not be subject to preemptive rights or
other similar rights of shareholders of the Company and will not
impose personal liability upon the holder
thereof.
d.
Acknowledgment
of Dilution
. The Company
understands and acknowledges the potentially dilutive effect to the
Common Stock upon the issuance of the Conversion Shares upon
conversion of the Note. The Company further acknowledges that its
obligation to issue Conversion Shares upon conversion of the Note
in accordance with this Agreement, the Note is absolute and
unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other shareholders of the
Company.
e.
No
Conflicts
. The execution,
delivery and performance of this Agreement, the Note by the Company
and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
issuance and reservation for issuance of the Conversion Shares)
will not (i) conflict with or result in a violation of any
provision of the Certificate of Incorporation or by-laws, or (ii)
violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which with notice or lapse
of time or both could become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture, patent, patent license or instrument
to which the Company or any of its subsidiaries is a party, or
(iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and
regulations and regulations of any self-regulatory organizations to
which the Company or its securities are subject) applicable to the
Company or any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries is bound or
affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a material adverse
effect). All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior
to the date hereof. The Company is not in violation of the listing
requirements of the OTC Markets QB (the “OTCQB”) and
does not reasonably anticipate that the Common Stock will be
delisted by the OTCBB in the foreseeable future, nor are the
Company’s securities “chilled” by FINRA. The
Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the
foregoing.
f.
Absence
of Litigation
. There is no
action, suit, claim, proceeding, inquiry or investigation before or
by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company or
any of its subsidiaries, threatened against or affecting the
Company or any of its subsidiaries, or their officers or directors
in their capacity as such, that could have a material adverse
effect. Schedule 3(f) contains a complete list and summary
description of any pending or, to the knowledge of the Company,
threatened proceeding against or affecting the Company or any of
its subsidiaries, without regard to whether it would have a
material adverse effect. The Company and its subsidiaries are
unaware of any facts or circumstances which might give rise to any
of the foregoing.
g.
Acknowledgment
Regarding Buyer’ Purchase of Securities
. The Company acknowledges and agrees that the
Buyer is acting solely in the capacity of arm’s length
purchasers with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that the
Buyer is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to this Agreement
and the transactions contemplated hereby and any statement made by
the Buyer or any of its respective representatives or agents in
connection with this Agreement and the transactions contemplated
hereby is not advice or a recommendation and is merely incidental
to the Buyer’ purchase of the Securities. The Company further
represents to the Buyer that the Company’s decision to enter
into this Agreement has been based solely on the independent
evaluation of the Company and its
representatives.
h.
No
Integrated Offering
. Neither
the Company, nor any of its affiliates, nor any person acting on
its or their behalf, has directly or indirectly made any offers or
sales in any security or solicited any offers to buy any security
under circumstances that would require registration under the 1933
Act of the issuance of the Securities to the Buyer. The issuance of
the Securities to the Buyer will not be integrated with any other
issuance of the Company’s securities (past, current or
future) for purposes of any shareholder approval provisions
applicable to the Company or its securities.
i.
Title
to Property
. The Company and
its subsidiaries have good and marketable title in fee simple to
all real property and good and marketable title to all personal
property owned by them which is material to the business of the
Company and its subsidiaries, in each case free and clear of all
liens, encumbrances and defects except such as are described in
Schedule 3(i) or such as would not have a material adverse effect.
Any real property and facilities held under lease by the Company
and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as would not have a
material adverse effect.
j.
Bad
Actor
. No officer or director
of the Company would be disqualified under Rule 506(d) of the
Securities Act as amended on the basis of being a "bad
actor" as that term is established in the September 19, 2013
Small Entity Compliance Guide published by the Securities and
Exchange Commission.
k.
Breach
of Representations and Warranties by the Company
. If the Company breaches any of the
representations or warranties set forth in this Section 3, and in
addition to any other remedies available to the Buyer pursuant to
this Agreement, it will be considered an Event of default under the
Note.
4.
COVENANTS
.
a.
Expenses
.
At the Closing, the Company shall reimburse Buyer for expenses
incurred by them in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement and the other
agreements to be executed in connection herewith
(“Documents”), including, without limitation,
reasonable attorneys’ and consultants’ fees and
expenses, transfer agent fees, fees for stock quotation services,
fees relating to any amendments or modifications of the Documents
or any consents or waivers of provisions in the Documents, fees for
the preparation of opinions of counsel, escrow fees, and costs of
restructuring the transactions contemplated by the Documents. When
possible, the Company must pay these fees directly, otherwise the
Company must make immediate payment for reimbursement to the Buyer
for all fees and expenses immediately upon written notice by the
Buyer or the submission of an invoice by the
Buyer.
b.
Listing
.
The Company shall promptly secure the listing of the Conversion
Shares upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are
then listed (subject to official notice of issuance) and, so long
as the Buyer owns any of the Securities, shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing
of all Conversion Shares from time to time issuable upon conversion
of the Note. The Company will obtain and, so long as the Buyer owns
any of the Securities, maintain the listing and trading of its
Common Stock on the OTCQB or any equivalent replacement exchange,
the Nasdaq National Market (“Nasdaq”), the Nasdaq
SmallCap Market (“Nasdaq SmallCap”), the New York Stock
Exchange (“NYSE”), or the American Stock Exchange
(“AMEX”) and will comply in all respects with the
Company’s reporting, filing and other obligations under the
bylaws or rules of the Financial Industry Regulatory Authority
(“FINRA”) and such exchanges, as applicable. The
Company shall promptly provide to the Buyer copies of any notices
it receives from the OTCQB and any other exchanges or quotation
systems on which the Common Stock is then listed regarding the
continued eligibility of the Common Stock for listing on such
exchanges and quotation systems.
c.
Corporate
Existence
. So long as the Buyer
beneficially owns any Note, the Company shall maintain its
corporate existence and shall not sell all or substantially all of
the Company’s assets, except in the event of a merger or
consolidation or sale of all or substantially all of the
Company’s assets, where the surviving or successor entity in
such transaction (i) assumes the Company’s obligations
hereunder and under the agreements and instruments entered into in
connection herewith and (ii) is a publicly traded corporation whose
Common Stock is listed for trading on the OTCQB, Nasdaq, Nasdaq
SmallCap, NYSE or AMEX.
d.
No
Integration
. The Company shall
not make any offers or sales of any security (other than the
Securities) under circumstances that would require registration of
the Securities being offered or sold hereunder under the 1933 Act
or cause the offering of the Securities to be integrated with any
other offering of securities by the Company for the purpose of any
stockholder approval provision applicable to the Company or its
securities.
e.
Termination
of Prepay
. The right of the
Company to prepay or redeem any of the existing notes between the
parties is hereby terminated and stricken and none of the existing
notes between the parties may be prepaid or
redeemed.
f.
Breach
of Covenants
. If the Company
breaches any of the covenants set forth in this Section 4, and in
addition to any other remedies available to the Buyer pursuant to
this Agreement, it will be considered an event of default under the
Note.
5.
Governing
Law; Miscellaneous
.
a.
Governing
Law
. This Agreement shall be
governed by and construed in accordance with the laws of the State
of New York without regard to principles of conflicts of laws. Any
action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in
the state and county of New York. The parties to this Agreement
hereby irrevocably waive any objection to jurisdiction and venue of
any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon
forum non
conveniens
. The Company and
Buyer waive trial by jury. The prevailing party shall be entitled
to recover from the other party its reasonable attorney's fees and
costs. In the event that any provision of this Agreement or any
other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform with
such statute or rule of law. Any such provision which may prove
invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision of any agreement.
Each party hereby irrevocably waives personal service of process
and consents to process being served in any suit, action or
proceeding in connection with this Agreement by mailing a copy
thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect
for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
law.
b.
Counterparts;
Signatures by Facsimile
. This
Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall constitute
one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the
other party. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a
copy of this Agreement bearing the signature of the party so
delivering this Agreement.
c.
Headings
.
The headings of this Agreement are for convenience of reference
only and shall not form part of, or affect the interpretation of,
this Agreement.
d.
Severability
.
In the event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform with
such statute or rule of law. Any provision hereof which may prove
invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision
hereof.
e.
Entire
Agreement; Amendments
. This
Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered
herein and therein and, except as specifically set forth herein or
therein, neither the Company nor the Buyer makes any
representation, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be waived or
amended other than by an instrument in writing signed by the
majority in interest of the Buyer.
f.
Notices
.
All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally
served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable
air courier service with charges prepaid, (iv) via electronic mail
or (v) transmitted by hand delivery, telegram, or facsimile,
addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or
other communication required or permitted to be given hereunder
shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such
notice is to be received) or delivery via electronic mail, or the
first business day following such delivery (if delivered other than
on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the
date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications
shall be:
If
to the Company, to:
Friendable,
Inc
125
E. Campbell Ave
Campbell,
CA 95008
Attn:
Robert Rositano, CEO
If
to the Buyer:
COVENTRY
ENTERPRISES, LLC
80 S.W.
8
th
Street
Suite
2000
Miami,
FL 33130
Attn:
Jack Bodenstein
Each
party shall provide notice to the other party of any change in
address.
g.
Successors
and Assigns
. This Agreement
shall be binding upon and inure to the benefit of the parties and
their successors and assigns. Neither the Company nor the Buyer
shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other. Notwithstanding the
foregoing, the Buyer may assign its rights hereunder to any person
that purchases Securities in a private transaction from the Buyer
or to any of its “affiliates,” as that term is defined
under the 1934 Act, without the consent of the
Company.
h.
Third
Party Beneficiaries
. This
Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for
the benefit of, nor may any provision hereof be enforced by, any
other person.
i.
Survival
.
The representations and warranties of the Company and the
agreements and covenants set forth in this Agreement shall survive
the closing hereunder notwithstanding any due diligence
investigation conducted by or on behalf of the Buyer. The Company
agrees to indemnify and hold harmless the Buyer and all their
officers, directors, employees and agents for loss or damage
arising as a result of or related to any breach or alleged breach
by the Company of any of its representations, warranties and
covenants set forth in this Agreement or any of its covenants and
obligations under this Agreement, including advancement of expenses
as they are incurred.
j.
Further
Assurances
. Each party shall do
and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
k.
No
Strict Construction
. The
language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any
party.
l.
Remedies
.
The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer by vitiating the
intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Agreement will be inadequate
and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Agreement, that the Buyer shall
be entitled, in addition to all other available remedies at law or
in equity, and in addition to the penalties assessable herein, to
an injunction or injunctions restraining, preventing or curing any
breach of this Agreement and to enforce specifically the terms and
provisions hereof, without the necessity of showing economic loss
and without any bond or other security being
required.
IN WITNESS WHEREOF, the undersigned Buyer and the Company have
caused this Agreement to be duly executed as of the date first
above written.
Friendable, Inc
By: _
/s/
Robert
Rositano
________________
Name _
Robert
Rositano
_________________
Title: Robert Rositano, CEO
COVENTRY ENTERPRISES, LLC.
By: _
/s/
Jack
Bodenstein
__________________
Name: Jack Bodenstein
Title: Manager
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of
Note:
$80,000.00
Aggregate Purchase Price:
Note: $80,000.00 less $4,000.00 in legal fees
EXHIBIT A
144 NOTE - $80,000
THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF
1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER (THE "1933 ACT)
US
$80,000.00
FRIENDABLE,
INC
8%
CONVERTIBLE REDEEMABLE NOTE
DUE
SEPTEMBER 8, 2017
FOR
VALUE RECEIVED, Friendable, Inc. (the “Company”)
promises to pay to the order of the COVENTRY ENTERPRISES, LLC and
its authorized successors and permitted assigns ("
Holder
"), the aggregate
principal face amount of Eighty Thousand dollars exactly (U.S.
$80,000.00) on September 8, 2017 ("
Maturity Date
") and to pay
interest on the principal amount outstanding hereunder at the rate
of 8% per annum commencing on September 8, 2016. The interest will
be paid to the Holder in whose name this Note is registered on the
records of the Company regarding registration and transfers of this
Note. The principal of, and interest on, this Note are payable at
80 S.W. 8
th
Street, Suite 2000,
Miami, FL 33130, initially, and if changed, last appearing on the
records of the Company as designated in writing by the Holder
hereof from time to time. The Company will pay each interest
payment and the outstanding principal due upon this Note before or
on the Maturity Date, less any amounts required by law to be
deducted or withheld, to the Holder of this Note by check or wire
transfer addressed to such Holder at the last address appearing on
the records of the Company. The forwarding of such check or wire
transfer shall constitute a payment of outstanding principal
hereunder and shall satisfy and discharge the liability for
principal on this Note to the extent of the sum represented by such
check or wire transfer. Interest shall be payable in Common Stock
(as defined below) pursuant to paragraph 4(b) herein.
This
Note is subject to the following additional
provisions:
1. This
Note is exchangeable for an equal aggregate principal amount of
Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for
such registration or transfer or exchange, except that Holder shall
pay any tax or other governmental charges payable in connection
therewith.
2. The
Company shall be entitled to withhold from all payments any amounts
required to be withheld under applicable laws.
3.
This Note may be transferred or exchanged only in compliance with
the Securities Act of 1933, as amended ("
Act
") and applicable state
securities laws. Any attempted transfer to a non-qualifying party
shall be treated by the Company as void. Prior to due presentment
for transfer of this Note, the Company and any agent of the Company
may treat the person in whose name this Note is duly registered on
the Company's records as the owner hereof for all other purposes,
whether or not this Note be overdue, and neither the Company nor
any such agent shall be affected or bound by notice to the
contrary. Any Holder of this Note electing to exercise the right of
conversion set forth in Section 4(a) hereof, in addition to the
requirements set forth in Section 4(a), and any prospective
transferee of this Note, also is required to give the Company
written confirmation that this Note is being converted
("
Notice of
Conversion
") in the form annexed hereto as
Exhibit A
. The date of receipt
(including receipt by telecopy) of such Notice of Conversion shall
be the Conversion Date.
4. (a) The
Holder of this Note is entitled, at its option, and after full cash
payment for the shares convertible hereunder,
to convert all or any amount of
the principal face amount of this Note then outstanding into shares
of the Company's common stock (the "
Common Stock
") at a price
("
Conversion
Price
") for each share of Common Stock equal to 50% of the
lowest
closing bid price
(with a
ceiling of $0.004 per share)
of the Common Stock as reported
on the National Quotations Bureau OTCQB exchange which the
Company’s shares are traded or any exchange upon which the
Common Stock may be traded in the future ("
Exchange
"), for the
twenty
prior
trading days including the day
upon which a Notice of Conversion is received by the Company or its
transfer agent (provided such Notice of Conversion is delivered by
fax or other electronic method of communication to the Company or
its transfer agent after 4 P.M. Eastern Standard or Daylight
Savings Time if the Holder wishes to include the same day closing
price). If the shares have not been delivered within 3 business
days, the Notice of Conversion may be rescinded. Such conversion
shall be effectuated by the Company delivering the shares of Common
Stock to the Holder within 3 business days of receipt by the
Company of the Notice of Conversion. Accrued but unpaid interest
shall be subject to conversion. No fractional shares or scrip
representing fractions of shares will be issued on conversion, but
the number of shares issuable shall be rounded to the nearest whole
share. To the extent the Conversion Price of the Company’s
Common Stock closes below the par value per share, the Company will
take all steps necessary to solicit the consent of the stockholders
to reduce the par value to the lowest value possible under law. The
Company agrees to honor all conversions submitted pending this
increase.
In the event the Company
experiences a DTC “Chill” on its shares, the conversion
price shall be decreased to 40% instead of 50% while that
“Chill” is in effect.
In no event shall the
Holder be allowed to effect a conversion if such conversion, along
with all other shares of Company Common Stock beneficially owned by
the Holder and its affiliates would exceed 9.9% of the outstanding
shares of the Common Stock of the Company. The conversion discount
and lookback period will be adjusted downward (i.e. for the benefit
of the Holder) if the Company offers a more favorable conversion
discount (whether via interest, rate OID or otherwise) or lookback
period to another party while this note is in effect and the Holder
will also get the benefit of any other term (for a example a higher
prepay or a lower fixed conversion price) granted to any third
party while this Note is in effect.
(b) Interest
on any unpaid principal balance of this Note shall be paid at the
rate of 8% per annum. Interest shall be paid by the Company in
Common Stock ("Interest Shares"). The dollar amount converted into
Interest Shares shall be all or a portion of the accrued interest
calculated on the unpaid principal balance of this Note to the date
of such notice.
(c) This
Note may not be redeemed or prepaid.
(d) Upon
(i) a transfer of all or substantially all of the assets of the
Company to any person in a single transaction or series of related
transactions, (ii) a reclassification, capital reorganization or
other change or exchange of outstanding shares of the Common Stock,
or (iii) any consolidation or merger of the Company with or into
another person or entity in which the Company is not the surviving
entity (other than a merger which is effected solely to change the
jurisdiction of incorporation of the Company and results in a
reclassification, conversion or exchange of outstanding shares of
Common Stock solely into shares of Common Stock) (each of items
(i), (ii) and (iii) being referred to as a "Sale Event"), then, in
each case, the Company shall, upon request of the Holder, redeem
this Note in cash for 150% of the principal amount, plus accrued
but unpaid interest through the date of redemption, or at the
election of the Holder, such Holder may convert the unpaid
principal amount of this Note (together with the amount of accrued
but unpaid interest) into shares of Common Stock immediately prior
to such Sale Event at the Conversion Price.
(e) In
case of any Sale Event in connection with which this Note is not
redeemed or converted, the Company shall cause effective provision
to be made so that the Holder of this Note shall have the right
thereafter, by converting this Note, to purchase or convert this
Note into the kind and number of shares of stock or other
securities or property (including cash) receivable upon such
reclassification, capital reorganization or other change,
consolidation or merger by a holder of the number of shares of
Common Stock that could have been purchased upon exercise of the
Note and at the same Conversion Price, as defined in this Note,
immediately prior to such Sale Event. The foregoing provisions
shall similarly apply to successive Sale Events. If the
consideration received by the holders of Common Stock is other than
cash, the value shall be as determined by the Board of Directors of
the Company or successor person or entity acting in good
faith.
5. No
provision of this Note shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal
of, and interest on, this Note at the time, place, and rate, and in
the form, herein prescribed.
6. The
Company hereby expressly waives demand and presentment for payment,
notice of non-payment, protest, notice of protest, notice of
dishonor, notice of acceleration or intent to accelerate, and
diligence in taking any action to collect amounts called for
hereunder and shall be directly and primarily liable for the
payment of all sums owing and to be owing hereto.
7. The
Company agrees to pay all costs and expenses, including reasonable
attorneys' fees and expenses, which may be incurred by the Holder
in collecting any amount due under this Note.
8. If
one or more of the following described "Events of Default" shall
occur:
(a) The
Company shall default in the payment of principal or interest on
this Note or any other note issued to the Holder by the Company;
or
(b) Any
of the representations or warranties made by the Company herein or
in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in
connection with the execution and delivery of this Note, or the
Securities Purchase Agreement under which this note was issued
shall be false or misleading in any respect; or
(c) The
Company shall fail to perform or observe, in any respect, any
covenant, term, provision, condition, agreement or obligation of
the Company under this Note or any other note issued to the Holder;
or
(d) The
Company shall (1) become insolvent; (2) admit in writing its
inability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings for
its dissolution; (4) apply for or consent to the appointment of a
trustee, liquidator or receiver for its or for a substantial part
of its property or business; (5) file a petition for bankruptcy
relief, consent to the filing of such petition or have filed
against it an involuntary petition for bankruptcy relief, all under
federal or state laws as applicable; or
(e) A
trustee, liquidator or receiver shall be appointed for the Company
or for a substantial part of its property or business without its
consent and shall not be discharged within thirty (30) days after
such appointment; or
(f) Any
governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control
of the whole or any substantial portion of the properties or assets
of the Company; or
(g) One
or more money judgments, writs or warrants of attachment, or
similar process, in excess of fifty thousand dollars ($50,000) in
the aggregate, shall be entered or filed against the Company or any
of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days
or in any event later than five (5) days prior to the date of any
proposed sale thereunder; or
(h) defaulted
on or breached any term of any other note of similar debt
instrument into which the Company has entered and failed to cure
such default within the appropriate grace period; or
(i) The
Company shall have its Common Stock delisted from an exchange
(including the OTCBB exchange) or, if the Common Stock trades on an
exchange, then trading in the Common Stock shall be suspended for
more than 10 consecutive days;
(j) If
a majority of the members of the Board of Directors of the Company
on the date hereof are no longer serving as members of the
Board;
(k) The
Company shall not deliver to the Holder the Common Stock pursuant
to paragraph 4 herein without restrictive legend within 3 business
days of its receipt of a Notice of Conversion; or
(l) The
Company shall not replenish the reserve set forth in Section 12,
within 3 business days of the request of the Holder.
(m) The
Company shall not be “current” in its filings with the
Securities and Exchange Commission; or
(n) The
Company shall lose the “bid” price for its stock in a
market (including the OTCQB marketplace or other
exchange).
Then,
or at any time thereafter, unless cured within 5 days, and in each
and every such case, unless such Event of Default shall have been
waived in writing by the Holder (which waiver shall not be deemed
to be a waiver of any subsequent default) at the option of the
Holder and in the Holder's sole discretion, the Holder may consider
this Note immediately due and payable, without presentment, demand,
protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything
herein or in any note or other instruments contained to the
contrary notwithstanding, and the Holder may immediately, and
without expiration of any period of grace, enforce any and all of
the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law. Upon an Event of Default,
interest shall accrue at a default interest rate of 24% per annum
or, if such rate is usurious or not permitted by current law, then
at the highest rate of interest permitted by law. In the event of a
breach of Section 8(k) the penalty shall be $250 per day the shares
are not issued beginning on the 4
th
day after the
conversion notice was delivered to the Company. This penalty shall
increase to $500 per day beginning on the 10
th
day. The penalty
for a breach of Section 8(n) shall be an increase of the
outstanding principal amounts by 20%. In case of a breach of
Section 8(i), the outstanding principal due under this Note shall
increase by 50%. Further, if a breach of Section 8(m) occurs or is
continuing after the 6 month anniversary of the Note, then the
Holder shall be entitled to use the lowest closing bid price during
the delinquency period as a base price for the conversion. For
example, if the lowest closing bid price during the delinquency
period is $0.01 per share and the conversion discount is 50% the
Holder may elect to convert future conversions at $0.005 per share.
If this Note is not paid at maturity, the outstanding principal due
under this Note shall increase by 10%.
If the
Holder shall commence an action or proceeding to enforce any
provisions of this Note, including, without limitation, engaging an
attorney, then if the Holder prevails in such action, the Holder
shall be reimbursed by the Company for its attorneys’ fees
and other costs and expenses incurred in the investigation,
preparation and prosecution of such action or
proceeding.
Make-Whole for
Failure to Deliver Loss. At the Holder’s election, if the
Company fails for any reason to deliver to the Holder the
conversion shares by the by the 3rd business day following the
delivery of a Notice of Conversion to the Company and if the Holder
incurs a Failure to Deliver Loss, then at any time the Holder may
provide the Company written notice indicating the amounts payable
to the Holder in respect of the Failure to Deliver Loss and the
Company must make the Holder whole as follows:
Failure
to Deliver Loss = [(High trade price at any time on or after the
day of exercise) x (Number of conversion shares)]
The
Company must pay the Failure to Deliver Loss by cash payment, and
any such cash payment must be made by the third business day from
the time of the Holder’s written notice to the
Company.
9. In
case any provision of this Note is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided,
if possible, so that it is enforceable to the maximum extent
possible, and the validity and enforceability of the remaining
provisions of this Note will not in any way be affected or impaired
thereby.
10. Neither
this Note nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the Company
and the Holder.
11. The
Company represents that it is not a “shell” issuer and
has never been a “shell” issuer or that if it
previously has been a “shell” issuer that at least 12
months have passed since the Company has reported form 10 type
information indicating it is no longer a “shell issuer.
Further. The Company will instruct its counsel to either (i) write
a 144 opinion to allow for salability of the conversion shares or
(ii) accept such opinion from Holder’s counsel.
12. The
Company shall issue irrevocable transfer agent instructions
reserving 114,285,000 shares of its Common Stock for conversions
under this Note (the “Share Reserve”). The reserve
shall be replenished as needed to allow for conversions of this
Note. Upon full conversion of this Note, any shares remaining in
the Share Reserve shall be cancelled. The Company shall pay all
costs associated with issuing and delivering the shares. If such
amounts are to be paid by the Holder, it may deduct such amounts
from the Conversion Price. Conversion Notices may be sent to the
Company or its transfer agent via electric mail. The company should
at all times reserve a minimum of four times the amount of shares
required if the note would be fully converted. The Holder may
reasonably request increases from time to time to reserve such
amounts.
13. The
Company will give the Holder direct notice of any corporate actions
including but not limited to name changes, stock splits,
recapitalizations etc. This notice shall be given to the Holder as
soon as possible under law.
14. This
Note shall be governed by and construed in accordance with the laws
of New York applicable to contracts made and wholly to be performed
within the State of New York and shall be binding upon the
successors and assigns of each party hereto. The Holder and the
Company hereby mutually waive trial by jury and consent to
exclusive jurisdiction and venue in the courts of the State of New
York or in the Federal courts sitting in the county or city of New
York. This Agreement may be executed in counterparts, and the
facsimile transmission of an executed counterpart to this Agreement
shall be effective as an original.
IN
WITNESS WHEREOF, the Company has caused this Note to be duly
executed by an officer thereunto duly authorized.
Dated:
September 08, 2016
|
FRIENDABLE,
INC
|
|
|
|
|
|
/s/
Robert
Rositano
|
|
By: Robert
Rositano
|
|
Title:
CEO
|
EXHIBIT A
NOTICE
OF CONVERSION
(To be
Executed by the Registered Holder in order to Convert the
Note)
The
undersigned hereby irrevocably elects to convert $___________ of
the above Note into _________ Shares of Common Stock of Friendable,
Inc. (“Shares”) according to the conditions set forth
in such Note, as of the date written below.
If
Shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer and other taxes
and charges payable with respect thereto.
Date of
Conversion:
_____________________________________________________________________________________
Applicable
Conversion Price:
______________________________________________________________________________
Signature:
_____________________________________________________________________________________________
[Print
Name of Holder and Title of Signer]
Address:
______________________________________________________________________________________________
______________________________________________________________________________________________
SSN or
EIN:
_________________________
Shares
are to be registered in the following name:
___________________________________________________________________________
Name:
_______________________________________________________________________________________________
Address:
_____________________________________________________________________________________________
Tel:
____________________________________
Fax:
____________________________________
SSN or
EIN: _____________________________
Shares
are to be sent or delivered to the following account:
Account
Name:
________________________________________________________________________________________
Address:
______________________________________________________________________________________________
EIGHTH AMENDMENT AND CLOSING AGREEMENT
This
Eighth Amendment and Closing Agreement (the “
Agreement
”) is made and entered
into as of September 12,
2016 by and among Friendable Inc. (f/k/a iHookup Social Inc.), a
Nevada corporation (the “
Company
”) and the parties
identified on the signature page hereto (each a “
Purchaser
” and collectively,
“
Purchasers
”).
Capitalized terms used but not defined herein will have the
meanings assigned to them in the March 8, 2016 Securities Purchase
Agreement and Transaction Documents (as defined below), as amended
pursuant to an Amendment and Closing Agreement dated May 17, 2016
(“
Amendment
Agreement
”), as further amended pursuant to a Second
Amendment and Closing Agreement dated May 20, 2016
(“
Second Amendment
Agreement
”), as further amended pursuant to a Third
Amendment and Closing Agreement dated June 3, 2016
(“
Third Amendment
Agreement
”), as further amended pursuant to a Fourth
Amendment and Closing Agreement dated June 16, 2016
(“
Fourth Amendment
Agreement
”), as further amended pursuant to a Fifth
Amendment and Closing Agreement dated July 8, 2016
(“
Fifth Amendment
Agreement
”), as further amended pursuant to a Sixth
Amendment and Closing Agreement dated August 4, 2016
(“
Sixth Amendment
Agreement
”), and as further amended pursuant to a
Seventh Amendment and Closing Agreement dated August 15, 2016
(“
Seventh Amendment
Agreement
”).
WHEREAS, the
Company and Purchasers identified on
Schedule A
entered into Securities
Purchase Agreements (“
March
2016 SPA
”) and related Transaction Documents with
respect to the Securities identified on
Schedule A
(“
March 2016 Transaction Documents
”)
as amended pursuant to the Amendment Agreement, and further amended
pursuant to the Second Amendment Agreement, and further amended
pursuant to the Third Amendment Agreement, and further amended
pursuant to the Fourth Amendment Agreement, and further amended
pursuant to the Fifth Amendment Agreement, and further amended
pursuant to the Sixth Amendment Agreement, and further amended
pursuant to the Seventh Amendment Agreement; and
WHEREAS, the
parties wish to further amend the terms of the March 2016 SPA to
increase the Initial Closing Note principal amount from $965,425 to
$1,050,500 (inclusive of Coventry Enterprises LLC’s
investment of $90,000 and Note in the amount of $5,000 issued to
Palladium Capital Advisors LLC both on March 8, 2016) and which
amount also includes as follows:
(i) $110,00
Note principal amount issued on the March 8, 2016 Closing to Alpha
Capital Anstalt, $100,000 additional note principal amount added on
May 17, 2016 (“
Allonge
#1
”) to the Note issued to Alpha Capital Anstalt on
March 8, 2016, an additional $110,000 additional note principal
amount added on May 20, 2016 (“
Allonge #2
”) to the Note issued to
Alpha Capital Anstalt on March 8, 2016, an additional $160,000
additional note principal amount added on June 3, 2016
(“
Allonge #3
”)
to the Note issued to Alpha Capital Anstalt on March 8, 2016, an
additional $50,000 additional note principal amount added on June
16, 2016 (“
Allonge
#4
”) to the Note issued to Alpha Capital Anstalt on
March 8, 2016, an additional $50,000 additional note principal
amount added on July 8, 2016 (“
Allonge #5
”) to the Note issued to
Alpha Capital Anstalt on March 8, 2016, an additional $110,000
additional note principal amount added on August 4, 2016
(“
Allonge #6
”)
to the Note issued to Alpha Capital Anstalt on March 8, 2016, an
additional $157,000 additional note principal amount added on
August 15, 2016 (“
Allonge
#7
”) to the Note issued to Alpha Capital Anstalt on
March 8, 2016, and an additional $83,000 note principal amount to
be added to the Note issued to Alpha Capital Anstalt on March 8,
2016 in the form of Allonge #8 for an aggregate Subscription Amount
by Alpha Capital Anstalt of $930,000;
(ii) $5,000
Note principal amount issued on the March 8, 2016 Closing to
Palladium Capital Advisors LLC, $2,500 additional note principal
amount representing a portion of the Placement Agent fee issued in
the form of Allonge #1 added on May 17, 2016 (“
Allonge #1
”), an additional $2,750
note principal amount added on May 20, 2016 (“
Allonge #2
”) representing a
portion of the Placement Agent fee added to the Note issued to
Palladium Capital Advisors LLC on March 8, 2016, an additional
$4,000 note principal amount added on June 3, 2016
(“
Allonge #3
”)
representing a portion of the Placement Agent fee added to the Note
issued to Palladium Capital Advisors LLC on March 8, 2016, an
additional $1,250 note principal amount added on June 16, 2016
(“
Allonge #4
”)
representing a portion of the Placement Agent fee added to the Note
issued to Palladium Capital Advisors LLC on March 8, 2016, an
additional $1,250 note principal amount added on July 8, 2016
(“
Allonge #5
”)
representing a portion of the Placement Agent fee added to the Note
issued to Palladium Capital Advisors LLC on March 8, 2016, an
additional $2,750 note principal amount added on August 4, 2016
(“
Allonge #6
”)
representing a portion of the Placement Agent fee added to the Note
issued to Palladium Capital Advisors LLC on March 8, 2016, an
additional $3,925 note principal amount added on August 15, 2016
(“
Allonge #7
”)
representing a portion of the Placement Agent fee added to the Note
issued to Palladium Capital Advisors LLC on March 8, 2016, and an
additional $2,075 note principal amount representing a portion of
the Placement Agent fee to be added to the Note issued to Palladium
Capital Advisors LLC on March 8, 2016 in the form of Allonge #8 (as
further described in Paragraph 6 below) as part of the Initial
Closing for an aggregate Subscription Amount by Palladium Capital
Advisors LLC of $25,500.
The
additional note principal amounts of $83,000 and $2,075 are the
“
Eighth Additional
Subscription Amount
”, and which Subscription Amount
shall be included as part of the Offering.
NOW
THEREFORE, in consideration of promises and mutual covenants
contained herein and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby consent and agree as follows:
1. The
Purchasers and Palladium Capital Advisors LLC each consent and
agree to the amendment of the terms of the Offering and upon the
closing of the Eighth Additional Subscription Amount to include
such Eighth Additional Subscription Amount as part of the Initial
Closing of the Offering (“
Eighth Additional Initial Closing
Date
”).
2. The
Company represents that except as updated and modified on the
Eighth Additional Initial Closing Date Schedules annexed hereto,
the Schedules provided with the March 2016 SPA are and will be true
and accurate on the Eighth Additional Initial Closing
Date.
3. Except
as specifically described in this Agreement, all of the
Company’s representations and warranties contained in the
March 2016 Transaction Documents are and will be true and accurate
as of the Eighth Additional Initial Closing Date.
4. Except
for items affected merely by the passage of time, all of the
Purchasers’ representations and warranties contained in the
March 2016 Transaction Documents are true and accurate as of the
Eighth Additional Initial Closing Date.
5. The
parties agree to amend Schedule A to the March 2016 Transaction
Documents Escrow Agreement to include the Eighth Additional
Subscription Amount therein.
6. In
connection with the Seventh Additional Initial Closing, Palladium
Capital Advisors LLC agrees to take its compensation of 7.5% as
follows: 5% (equal to $4,150 cash) in 1,660,000 shares of Common
Stock (at $0.0025 per share), and 2.5% ($2,075) in the form of
Allonge #8 to the Note issued to Palladium Capital Advisors LLC on
March 8, 2016 which will be used as payment of Palladium Capital
Advisors LLC’s Subscription Amount per Schedule 3.1(s) of the
March 2016 SPA (which was identical to the Purchaser’s Note).
The foregoing notwithstanding, Palladium Capital Advisors LLC
hereby agrees to waive all of the Warrants issuable to Palladium
Capital Advisors LLC in connection with this Eighth Additional
Initial Closing.
7. Annexed
hereto as
Exhibit C
is the
form of Eighth Additional Initial Closing Escrow Agreement to be
executed by the parties in connection with the Eighth Additional
Initial Closing.
8. On
or before the Eighth Additional Initial Closing Date, the Company
undertakes to deliver a bring down legal opinion with an amended
schedule to the legal opinion provided to Purchasers on March 8,
2016 to include the Eighth Additional Subscription Amount therein
and to deliver to the Escrow Agent original Allonges and Warrants
for the Eighth Additional Subscription Amount.
9. In
connection with the Eighth Additional Initial Closing, the Company
agrees to pay Grushko & Mittman, P.C. a legal fee of
$2,500.
10
. Except
as specifically described herein, there is no other waiver
expressed or implied.
11.
In this Agreement words importing the singular number include the
plural and vice versa; words importing the masculine gender include
the feminine and neutral genders. The word “person”
includes an individual, body corporate, partnership, trustee or
trust or unincorporated association executor, administrator or
legal representative.
12. The
invalidity or unenforceability of any provision hereof will in no
way affect the validity or enforceability of any other
provision.
13.
All notices, demands, requests, consents, approvals, and other
communications required or permitted in connection with this
Agreement shall be made and given in the same manner set forth in
Section 5.4 of the March 2016 SPA.
14. This
Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to conflicts of laws
and principles that would result in the application of the
substantive laws of another jurisdiction. Any action brought by
either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state
courts of New York in the federal courts located in the state of
New York. Both parties and the individuals executing this Agreement
and other agreements on behalf of the parties agree to submit to
the jurisdiction of such courts and waive trial by jury. The
prevailing party (which shall be the party which receives an award
most closely resembling the remedy or action sought) shall be
entitled to recover from the other party its reasonable
attorney’s fees and costs. In the event that any provision of
this Agreement or any other agreement delivered in connection
herewith is invalid or unenforceable under any applicable statute
or rule of law, then such provision shall be deemed inoperative to
the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other
provision of any agreement.
15. The
division of this Agreement into articles, sections, subsections and
paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or
interpretation of this agreement.
16. This
Agreement may be executed in counterparts, all of which when taken
together shall be considered one and the same Agreement and shall
become effective when the counterparts have been signed by each
party and delivered to the other party, it is being understood that
all parties need not sign the same counterpart. In the event that
any signature is delivered by facsimile or PDF transmission, such
signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were
an original thereof.
(Signatures to follow)
IN
WITNESS WHEREOF, the Company and the undersigned Purchasers have
caused this
Eighth
Agreement
to be executed as of the date first written above.
|
FRIENDABLE, INC.
|
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the “Company”
|
|
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|
|
|
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|
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|
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By:
|
/s/
Robert
Rositano Jr.
|
|
|
|
Name: Robert Rositano Jr.
|
|
|
Title: CEO
|
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|
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|
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ALPHA CAPITAL ANSTALT
|
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the “Purchaser”
|
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/s/
Konrad
Ackermann
|
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Name: Konrad Ackermann
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Title: Director
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COVENTRY ENTERPRISES LLC
|
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the “Purchaser”
|
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By:
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/s/
Sol
Eisnberg
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Name: Sol Eisnberg
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Title:
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PALLADIUM CAPITAL ADVISORS LLC
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the “Placement Agent”
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By:
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/s/
Joel
Padowitz
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Title: Chief Executive Officer
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SCHEDULE A
MARCH 2016 CLOSING
PURCHASERS
|
PURCHASE PRICE AND PRINCIPAL AMOUNT OF NOTE
|
WARRANTS
|
ALPHA CAPITAL ANSTALT
Lettstrasse
32
9490
Vaduz, Liechtenstein
Attn:
Konrad Ackermann, Director
Fax:
011-423-2323196
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$110,000.00
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44,000,000
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COVENTRY
ENTERPRISES LLC
80 S.W.
8
th
Street, #2000
Miami,
FL 33130
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$90,000.00
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36,000,000
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PALLADIUM
CAPITAL ADVISORS, LLC
230
Park Avenue, Suite 539
New
York, NY 10169
Fax:
Taxpayer
ID#:
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Partial
Placement Agent Fee in the amount of $5,000.00 *
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2,000,000
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TOTAL
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$205,000.00
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82,000,000
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* A
Note in the amount of $5,000 and corresponding Warrants as
described in Section 2 of the Securities Purchase Agreement will be
issued to Palladium Capital Advisors LLC in lieu of a corresponding
cash amount of a portion of its placement agent fee.
AMENDMENT AND CLOSING AGREEMENT
PURCHASERS
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ADDITIONAL SUBSCRIPTION AMOUNT
|
WARRANTS
|
ALPHA CAPITAL ANSTALT
Lettstrasse
32
9490
Vaduz, Liechtenstein
Attn:
Konrad Ackermann, Director
Fax:
011-423-2323196
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$100,000.00
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40,000,000
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PALLADIUM
CAPITAL ADVISORS, LLC
230
Park Avenue, Suite 539
New
York, NY 10169
Fax:
Taxpayer
ID#:
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Partial
Placement Agent Fee in the amount of $2,500.00*
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1,000,000
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TOTAL
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$107,500.00
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41,000,000
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* A
Note in the amount of $2,500 and corresponding Warrants as
described in Section 2 of the Securities Purchase Agreement will be
issued to Palladium Capital Advisors LLC in lieu of a corresponding
cash amount of its placement agent fee.
SECOND AMENDMENT AND CLOSING AGREEMENT
PURCHASERS
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ADDITIONAL SUBSCRIPTION AMOUNT
|
WARRANTS
|
ALPHA CAPITAL ANSTALT
Lettstrasse
32
9490
Vaduz, Liechtenstein
Attn:
Konrad Ackermann, Director
Fax:
011-423-2323196
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$110,000.00
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44,000,000
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PALLADIUM
CAPITAL ADVISORS, LLC
230
Park Avenue, Suite 539
New
York, NY 10169
Fax:
Taxpayer
ID#:
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Partial
Placement Agent Fee in the amount of $2,750.00*
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1,100,000
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TOTAL
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$112,750.00
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45,100,000
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* A
Note in the amount of $2,750 and corresponding Warrants as
described in Section 2 of the Securities Purchase Agreement will be
issued to Palladium Capital Advisors LLC in lieu of a corresponding
cash amount of its placement agent fee.
THIRD AMENDMENT AND CLOSING AGREEMENT
PURCHASERS
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PURCHASE PRICE AND PRINCIPAL AMOUNT OF NOTE
|
WARRANTS
|
ALPHA CAPITAL ANSTALT
Lettstrasse
32
9490
Vaduz, Liechtenstein
Attn:
Konrad Ackermann, Director
Fax:
011-423-2323196
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$160,000.00
|
64,000,000
|
PALLADIUM
CAPITAL ADVISORS, LLC
230
Park Avenue, Suite 539
New
York, NY 10169
Fax:
Taxpayer
ID#:
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Partial
Placement Agent Fee in the amount of $4,000.00 *
|
See
note below.
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TOTAL
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$164,000.00
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64,000,000
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* A
Note in the amount of $4,000 as described in Section 2 of the
Securities Purchase Agreement will be issued to Palladium Capital
Advisors LLC in lieu of a corresponding cash amount of a portion of
its placement agent fee. Palladium Capital Advisors LLC has waived
the requirement for the Company to deliver the corresponding
Warrants in connection with this Closing.
FOURTH AMENDMENT AND CLOSING AGREEMENT
PURCHASERS
|
PURCHASE PRICE AND PRINCIPAL AMOUNT OF NOTE
|
WARRANTS
|
ALPHA CAPITAL ANSTALT
Lettstrasse
32
9490
Vaduz, Liechtenstein
Attn:
Konrad Ackermann, Director
Fax:
011-423-2323196
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$50,000.00
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20,000,000
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PALLADIUM
CAPITAL ADVISORS, LLC
230
Park Avenue, Suite 539
New
York, NY 10169
Fax:
Taxpayer
ID#:
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Partial
Placement Agent Fee in the amount of $1,250.00 *
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See
note below.
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TOTAL
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$51,250.00
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20,000,000
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* A
Note in the amount of $1,250 as described in Section 2 of the
Securities Purchase Agreement will be issued to Palladium Capital
Advisors LLC in lieu of a corresponding cash amount of a portion of
its placement agent fee. Palladium Capital Advisors LLC has waived
the requirement for the Company to deliver the corresponding
Warrants in connection with this Closing.
FIFTH AMENDMENT AND CLOSING AGREEMENT
PURCHASERS
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PURCHASE PRICE AND PRINCIPAL AMOUNT OF NOTE
|
WARRANTS
|
ALPHA CAPITAL ANSTALT
Lettstrasse
32
9490
Vaduz, Liechtenstein
Attn:
Konrad Ackermann, Director
Fax:
011-423-2323196
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$50,000.00
|
20,000,000
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PALLADIUM
CAPITAL ADVISORS, LLC
230
Park Avenue, Suite 539
New
York, NY 10169
Fax:
Taxpayer
ID#:
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Partial
Placement Agent Fee in the amount of $1,250.00 *
|
See
note below.
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TOTAL
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$51,250.00
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20,000,000
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* A
Note in the amount of $1,250 as described in Section 2 of the
Securities Purchase Agreement will be issued to Palladium Capital
Advisors LLC in lieu of a corresponding cash amount of a portion of
its placement agent fee. Palladium Capital Advisors LLC has waived
the requirement for the Company to deliver the corresponding
Warrants in connection with this Closing.
SIXTH AMENDMENT AND CLOSING AGREEMENT
PURCHASERS
|
ADDITIONAL SUBSCRIPTION AMOUNT
|
WARRANTS
|
ALPHA CAPITAL ANSTALT
Lettstrasse
32
9490
Vaduz, Liechtenstein
Attn:
Konrad Ackermann, Director
Fax:
011-423-2323196
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$110,000.00
|
44,000,000
|
PALLADIUM
CAPITAL ADVISORS, LLC
230
Park Avenue, Suite 539
New
York, NY 10169
Fax:
Taxpayer
ID#:
|
Partial
Placement Agent Fee in the amount of $2,750.00*
|
See
note below
|
TOTAL
|
$112,750.00
|
44,000,000
|
* A
Note in the amount of $2,750 as described in Section 2 of the
Securities Purchase Agreement will be issued to Palladium Capital
Advisors LLC in lieu of a corresponding cash amount of a portion of
its placement agent fee. Palladium Capital Advisors LLC has waived
the requirement for the Company to deliver the corresponding
Warrants in connection with this Closing.
SEVENTH AMENDMENT AND CLOSING AGREEMENT
PURCHASERS
|
ADDITIONAL SUBSCRIPTION AMOUNT
|
WARRANTS
|
ALPHA CAPITAL ANSTALT
Lettstrasse
32
9490
Vaduz, Liechtenstein
Attn:
Konrad Ackermann, Director
Fax:
011-423-2323196
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$157,000.00
|
62,800,000
|
PALLADIUM
CAPITAL ADVISORS, LLC
230
Park Avenue, Suite 539
New
York, NY 10169
Fax:
Taxpayer
ID#:
|
Partial
Placement Agent Fee in the amount of $3,925.00*
|
See
note below
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TOTAL
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$160,925.00
|
62,800,000
|
* A
Note in the amount of $3,925 as described in Section 2 of the
Securities Purchase Agreement will be issued to Palladium Capital
Advisors LLC in lieu of a corresponding cash amount of a portion of
its placement agent fee. Palladium Capital Advisors LLC has waived
the requirement for the Company to deliver the corresponding
Warrants in connection with this Closing.
EIGHTH AMENDMENT AND CLOSING AGREEMENT
PURCHASERS
|
ADDITIONAL SUBSCRIPTION AMOUNT
|
WARRANTS
|
ALPHA CAPITAL ANSTALT
Lettstrasse
32
9490
Vaduz, Liechtenstein
Attn:
Konrad Ackermann, Director
Fax:
011-423-2323196
|
$83,000.00
|
33,200,000
|
PALLADIUM
CAPITAL ADVISORS, LLC
230
Park Avenue, Suite 539
New
York, NY 10169
Fax:
Taxpayer
ID#:
|
Partial
Placement Agent Fee in the amount of $2,075.00*
|
See
note below
|
TOTAL
|
$85,075.00
|
33,200,000
|
* A
Note in the amount of $2,075 as described in Section 2 of the
Securities Purchase Agreement will be issued to Palladium Capital
Advisors LLC in lieu of a corresponding cash amount of a portion of
its placement agent fee. Palladium Capital Advisors LLC has waived
the requirement for the Company to deliver the corresponding
Warrants in connection with this Closing.
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY
A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
FRIENDABLE,
INC.
Warrant Shares: 33,200,000
|
Initial Exercise Date: September 12, 2016
|
Warrant
No: 2016-0111
THIS
COMMON STOCK PURCHASE WARRANT (the “
Warrant
”) certifies that,
for value received,
ALPHA CAPITAL
ANSTALT
or its assigns (the “
Holder
”), with an address
at: Lettstrasse 32, 9490 Vaduz, Liechtenstein, Fax:
011-423-2323196, 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 date hereof (the “
Initial Exercise Date
”)
and on or prior to the close of business on the five (5) year
anniversary of the Initial Exercise Date (the “
Termination Date
”) but
not thereafter, to subscribe for and purchase from
Friendable, Inc.
, a Nevada corporation
(the “
Company
”), up to
33,200,000
shares (as
subject to adjustment hereunder, the “
Warrant Shares
”) of
Common Stock. The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in
Section 2(b).
Section
1
.
Definitions
.
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in that certain Securities Purchase
Agreement (the “
Purchase Agreement
”),
dated March 8, 2016, among the Company and the purchasers signatory
thereto.
Section
2
.
Exercise
.
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
Initial Exercise 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. Within two (2) Trading Days following
the date of exercise as aforesaid, the Holder shall deliver the
aggregate Exercise Price for the shares specified in the applicable
Notice of Exercise by wire transfer or cashier’s check drawn
on a United States bank unless the cashless exercise procedure
specified in Section 2(c) below is specified in the applicable
Notice of Exercise. Notwithstanding anything herein to the contrary
(although the Holder may surrender the Warrant to, and receive a
replacement Warrant from, the Company), 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) Trading 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 Company shall deliver any objection to any Notice of
Exercise Form within one (1) Trading Day of delivery of such
notice.
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.
a)
Exercise Price
. The initial
exercise price per share of the Common Stock under this Warrant
shall be
$0.0030
, subject to
adjustment hereunder (the “
Exercise
Price
”).
b)
Cashless Exercise
. If at any
time commencing 180 days after the Initial Exercise Date, there is
no effective Registration Statement registering, or no current
prospectus available for the resale of the Warrant Shares by the
Holder, then this Warrant may also be exercised at the
Holder’s election, in whole or in part, at such time by means
of a “cashless exercise” in which the Holder shall be
entitled to receive a number of Warrant Shares equal to the
quotient obtained by dividing [(A-B) (X)] by (A),
where:
(A) =
|
the
VWAP on the Trading Day immediately preceding the date on which
Holder elects to exercise this Warrant by means of a
“cashless exercise,” as set forth in the applicable
Notice of Exercise;
|
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(B) =
|
the Exercise Price of this Warrant, as adjusted hereunder;
and
|
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(X) =
|
the number of Warrant Shares that would be issuable upon exercise
of this Warrant in accordance with the terms of this Warrant if
such exercise were by means of a cash exercise rather than a
cashless exercise.
|
Notwithstanding
anything herein to the contrary, on the Termination Date, unless
the Holder notifies the Company otherwise, if there is no effective
Registration Statement registering, or no current prospectus
available for, the resale of the Warrant Shares by the Holder, then
this Warrant shall be automatically exercised via cashless exercise
pursuant to this Section 2(c).
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 permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by the Holder or
(B) this Warrant is being exercised via cashless exercise and Rule
144 is available, and otherwise by physical delivery to the address
specified by the Holder in the Notice of Exercise by the date that
is three (3) Trading Days after the latest of (A) the delivery to
the Company of the Notice of Exercise, (B) surrender of this
Warrant (if required) and (C) payment of the aggregate Exercise
Price as set forth above (including by cashless exercise, if
permitted) (such date, the “
Warrant Share Delivery
Date
”). 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
exercised, with payment to the Company of the Exercise Price (or by
cashless exercise, if permitted) and all taxes required to be paid
by the Holder, if any, pursuant to Section 2(d)(vi) prior to the
issuance of such shares, having been paid.
The Company understands that a delay in the
delivery of the Warrant Shares after the Warrant Share Delivery
Date could result in economic loss to the Holder. As compensation
to the Holder for such loss, the Company agrees to pay (as
liquidated damages and not as a penalty) to the Holder for late
issuance of Warrant Shares upon exercise of this Warrant the
proportionate amount of $10 per Trading Day (increasing to $20 per
Trading Day after the fifth (5
th
)
Trading Day) after the Warrant Share Delivery Date for each $1,000
of Exercise Price of Warrant Shares for which this Warrant is
exercised which are not timely delivered. The Company shall pay any
payments incurred under this Section in immediately available funds
upon demand. Furthermore, in addition to any other remedies which
may be available to the Holder, in the event that the Company fails
for any reason to effect delivery of the Warrant Shares by the
Warrant Share Delivery Date, the Holder may revoke all or part of
the relevant Warrant exercise by delivery of a notice to such
effect to the Company, whereupon the Company and the Holder shall
each be restored to their respective positions immediately prior to
the exercise of the relevant portion of this Warrant, except that
the liquidated damages described above shall be payable through the
date notice of revocation or rescission is given to the
Company.
ii.
Delivery of New Warrants Upon
Exercise
. If this Warrant shall have been exercised in part,
the Company shall, at the request of a 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(d)(i) by the
Warrant Share Delivery Date, then the Holder will have the right,
at any time prior to issuance of such Warrant Shares, to rescind
such exercise.
iv.
Compensation for Buy-In on Failure to
Timely Deliver Certificates Upon Exercise
. In addition to
any other rights available to the Holder, 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 an
exercise on or before the Warrant Share Delivery Date, and if after
such date the Holder is required by its broker to purchase (in an
open market transaction or otherwise) or the Holder’s
brokerage firm otherwise purchases, shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant
Shares which the Holder anticipated receiving upon such exercise (a
“
Buy-In
”), then the
Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times (2)
the price at which the sell order giving rise to such purchase
obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored (in which
case such exercise shall be deemed rescinded) or deliver to the
Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with an aggregate sale price giving rise to such
purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of
such loss. Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of the Warrant as required
pursuant to the terms hereof.
v.
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.
vi.
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. The Company shall pay
all Transfer Agent fees required for same-day processing of any
Notice of Exercise.
vii.
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 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(e), 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(e) 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. 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(e), 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 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 Trading Days confirm orally and in
writing to the Holder the number of shares of Common Stock then
outstanding. 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 9.99% 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 may, upon not less than 61
days’ prior notice to the Company, increase the Beneficial
Ownership Limitation provisions of this Section 2(e), 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(e) shall continue to apply. Any such increase will
not be effective until the 61
st
day after such
notice is delivered to the Company. 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(e) 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
pursuant to any of the other Transaction Documents), (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)
Subsequent Equity Sales
. If the
Company or any Subsidiary thereof, as applicable, at any time while
this Warrant is outstanding, shall sell or grant any option to
purchase, or sell or grant any right to reprice, or otherwise issue
(or announce any offer, sale, grant or any option to purchase or
other disposition) any Common Stock or Common Stock Equivalents, at
an effective price per share less than the Exercise Price then in
effect, excluding Exempt Issuances as defined in the Purchase
Agreement (such lower price, the “
Base Share Price
” and
such issuances collectively, a “
Dilutive Issuance
”) (it
being understood and agreed that if the holder of the Common Stock
or Common Stock Equivalents so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to
warrants, options or rights per share which are issued in
connection with such issuance, be entitled to receive shares of
Common Stock at an effective price per share that is less than the
Exercise Price, such issuance shall be deemed to have occurred for
less than the Exercise Price on such date of the Dilutive Issuance
at such effective price), then simultaneously with the consummation
of each Dilutive Issuance the Exercise Price shall be reduced and
only reduced to equal the Base Share Price and the number of
Warrant Shares issuable hereunder shall be increased such that the
aggregate Exercise Price payable hereunder, after taking into
account the decrease in the Exercise Price, shall be equal to the
aggregate Exercise Price prior to such adjustment. Such adjustment
shall be made whenever such Common Stock or Common Stock
Equivalents are issued. Notwithstanding the foregoing, no
adjustments shall be made, paid or issued under this Section 3(b)
in respect of an Exempt Issuance. The Company shall notify the
Holder, in writing, no later than the Trading Day following the
issuance or deemed issuance of any Common Stock or Common Stock
Equivalents subject to this Section 3(b), indicating therein the
applicable issuance price, or applicable reset price, exchange
price, conversion price and other pricing terms (such notice, the
“
Dilutive Issuance
Notice
”). For purposes of clarification, whether or
not the Company provides a Dilutive Issuance Notice pursuant to
this Section 3(b), upon the occurrence of any Dilutive Issuance,
the Holder is entitled to receive a number of Warrant Shares based
upon the Base Share Price regardless of whether the Holder
accurately refers to the Base Share Price in the Notice of
Exercise. If the Company enters into a Variable Rate Transaction,
despite the prohibition thereon in the Purchase Agreement, the
Company shall be deemed to have issued Common Stock or Common Stock
Equivalents at the lowest possible conversion or exercise price at
which such securities may be converted or exercised.
Notwithstanding the foregoing, the issuance of any Common Stock or
Common Stock Equivalents pursuant to the Purchase Agreement shall
not be deemed a Dilutive Issuance.
c)
Subsequent Rights Offerings
.
In addition to any adjustments
pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase
stock, warrants, securities or other property pro rata to the
record holders of any class of shares of Common Stock (the
“
Purchase
Rights
”), then the Holder
will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided, however, to the extent that the
Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in
abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).
d)
Pro Rata Distributions
. If the
Company, at any time while this Warrant is outstanding, shall
distribute to all holders of Common Stock (and not to the Holder)
evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any
security other than the Common Stock (which shall be subject to
Section 3(c)), then in each such case the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately
prior to the record date fixed for determination of stockholders
entitled to receive such distribution by a fraction of which the
denominator shall be the VWAP determined as of the record date
mentioned above, and of which the numerator shall be such VWAP on
such record date less the then per share fair market value at such
record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of
the Common Stock as determined by the Board of Directors in good
faith. In either case the adjustments shall be described in a
statement provided to the Holder of the portion of assets or
evidences of indebtedness so distributed or such subscription
rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned
above.
e)
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,
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 or group of Persons whereby such
other Person or group 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(e) 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(e) on the exercise
of this Warrant). 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. Notwithstanding anything to the contrary,
in the event of a Fundamental Transaction that is (1) an all cash
transaction, (2) a “Rule 13e-3 transaction” as defined
in Rule 13e-3 under the Exchange Act, or (3) a Fundamental
Transaction involving a person or entity not traded on a national
securities exchange or trading market (with such exchange or market
including, without limitation, the Nasdaq Global Select Market, the
Nasdaq Global Market, or the Nasdaq Capital Market, The New York
Stock Exchange, Inc., the NYSE or Amex), the Company or any
Successor Entity (as defined below) shall, at the Holder’s
option, exercisable concurrently with the consummation of the
Fundamental Transaction,
purchase this
Warrant from the Holder by paying to the Holder the higher of
(i)
an amount of cash equal to the Black Scholes Value of
the remaining unexercised portion of this Warrant on the date of
the consummation of such Fundamental Transaction, or (ii) the
positive difference between the cash per share paid in such
Fundamental Transaction minus the then in effect Exercise Price.
“
Black Scholes
Value
” means the value of the unexercised portion of
this Warrant based on the Black and Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg, L.P.
(“
Bloomberg
”) determined as
of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period
equal to the time between the date of the public announcement of
the applicable Fundamental Transaction and the Termination Date,
(B) an expected volatility equal to the greater of 100% and the 100
day volatility obtained from the HVT function on Bloomberg as of
the Trading Day immediately following the public announcement of
the applicable Fundamental Transaction, (C) the underlying price
per share used in such calculation shall be the sum of the price
per share being offered in cash, if any, plus the value of any
non-cash consideration, if any, being offered in such Fundamental
Transaction and (D) a remaining option time equal to the time
between the date of the public announcement of the applicable
Fundamental Transaction and the Termination Date. 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 and the other Transaction Documents 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 and the
other Transaction Documents 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 and the other
Transaction Documents with the same effect as if such Successor
Entity had been named as the Company herein.
f)
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.
g)
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
any resulting adjustment to the number of Warrant Shares and
setting forth a brief statement of the facts requiring such
adjustment.
ii.
Notice to Allow Exercise by
Holder
. If (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, 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, to the extent that such information
constitutes material non-public information (as determined in good
faith by the Company) the Company shall follow the procedure
described in Section 13 of the Subscription Agreement and shall
deliver to the Holder at its last address as it shall appear upon
the Warrant Register of the Company, at least 20 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 any applicable securities laws and the provisions
of the Purchase Agreement, this Warrant and all rights hereunder
(including, without limitation, any registration rights) 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 be
dated the initial issuance date of this Warrant and shall be
identical with this Warrant except as to the number of Warrant
Shares issuable pursuant thereto.
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 notice to the contrary.
Section
5
.
Miscellaneous
.
a)
Notices
.
All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall
be (i) personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or
(iv) transmitted by hand delivery, telegram, facsimile, or
electronic mail, addressed as set forth below or to such other
address as such party shall have specified most recently by written
notice. Any notice or other communication required or permitted to
be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by
the transmitting facsimile machine, at the address or number
designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to
be received), or (b) upon receipt, when sent by electronic mail
(provided confirmation of transmission is electronically generated
and keep on file by the sending party), or (c) on the second
business day following the date of mailing by express courier
service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses
for such communications shall be: (i) if to the Company, to:
Friendable, Inc.
,
125 East
Campbell Avenue, 2
nd
Floor, Campbell CA
95008, Attn: Robert Rositano, CEO, fax: (408) 547-0110, email:
robert@ihookupsocial.com, with a copy by fax or email only to:
Morgan, Lewis & Bockius LLP, Two Palo Alto Square, 3000 El
Camino Real, Suite 700, Palo Alto, CA 94306, Attn: James C.
Chapman, Esq., fax: (650) 843-4001, email:
james.chapman@morganlewis.com, and (ii) if to the Holder, to: the
address and fax number indicated on the front page of this Warrant,
with an additional copy by fax only to (which shall not constitute
notice): Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley
Stream, New York 11581, fax: (212) 697-3575, email:
counslers@aol.com.
b)
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(d)(i).
c)
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 (which, in the case of the Warrant, shall not
include the posting of any bond), 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 and dated as of such cancellation, in
lieu of such Warrant or stock certificate.
d)
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 Trading Day, then, such action may be taken or such
right may be exercised on the next succeeding Trading
Day.
e)
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. 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 non-assessable 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 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.
f)
Jurisdiction
. All questions
concerning the construction, validity, enforcement and
interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement.
g)
Restrictions
. The Holder
acknowledges that the Warrant Shares acquired upon the exercise of
this Warrant, if not registered, or unless exercised in a cashless
exercise when Rule 144 is available, and the Holder does not
utilize cashless exercise, will have restrictions upon resale
imposed by state and federal securities laws.
h)
Non-waiver 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 the Holder’s rights, powers or
remedies. Without limiting any other provision of this Warrant or
the Purchase Agreement, if the Company willfully and knowingly
fails to comply with any provision of this Warrant, which results
in any material damages to the Holder, the Company shall pay to the
Holder 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 the
Holder in collecting any amounts due pursuant hereto or in
otherwise enforcing any of its rights, powers or remedies
hereunder.
i)
Notices
. Any notice, request or
other document required or permitted to be given or delivered to
the Holder by the Company shall be delivered in accordance with the
notice provisions of the Purchase Agreement.
j)
Limitation of Liability
. No
provision hereof, in the absence of any affirmative action by the
Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder, shall
give rise to any liability of the 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.
k)
Remedies
. The Holder, 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. The Company agrees
that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this
Warrant and hereby agrees to waive and not to assert the defense in
any action for specific performance that a remedy at law would be
adequate.
l)
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.
m)
Amendment
. This Warrant may be
modified or amended or the provisions hereof waived with the
written consent of the Company
and the
Holders of not less than a majority of the outstanding Warrants
issued pursuant to the Purchase Agreement
.
n)
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.
o)
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.
|
FRIENDABLE,
INC.
|
|
|
|
|
|
|
By:
|
/s/ Robert Rositano
Jr.
|
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Name: Robert
Rositano Jr.
|
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Title:
CEO
|
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NOTICE OF EXERCISE
TO: FRIENDABLE,
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.
(2)
Payment shall take
the form of (check applicable box):
[ ] in
lawful money of the United States; or
[ ] [if
permitted] the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number
of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(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:
_______________________________
(4)
After giving effect
to this Notice of Exercise, the undersigned will not have exceeded
the Beneficial Ownership Limitation.
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.)
FRIENDABLE
,
INC.
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:
|
_____________________________
|
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Holder’s Address:
|
_____________________________
|
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_____________________________
|
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.