CLRD Clearday Inc (QX)

 

 

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): February 15, 2024 (February 9, 2024)

 

Clearday, Inc.

(Exact Name of Registrant as Specified in Charter)

 

Delaware		0-21074		77-0158076
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification Number)

 

8800 Village Drive, Suite 106, San Antonio, TX 78217

(Address of Principal Executive Offices) (Zip Code)

 

(210) 451-0839

(Registrant’s telephone number, including area code)

 

 

(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:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001		CLRD		OTCQX

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

Clearday, Inc. (“Clearday” or the “Company”) modified and amended a loan agreement with an institutional lender and obtained additional gross proceeds of approximately $100,000 and entered into certain related transactions.

 

On February 9, 2024 (“Closing Date”), the Company closed an additional loan with an institutional lender (“Lender”) under the terms of an Amendment (the “Amendment”) that modified the terms and conditions of its existing loan under a promissory note (the “Promissory Note”) dated as of January 12, 2023. The additional loan has the same terms of the Promissory Note, which has a maturity date of January 26, 2024 (the “Maturity Date”). The terms and conditions of the Promissory Note were summarized by the Company in a Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2023 (the “Prior 8K”).

 

The Company has obligations (the “Note Obligations”) to the lender under the following promissory notes (the “Mast Hill Notes”):

 

●	the promissory note in the original principal amount of $600,000.00 dated on or around July 1, 2022, as the same may be amended, replaced, renewed, extended or otherwise modified from time to time (the “First Note”),
●	the promissory note in the original principal amount of $315,000.00 dated on or around September 28, 2022, as the same may be amended, replaced, renewed, extended or otherwise modified from time to time (the “Second Note”), and
●	the Promissory Note, as the same may be amended, replaced, renewed, extended or otherwise modified from time to time including the Amendment (the “Third Note”).

 

On the Closing Date, the Note Obligations were amended as follows under the terms of the Global Amendment to the Notes dated as of the Closing Date as follows:

 

●	The First Note outstanding balance as of the Closing Date in the amount of $375,171.76 (the “First Note Balance”), consisting of $314,734.28 of principal and $60,437.48 of accrued interest has been increased by $56,275.77, which will result in the First Note Balance increasing to $431,447.53.
●	The Second Note is outstanding balance as of the Closing Date in the amount of $297,472.29 (the “Second Note Balance”), consisting of $260,455.05 of principal and $37,017.24 of accrued interest has been increased by $44,620.85, which will result in the Second Note Balance increasing to $342,093.14.
●	The Third Note outstanding balance as of the Closing Date in the amount of $881,503.40 (the “Third Note Balance”), consisting of $781,171.07 of principal and $100,332.33 of accrued interest has been increased by $132,225.51, which will result in the Third Note Balance increasing to $1,013,728.91.
●	The maturity date for each of the First Note, the Second Note and the Third Note has been extended to February 8, 2025.
●	The applicable interest rate for each of the First Note, the Second Note and the Third Note has been increased to 16% per annum.

 

On the Closing Date, the lender waived the previously reported defaults under the Note Obligations under the terms of the Omnibus Amendment Regarding Loans by Mast Hill Fund, LP to Clearday, Inc. to waive the existing defaults. Such waiver is effective until March 31, 2024.

 

The Amendment to the Third Note and the additional loan provided in connection with the additional financing provided the following:

 

●	Additional financing of $100,000 for an increase in the principal amount of the Promissory Note of $111,111.11;
●	Net financing of $96,000 after payment of $4,000 of lender expenses;
●	The issuance of a warrant (“2024 Warrant”) to the lender, which 2024 Warrant provides:

 

	○	for the purchase of 135,502 additional shares of our common stock, par value $0.001 (“Common Stock”), at an exercise price equal to $0.82 per share, subject to customary adjustment for fundamental transactions as described in the 2024 Warrant and full ratchet anti-dilution adjustment for future issuances or deemed issuances of our Common Stock or equivalents of Common Stock;
	○	customary cashless exercise for the purchase of the shares of Common Stock;
	○	a 5 year period for the exercise of the 2024 Warrant;
	○	customary limitation of beneficial ownership of the holder of the 2024 Warrant to 4.99% of our outstanding shares of Common Stock;
	○	rights and remedies of the holder of the 2024 Warrant, including certain additional amounts payable if the Company does not issue shares of Common Stock upon the exercise of the 2024 Warrant, in whole or in part, when required under the 2024 Warrant; and
	○	other customary terms and conditions.

 

●

The guaranty (the “New Guaranty”) by AIU 8800 Village Drive, LLC, a subsidiary of the Company (the “New Guarantor”) that owns our headquarters building located in San Antonio, Texas. The New Guaranty is in favor of the lender and guarantees the full and prompt payment of all obligations of the Company to the lender under all of the Note Obligations and provided for a grant of all assets of the New Guarantor as collateral to the lender, and other customer terms and conditions.

●

The First Amendment (the “SRP Guaranty Amendment”) to the Guaranty (the “SRP Guaranty”) by Shadow Retail Partners, LP, a subsidiary of the Company, of the obligations under the Promissory Note, which was summarized in the Prior 8K The SRP Guaranty Amendment amended the terms of the SRP Guaranty to extend the obligations under the SRP Guaranty to the full and prompt payment of all obligations of the Company to the lender under all of the Note Obligations.

 

The Company is negotiating the terms of further amendment of the Note Obligations and the extension of additional credit of $400,000. However, there can be no assurance that we will be able to consummate a further amendment or extension of credit on acceptable terms or at all.

 

On the Closing Date, the Company also acknowledged and modified the warrants described as the Lender Remedy Warrants in the Quarterly Report on Form 10-Q filed by the Company on January 16, 2024 (the “Recent 10Q”) under the terms of the MFN Acknowledgement, dated as of the Closing Date, so that such warrants became exercisable. These warrants are the following:

 

		Shares				Exercise Price
Related to the First Note			1,134,000			$	0.75
Related to the Second Note			472,500			$	0.75
Related to the Third Note			900,000			$	0.50

 

The foregoing descriptions of our obligations under the Amendment, the New Guaranty, the SRP Guaranty Amendment, the 2024 Warrant, the amendments to the First Note, Second Note and Third Note, the existing Lender Remedy Warrants and the waivers by the lender are not complete and are qualified in their entirety by reference to the full text of the Amendment, the New Guaranty, the SRP Guaranty Amendment, the 2024 Warrant, Global Amendment to the Notes, the MFN Acknowledgement and the Omnibus Amendment Regarding Loans by Mast Hill Fund, LP to Clearday, Inc., which are filed as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 and 10.7 to this Report and the summary of the Promissory Note and related documents in the Prior 8K and in the Quarterly Report on Form 10-Q filed by the Company on January 16, 2024 (the “Recent 10Q”) and are incorporated herein by reference.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 3.02 by reference.

 

 

Forward Looking Statements

 

This communication contains forward-looking statements (including within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended) concerning the Company. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of the management of the Company, as well as assumptions made by, and information currently available to, management. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend,” and other similar expressions. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: the risks regarding the Company and its business, generally; risks related to the Company’s ability to correctly estimate and manage its operating expenses and develop its innovate non-acute care businesses and the acceptance of its proposed products and services, including with respect to future financial and operating results; the ability of the Company to protect its intellectual property rights; competitive responses to the Company’s businesses including its innovative non-acute care business; unexpected costs, charges or expenses; regulatory requirements or developments; changes in capital resource requirements; and legislative, regulatory, political and economic developments. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the risk factors included in the Company’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC and the registration statement regarding the Company’s previously announced merger, that was filed and declared effective. The Company can give no assurance that the actual results will not be materially different than those based on the forward looking statements. Except as required by applicable law, the Company undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

No.		Description
10.1		Amendment dated as of February 9, 2024, by and between Clearday, Inc., a Delaware corporation, and Mast Hill Fund, L.P., a Delaware limited partnership.
10.2		Guaranty, dated as of February 9, 2024, by AIU 8800 Village Drive, LLC (the “Guarantor”), in favor of Mast Hill Fund, L.P., a Delaware limited partnership (the “Lender”).
10.3		First Amendment to the Guaranty, dated as of February 9, 2024, by and between SRP Artesia, LLC, a Delaware limited liability company, and Mast Hill Fund, L.P., (the Lender) regarding the obligations of certain promissory notes issued by Clearday, Inc. to the Lender
10.4		Warrant to purchase 135,502 shares of Common Stock dated February 9, 2024
10.5		Global Amendment To The Notes dated as of February 9, 2024
10.6		MFN Acknowledgement dated as of February 9, 2024
10.7		Omnibus Amendment Regarding Loans by Mast Hill Fund, LP to Clearday, Inc dated as of February 15, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.

 

 

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.

 

	CLEARDAY, INC.
	By:	/s/ James Walesa
	Name:	James Walesa
	Title:	Chief Executive Officer
Dated February 15, 2024

 

 

 

Exhibit 10.1

 

AMENDMENT

 

THIS AMENDMENT to the Note (as defined below) (the “Amendment”) is entered into as of February 9, 2024 (the “Effective Date”), by and between Clearday, Inc., a Delaware corporation (the “Company”), and Mast Hill Fund, L.P., a Delaware limited partnership (the “Holder”) (collectively the “Parties”).

 

BACKGROUND

 

A. The Company and Holder are the parties to that certain promissory note in the original principal amount of $756,000.00 dated on or around January 12, 2023 (as amended from time to time, the “Note”); and

 

B. The Parties desire to amend the Note as set forth expressly below.

 

NOW THEREFORE, in consideration of the execution and delivery of the Amendment and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1. The Parties hereby agree that the Holder shall fund an additional $100,000.00 to the Company under the Note, which shall result in an increase of $111,111.11 of principal to the Note (the “Note Additional Funding”).

 

2. In connection with the Note Additional Funding, the Company shall issue a common stock purchase warrant to the Holder on the Effective Date, a copy of which is attached hereto as Exhibit “A”, which shall be earned in full as of the Effective Date.

 

3. Section 4.6 of the Note shall apply to this Amendment.

 

4. This Amendment may be executed in two or more counterparts, each of which when so executed and delivered to the other party shall be deemed an original. The executed page(s) from each original may be joined together and attached to one such original and shall thereupon constitute one and the same instrument. Such counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

5. This Amendment shall be deemed part of, but shall take precedence over and supersede any provisions to the contrary contained in the Note. Except as specifically modified hereby, all of the provisions of the Note, which are not in conflict with the terms of this Amendment, shall remain in full force and effect.

 

[Signature page to follow]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written.

 

Clearday, Inc.			Mast Hill Fund, L.P.
By:	/s/ James Walesa		By:	/s/ Patrick Hassani
Name:	James Walesa		Name:	Patrick Hassani
Title:	Chief Executive Officer		Title:	Chief Investment Officer

 

 

Exhibit A

 

(see attached)

 

 

 

 

Exhibit 10.2

 

GUARANTY

 

THIS GUARANTY (“Guaranty”), dated as of February 9, 2024, is made by AIU 8800 VILLAGE DRIVE, LLC, a Delaware limited liability company (the “Guarantor”), in favor of Mast Hill Fund, L.P., a Delaware limited partnership (the “Lender”) (together with the Guarantor, the “Parties”).

 

W I T N E S S E T H:

 

WHEREAS, Clearday, Inc., a Delaware corporation (the “Borrower”) and the Lender are the parties to that certain promissory note in the original principal amount of $600,000.00 dated on or around July 1, 2022, as the same may be amended, replaced, renewed, extended or otherwise modified from time to time (the “First Note”), certain promissory note in the original principal amount of $315,000.00 dated on or around September 28, 2022, as the same may be amended, replaced, renewed, extended or otherwise modified from time to time (the “Second Note”), and certain promissory note in the original principal amount of $756,000.00 dated on or around January 12, 2023, as the same may be amended, replaced, renewed, extended or otherwise modified from time to time (the “Third Note”); and

 

WHEREAS, a copy of the First Note, Second Note, and Third Note are attached hereto as Exhibits “A”, “B”, and “C”, respectively; and

 

WHEREAS, the Lender is funding a second tranche purchase price of $100,000.00 under the Third Note on or around February 9, 2024, which will result in an increase of $111,111.11 of principal to the Third Note (the “Third Note Additional Funding”, and together with the First Note, Second Note, and Third Note, the “Notes”);

 

WHEREAS, as a condition to making the Third Note Additional Funding, Lender has required that Guarantor execute and deliver this Guaranty. Guarantor is willing to execute and deliver this Guaranty for the express and intended purpose of inducing Lender to make the Third Note Additional Funding.

 

WHEREAS, Guarantor acknowledges that it expects to benefit from Lender’s funding of the Third Note Additional Funding, and has benefited from Lender’s funding of the First Note, Second Note, and Third Note, because of Guarantor’s relationship with Borrower and that it is executing this Guaranty in consideration of that anticipated benefit.

 

NOW, THEREFORE, in order to induce the Lender to make the Third Note Additional Funding to the Borrower, and in consideration thereof, the foregoing recitals, as well as mutual covenants contained herein, the Parties hereby agrees as follows:

 

1. Guaranty; Grant of Security Interest. Guarantor hereby absolutely and unconditionally guarantees to Lender and its successors and assigns the payment of the entire principal balance of the Notes, all accrued interest thereon, all penalties therein, and all costs and expenses incurred by Lender, including without limitation, the costs and expenses of Lender’s outside counsel, in connection with the enforcement of Borrower’s obligations under the Notes, as and when the same shall be due and payable (collectively, the “Obligations”), if an Event of Default (as defined in the Notes) occurs under the Notes. Guarantor hereby irrevocably and unconditionally covenants and agrees that it is liable for the Obligations as a primary obligor and that it shall fully perform each and every term and provision hereof.

 

 

The Guarantor hereby grants, pledges and collaterally assigns to the Lender a security interest in all of the Guarantor’s right, title and interest in all of the Pledged Collateral (as defined below), now owned or at any time hereafter acquired by the Guarantor or in which the Guarantor now has or at any time in the future may acquire any right, title or interest, and wherever located or deemed located as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations. To this end, the Guarantor hereby pledges with, hypothecates, transfers and assigns to the Lender all of the Pledged Collateral, which shall be defined as:

 

(i) All capital stock and equity securities and all general intangibles relating to the ownership of such capital stock and equity securities of the Borrower now or at any time or times hereafter owned by Guarantor comprised of all of such equity securities (and general intangibles related thereto), as well as all indebtedness and promissory notes owed by the Borrower to the Guarantor (collectively, the “Pledged Interests”); and

 

(ii) All warrants, options and other rights to acquire, and rights in and to, the capital stock or other equity securities of the Borrower now or at any time or times hereafter owned by Guarantor with respect to the Pledged Interests (collectively, the “Rights”); and

 

(iii) All other property now or at any time or times hereafter received, receivable or otherwise distributed in respect of or in exchange or substitution for any or all of the Pledged Interests and/or the Rights, and all of Guarantor’s rights thereto, including, without limitation, any shares and other securities into which such Pledged Interests may be convertible or exchangeable and any dividends or other distributions in connection therewith; and

 

(iv) All accounts, chattel paper, contracts, contract rights, accounts receivable, tax refunds, note receivable, documents, other choses in action and general intangibles, including, but not limited to, proceeds of inventory and returned goods and proceeds from the sale of goods and services, and all rights, liens, securities, guaranties, remedies and privileges related thereto, including the right of stoppage in transit and rights and property of any kind forming the subject matter of any of the foregoing; and

 

(v) All assets of any type or description that may at any time be assigned or delivered to or come into possession of Guarantor for any purpose or as to which Guarantor may have any right, title, interest or power (including but not limited to the properties located at 8800 Village Drive, San Antonio, TX 78217 (Bexar County property description: New City Block 13567 Block 3 Lots 1 and 2, Mary Mont Unit 1, City of San Antonio, Bexar County, Texas), and a true and correct copy of the grant deed with respect to the aforementioned property is attached hereto as Exhibit “B”), and property in the possession or custody of or in transit to anyone for the account of Guarantor, as well as all proceeds and products thereof and accessions and annexations thereto; and

 

(vi) All proceeds of all of the foregoing.

 

Any Pledged Collateral received by the Guarantor on or after the date hereof shall be immediately delivered to the Lender together with any executed stock powers or other transfer documents requested by the Lender, which request may be made at any time prior to the date when the Obligations shall have been paid and otherwise satisfied in full.

 

Guarantor agrees to execute and deliver to Lender (i) assignments separate from certificate, undated and appropriately endorsed in blank, with respect to any certificated Pledged Interests and any warrants or options for the purchase of capital stock or other equity securities of issuer included in the Rights and (ii) such other documents of transfer as Lender may from time to time reasonably request to enable Lender to transfer the Pledged Collateral into its name or the name of its nominee.

 

The Guarantor shall (and is hereby authorized to) file with the applicable filing office(s) such financing statements, amendments, addenda, continuations, terminations, assignments and other records (whether or not executed by Guarantor) to perfect and to maintain perfected security interests in the Pledged Collateral by the Lender, including but not limited to (a) promptly upon the execution of this Guaranty, a Financing Statement on Form UCC-1 shall be filed with all applicable jurisdictions on behalf of the Lender with respect to the Pledged Collateral; The financing statement shall designate the Lender as a secured party and Guarantor as the guarantor, shall identify the security interest in the Pledged Collateral, and contain any other items required by law. In addition to the foregoing, Guarantor hereby irrevocably authorizes Lender at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the Pledged Collateral (i) as all assets of Guarantor or words of similar effect, regardless of whether any particular asset comprised in the Pledged Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the respective state or such jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail; and (b) provide any other information required by part 5 of Article 9 of the Uniform Commercial Code of the respective state, or such other jurisdiction, for the sufficiency or filing office acceptance of any financing statement or amendment. The Guarantor agrees to furnish any such information to the Lender promptly upon such Lender’s request.

 

 

2. Guaranty Absolute; Unsecured Recourse Obligations.

 

(a) The Guarantor guarantees that the Obligations will be paid and performed strictly in accordance with the terms of the Notes, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Lender with respect thereto. The liability of the Guarantor under this Guaranty shall be absolute and unconditional irrespective of:

 

	(i)	any lack of validity or enforceability of any of the Notes;
	(ii)	any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to departure from any of the Notes, including, without limitation, changes in the terms of disbursement of the proceeds or repayment thereof, modifications, extensions (including extensions beyond and after the original term) or renewals of payment dates, changes in interest rate or the advancement of additional funds by the Lender in its discretion;
	(iii)	any exchange, release or non perfection of any collateral, or any release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Obligations; or
	(iv)	any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Borrower in respect of the Obligations or the Guarantor in respect of this Guaranty.

 

(b) Notwithstanding any termination of this Guaranty or the cancellation of the Notes or any other agreement evidencing the Obligations, if at any time any payment of any of the Obligations (from any source) is rescinded, repaid or must otherwise be returned by the Lender (i) due to or upon the insolvency, bankruptcy or reorganization of the Borrower or the Guarantor, or (ii) for any other circumstance, this Guaranty shall continue to be effective or be reinstated, as the case may be, all as though such payment had not been made.

 

3. Subrogation. As a material inducement to Lender’s agreement to make the Third Note Additional Funding and in view of the fact that Guarantor could be considered an “insider” as defined in Section 101 of the United States Bankruptcy Code, Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against Borrower that arises from the existence or performance of Guarantor’s obligations under this Guaranty or any of the other Notes, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, any right to participate in any claim or remedy of Lender against Borrower or any collateral security which Lender now has or hereafter acquires, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, by any payment made hereunder or otherwise, including, without limitation, the right to take or receive from Borrower, directly or indirectly, in cash or other property or by setoff or in any other manner, payment or security on account of such claim or other rights. An agreement between Guarantor and Borrower which is in any respect contrary to the foregoing shall be null and void and of no force or effect. If any amount shall be paid to Guarantor in violation of the preceding sentences and the Obligations shall not have been fully paid or performed, such amount shall be deemed to have been paid to Guarantor for the benefit of, and held in trust for the benefit of, Lender, and shall forthwith be paid to Lender to be credited and applied upon the Obligations, whether matured or un-matured, in accordance with the terms of the Notes.

 

 

4. Guaranty Independent; Waivers.

 

(a) The Guarantor agrees that:

 

	(i)	The Obligations hereunder are independent of and in addition to the undertakings of the Borrower pursuant to the Notes, any evidence of indebtedness issued in connection therewith, any deed of trust or security agreement given to secure the same, any other guaranties given in connection with the Notes and any other obligations of the Guarantor to the Lender,
	(ii)	A separate action may be brought to enforce the provisions hereof whether the Borrower is a party in any such action or not,
	(iii)	The Lender may at any time, or from time to time to the extent that such is permitted by the terms of the Notes, in its sole discretion (A) extend or change the time of payment and/or performance and/or the manner, place or terms of payment and/or performance of all or any of the Obligations; (B) exchange, release and/or surrender all or any of the collateral security, or any part thereof, by whomsoever deposited, which is now or may hereafter be held by the Lender in connection with all or any of the Obligations; (C) sell and/or purchase all or any such collateral at public or private sale, or at any broker’s board, in the manner permitted by law and after giving any notice which may be required, and after deducting all costs and expenses of every kind for collection, sale or delivery, the net proceeds of any such sale may be applied by the Lender upon all or any of the Obligations; and (D) settle or compromise with the Borrower, and/or any other person liable thereon, any and all of the Obligations, and/or subordinate the payment of same, or any part thereof, to the payment of any other debts or claims, which may at any time be due or owing to the Lender and/or any other person or corporation, and
	(iv)	The Lender shall be under no obligation to marshal any assets in favor of the Guarantor or in payment of any or all of the Obligations.

 

(b) The Guarantor hereby waives:

 

	(i)	Presentment, demand, protest, notice of acceptance, notice of dishonor, notice of nonperformance and any other notice with respect to any of the Obligations and this Guaranty, and promptness in commencing suit against any party thereto or liable thereon, and/or in giving any notice to or making any claim or demand hereunder upon the Guarantor;
	(ii)	any right to require the Lender to (A) proceed against the Borrower, (B) proceed against or exhaust any security held from the Borrower, or (C) pursue any remedy in the Lender’s power whatsoever;
	(iii)	any defense arising by reason of any disability or other defense of the Borrower or by reason of the cessation from any cause whatsoever of the liability of the Borrower other than full payment of the Obligations;
	(iv)	any defense it may acquire by reason of the Lender’s election of any remedy against it or the Borrower or both, including, without limitation, election by the Lender to exercise its rights under the power of sale provisions set forth in the Notes;

 

Without limitation on the generality of the foregoing, if applicable, Guarantor waives (i) all rights and defenses arising out of an election of remedies by the Lendor, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed the guarantor’s rights of subrogation and reimbursement against the principal by the operation of law or otherwise, and (ii) all rights and defenses that the Guarantor may have because Borrower’s debt to Lender is secured by real property. This means, among other things: (a) Lender may collect from Guarantor without first foreclosing on any real or personal property collateral pledges by Borrower; and (b) if Lender forecloses on any real property collateral pledged by Borrower, the amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price and Lender may collect from Guarantor even if Lender, by foreclosing on the real property collateral, has destroyed any right Guarantor may have to collect from Borrower. This is an unconditional and irrevocable waiver of any rights and defenses that Guarantor may have because Borrower’s debt is secured by real property.

 

 

5. Does Not Supersede Other Guaranties. The obligations of the Guarantor hereunder shall be in addition to any obligations of the Guarantor under any other guaranties, and this Guaranty shall not affect or invalidate any such other guaranties. The liability of the Guarantor to the Lender shall at all times be deemed to be the aggregate liability of the Guarantor under the terms of this Guaranty.

 

6. Representations And Warranties. The Guarantor hereby represents and warrants as follows:

 

(a) Validity of Guaranty.

 

	(i)	The execution, delivery and performance by the Guarantor of this Guaranty (A) has received all necessary governmental approvals, and (B) will not violate any provision of law, any order of any court or agency of government, or any indenture, agreement or any other instrument to which the Guarantor is a party, or be in conflict with, result in a breach of or constitute (with due notice and/or lapse of time) a default under any such indenture, agreement or other instrument, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of its property or assets.
	(ii)	This Guaranty, when delivered to the Lender, will constitute a legal, valid and binding obligation enforceable against the Guarantor in accordance with its terms.

 

(b) Financial Statements.

 

	(i)	All financial statements and data that have been given to the Lender by the Guarantor with respect to the Guarantor, (A) are complete and correct in all material respects as of the date given; and (B) accurately present the financial condition of the Guarantor on each date as of which the same have been furnished.
	(ii)	There has been no adverse change in the financial condition or operations of the Guarantor since the date of the most recent financial statement given to the Lender with respect to the Guarantor.

 

(c) Other Arrangements. The Guarantor is not a party to any agreement or instrument materially and adversely affecting the Guarantor’s present or proposed business, properties or assets, or operations or conditions (whether financial or otherwise); and the Guarantor is not in default in the performance, observance or fulfillment of any of the material obligations, covenants or conditions set forth in any agreement or instrument to which the Guarantor is a party.

 

(d) Litigation. There is not now pending against or affecting the Guarantor, nor to the knowledge of the Guarantor is there threatened, any action, suit or proceeding at law or in equity or by or before any administrative agency that, if adversely determined, would materially impair or affect the financial condition or operations of the Guarantor.

 

(e) Taxes. The Guarantor has filed all national, state, provincial, county, municipal and other income tax returns required to have been filed by the Guarantor and has paid all taxes that have become due pursuant to such returns or pursuant to any assessments received by the Guarantor, and the Guarantor does not know of any basis for any material additional assessment against it in respect of such taxes.

 

 

7. Affirmative Covenants. The Guarantor covenants and agrees that, so long as any part of the Notes shall remain unpaid, the Guarantor will, unless the Lender shall otherwise consent in writing:

 

(a) Taxes Affecting the Guarantor. File all tax returns required to be filed by it under the laws of any jurisdiction in which Guarantor does business or is otherwise required to file tax returns and pay before the same become delinquent all taxes that become due pursuant to such returns or pursuant to any assessments received by it.

 

(b) Compliance with Law. Promptly and faithfully comply in all material respects with all laws, ordinances, rules, regulations and requirements, both present and future, of every duly constituted governmental authority or agency having jurisdiction that may be applicable to it.

 

(c) Litigation or Adverse Conditions. Promptly notify Lender in writing of any litigation, action, suit or proceeding at law or in equity or by or before any administrative agency, or any other adverse condition, affecting Guarantor.

 

8. Amendments. No amendment or waiver of any provision of this Guaranty nor consent to any departure by the Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by the Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Guarantor shall in any case entitle it to any other or further notice or demand in similar or other circumstances.

 

9. Notices. All notices that may be required or otherwise provided for or contemplated under the terms of this Guaranty for any party to serve upon or give to any other shall, whether or not so stated, be in writing, and if not so in writing shall not be deemed to have been given, and be either (i) personally served, or (ii) sent by a nationally recognized commercial overnight service that provides a receipt, (iii) sent with return receipt requested by registered or certified mail with postage (including registration or certification charges) prepaid in a securely enclosed and sealed envelope, sent to the following addresses, or (iv) via electronic mail:

 

(a) If to the Guarantor, addressed to:

 

AIU 8800 VILLAGE DRIVE, LLC

8800 Village Drive, Suite 106 San Antonio, TX 78217

e-mail: info@myclearday.com

 

(b) If to the Lender, addressed to:

 

Mast Hill Fund, L.P. 48 Parker Road

Wellesley, MA 02482

e-mail: admin@masthillfund.com

 

Such addresses may be changed from time to time by written notice to the other parties given in the same manner.

 

10. No Waiver; Remedies. No failure on the part of the Lender to exercise and no delay in exercising any right or remedy hereunder shall operate as a waiver thereof; nor shall the Lender be estopped to exercise any such right or remedy at any future time because of any such failure or delay; nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or remedy. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

 

11. Continuing Guaranty; Transfer of Notes. This Guaranty is a continuing guaranty and shall remain in full force and effect until payment and performance in full of the Notes, Obligations, and all other amounts payable under this Guaranty. The Lender may assign or otherwise transfer the Notes to any person, corporation, firm, partnership, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity (collectively, a “Person”), pursuant to the provisions of the Notes, and such other Person shall thereupon become vested with all the rights in respect thereof granted to the Lender herein or otherwise.

 

 

12. Subordination. Any indebtedness of the Borrower now or hereafter held by the Guarantor is hereby subordinated to the indebtedness of the Borrower to the Lender, and such indebtedness of the Borrower to the Guarantor shall, if the Lender so requests, be collected, enforced and received by the Guarantor as trustee for the Lender and be paid over to the Lender on account of the indebtedness of the Borrower to the Lender, but without reducing or limiting in any manner the liability of the Guarantor under the other provisions of this Guaranty.

 

13. No Duty. The Guarantor assumes the responsibility for keeping informed of the financial condition of the Borrower and of all other circumstances bearing upon the risk of nonpayment of the Obligations, and agrees that the Lender shall have no duty to advise the Guarantor of any information known to the Lender regarding any such financial condition or circumstances.

 

14. Waiver of Right To Trial By Jury. The Guarantor hereby waives any right to trial by jury with Person, relating to (A) the Notes and/or any understandings or prior dealings between the parties hereto, or (B) this Guaranty, to which the Lender is a party. The Guarantor hereby respect to any action or proceeding (i) brought by the Guarantor, the Borrower, the Lender or any other agrees that this Guaranty constitutes a written consent to waiver of trial by jury, and the Guarantor does hereby constitute and appoint the Lender its true and lawful attorney-in-fact, which appointment is coupled with an interest, and the Guarantor does hereby authorize and empower the Lender, in the name, place and stead of the Guarantor, to file this Guaranty with the clerk or judge of any court of competent jurisdiction as a statutory written consent to waiver of trial by jury.

 

15. Bankruptcy of Borrower. Notwithstanding any modification, discharge or extension of the Obligations or any amendment, modification, stay or cure of the Lender’s rights which may occur in any bankruptcy or reorganization case or proceeding concerning the Borrower, whether permanent or temporary, and whether assented to by the Lender, the Guarantor hereby agrees that it shall be obligated hereunder to pay and perform the Obligations and discharge its other obligations in accordance with the terms of the Obligations and the terms of this Guaranty in effect on the date hereof. The Guarantor understands and acknowledges that by virtue of this Guaranty, it has specifically assumed any and all risks of a bankruptcy or reorganization case or proceeding with respect to the Borrower. As an example and not in any way of limitation, a subsequent modification of the Obligations in any reorganization case concerning the Borrower shall not affect the obligation of the Guarantor to pay and perform the Obligations in accordance with their original terms.

 

16. Entire Agreement. This Guaranty is intended as a final expression of this agreement of guaranty and is intended also as a complete and exclusive statement of the terms of this agreement. No course of prior dealings between the Guarantor and Lender, no usage of the trade, and no parol or extrinsic evidence of any nature, shall be used or be relevant to supplement, explain, contradict or modify the terms and/or provisions of this Guaranty.

 

17. Governing Law. The validity of this Guaranty, its construction, interpretation and enforcement, and the rights of the parties hereunder, shall be determined under, governed by, and construed in accordance with the laws of the state of Delaware as applied to contracts made and to be fully performed in such state, without regard to the conflicts of laws provisions thereof. Any action brought by either party against the other concerning the transactions contemplated by this Guaranty, the Notes, or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in the Court of Chancery of the State of Delaware or, to the extent such court does not have subject matter jurisdiction, the United States District Court for the District of Delaware or, to the extent that neither of the foregoing courts has jurisdiction, the Superior Court of the State of Delaware. The parties to this Notes 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.

 

 

18. Attorney Fees. If either party hereto fails to perform any of its obligations under this Guaranty or if any dispute arises between the parties hereto concerning the meaning or interpretation of any provision of this Guaranty, then the defaulting party or the party not prevailing in such dispute, as the case may be, shall pay any and all costs and expenses incurred by the other party on account of such default and/or in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorney fees and disbursements. Any such attorney fees and other expenses incurred by either party in enforcing a judgment in its favor under this Guaranty shall be recoverable separately from and in addition to any other amount included in such judgment, and such attorney fees obligation is intended to be severable from the other provisions of this Guaranty and to survive and not be merged into any such judgment.

 

19. Miscellaneous.

 

(a) This Guaranty is made for the sole protection and benefit of Lender and its successors and assigns, and no other person shall have any right of action hereon.

 

(b) If any term, provision, covenant or condition hereof or any application thereof should be held by a court of competent jurisdiction to be invalid, void or unenforceable, all provisions, covenants and conditions hereof, and all applications thereof not held invalid, void or unenforceable, shall continue in full force and effect and shall in no way be affected, impaired or invalidated thereby.

 

(c) This Guaranty may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of such counterparts taken together shall constitute but one and the same instrument.

 

(d) Section headings in this Guaranty are included for convenience of reference only and do not constitute a part of this Guaranty for any other purpose.

 

(e) All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Paragraph 6(b) above.

 

(f) Until the Notes are repaid in its entirety, Guarantor shall not enforce Guarantor’s rights to any default under any loan made by Guarantor to the Borrower.

 

(g) 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 Guaranty and the consummation of the transactions contemplated hereby.

 

[Signature page to follow]

 

 

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Guaranty as of the date first above written.

 

GUARANTOR:
AIU 8800 VILLAGE DRIVE, LLC
By:	Naples JV LLC
	a Delaware limited liability company
	Sole Member
By:	/s/ James Walesa
Name:	James Walesa
Title:	Manager
LENDER:
MAST HILL FUND, L.P.
By:	/s/ Patrick Hassani
Name:	Patrick Hassani
Title:	Chief Investment Officer

 

 

EXHIBIT A

 

(see attached)

 

 

EXHIBIT B

 

(see attached)

 

 

 

 

 

Exhibit 10.3

 

FIRST AMENDMENT

 

THIS FIRST AMENDMENT to the Guaranty (as defined below) (the “Amendment”) is entered into as of February 9, 2024 (the “Effective Date”), by and between SRP Artesia, LLC, a Delaware limited liability company (the “Guarantor”), and Mast Hill Fund, L.P., a Delaware limited partnership (the “Lender”, and collectively with Guarantor, the “Parties”).

 

BACKGROUND

 

A. Clearday, Inc., a Delaware corporation (the “Borrower”) and the Lender are the parties to that certain promissory note in the original principal amount of $600,000.00 dated on or around July 1, 2022 (the “First Note”); and

 

B. The Borrower and the Lender are the parties to that certain promissory note in the original principal amount of $315,000.00 dated on or around September 28, 2022 (the “Second Note”); and

 

C. The Borrower and the Lender are the parties to that certain promissory note in the original principal amount of $756,000.00 dated on or around January 12, 2023 (including the Third Note Additional Funding (as defined in this Amendment), the “Third Note”, and collectively with the First Note and Second Note, the “Notes”); and

 

D. The Parties are the parties to that certain guaranty dated on or around January 12, 2023 (as amended from time to time, the “Guaranty”), a copy of which is attached hereto as Exhibit “A”; and

 

E. The Lender is funding a second tranche purchase price of $100,000.00 under the Third Note on or around the Effective Date, which will result in an increase of $111,111.11 of principal to the Third Note (the “Third Note Additional Funding”); and

 

F. Guarantor acknowledges that it expects to benefit from Lender’s funding of the Third Note Additional Funding under the Third Note because of Guarantor’s relationship with Borrower, and that Guarantor is executing this Guaranty in consideration of that anticipated benefit; and

 

G. The Parties desire to amend the Guaranty as set forth expressly below.

 

NOW THEREFORE, in consideration of the execution and delivery of the Amendment and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Lender to fund the Third Note Additional Funding to the Borrower under the Third Note, the Parties agree as follows:

 

1. Unless otherwise defined herein, terms defined in the Guaranty and used herein shall have the meanings given to them in the Guaranty.

 

2. All references to “Loan” in the Guaranty shall be replaced with “Loans”, and “Loans” shall mean the loans evidenced by the Notes.

 

3. All references to “Loan Agreement” in the Guaranty shall be replaced with “Loan Agreements”, and “Loan Agreements” shall mean the Notes and all ancillary documentation entered into between the Borrower and Lender with respect to the Notes.

 

4. All references to “Note” in the Guaranty shall be replaced with “Notes”, and “Notes” shall have the meaning given to it in this Amendment. For the avoidance of doubt, the Obligations (as defined in the Guaranty) shall now mean the payment of the entire principal balance of the Loans, all accrued interest thereon, all penalties therein, and all costs and expenses incurred by Lender, including without limitation, the costs and expenses of Lender’s outside counsel, in connection with the enforcement of Borrower’s obligations under the Notes, as and when the same shall be due and payable.

 

5. Section 17 of the Guaranty shall be replaced with the following:

 

“17. Governing Law; Venue. The validity of this Guaranty, its construction, interpretation and enforcement, and the rights of the parties hereunder, shall be determined under, governed by, and construed in accordance with the laws of the state of Delaware as applied to contracts made and to be fully performed in such state, without regard to the conflicts of laws provisions thereof. Any action brought by either party against the other concerning the transactions contemplated by this Guaranty, the Loan Agreements, or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in the state or federal courts located in the Commonwealth of Massachusetts. The parties to this Guaranty 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.

 

 

6. Section 17 of the Guaranty (as amended) shall apply to this Amendment.

 

7. This Amendment may be executed in two or more counterparts, each of which when so executed and delivered to the other party shall be deemed an original. The executed page(s) from each original may be joined together and attached to one such original and shall thereupon constitute one and the same instrument. Such counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

8. This Amendment shall be deemed part of, but shall take precedence over and supersede any provisions to the contrary contained in the Guaranty. Except as specifically modified hereby, all of the provisions of the Guaranty, which are not in conflict with the terms of this Amendment, shall remain in full force and effect.

 

[Signature page to follow]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written.

 

SRP ARTESIA, LLC			Mast Hill Fund, L.P.
By:	Shadow Retail Partners, LP, Sole Member		By:	/s/ Patrick Hassani
By:	Cibolo Creek Partners, LLC, General Partner of Shadow Retail Partners, LP		Name:	Patrick Hassani
			Title:	Chief Investment Officer

 

By:	/s/ B.J. Parrish
Name:	B.J. Parrish
Title:	Vice President

 

 

Exhibit A

(see attached)

 

 

 

Exhibit 10.4

 

NEITHER THIS SECURITY NOR THE SECURITIES AS TO WHICH THIS SECURITY MAY BE EXERCISED HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

 

CLEARDAY, INC.

 

Warrant Shares: 135,502

Date of Issuance: February 9, 2024 (“Issuance Date”)

 

This COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Mast Hill Fund, L.P., a Delaware limited partnership (including any permitted and registered assigns, the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from CLEARDAY, INC., a Delaware corporation (the “Company”), 135,502 shares of Common Stock (the “Warrant Shares”) (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant) at the Exercise Price per share then in effect. This Warrant is issued by the Company as of the date hereof in connection with that certain amendment to the Note (as defined below) entered into by the Company and Holder on or around the Issuance Date. “Note” shall mean the promissory note in the original principal amount of $756,000.00 issued by the Company to Holder on or around January 12, 2023 (as amended from time to time). “Purchase Agreement” shall mean the securities purchase agreement entered into on or around January 12, 2023, by and among the Company and the Holder in connection with the issuance of the Note.

 

Capitalized terms used in this Warrant shall have the meanings set forth in the Purchase Agreement unless otherwise defined in the body of this Warrant or in Section 12 below. For purposes of this Warrant, the term “Exercise Price” shall mean $0.82, subject to adjustment as provided herein (including but not limited to cashless exercise), and the term “Exercise Period” shall mean the period commencing on the Issuance Date and ending on 5:00 p.m. eastern standard time on the date that is five (5) years after the Issuance Date.

 

1. EXERCISE OF WARRANT.

 

(a) Mechanics of Exercise. Subject to the terms and conditions hereof, the rights represented by this Warrant may be exercised in whole or in part at any time or times during the Exercise Period by delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant. The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. On or before the second Trading Day (the “Warrant Share Delivery Date”) following the date on which the Holder sent the Exercise Notice to the Company or the Company’s transfer agent, and upon receipt by the Company of payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which all or a portion of this Warrant is being exercised (the “Aggregate Exercise Price” and together with the Exercise Notice, the “Exercise Delivery Documents”) in cash or by wire transfer of immediately available funds (or by cashless exercise, in which case there shall be no Aggregate Exercise Price provided), the Company shall (or direct its transfer agent to) issue and deliver by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise (or deliver such shares of Common Stock in electronic format if requested by the Holder). Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates evidencing such Warrant Shares. If this Warrant is submitted in connection with any exercise and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three business days after any exercise and at its own expense, issue a new Warrant (in accordance with Section 6) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.

 

 

If the Company fails to cause its transfer agent to issue to the Holder the respective shares of Common Stock by the respective Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise in Holder’s sole discretion in addition to all other rights and remedies at law, under this Warrant, or otherwise, and such failure shall also be deemed an event of default under the Note, a material breach under this Warrant, and a material breach under the Purchase Agreement.

 

If the Market Price of one share of Common Stock is greater than the Exercise Price, then the Holder may elect to receive Warrant Shares pursuant to a cashless exercise, in lieu of a cash exercise, equal to the value of this Warrant determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of this Warrant and an Exercise Notice, in which event the Company shall issue to Holder a number of Common Stock computed using the following formula:

 

X = Y (A-B)

A

 

Where	X =	the number of Shares to be issued to Holder.
	Y =	the number of Warrant Shares that the Holder elects to purchase under this Warrant (at the date of such calculation).
	A =	the Market Price (at the date of such calculation).
	B =	Exercise Price (as adjusted to the date of such calculation).

 

(b) No Fractional Shares. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Warrant Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then-current fair market value of a Warrant Share by such fraction.

 

 

(c) Holder’s Exercise Limitations. Notwithstanding anything to the contrary contained herein, the Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 1 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Exercise Notice, the Holder (together with the Holder’s affiliates (the “Affiliates”), and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 1(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Holder is solely responsible for any schedules required to be filed in accordance therewith. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 1(c), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding at the time of the respective calculation hereunder. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

(d) Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Company’s transfer agent to transmit to the Holder the Warrant Shares in accordance with the provisions of this Warrant (including but not limited to Section 1(a) above pursuant to an exercise on or before the respective Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder, within one (1) business day of Holder’s request, the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the product of (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder within one (1) business day of Holder’s request the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases, or effectuates a cashless exercise hereunder for, Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

 

2. ADJUSTMENTS. The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:

 

(a) Distribution of Assets. If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including without limitation any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case:

 

(i) any Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction (i) the numerator of which shall be the Closing Sale Price of the shares of Common Stock on the Trading Day immediately preceding such record date minus the value of the Distribution (as determined in good faith by the Company’s Board of Directors) applicable to one share of Common Stock, and (ii) the denominator of which shall be the Closing Sale Price of the shares of Common Stock on the Trading Day immediately preceding such record date; and

 

(ii) the number of Warrant Shares shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i); provided, however, that in the event that the Distribution is of shares of common stock of a company (other than the Company) whose common stock is traded on a national securities exchange or a national automated quotation system (“Other Shares of Common Stock”), then the Holder may elect to receive a warrant to purchase Other Shares of Common Stock in lieu of an increase in the number of Warrant Shares, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the number of shares of Other Shares of Common Stock that would have been payable to the Holder pursuant to the Distribution had the Holder exercised this Warrant immediately prior to such record date and with an aggregate exercise price equal to the product of the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the immediately preceding clause (i) and the number of Warrant Shares calculated in accordance with the first part of this clause (ii).

 

 

(b) Anti-Dilution Adjustments to Exercise Price. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or securities (including but not limited to Common Stock Equivalents) entitling any person or entity (for purposes of clarification, including but not limited to the Holder pursuant to (i) any other security of the Company currently held by Holder, (ii) any other security of the Company issued to Holder on or after the Issuance Date (including but not limited to the Note), or (iii) any other agreement entered into between the Company and Holder) to acquire shares of Common Stock (upon conversion, exercise or otherwise), at an effective price per share less than the then Exercise Price (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, elimination of an applicable floor price for any reason in the future (including but not limited to the passage of time or satisfaction of certain condition(s)), reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled or potentially entitled to receive shares of Common Stock at an effective price per share which is less than the Exercise Price at any time while such Common Stock or Common Stock Equivalents are in existence, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance (regardless of whether the Common Stock or Common Stock Equivalents are (i) subsequently redeemed or retired by the Company after the date of the Dilutive Issuance or (ii) actually converted or exercised at such Base Share Price), then the Exercise Price shall be reduced at the option of the Holder and only reduced to equal the Base Share Price, and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment (for the avoidance of doubt, the aggregate Exercise Price prior to such adjustment is calculated as follows: the total number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment (without regard to the Beneficial Ownership Limitation) multiplied by the Exercise Price in effect immediately prior to such adjustment). By way of example, if E is the total number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment (without regard to the Beneficial Ownership Limitation), F is the Exercise Price in effect immediately prior to such adjustment, and G is the Base Share Price, the adjustment to the number of Warrant Shares can be expressed in the following formula: Total number of Warrant Shares after such Dilutive Issuance = the number obtained from dividing [E x F] by G. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued, regardless of whether the Common Stock or Common Stock Equivalents are (i) subsequently redeemed or retired by the Company after the date of the Dilutive Issuance or (ii) actually converted or exercised at such Base Share Price by the holder thereof (for the avoidance of doubt, the Holder may utilize the Base Share Price even if the Company did not actually issue shares of its common stock at the Base Share Price under the respective Common stock Equivalents). The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 2(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of clarification, regardless of whether (i) the Company provides a Dilutive Issuance Notice pursuant to this Section 2(b) upon the occurrence of any Dilutive Issuance or (ii) the Holder accurately refers to the number of Warrant Shares or Base Share Price in the Exercise Notice, the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price as well as the Base Share Price at all times on and after the date of such Dilutive Issuance.

 

(c) Subdivision or Combination of Common Stock. If the Company at any time on or after the Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of Warrant Shares will be proportionately increased. If the Company at any time on or after the Issuance Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of Warrant Shares will be proportionately decreased. Any adjustment under this Section 2(c) shall become effective at the close of business on the date the subdivision or combination becomes effective. Each such adjustment of the Exercise Price shall be calculated to the nearest one-hundredth of a cent. Such adjustment shall be made successively whenever any event covered by this Section 2(c) shall occur.

 

 

3. FUNDAMENTAL TRANSACTIONS. If, at any time while this Warrant is outstanding, (i) the Company effects any merger of the Company with or into another entity and the Company is not the surviving entity (such surviving entity, the “Successor Entity”), (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or by another individual or entity, and approved by the Company) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares of Common Stock for other securities, cash or property and the holders of at least 50% of the Common Stock accept such offer, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock) (in any such case, a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive the number of shares of Common Stock of the Successor Entity or of the Company and any additional consideration (the “Alternate Consideration”) receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event (disregarding any limitation on exercise contained herein solely for the purpose of such determination). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any Successor Entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into Alternate Consideration.

 

4. NON-CIRCUMVENTION. The Company covenants and agrees that it will not, by amendment of its certificate of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, for so long as this Warrant is outstanding, have authorized and reserved, free from preemptive rights, 2 times the number of shares of Common Stock into which the Warrants are then exercisable into to provide for the exercise of the rights represented by this Warrant (without regard to any limitations on exercise).

 

5. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, this Warrant, in and of itself, shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

6. REISSUANCE.

 

(a) Lost, Stolen or Mutilated Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company will, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.

 

(b) Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant shall be of like tenor with this Warrant, and shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date.

 

 

7. TRANSFER. This Warrant shall be binding upon the Company and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Notwithstanding anything to the contrary herein, the rights, interests or obligations of the Company hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior signed written consent of the Holder, which consent may be withheld at the sole discretion of the Holder (any such assignment or transfer shall be null and void if the Company does not obtain the prior signed written consent of the Holder). This Warrant or any of the severable rights and obligations inuring to the benefit of or to be performed by Holder hereunder may be assigned by Holder to a third party, in whole or in part, without the need to obtain the Company’s consent thereto.

 

8. NOTICES. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with the notice provisions contained in the Purchase Agreement. The Company shall provide the Holder with prompt written notice (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, the calculation of such adjustment and (ii) at least 20 days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any stock or other securities directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock or other property, pro rata to the holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.

 

9. AMENDMENT AND WAIVER. The terms of this Warrant may be amended or waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder.

 

10. GOVERNING LAW AND VENUE. This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Warrant or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in the Court of Chancery of the State of Delaware or, to the extent such court does not have subject matter jurisdiction, the United States District Court for the District of Delaware or, to the extent that neither of the foregoing courts has jurisdiction, the Superior Court of the State of Delaware. The parties to this Warrant 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. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT ENTERED INTO IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. 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 Warrant 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 Warrant or any other transaction document entered into in connection with this Warrant 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 the Purchase 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.

 

11. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.

 

 

12. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:

 

(a) [Intentionally Omitted].

 

(b) “Closing Sale Price” means, for any security as of any date, (i) the last closing trade price for such security on the Principal Market, as reported by Quotestream or other similar quotation service provider designated by the Holder, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00 p.m., New York time, as reported by Quotestream or other similar quotation service provider designated by the Holder, or (ii) if the foregoing does not apply, the last trade price of such security in the over-the-counter market for such security as reported by Quotestream or other similar quotation service provider designated by the Holder, or (iii) if no last trade price is reported for such security by Quotestream or other similar quotation service provider designated by the Holder, the average of the bid and ask prices of any market makers for such security as reported by Quotestream or other similar quotation service provider designated by the Holder. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

(c) “Common Stock” means the Company’s common stock, par value $0.001, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

(d) “Common Stock Equivalents” means any securities of the Company that would entitle the holder thereof to acquire at any time Common Stock, including without limitation any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

(e) “Person” and “Persons” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any governmental entity or any department or agency thereof.

 

(f) “Principal Market” means the principal securities exchange or trading market where such Common Stock is listed or quoted, including but not limited to any tier of the OTC Markets, any tier of the NASDAQ Stock Market (including NASDAQ Capital Market), or the NYSE American, or any successor to such markets.

 

(g) “Market Price” means the highest traded price of the Common Stock during the one hundred and fifty Trading Days prior to the date of the respective Exercise Notice.

 

(h) “Trading Day” means any day on which the Common Stock is listed or quoted on its Principal Market, provided, however, that if the Common Stock is not then listed or quoted on any Principal Market, then any calendar day.

 

* * * * * * *

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the Issuance Date set forth above.

 

	CLEARDAY, INC.
	/s/ James Walesa
	Name:	James Walesa
	Title:	Chief Executive Officer

 

 

EXHIBIT A

 

EXERCISE NOTICE

 

(To be executed by the registered holder to exercise this Common Stock Purchase Warrant)

 

THE UNDERSIGNED holder hereby exercises the right to purchase___________________of the shares of Common Stock (“Warrant Shares”) of CLEARDAY, INC., a Delaware corporation (the “Company”), evidenced by the attached copy of the Common Stock Purchase Warrant (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1.	Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be made as (checkone):

 

	☐	a cash exercise with respect to___________________Warrant Shares; or
	☐	by cashless exercise pursuant to the Warrant.

 

2.	Payment of Exercise Price. If cash exercise is selected above, the holder shall pay the applicable Aggregate Exercise Price in the sum of $ ___________________to the Company in accordance with the terms of the Warrant.

 

3.	Delivery of Warrant Shares. The Company shall deliver to the holder ___________________Warrant Shares in accordance with the terms of the Warrant.

 

Date:
			(Print Name of Registered Holder)
			By:
			Name:
			Title:

 

 

EXHIBIT B

 

ASSIGNMENT OF WARRANT

 

(To be signed only upon authorized transfer of the Warrant)

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto ___________________the right to purchase ___________________shares of common stock of CLEARDAY, INC., to which the within Common Stock Purchase Warrant relates and appoints , as attorney-in-fact, to transfer said right on the books of CLEARDAY, INC. with full power of substitution and re-substitution in the premises. By accepting such transfer, the transferee has agreed to be bound in all respects by the terms and conditions of the within Warrant.

 

Dated:
			(Signature) *
			(Name)
			(Address)
			(Social Security or Tax Identification No.)

 

* The signature on this Assignment of Warrant must correspond to the name as written upon the face of the Common Stock Purchase Warrant in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.

 

 

 

 

Exhibit 10.5

 

GLOBAL AMENDMENT TO THE NOTES

 

THIS GLOBAL AMENDMENT to the Notes (as defined below) (the “Amendment”) is entered into as of February 9, 2024 (the “Effective Date”), by and between CLEARDAY, INC., a Delaware corporation (the “Company”), and Mast Hill Fund, L.P., a Delaware limited partnership (the “Holder”) (collectively the “Parties”).

 

BACKGROUND

 

A. The Company and Holder are the parties to that certain promissory note in the original principal amount of $600,000.00 dated on or around July 1, 2022 (the “First Note”); and

 

B. The Company and Holder are the parties to that certain promissory note in the original principal amount of $315,000.00 dated on or around September 28, 2022 (the “Second Note”); and

 

C. The Company and Holder are the parties to that certain promissory note in the original principal amount of $756,000.00 dated on or around January 12, 2023 (the “Third Note”, and collectively with the First Note and Second Note, the “Notes”); and

 

D. The Parties desire to amend the Notes as set forth expressly below.

 

NOW THEREFORE, in consideration of the execution and delivery of the Amendment and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1. As of the Effective Date, the First Note is outstanding in the amount of $375,171.76 (the “First Note Balance”), consisting of $314,734.28 of principal and $60,437.48 of accrued interest. Upon the full execution of this Amendment, the principal amount of the First Note shall increase by $56,275.77, which will result in the First Note Balance increasing to $431,447.53.

 

2. As of the Effective Date, the Second Note is outstanding in the amount of $297,472.29 (the “Second Note Balance”), consisting of $260,455.05 of principal and $37,017.24 of accrued interest. Upon the full execution of this Amendment, the principal amount of the Second Note shall increase by $44,620.85, which will result in the Second Note Balance increasing to $342,093.14.

 

3. As of the Effective Date, the Third Note is outstanding in the amount of $881,503.40 (the “Third Note Balance”), consisting of $781,171.07 of principal and $100,332.33 of accrued interest. Upon the full execution of this Amendment, the principal amount of the Third Note shall increase by $132,225.51, which will result in the Third Note Balance increasing to $1,013,728.91.

 

4. The Maturity Date (as defined in the Notes) shall be amended to February 8, 2025.

 

5. Section 4.17 of the Notes shall be deleted in the entirety.

 

6. The Interest Rate (as defined in the Notes) of the Notes shall be increased to sixteen percent (16%) per annum upon the full execution of this Amendment.

 

7. The Company shall repay the Notes in the entirety simultaneously with, or prior to, the closing of the merger transaction contemplated by that certain merger agreement dated on or around April 5, 2023, by and between the Company, Viveon Health Acquisition Corp., VHAC2 Merger Sub, Inc., Viveon Health LLC, and Clearday SR LLC.

 

8. Section 4.6 of the Notes shall apply to this Amendment.

 

9. This Amendment may be executed in two or more counterparts, each of which when so executed and delivered to the other party shall be deemed an original. The executed page(s) from each original may be joined together and attached to one such original and shall thereupon constitute one and the same instrument. Such counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

10. This Amendment shall be deemed part of, but shall take precedence over and supersede any provisions to the contrary contained in the Notes. Except as specifically modified hereby, all of the provisions of the Notes, which are not in conflict with the terms of this Amendment, shall remain in full force and effect.

 

[Signature page to follow]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first abovewritten.

 

CLEARDAY, INC.			Mast Hill Fund, L.P.
By:	/s/ James Walesa		By:	/s/Patrick Hassani
Name:	James Walesa		Name:	Patrick Hassani
Title:	Chief Executive Officer		Title:	Chief Investment Officer

 

 

 

Exhibit 10.6

 

MFN ACKNOWLEDGEMENT

 

THIS MFN ACKNOWLEDGEMENT (the “Acknowledgement”) is entered into as of February 9, 2024 (the “Effective Date”), by and between CLEARDAY, INC., a Delaware corporation (the “Company”), and Mast Hill Fund, L.P., a Delaware limited partnership (the “Holder”) (collectively the “Parties”).

 

BACKGROUND

 

A. The Company and Holder are the parties to that certain common stock purchase warrant dated on or around July 1, 2022 (the “First Warrant”), which was issued pursuant to a securities purchase agreement of even date (the “First SPA”); and

 

B. The Company and Holder are the parties to that certain common stock purchase warrant dated on or around September 28, 2022 (the “Second Warrant”), which was issued pursuant to a securities purchase agreement of even date (the “Second SPA”); and

 

C. The Company and Holder are the parties to two (2) common stock purchase warrants dated on or around January 12, 2023 (the “Third Warrants”, and collectively with the First Warrant and Second Warrant, the “Warrants”), which was issued pursuant to a securities purchase agreement of even date (the “Third SPA”, and collectively with the First SPA and Second SPA, the “Purchase Agreements”); and

 

D. The Company entered into that certain securities purchase agreement and related documents on or around February 17, 2023, with a third party as further described in the Company’s Form 8-K filed on February 24, 2023 (the “Subsequent Transaction”); and

 

NOW THEREFORE, the Parties agree as follows:

 

1. The Parties hereby acknowledge and agree that pursuant to Section 4(p) of the Purchase Agreements, the Warrants became immediately exercisable at any time due to the Company’s execution of the transaction documents with respect to the Subsequent Transaction.

 

2. Section 8(a) of the Purchase Agreements shall apply to this Acknowledgement.

 

3. This Acknowledgement may be executed in two or more counterparts, each of which when so executed and delivered to the other party shall be deemed an original. The executed page(s) from each original may be joined together and attached to one such original and shall thereupon constitute one and the same instrument. Such counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

[Signature page to follow]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Acknowledgement as of the date first above written.

 

CLEARDAY, INC.			Mast Hill Fund, L.P.
By:	/s/ James Walesa		By:	/s/Patrick Hassani
Name:	James Walesa		Name:	Patrick Hassani
Title:	Chief Executive Officer		Title:	Chief Investment Officer

 

 

 

 

Exhibit 10.7

 

	Clearday, Inc.
	8800 Village Drive, Suite 106
	San Antonio, TX 78217
	www.myclearday.com
	OTCQX: CLRD
	As of February 15, 2024

 

VIA ELECTRONIC MAIL

 

Mast Hill Fund, L.P.

48 Parker Road

Wellesley, MA 02482

Attn: Patrick Hassani

Email: patrick@masthillfund.com;

 

RE:

Omnibus Amendment Regarding Loans by Mast Hill Fund, LP to Clearday, Inc. (the “Company”)

 

Mr. Hassani:

 

We refer to the following loans under the promissory notes with Mast Hill Fund, L.P. (the “Investor”) (collectively, “Notes”): (i) made on July 1, 2022 in the original principal amount of $600,000; (ii) September 28, 2022 in the original principal amount of $315,000; and (iii) January 12, 2023 in the original principal amount of $756,000, in each case as amended as of February 9, 2024 (the “Amendments”), and the related purchase agreements, and registration rights agreements (collectively, the “Mast Hill Documents”). We request that you amend each of the Notes and waive certain defaults that may have occurred under the Notes and the Mast Hill Documents, as specifically identified below:

 

	●	The Company and Investor acknowledge that the Maturity Date, as defined in each of the Notes, has been amended to February 8, 2025, pursuant to the Amendments.
	●	The Investor waives the defaults under each of the Notes and the Mast Hill Documents, as follows:

 

	○	The failure to pay amounts due on the Notes on the respective maturity date and the monthly payments on the Notes.
	○	Section 1.10 of each of the Notes (Repayment from Proceeds) with respect to the Company’s receipt of proceeds prior to February 15, 2024.
	○	Section 2.5 of each of the Notes (Sale of Assets) related to the disposition of the residential facilities that were leased from an affiliate of Invesque, specifically, the residential communities at Westover, TX., New Braunfels, TX., and Little Rock, TX.
	○	Section 3.6 of each of the Notes (Judgements) related to the judgements that have been summarized in the Quarterly Report on Form 10-Q filed by the Company on January 16, 2024 and the judgement that has been summarized in the Current Report on Form 8-K filed on February 9, 2024.

 

●

Section 3.14 of each of the Notes (Cross-Default) related to the defaults by subsidiaries of the Company for non-payment of obligations that occurred prior to January 15, 2024.

 

	○	Section 3.19 of the Notes (Registration Statement Failures).
	○	Section 3.20 of each of the Notes (Failure to Pay an Amortization Payment).
	○	Compliance with each of the Registration Rights Agreements entered into between the Company and Investor.

 

Unless otherwise expressly stated in this letter, the waivers in this letter shall continue in force until the earlier of (i) the closing of the merger (“Merger”) with Viveon Health Acquisition Corp under the merger agreement dated as of April 5, 2023, (ii) March 31, 2024, (iii) the date that the Company or any subsidiary of the Company shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed. or (iv) the date that bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company or any subsidiary of the Company (the earlier of the aforementioned (i), (ii), (iii) or (iv) shall be referred to herein as the “Waiver Expiration Date”).

 

[continued on the next page]

 

 

Please indicate your acceptance to the provisions of this letter by signing a copy of this letter and returning it to us. We appreciate your support to our journey to improve the way care is delivered to older Americans.

 

	Sincerely,
	James T. Walesa, CEO

 

Mast Hill Fund, L.P.
By:
Name:	Patrick Hassani
Title:	Chief Investment Officer

 

 

v3.24.0.1

Cover	Feb. 15, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Feb. 15, 2024
Entity File Number	0-21074
Entity Registrant Name	Clearday, Inc.
Entity Central Index Key	0000895665
Entity Tax Identification Number	77-0158076
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	8800 Village Drive
Entity Address, Address Line Two	Suite 106
Entity Address, City or Town	San Antonio
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78217
City Area Code	(210)
Local Phone Number	451-0839
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.001
Trading Symbol	CLRD
Entity Emerging Growth Company	false

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