UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 26, 2015
Global Digital Solutions, Inc.
(Exact name of registrant as specified in its
charter)
New Jersey |
|
000-26361 |
|
22-3392051 |
(State
or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
|
(IRS
Employer
Identification No.) |
777 South Flagler Drive, Suite 800 West
West Palm Beach, Florida 33401
(Address of
principal executive offices, including zip code) |
Registrant’s
telephone number, including area code: (561) 515-6163
N/A
(Former name or former address, if changed
since last report)
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry Into a Material Definitive Agreement.
On January 26, 2015 (the “Issuance
Date”), Global Digital Solutions, Inc. (the “Company”) entered into a financing agreement with JSJ
Investments Inc. (“JSJ”) providing for the purchase of a 10% Convertible Note in the aggregate principal amount
of $66,000 (the “JSJ” Note). The JSJ Note contains a $6,000 original issue discount such that the purchase price of
the JSJ Note is $60,000. The JSJ Note was funded on January 27, 2015, with the Company receiving $52,000 of net proceeds (net
of legal and due diligence fees). The JSJ Note bears interest at the rate of 10% per annum; is due and payable on January 26,
2016; and may be converted by JSJ at any time after 180 days of the Issuance Date into shares of the Company’s common
stock at a conversion price equal to the lower of (i) a 40% discount of the lowest trading price during the previous twenty
(20) trading days prior to the date of conversion; or (ii) a 40% discount to the lowest trading price during the previous
twenty (20) trading days before the date that the JSJ Note was executed. The JSJ Note also contain certain representations,
warranties, covenants and events of default, and increases in the amount of the principal and interest rate under the JSJ
Note in the event of such defaults.
On January 26, 2015, the Company closed a Securities
Purchase Agreement (the “AB SPA”) with Adar Bays, LLC (“Adar Bays”) providing for the purchase of a Convertible
Redeemable Note (the “AB Note”) in the aggregate principal amount of $35,000. The AB Note was funded on January 27,
2015, with the Company receiving $29,750 of net proceeds (net of legal and finders fees). The AB Note bears interest at the rate
of 8% per annum; is due and payable on January 26, 2016; and may be converted by Adar Bays at any time after 180 days of the date
of closing into shares of the Company’s common stock at a conversion price equal to a 40% discount of the lowest trading
price (as set forth in the AB Note) calculated at the time of conversion. The AB Note also contain certain representations, warranties,
covenants and events of default, and increases in the amount of the principal and interest rate under the AB Note in the event
of such defaults.
On January 28, 2014, the Company received a
funding of $82,500 (including an original issue discount of $7,500) pursuant to a $250,000 Convertible Note (the “JMJ Note”)
dated January 28, 2015 with JMJ Financial. The Company received $67,500 of proceeds, net of $7,500 original issue discount, and
net of $7,500 finders fee. The JMJ Note matures twenty four months from the date funded, has a one-time 12% interest charge if
not paid within 90 days, and is convertible at the option of JMJ Financial into shares of the Company’s common stock at the
lesser of $0.075 per share or 60% of the average of the trade price in the 25 trading days prior to conversion. The
JMJ Note might be accelerated if an event of default occurs under the terms of the JMJ Note, including the Company’s
failure to pay principal and interest when due, certain bankruptcy events or if the Company is delinquent in its SEC filings.
The foregoing descriptions
of the JSJ Note, the AB SPA, the AB Note, and the JMJ Note are qualified in their entirety by reference to such documents, which
are attached hereto as Exhibit 10.1. Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4, respectively, and are incorporated herein by
reference.
Item 2.03. Creation of a Direct Financial
Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 is incorporated herein by
reference.
Item 3.02 Unregistered
Sales of Equity Securities.
The information contained in Item 1.01 is hereby
incorporated by reference. Each of the notes issued by the Company as described in Item 1.01 were offered and sold to accredited
investors pursuant to an exemption from the registration requirements under Section 4(2) of the Securities Act of 1933, as amended,
and Rule 506 of Regulation D promulgated thereunder.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number |
|
Description |
10.1 |
|
10% Convertible Note, dated January 26, 2015, with JSJ Investments Inc. |
10.2 |
|
Securities Purchase Agreement, dated January 26, 2015, with Adar Bays, LLC |
10.3 |
|
8% Convertible Redeemable Note, dated January 26, 2015, with Adar Bays, LLC |
10.4 |
|
$250,000 Convertible Note, dated January 28, 2015, with JMJ Financial |
SIGNATURE
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.
|
Global Digital Solutions, Inc. |
|
|
|
Date: January 30, 2015 |
By: |
/s/
David A. Loppert |
|
|
David A. Loppert |
|
|
Chief Financial Officer |
Exhibit
Index
Exhibit
Number |
|
Description |
10.1 |
|
10% Convertible Note, dated January 26, 2015, with JSJ Investments Inc. |
10.2 |
|
Securities Purchase Agreement, dated January 26, 2015, with Adar Bays, LLC |
10.3 |
|
8% Convertible Redeemable Note, dated January 26, 2015, with Adar Bays, LLC |
10.4 |
|
$250,000 Convertible Note, dated January 28, 2015, with JMJ Financial |
4
Exhibit 10.1
NEITHER
THIS NOTE NOR THE SECURITIES THAT MAY BE ISSUED BY THE BORROWER UPON CONVERSION HEREOF (COLLECTIVELY, THE “SECURITIES”)
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION. NEITHER THE SECURITIES NOR ANY INTEREST OR PARTICIPATION THEREIN MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED: (i) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT, OR APPLICABLE STATE
SECURITIES LAWS; OR (ii) IN THE ABSENCE OF AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE ISSUER, THAT REGISTRATION IS NOT
REQUIRED UNDER THE 1933 ACT OR; (iii) UNLESS SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO RULE 144 UNDER THE 1933 ACT.
10%
CONVERTIBLE NOTE
Maturity
Date of January 26, 2016
$66,000
January 26, 2015 the “Issuance Date”
Principal
Amount: $66,000
Purchase
Price: $60,000
FOR
VALUE RECEIVED, Global Digital Solutions Inc., a New
Jersey Corporation (the “Company”) doing business in West Palm Beach,
FL, hereby promises to pay to the order of JSJ Investments Inc., an accredited investor and Texas Corporation, or its assigns
(the “Holder”) the principal amount of Sixty-Six
Thousand Dollars ($66,000), on demand of the Holder at any time on or after January
26, 2016 (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate
of Ten Percent (10%) per annum (the “Interest Rate”) from the date
hereof (the “Issuance Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by
prepayment or otherwise; provided, that any amount of principal or interest on this Note which is not paid when due shall
bear interest at such rate on the unpaid principal balance hereof plus Default Interest from the due date thereof until the same
is paid in full. The Principal Amount is Sixty-Six Thousand Dollars Dollars ($66,000) and the consideration paid by the
Holder is Sixty Thousand Dollars ($60,000) (the “Consideration”) (there exists a $6,000 original issue discount (the
“OID”)). Interest shall commence accruing on the Issuance Date, shall be computed on the basis of a 365-day year and
the actual number of days elapsed and shall accrue daily and, after the Maturity Date, compound quarterly.
| 1. | Payments
of Principal and Interest. |
| | |
| a. | Payment
of Principal. Until the One Hundred and Fiftieth (150th) day after the Issuance
Date the Company may pay the principal at a cash redemption of 150% without the Holder’s
consent. After the 150th day, up to, upon or after the Maturity Date, this
Note has a cash redemption premium of 150% of the principal amount, in addition to outstanding
interest, which may only be exercised upon approval and acceptance by JSJ Investments
Inc. The principal balance of this Note shall be paid to the Holder hereof on demand. |
| | |
| b. | Default
Interest. Any amount of principal on this Note which
is not paid when due shall bear Twelve Percent
(10%) interest per annum from the date thereof until the same
is paid (“Default Interest”) and the Holder, at the Holder’s sole discretion,
may include any accrued but unpaid Default Interest in the Conversion Amount. |
| | |
| c. | General
Payment Provisions. This Note shall be made
in lawful money of the United States of America by check to such account as the Holder
may from time to time designate by written notice to the Company in accordance with the
provisions of this Note. Whenever any amount expressed to be due by the terms of this
Note is due on any day which is not a Business Day (as defined below), the same shall
instead be due on the next succeeding day which is a Business Day and, in the case of
any interest payment date which is not the date on which this Note is paid in full, the
extension of the due date thereof shall not be taken into account for purposes of determining
the amount of interest due on such date. For purposes of this Note, “Business Day”
shall mean any day other than a Saturday, Sunday or a day on which commercial banks in
the State of Texas are authorized or required by law or executive order to remain closed. |
| | |
| 2. | Conversion
of Note. At any time prior to the Maturity Date, or after the Maturity Date, the Conversion
Amount of this Note shall be convertible into shares
of the Company’s common stock, share (the “Common Stock”), on the terms
and conditions set forth in this Paragraph 2. |
| | |
| a. | Certain
Defined Terms. For purposes of this Note, the following terms shall have the following
meanings: |
“Conversion
Amount” means the sum of (A) the principal amount of this Note
to be converted with respect to which this determination is being made, (B) Interest; and (C) Default Interest, if any, on unpaid
interest and principal, if so included at the Holder’s sole discretion.
“Conversion
Price” means the lower of: (i) a 40% discount to the lowest trading price during the previous twenty (20) trading
days to the date of Conversion; or (ii) a 40% discount to the lowest trading price during the previous twenty (20) trading days
before the date that this note was executed.
“Person”
means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.
“Shares”
means the Shares of the Company into which any balance on this Note may be converted upon submission of a “Conversion Notice”
attached hereto as Exhibit 1.
| b. | Holder’s
Conversion Rights. At any time or times on or after the Issuance Date, the Holder shall
be entitled to convert all of the outstanding and unpaid principal amount of this Note
into fully paid and non-assessable shares of Common Stock in accordance with the stated
Conversion Price. |
| | |
| c. | Fractional
Shares. The Company shall not issue any fraction
of a share of Common Stock upon any conversion; if such issuance would result
in the issuance of a fraction of a share of Common Stock, the Company shall round such
fraction of a share of Common Stock up to the nearest whole share. |
| | |
| d. | Conversion
Amount. The Conversion Amount shall be converted pursuant to Rule 144(b)(1)(ii) and Rule
144(d)(1)(ii) as promulgated by the Securities and Exchange Commission under the Securities
Act of 1933, as amended, into free trading shares at the Conversion Price. |
| | |
| e. | Mechanics
of Conversion. The conversion of this Note shall be conducted in the following manner: |
Holder’s
Conversion Requirements. To convert this Note into shares of Common Stock on any date set forth in the Conversion Notice by the
Holder (the “Conversion Date”), the Holder hereof shall transmit by email, facsimile or otherwise deliver, for receipt
on or prior to 11:59 p.m., Eastern Time, on such date or on the next business day, a copy
of a fully executed notice of conversion in the form attached hereto as Exhibit 1 to the Company.
Company’s
Response. Upon receipt by the Company of a copy of a Conversion Notice, the Company shall as soon as practicable, but in
no event later than one (1) Business Day after receipt of such Conversion Notice, send, via email, facsimile or overnight courier,
a confirmation of receipt of such Conversion Notice to such Holder indicating that the Company will process such Conversion Notice
in accordance with the terms herein. Within two (2) Business Days after the date the Conversion Notice is delivered, the Company
shall have issued and electronically transferred the shares to the Broker indicated in the Conversion Notice; should the Company
be unable to transfer the shares electronically, it shall, within two (2) Business Days after the date the Conversion was delivered,
have surrendered to FedEx for delivery the next day to the address as specified in the Conversion Notice, a certificate, registered
in the name of the Holder, for the number of shares of Common Stock to which the Holder shall be entitled.
Record
Holder. The person or persons entitled to receive the shares of Common Stock issuable upon
a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock
on the Conversion Date.
Timely
Response by Company. Upon receipt by Company of a Conversion Notice, Company shall respond within one business day to Holder confirming
the details of the Conversion, and provide within two business days the Shares requested in the Conversion Notice.
Penalty
for Delinquent Response. If Company fails to deliver for whatever reason (including any neglect or failure by, e.g., the
Company, its counsel or the transfer agent) to Holder the Shares as requested in a Conversion Notice and within three business
days of the Conversion Date, the Company shall be deemed in “Default of Conversion.” As of the day the Company is
deemed in Default of Conversion, there shall accrue a penalty of Additional Shares due to Holder equal to 25% of the number stated
in the Conversion Notice beginning on the Fourth business day after the date of the Notice. The Additional Shares shall be issued
and the amount of the Note retired will not be reduced beyond that stated in the Conversion Notice. Each additional 5 business
days beyond the Fourth business day after the date of this Notice shall accrue an additional 25% penalty for delinquency, without
any corresponding reduction in the amount due under the Note, for so long as Company fails to provide the Shares so demanded.
Any time after a Default of Conversion the Holder may, at their sole discretion, rescind the Conversion.
Rescindment
of Conversion Notice. If (i) the Company fails to respond to Holder within one business day from the date of Conversion confirming
the details of Conversion, (ii) the Company fails to provide the Shares requested in the Conversion Notice within three business
days from the date of Conversion, (iii) the Holder is unable to procure a legal opinion required to have the Shares issued unrestricted
and/or deposited to sell for any reason related to the Company's standing, (iv) the Holder is unable to deposit the Shares requested
in the Conversion Notice for any reason related to the Company's standing, or (v) if OTC Markets changes the Company's designation
to 'Limited Information' (Yield), 'No Information' (Stop Sign), 'Caveat Emptor' (Skull and Crossbones), or 'OTC', 'Other OTC'
or 'Grey Market' (Exclamation Mark Sign) on the day of or any day after the date of Conversion, the Holder maintains the option
and sole discretion to rescind the Conversion Notice ("Rescindment") with a "Notice of Rescindment."
Transfer
Agent Fees and Legal Fees. The issuance of the certificates shall be without charge or expense to the Holder. The Company shall
pay any and all Transfer Agent fees, legal fees, and advisory fees required for execution of this Convertible Note and processing
of any Notice of Conversion, including but not limited to the cost of obtaining a legal opinion with regard to the conversion.
The Holder will deduct legal fees in the amount of $2,000 from the principal payment of the Convertible Note. The Holder will
deduct 3rd party due diligence fees due Carter, Terry & Co. in the amount of $6,000 from the principal payment
of the Convertible Note.
Conversion
Right Unconditional. If the Holder shall provide a Notice of Conversion as provided herein, the Company’s obligations to
deliver Common Stock shall be absolute and unconditional, irrespective of any claim of setoff, counterclaim, recoupment, or alleged
breach by the Holder of any obligation to the Company.
| 3. | Other
Rights of Holders: Reorganization, Reclassification, Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Company’s assets to another Person or other
transaction which is effected in such a way that holders of Common Stock are entitled
to receive (either directly or upon subsequent liquidation) stock, securities or assets
with respect to or in exchange for Common Stock is referred to herein as “Organic
Change.” Prior to the consummation of any
(i) Organic Change or (ii) other Organic Change following which the Company is
not a surviving entity, the Company will secure from the Person purchasing such assets
or the successor resulting from such Organic Change (in each case, the “Acquiring
Entity”) a written agreement (in form and substance
reasonably satisfactory to the Holder) to deliver to Holder in exchange for this
Note, a security of the Acquiring Entity evidenced by a written instrument substantially
similar in form and substance to this Note, and reasonably satisfactory to the Holder.
Prior to the consummation of any other Organic Change, the Company shall make appropriate
provision (in form and substance reasonably satisfactory to the Holders of a majority
of the Conversion Amount of the Notes then outstanding) to ensure that
each of the Holders will thereafter have the right to acquire and receive in lieu of
or in addition to (as the case may be) the shares of Common Stock immediately
theretofore acquirable and receivable upon the conversion of such Holder’s Note,
such shares of stock, securities or assets that would have been issued or payable in
such Organic Change with respect to or in exchange for the number of shares of Common
Stock which would have been acquirable and receivable upon the conversion of such Holder’s
Note as of the date of such Organic Change (without taking into account any limitations
or restrictions on the convertibility of the Note). All provisions of this Note must
be included to the satisfaction of Holder in any new Note created pursuant to this section. |
| | |
| 4. | Representations
and Warranties of the Company. In connection with the transactions provided for herein,
the Company hereby represents and warrants to the Holders the following. |
| | |
| a. | Organization,
Good Standing and Qualification. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation and has
all requisite corporate power and authority to carry on its business as now conducted.
The Company is duly qualified to transact business and is in good standing in each jurisdiction
in which the failure to so qualify would have a material adverse effect on its business
or properties. |
| | |
| b. | Authorization.
All corporate action has been taken on the part of the Company, its officers, directors
and stockholders necessary for the authorization, execution and delivery of this Agreement.
The Company has taken all corporate action required to make all of the obligations of
the Company reflected in the provisions of this Agreement, valid and enforceable obligations.
The shares of capital stock issuable upon conversion of the Notes have been authorized
or will be authorized prior to the issuance of such shares. |
| | |
| c. | Fiduciary
Obligations. The Company hereby represents that it intends to use the proceeds of the
Notes primarily for the operations of its business and not for any personal, family,
or household purpose. The Company hereby represents that its board of directors, in the
exercise of its fiduciary duty, has approved the execution of this Agreement based upon
a reasonable belief that the loan provided for herein is appropriate for the Company
after reasonable inquiry concerning its financial objectives and financial situation. |
| 5. | Covenants
of the Company. So long as the Company shall have any obligations under this Note, the
Company shall not without the Holder’s written consent pay, declare or set apart
for such payment any dividend or other distribution (whether in cash, property, or other
securities) on share of capital stock solely in the form of additional shares of Common
Stock. |
| | |
| a. | So
long as the Company shall have any obligations under this Note, the Company shall not
without the Holder’s written consent redeem, repurchase, or otherwise acquire (whether
for cash or in exchange for property or other securities) in any one transaction or series
of transactions any shares of capital stock of the Company or any warrants, rights, or
options to acquire any such shares. |
| | |
| b. | So
long as the Company shall have any obligations under this Note, the Company shall not
without the Holder’s written consent sell, lease, or otherwise dispose of a significant
portion of its assets outside the ordinary course of business. Any consent to the disposition
of any assets may be conditioned upon a specified use of the proceeds thereof. |
| 6. | Issuance
of Common Stock Equivalents. If the Company, at any time after the Issuance Date, shall
issue any securities convertible into or exchangeable for, directly or indirectly, Common
Stock (“Convertible Securities”), other than the Note, or any rights or warrants
or options to purchase any such Common Stock or Convertible Securities, shall be issued
or sold (collectively, the “Common Stock Equivalents”) and the aggregate
of the price per share for which Additional Shares of Common Stock may be issuable thereafter
pursuant to such Common Stock Equivalent, plus the consideration received by the Company
for issuance of such Common Stock Equivalent divided by the number of shares of Common
Stock issuable pursuant to such Common Stock Equivalent (the “Aggregate Per Common
Share Price”) shall be less than the applicable Conversion Price then in effect,
or if, after any such issuance of Common Stock Equivalents, the price per share for which
Additional Shares of Common Stock may be issuable thereafter is amended or adjusted,
and such price as so amended shall make the Aggregate Per Share Common Price be less
than the applicable Conversion Price in effect at the time of such amendment or adjustment,
then the applicable Conversion Price upon each such issuance or amendment shall be adjusted
on the basis that (1) the maximum number of Additional Shares of Common Stock issuable
pursuant to all such Common Stock Equivalents shall be deemed to have been issued (whether
or not such Common Stock Equivalents are actually then exercisable, convertible or exchangeable
in whole or in part) as of the earlier of (A) the date on which the Company shall enter
into a firm contract for the issuance of such Common Stock Equivalent, or (B) the date
of actual issuance of such Common Stock Equivalent. No adjustment of the applicable Conversion
Price shall be made under this subsection (vii) upon the issuance of any Convertible
Security which is issued pursuant to the exercise of any warrants or other subscription
or purchase rights therefor, if any adjustment shall previously have been made to the
exercise price of such warrants then in effect upon the issuance of such warrants or
other rights pursuant to this subsection (vii). No adjustment shall be made to the Conversion
Price upon the issuance of Common Stock pursuant to the exercise, conversion or exchange
of any Convertible Security or Common Stock Equivalent where an adjustment to the Conversion
Price was made as a result of the issuance or purchase of any Convertible Security or
Common Stock Equivalent. |
| 7. | Reservation
of Shares. The Company shall at all times, so long as any principal amount of the Note
is outstanding, reserve and keep available out of its authorized and unissued Common
Stock, solely for the purpose of effecting the conversion of the Note, such number
of shares of Common Stock as shall at all times be sufficient to effect the conversion
of all of the principal amount of the Note then outstanding. The initial number of shares
of Common Stock reserved for conversions of the Notes shall be calculated as four times
the number of shares necessary to convert the entire value of the Note on the day it
was executed, unless the Holder stipulates otherwise in the “Irrevocable Letter
of Instructions to the Transfer Agent,” and each increase in the number of shares
so reserved shall be allocated pro rata among the Holders of the Note based on the principal
and interest amount of the Notes held by each Holder at the time of issuance of the Notes
or increase in the number of reserved shares, as the case may be. In the event a Holder
shall sell or otherwise transfer any of such Holder’s Note, each transferee shall
be allocated a pro rata portion of the number of reserved shares of Common Stock reserved
for such transferor. Any shares of Common Stock reserved and allocated to any Person
which ceases to hold any Note shall be allocated to the remaining Holders, pro rata based
on the principal amount of the Note then held by such Holders. |
| 8. | Voting
Rights. Holders of this Note shall have no voting rights, except as required by law. |
| 9. | Reissuance
of Note. In the event of a conversion or redemption pursuant to this Note of less than
all of the Conversion Amount represented by this Note, the Company shall promptly cause
to be issued and delivered to the Holder, upon tender by the Holder of the Note
converted or redeemed, a new note of like tenor
representing the remaining principal amount of this Note which has not been so converted
or redeemed and which is in substantially the same form as this Note, as set forth
above. |
| a. | Event
of Default. An “Event of Default” is:
(i) default for ten (10) days in payment of interest or Default Interest on this
Note; (ii) default in payment of the principal amount of this Note when due; (iii) failure
by the Company for thirty (30) days after notice to it to comply with any other material
provision of this Note; (iv) breach of any covenants, warranties, or representations
by the Company herein; (v) cessation of operations by the Company or a material subsidiary;
(vi) if the Company pursuant to or within the meaning of any Bankruptcy Law; (A) commences
a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary
case; (C) consents to the appointment of a Custodian of it or for all or substantially
all of its property; (D) makes a general assignment for the benefit of its creditors;
or (E) admits in writing that it is generally unable
to pay its debts as the same become due; or (vi) a court of competent jurisdiction enters
an order or decree under any Bankruptcy Law that: (I) is for relief against the
Company in an involuntary case; (2) appoints a Custodian of the Company or for all or
substantially all of its property; or (3) orders the liquidation of the Company or any
subsidiary, and the order or decree remains unstayed and in effect for thirty
(30) days. The Term “Bankruptcy Law”
means Title 11, U.S. Code, or any similar Federal or State Law for the relief
of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law. |
| | |
| b. | Remedies.
If an Event of Default occurs and is continuing,
the Holder of this Note may declare all of this Note, including any interest and
Default Interest and other amounts due, to be due and payable immediately. |
| 11. | Vote
to Change the Terms of this Note. This Note and any provision hereof may only be amended
by an instrument in writing signed by the Company and holders of a majority of the aggregate
Conversion Amount of the Notes then outstanding. |
| 12. | Lost
or Stolen Note. Upon receipt by the Company of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of this
Note, and, in the case of loss, theft or destruction, of an indemnification
undertaking by the Holder to the Company in a form reasonably acceptable to the Company
and, in the case of mutilation, upon surrender
and cancellation of the Notes, the Company shall execute and deliver
a new Note of like tenor and date and in substantially the same form as this Note; provided,
however, the Company shall not be obligated
to re-issue a Note if the Holder contemporaneously requests the Company to convert
such remaining principal amount into Common Stock. |
| 13. | Payment
of Collection, Enforcement and Other Costs. If:
(i) this Note is placed in the hands of an attorney for collection or enforcement
or is collected or enforced through any legal proceeding; or (ii) an attorney is retained
to represent the Holder of this Note in any bankruptcy, reorganization, receivership
or other proceedings affecting creditors’
rights and involving a claim under this Note, then the Company shall pay to the
Holder all reasonable attorneys’ fees, costs and expenses incurred in connection
therewith, in addition to all other amounts due hereunder. |
| 14. | Cancellation.
After all principal and accrued interest at any
time owed on this Note has been paid in full, this Note shall automatically be
deemed canceled, shall be surrendered to the Company for cancellation and shall not be
reissued. |
| 15. | Waiver
of Notice. To the extent permitted by law, the Company hereby waives demand, notice,
protest and all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note. |
| 16. | Governing
Law. This Note shall be construed and enforced in accordance with, and all questions
concerning the construction, validity, interpretation and performance of this Note shall
be governed by, the laws of the State of Texas, without giving effect to provisions
thereof regarding conflict of laws. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal courts
sitting in Texas for the adjudication of
any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably waives,
and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction of any
such court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by sending by certified mail or overnight
courier a copy thereof to such party at the address for such 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 manner permitted
by law. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY. |
| 17. | Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided
in this Note shall be cumulative and in addition to all other remedies available under
this Note, at law or in equity (including a decree
of specific performance and/or other injunctive relief), and no remedy contained
herein shall be deemed a waiver of compliance with the provisions giving rise to such
remedy and nothing herein shall limit a Holder’s right to pursue actual damages
for any failure by the Company to comply with the terms of this Note. The Company covenants
to each Holder of Notes that there shall be no characterization concerning this instrument
other than as expressly provided herein. Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the Holder thereof and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance thereof). |
| 18. | Specific
Shall Not Limit General; Construction. No specific
provision contained in this Note shall limit or modify any more general provision
contained herein. This Note shall be deemed to be jointly drafted by the Company and
all Holders and shall not be construed against any person as the drafter hereof. |
| 19. | Failure
or Indulgence Not Waiver. No failure or delay on
the part of this Note in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
of any such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. |
| 20. | Partial
Payment. In the event of partial payment by the Holder, the principal sum due
to the Holder shall be prorated based on the consideration actually paid by lender such
that the company is only required to repay the amount funded and the company is not required
to repay any unfunded portion of this note. |
| 21. | Entire
Agreement. This Agreement constitutes the full and entire understanding and agreement
between the parties with regard to the subjects herein. None of the terms of
this Agreement can be waived or modified, except by an express agreement signed by the
Parties. |
| 22. | Representations
and Warranties. The Company expressly acknowledges that the Holder, including but not
limited to its officer, directors, employees, agents, and affiliates, have not made any
representation or warranty to it outside the terms of this Agreement. The Company further
acknowledges that there have been no representations or warranties about future financing
or subsequent transactions between the parties. |
| 23. | Notices.
All notices and other communications given or made to the Company pursuant hereto shall
be in writing (including facsimile or similar electronic transmissions) and shall be
deemed effectively given: (i) upon personal delivery, (ii) when sent by electronic
mail or facsimile, as deemed received by the close of business on the date sent, (iii)
five (5) days after having been sent by registered or certified mail, return receipt
requested, postage prepaid or (iv) one (1) day after deposit with a nationally recognized
overnight courier, specifying next day delivery. All communications shall be sent
either by email, or fax, or to the address specified on the signature page. The physical
address, email address, and phone number provided on the signature page shall be considered
valid pursuant to the above stipulations; should the Company’s contact information
change from that listed on the signature page, it is incumbent on the Company to inform
the Holder. |
| 24. | Severability.
If one or more provisions of this Agreement are held to be unenforceable under applicable
law, such provision shall be excluded from this Agreement and the rest of the Agreement
shall be enforceable in accordance with its terms. |
| 25. | Usury.
If it shall be found that any interest or other amount deemed interest due hereunder
violates the applicable law governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum rate of interest permitted under
applicable law. The Company covenants (to the extent that it may lawfully do so) that
it will not seek to claim or take advantage of any law that would prohibit or forgive
the Company from paying all or a portion of the principal or interest on this Note. |
| 26. | Successors
and Assigns. This Agreement shall be binding upon successors and assigns. |
—
SIGNATURE PAGE TO FOLLOW —
IN
WITNESS WHEREOF, the Company has caused this Note to be signed by its CEO, on and as of the Issuance Date.
COMPANY: |
GLOBAL DIGITAL SOLUTIONS, INC. |
|
|
|
|
Signature: |
/s/ Richard J. Sullivan |
|
Name: |
Richard J. Sullivan |
|
Title: |
Chief Executive Officer |
|
Address: |
777 South Flagler Drive, Suite 800 West |
|
|
West Palm Beach, FL 33401 |
|
Email: |
dloppert@gdsi.co and richardjsullivan@msn.com |
|
Phone: |
(561) 307-1635 |
|
|
|
|
HOLDER: |
|
|
|
Signature: |
|
|
|
/s/ Sameer
Hirji |
|
Sameer
Hirji, President |
|
JSJ
Investments Inc. |
|
6060 North Central
Expressway, Suite 500 |
|
Dallas TX 75206 |
|
888-503-2599 |
|
Exhibit
1
Conversion
Notice
Reference
is made to the Convertible Note issued by Global Digital Solutions, Inc. (the "Note"), dated January 26, 2015 in the
principal amount of $66,000 with 10% interest. This note currently holds a principal balance of $66,000 and accrued interest in
the amount of $_______. The features of conversion stipulate a Conversion Price the lower of (i) a 40% discount to the lowest
trading price during the previous twenty (20) trading days to the date of Conversion; or (ii) a 40% discount to the lowest trading
price during the previous twenty (20) trading days before the date that this note was executed, pursuant to the provisions of
Section 2(a)(ii) in the Note.
In
accordance with and pursuant to the Note, the undersigned hereby elects to convert $______ of the PRINCIPAL/INTEREST balance
of the Note, indicated below into shares of Common Stock (the "Common Stock"), of the Company, by tendering the Note
specified as of the date specified below.
Date
of Conversion: __________
Please
confirm the following information:
Conversion
Amount: $ ____________________
Conversion
Price: $ ____________________ ( ____ % discount from $ ____________________)
Number
of Common Stock to be issued: _____________________________________________________________________
Current
Issued/Outstanding: _______________________________________________________________________________
Please
issue the common stock into which the note is being converted in the name of the Holder of the Note and transfer the shares electronically
to:
[BROKER
INFORMATION]
Holder
Authorization:
JSJ Investments Inc.
6060 North Central Expressway, Suite 500
Dallas TX 75206
888-503-2599
Tax
ID: 20-2122354
Sameer Hirji, President
Date:
[Continued on Next Page]
PLEASE
BE ADVISED, pursuant to Section 2(e)(ii) of the Note, “Upon receipt by the Company of a copy of the Conversion Notice, the
Company shall as soon as practicable, but in no event later than one (1) Business Day after receipt of such Conversion
Notice, SEND, VIA EMAIL, FACSIMILE OR OVERNIGHT COURIER, A CONFIRMATION OF RECEIPT OF SUCH CONVERSION NOTICE TO SUCH HOLDER INDICATING
THAT THE COMPANY WILL PROCESS SUCH CONVERSION NOTICE in accordance with the terms herein. Within two (2) Business Days after the
date of the Conversion Confirmation, the Company shall have issued and electronically transferred the shares to the Broker indicated
in the Conversion Notice; should the Company be unable to transfer the shares electronically, they shall, within two (2) Business
Days after the date of the Conversion Confirmation, have surrendered to FedEx for delivery the next day to the address as specified
in the Conversion Notice, a certificate, registered in the name of the Holder, for the number of shares of Common Stock to which
the Holder shall be entitled.”
Signature:
/s/ Richard
J. Sullivan |
|
|
Richard J. Sullivan |
|
|
CEO |
|
|
Global Digital Solutions, Inc. |
|
|
10
Exhibit 10.2
SECURITIES
PURCHASE AGREEMENT
This
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of January 26, 2015, by and between Global Digital
Solutions, Inc., a New Jersey corporation, with headquarters located at 777 South Flagler Drive, Suite #800 West, West Palm
Beach, FL 33401 (the “Company”), and ADAR BAYS, LLC, a Florida limited liability company, with its address
at 3411 Indian Creek Drive, Suite 403, Miami Beach, FL 33140 (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 forms attached hereto as Exhibit A in the aggregate principal amount of $35,000.00 (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, $0.001 par value per share, 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 each 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), (i) 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, 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
(ii) the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase
Price.
DAL
Company Initials
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 January 26, 2015, 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.
DAL
Company Initials
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 (i) 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 (a) the Securities
are sold pursuant to an effective registration statement under the 1933 Act, (b) 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, (c) 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, (d) the Securities are sold pursuant to Rule 144, or (e) 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.”
DAL
Company Initials
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.
DAL
Company Initials
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.
DAL
Company Initials
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 OTCQB marketplace
(the “OTCQB”) and does not reasonably anticipate that the Common Stock will be delisted by the OTCQB in the foreseeable
future, nor are the Company’s securities “chilled” by DTC. 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. Except as disclosed in the Company’s public filings, 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.
DAL
Company Initials
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. The Company’s obligation with respect to this transaction is to reimburse Buyer’s expenses
shall be $1,750 in legal fees which shall be deduced from the Note when funded.
DAL
Company Initials
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 market,
the Nasdaq stock market (“Nasdaq”), 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 markets on which the Common
Stock is then listed regarding the continued eligibility of the Common Stock for listing on such markets.
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, 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. 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 or any other Transaction Document 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.
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Company Initials
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, or (iv) 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 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:
Global
Digital Solutions, Inc.
777
South Flagler Drive, Suite #800 West
West
Palm Beach, FL 33401
Attn:
Richard J. Sullivan, CEO
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Company Initials
If to the Buyer:
ADAR
BAYS, LLC
3411
Indian Creek Drive, Suite 403
Miami
Beach, FL 33140
Attn:
Sarah Eisenberg
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.
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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.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above
written.
Global
Digital Solutions, Inc.
By: |
/s/
David A. Loppert |
|
Name: |
David
A. Loppert |
|
Title: |
CFO |
|
ADAR
BAYS, LLC.
By: |
/s/
Sarah Eisenberg |
|
Name: |
Sarah
Eisenberg |
|
Title: |
Manager |
|
AGGREGATE
SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of Note: |
$ 35,000.00 |
Aggregate
Purchase Price:
Note
1: $35,000.00 less $1,750.00 in legal fees and $3,500 in fees to Carter, Terry & Co.
EXHIBIT
A
144
NOTE - $35,000
Exhibit 10.3
THIS
NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE 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
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT”)
US
$35,000.00
GLOBAL
DIGITAL SOLUTIONS, INC.
8%
CONVERTIBLE REDEEMABLE NOTE
DUE
JANUARY 26, 2016
FOR
VALUE RECEIVED, Global Digital Solutions, Inc. (the “Company”) promises to pay to the order of ADAR BAYS, LLC and
its authorized successors and permitted assigns ("Holder"), the aggregate principal face amount of Thirty Five
Thousand Dollars exactly (U.S. $35,000.00) on January 26, 2016 ("Maturity Date") and to pay interest on the principal
amount outstanding hereunder at the rate of 8% per annum commencing on January 26, 2015. 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 3411 Indian Creek Drive, Suite 403, Miami Beach, FL 33140, 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.
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Company Initials
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, at any time after 180 days, 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") without restrictive
legend of any nature, at a price ("Conversion Price") for each share of Common Stock equal to 60% of the
lowest trading price 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 (provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company
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. Once the Holder has received such shares of Common Stock, the Holder shall surrender this Note to the Company,
executed by the Holder evidencing such Holder's intention to convert this Note or a specified portion hereof, and accompanied
by proper assignment hereof in blank. 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. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased
to 50% instead of 60% 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.
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Company Initials
(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"). Holder may, at any time, send in a Notice of Conversion to the Company for Interest
Shares based on the formula provided in Section 4(a) above. 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) The
Notes may be prepaid with the following penalties:
PREPAY
DATE |
PREPAY
AMOUNT |
<
30 days |
115%
of principal plus accrued interest |
31-
60 days |
121%
of principal plus accrued interest |
61-90
days |
127%
of principal plus accrued interest |
91-120
days |
133%
of principal plus accrued interest |
121-150
days |
139%
of principal plus accrued interest |
151-180
days |
145%
of principal plus accrued interest |
This
Note may not be prepaid after the 180th day. Such redemption must be closed and funded within 3 days of giving notice
of redemption of the right to redeem shall be null and void.
(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, other than a forward or reverse stock split or stock dividend, 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 (not to include a sale of all or substantially all of the Company’s assets) 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.
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Company Initials
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 sixty (60) 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
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Company Initials
(h) The
Company shall have 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 4th
day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th
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%. If this Note is not paid at
maturity, the outstanding principal due under this Note shall increase by 10%.
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Company Initials
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- 3(a)(9)
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 4,487,000 shares of its Common Stock for conversions under
this Note (the “Share Reserve”). 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. 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. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement
shall be effective as an original.
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IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.
|
GLOBAL DIGITAL SOLUTIONS, INC. |
|
|
|
By: |
/s/
David A. Loppert |
|
|
David
A. Loppert, Chief Financial Officer |
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Company Initials
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 Global
Digital Solutions, 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:
_________________________________________________________
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8
Exhibit 10.4
GDSI |
|
|
|
|
|
$250,000 CONVERTIBLE NOTE |
Interest free if paid in full within 3 months |
FOR VALUE
RECEIVED, Global Digital Solutions, Inc., a New Jersey corporation (the "Issuer" of this Security) with at least
106,000,000 common shares issued and outstanding, issues this Security and promises to pay to JMJ Financial, a Nevada sole proprietorship,
or its Assignees (the "Investor") the Principal Sum along with the Interest Rate and any other fees according to the
terms herein. This Note will become effective only upon execution by both parties and delivery of the first payment of Consideration
by the Investor (the "Effective Date").
The Principal Sum is $250,000 (two
hundred fifty thousand) plus accrued and unpaid interest and any other fees. The Consideration is $225,000 (two hundred twenty
five thousand) payable by wire (there exists a $25,000 original issue discount (the "OID")). The Investor shall pay
$75,000 of Consideration upon closing of this Note. The Investor may pay additional Consideration to the Issuer in such amounts
and at such dates as the Investor may choose in its sole discretion. THE PRINCIPAL SUM DUE TO THE INVESTOR SHALL BE PRORATED
BASED ON THE CONSIDERATION ACTUALLY PAID BY INVESTOR (PLUS AN APPROXIMATE 10% ORIGINAL ISSUE DISCOUNT THAT IS PRORATED BASED ON
THE CONSIDERATION ACTUALLY PAID BY THE INVESTOR AS WELL AS ANY OTHER INTEREST OR FEES) SUCH THAT THE ISSUER IS ONLY REQUIRED TO
REPAY THE AMOUNT FUNDED AND THE ISSUER IS NOT REQUIRED TO REPAY ANY UNFUNDED PORTION OF THIS NOTE. The Maturity Date is two
years from the Effective Date of each payment (the "Maturity Date") and is the date upon which the Principal Sum of
this Note, as well as any unpaid interest and other fees, shall be due and payable. The Conversion Price is the lesser of $0.075
or 60% of the lowest trade price in the 25 trading days previous to the conversion (In the case that conversion shares are not
deliverable by DWAC an additional 10% discount will apply; and if the shares are ineligible for deposit into the DTC system and
only eligible for Xclearing deposit an additional 5% discount shall apply; in the case of both an additional cumulative 15% discount
shall apply). Unless otherwise agreed in writing by both parties, at no time will the Investor convert any amount of the Note
into common stock that would result in the Investor owning more than 4.99% of the common stock outstanding.
1.
ZERO Percent Interest for the First Three Months. The Issuer may repay this Note at any time on or
before 90 days from the Effective Date, after which the Issuer may not make further payments on this Note prior to the Maturity
Date without written approval from the Investor. If the Issuer repays a payment of Consideration on or before 90 days from
the Effective Date of that payment, the Interest Rate on that payment of Consideration shalt be ZERO PERCENT (0%). If the
Issuer does not repay a payment of Consideration on or before 90 days from its Effective Date, a one-time Interest charge of 12%
shall be applied to the Principal Sum. Any interest payable is in addition to the OID, and that OID (or prorated OID, if applicable)
remains payable regardless of time and manner of payment by the Issuer.
2.
Conversion. The Investor has the right, at any time after the Effective Date,
at its election, to convert all or part of the outstanding and unpaid Principal Sum and accrued interest (and any other fees) into
shares of fully paid and non-assessable shares of common stock of the Issuer as per this conversion formula: Number of shares receivable
upon conversion equals the dollar conversion amount divided by the Conversion Price. Conversions may be delivered to the Issuer
by method of the Investor's choice (including but not limited to email, facsimile, mail, overnight courier, or personal delivery),
and all conversions shall be cashless and not require further payment from the Investor. If no objection is delivered from the
Issuer to the Investor regarding any variable or calculation of the conversion notice within 24 hours of delivery of the conversion
notice, the Issuer shall have been thereafter deemed to have irrevocably confirmed and irrevocably ratified such notice of conversion
and waived any objection thereto. The Issuer shall deliver the shares from any conversion to the Investor (in any name directed
by the Investor) within 3 (three) business days of conversion notice delivery.
3.
Conversion Delays. If the Issuer fails to deliver shares in accordance with the timeframe stated in Section 2, the
Investor, at any time prior to selling all of those shares, may rescind any portion, in whole or in part, of that particular conversion
attributable to the unsold shares and have the rescinded conversion amount returned to the Principal Sum with the rescinded conversion
,shares returned to the Issuer (under the Investor's and the Issuer's expectations that any returned conversion amounts
will tack back to the original date of the Note). In addition, for each conversion, in the event that shares are not delivered
by the third business day (inclusive of the day of conversion), a penalty of $2,000 per day will be assessed for each day
after the third business day (inclusive of the day of the conversion) until share delivery is made; and such penalty will be added
to the Principal Sum of the Note (under the Investor's and the Issuer's expectations that any penalty amounts will tack back to
the original date of the Note).
4.
Reservation of Shares. At all times during which this Note is convertible, the Issuer will reserve from its authorized
and unissued Common Stock to provide for the issuance of Common Stock upon the full conversion of this Note. The Issuer will at
all times reserve at least 26,650,000 shares of Common Stock for conversion.
5.
Piggyback Registration Rights. The Issuer shall include on the next registration statement the Issuer files with
SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon
conversion of this Note. Failure to do so will result in liquidated damages of 25% of the outstanding principal balance of this
Note, but not less than $25,000, being immediately due and payable to the Investor at its election in the form of cash payment
or addition to the balance of this Note.
6.
Terms of Future Financings. Se long as this Note is outstanding, upon any issuance by the Issuer or any of its subsidiaries
of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security
that was not similarly provided to the Investor in this Note, then the Issuer shall notify the Investor of such additional or
more favorable term and such term, at the Investor's option, shall become a part of the transaction documents with the Investor.
The types of terms contained in another security that may be more favorable to the holder of such security include, but are not
limited to, terms addressing conversion discounts, conversion lookback periods, interest rates, original issue discounts, stock
sale price, private placement price per share, and warrant coverage.
7. Default.
The following are events of default under this Note: (i) the Issuer shall fail to pay any principal under the Note when due
and payable (or payable by conversion) thereunder; or (ii) the Issuer shall fail to pay any interest or any other amount
under the Note when due and payable (or payable by conversion) thereunder; or (iii) a receiver, trustee or other similar
official shall be appointed over the Issuer or a material part of its assets and such appointment shall remain
uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60) days; or (iv) the Issuer shall
become insolvent or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject
to applicable grace periods, if any; or (v) the Issuer shall make a general assignment for the benefit of creditors; or (vi)
the Issuer shall file a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign); or (vii)
an involuntary proceeding shall be commenced or filed against the Issuer; or (viii) the Issuer shall lose its status as
"DTC Eligible" or the Issuer's shareholders shall lose the ability to deposit (either electronically or by physical
certificates, or otherwise) shares into the DTC System; or (ix) the Issuer shall become delinquent in its filing requirements
as a fully-reporting issuer registered with the SEC; or (x) the Issuer shall fail to meet all requirements to satisfy the
availability of Rule 144 to the Investor or its assigns including but not limited to timely fulfillment of its filing
requirements as a fully-reporting issuer registered with the SEC, requirements for XBRL filings, and requirements for
disclosure of financial statements on its website.
8.
Remedies.
In the event of any default, the outstanding principal amount of this Note, plus accrued but unpaid interest, liquidated damages,
fees and other amounts owing in respect thereof through the date of acceleration, shall become, at the Investor's election, immediately
due and payable in cash at the Mandatory Default Amount. The Mandatory Default Amount means the greater of (i) the outstanding
principal amount of this Note, plus all accrued and unpaid interest, liquidated damages, fees and other amounts hereon, divided
by the Conversion Price on the date the Mandatory Default Amount is either demanded or paid in full, whichever has a lower Conversion
Price, multiplied by the VWAP on the date the Mandatory Default Amount is either demanded or paid in full, whichever has a higher
VWAP, or (ii) 150% of the outstanding principal amount of this Note, plus 100% of accrued and unpaid interest, liquidated damages,
fees and other amounts hereon. Commencing five (5) days after the occurrence of any event of default that results in the eventual
acceleration of this Note, the interest rate on this Note shall accrue at an interest rate equal to the lesser of 18% per annum
or the maximum rate permitted under applicable law. In connection with such acceleration described herein, the Investor need not
provide, and the Issuer hereby waives, any presentment, demand, protest or other notice of any kind, and the Investor may immediately
and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available
to it under applicable law. Such acceleration may be rescinded and annulled by the Investor at any time prior to payment hereunder
and the Investor shall have all rights as a holder of the note until such time, if any, as the Investor receives full payment
pursuant to this Section 8. No such rescission or annulment shall affect any subsequent event of default or impair any right consequent
thereon. Nothing herein shall limit the Investor's right to pursue any other remedies available to it at law or, in equity including,
without limitation, a decree of specific performance and/or injunctive relief with respect to the Issuer's failure to timely deliver
certificates representing shares of Common Stock upon conversion of the Note as required pursuant to the terms hereof.
9.
No
Shorting. The Investor agrees that so long as this Note from the Issuer to the Investor remains outstanding, the Investor
will not enter into or effect "short sales" of the Common Stock or hedging transaction which establishes a net short
position with respect to the Common Stock of the Issuer. The Issuer acknowledges and agrees that upon delivery of a conversion
notice by the Investor, the Investor immediately owns the shares of Common Stock described in the conversion notice and any sale
of those shares issuable under such conversion notice would not be considered short sales.
10.
Assignability.
The Issuer may not assign this Note. This Note will be binding upon the Issuer and its successors and will inure to the benefit
of the Investor and its successors and assigns and may be assigned by the Investor to anyone without the Issuer's approval.
11.
Governing Law, This Note will be governed by, and construed and enforced in
accordance with, the laws of the State of Nevada, without regard to the conflict of laws principles thereof. 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 Florida or in the federal courts located in Miami-Dade County, in the State of Florida. Both parties and the individuals
signing this Agreement agree to submit to the jurisdiction of such courts.
12.
Delivery of Process by the Investor to the Issuer. In the event of any action or proceeding by the Investor against
the Issuer, and only by the Investor against the Issuer, service of copies of summons and/or complaint and/or any other process
which may be served in any such action or proceeding may be made by the Investor via U.S. Mail, overnight delivery service such
as FedEx or UPS, email, fax, or process server, or by mailing or otherwise delivering a copy of such process to the Issuer at
its last known attorney as set forth in its most recent SEC filing.
13.
Attorney
Fees. If any attorney is employed by either party with regard to any legal or equitable action, arbitration or other proceeding
brought by such party for enforcement of this Note or because of an alleged dispute, breach, default or misrepresentation in connection
with any of the provisions of this Note, the prevailing party will be entitled to recover from the other party reasonable attorneys'
fees and other costs and expenses incurred, in addition to any other relief to which the prevailing party may be entitled.
14.
Opinion
of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, the Investor has the right
to have any such opinion provided by its counsel. Investor also has the right to have any such opinion provided by Issuer's counsel.
15. Notices.
Any notice required or permitted hereunder (including Conversion Notices) must be in writing and either personally served,
sent by facsimile or email transmission, or sent by overnight courier. Notices will be deemed effectively delivered at the
time of transmission if by facsimile or email, and if by overnight courier the business day after such notice is
deposited with the courier.
Issuer: |
|
Investor: |
|
|
|
/s/ David Loppert |
|
|
Global Digital Solutions, Inc. |
|
JMJ Financial |
David Loppert |
|
Its Principal |
Chief Financial Officer |
|
|
|
|
|
Date: 1/26/15 |
|
Date: 1/28/15 |
[Signature Page to $250,000 Convertible Note]
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