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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): September
1, 2023
HEARTCORE
ENTERPRISES, INC.
(Exact
name of registrant as specified in its charter)
Delaware |
|
001-41272 |
|
87-0913420 |
(State
or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
|
(I.R.S.
Employer
Identification Number) |
1-2-33,
Higashigotanda,
Shinagawa-ku,
Tokyo,
Japan
(Address
of principal executive offices)
+81-3-6409-6966
(Registrant’s
telephone number, including area code)
N/A
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations 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 |
|
HTCR |
|
Nasdaq
Capital Market |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item
1.01. Entry into a Material Definitive Agreement.
On
September 1, 2023, HeartCore Enterprises, Inc. (the “Company”) entered into a loan and note purchase agreement (the “Loan
and NPA”) with Sigmaways, Inc., a 51% owned subsidiary of the Company (“Sigmaways”). Pursuant to the terms of the Loan
and NPA, the Company agreed to loan to Sigmaways $400,000 (the “Loan”), which Loan will be evidenced by a promissory note
between the Company and Sigmaways (the “Sigmaways Note”). Of the $400,000 Loan, $300,000 will be used to make a loan to Sabatini
Global, Inc. (“Sabatini”) in connection with engagement by Sigmaways of certain employees of Sabatini, to be evidenced by
a promissory note between Sigmaways and Sabatini (the “Sabatini Note”), and the remainder will be used by Sigmaways to fund
its operations.
On
September 1, 2023, Sigmaways issued to the Company the Sigmaways Note in the principal amount of $400,000. The Sigmaways Note bears interest
at the rate of 0.1% per annum, simple interest, and has a maturity date of September 1, 2026. There is no prepayment penalty. In the
event that any amount due under the Sigmaways Note is not paid as and when due, such amounts will accrue interest at the rate of 10%
per year until paid. Pursuant to the terms of the Sigmaways Note, in the event that any payments are made to Sigmaways by Sabatini in
repayment of the Sabatini Note, Sigmaways agreed to pay such funds to the Company as a payment under the Sigmaways Note.
Upon
the occurrence and during the continuance of an Event of Default (as defined in the Sigmaways Note, and which includes an event of default
under the Sabatini Note), the Company may at any time at its option (i) declare the principal and any accrued interest under the Sigmaways
Note due and payable; and (ii) exercise all other rights and remedies available to it under the transaction documents.
On
September 1, 2023, Lucca Unlimited LLC, an affiliate of Andrew Sabatini, Sabatini’s founder and managing partner (“Lucca”),
issued to Sigmaways the Sabatini Note, in the principal amount of $300,000. The Sabatini Note bears interest at the rate of 4.0% per
annum, simple interest, and has a maturity date of September 2, 2026. On the first business day following each annual anniversary of
September 1, 2023, the issue date, Lucca agreed to pay to Sigmaways the sum of one-third of the total loan amount due and outstanding,
including all accrued and unpaid interest as of such time (each, an “Annual Payment”). To the extent not repaid as of September
2, 2026 or forgiven as set forth in the Sabatini Note, the remaining principal amount and all accrued interest will be due and payable
on September 2, 2026. There is no prepayment penalty.
In
the event that the following conditions have been satisfied with respect to the prior year, then the applicable Annual Payment that would
otherwise have been due and payable on such Annual Payment date will be deemed forgiven and the then-outstanding indebtedness under the
Sabatini Note will be deemed reduced by the amount of the Annual Payment which is so forgiven:
|
(i) |
Lucca
remaining engaged by Sigmaways, whether pursuant to that certain independent contractor agreement, dated as of September 1, 2023,
by and between Lucca and Sigmaways (the “Independent Contractor Agreement”) or otherwise; |
|
(ii) |
No
event of default shall have occurred under the Sabatini Note or under the Independent Contractor Agreement; |
|
(iii) |
Lucca’s
efforts must have accomplished Sigmaways’ meeting or exceeding the specified annual sales targets set by Sigmaways for the
annual period preceding the applicable Annual Payment date, which shall be targets determined based on Sigmaways’ revenue goals
and profitability to materially exceed the Annual Payment to be then forgiven by at least $250,000 and growth objectives; |
|
(iv) |
Lucca
shall have maintained a high level of customer satisfaction, as measured by feedback surveys and client reviews, thereby demonstrating
Sigmaways’ ability to build strong and lasting relationships with customers; |
|
(v) |
Lucca
shall have actively collaborated with Sigmaways’ sales team and other departments to foster a cohesive and productive work
environment; |
|
(vi) |
Lucca
shall have actively contributed to the acquisition of new customers and business opportunities for Lucca, which may include generating
leads, prospecting, and closing new deals; |
|
(vii) |
Lucca
shall have provided timely and accurate sales reports, forecasts, and other relevant data to Sigmaways’ management team, which
information will aid in decision-making and strategy development; |
|
(viii) |
Lucca
and its personnel must have actively engaged in professional development opportunities, such as attending industry events, workshops,
and training sessions, to enhance Lucca’s and its personnel’s skills and knowledge; and |
|
(ix) |
Lucca
and its personnel must have adhered to all of Sigmaways’ company policies, ethical standards, and legal requirements while
conducting sales and business activities. |
Upon
an event of default under the Sabatini Note, including a breach of or default by Lucca of any of the terms of the Independent Contractor
Agreement which has not been cured within five days of written notice therefor from Sigmaways to Lucca, among other things, Sigmaways
may declare all or any portion of the then-outstanding indebtedness under the Sabatini Note due and payable, and/or the entire unpaid
and outstanding principal amount and accrued interest thereon, will bear interest at 10% per annum, compounded annually.
The
Sabatini Note is personally guaranteed by Sabatini and by Mr. Sabatini, Sabatini’s managing partner and founder, and Lucca’s
sole partner.
The
foregoing description of the Loan and NPA, the Sigmaways Note and the Sabatini Note does not purport to be complete and is qualified
in its entirety by reference to the full text of the Loan and NPA, the Sigmaways Note and the Sabatini Note, copies of which are filed
herewith as Exhibits 10.1, 10.2 and 10.3, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Item
2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
To
the extent required by Item 2.03 of Form 8-K, the information contained in Item 1.01 hereof regarding the Sigmaways Note and the Sabatini
Note is incorporated herein by reference.
Item
9.01 Financial Statement and Exhibits.
(d)
Exhibits
Exhibit
No. |
|
Description |
10.1 |
|
Loan
and Note Purchase Agreement, dated September 1, 2023, by and between HeartCore Enterprises, Inc. and Sigmaways, Inc. |
10.2 |
|
Promissory
Note, dated September 1, 2023, issued by Sigmaways, Inc. in favor of HeartCore Enterprises, Inc. |
10.3 |
|
Promissory
Note, dated September 1, 2023, issued by Lucca Unlimited LLC in favor of Sigmaways, Inc. |
104 |
|
Cover
Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
|
HEARTCORE
ENTERPRISES, INC. |
|
|
|
Dated:
September 11, 2023 |
By: |
/s/
Sumitaka Yamamoto |
|
Name: |
Sumitaka
Yamamoto |
|
Title: |
Chief
Executive Officer |
Exhibit
10.1
Loan
and Note Purchase Agreement
By
and Among
HeartCore
Enterprises, Inc.
And
Sigmaways,
Inc.
Table
of Contents
Article
I. Definitions and Interpretation |
1 |
Section
1.01 Definitions. |
1 |
Section
1.02 Interpretive Provisions. |
3 |
Article
II. Loan; Purchase and Sale of Note |
3 |
Section
2.01 Loan; Exchange Agreement. |
3 |
Section
2.02 Deliverables at Closing. |
3 |
Section
2.03 Closing. |
3 |
Article
III. Representations and Warranties of Sigmaways |
4 |
Section
3.01 Authorization of Transactions. |
4 |
Section
3.02 Governmental Approvals; Non-contravention. |
4 |
Section
3.03 Brokers. |
4 |
Article
IV. Representations and Warranties of HeartCore |
4 |
Section
4.01 Authorization of Transactions. |
4 |
Section
4.02 Governmental Approvals; Non-contravention. |
5 |
Section
4.03 Investment Representations. |
5 |
Section
4.04 Brokers. |
6 |
Article
V. Miscellaneous |
6 |
Section
5.01 Indemnification; Costs. |
6 |
Section
5.02 Notices. |
7 |
Section
5.03 Attorneys’ Fees |
7 |
Section
5.04 Amendments; No Waivers; No Consequential Damages. |
7 |
Section
5.05 Expenses. |
8 |
Section
5.06 Further Assurances. |
8 |
Section
5.07 Successors and Assigns; Benefit. |
8 |
Section
5.08 Governing Law; Etc. |
9 |
Section
5.09 Survival. |
9 |
Section
5.10 Severability. |
10 |
Section
5.11 Entire Agreement. |
10 |
Section
5.12 Specific Performance. |
10 |
Section
5.13 Construction. |
10 |
Section
5.14 Counsel. |
10 |
Section
5.15 Counterparts. |
10 |
|
|
Exhibit
A Promissory Note |
|
Loan
and Note Purchase Agreement
Dated
as of September 1, 2023
This
Loan and Note Purchase Agreement (this “Agreement”) is entered into as of the date set forth above (the “Closing Date”),
by and among HeartCore Enterprises, Inc., a Delaware corporation (“HeartCore”); and (ii) Sigmaways, Inc., a California corporation
(“Sigmaways”). Each of Sigmaways and HeartCore may be referred to herein individually as a “Party” and collectively
as the “Parties”. This Agreement is joined by Prakash Sadasivam (“Mr. Sadasivam”) for the limited purposes herein.
WHEREAS,
the Parties and Mr. Sadasivam are all of the parties to that certain Share Exchange and Purchase Agreement, dated as of September 6,
2022 (as amended and addended to date, the “Exchange Agreement”);
WHEREAS,
pursuant to the Exchange Agreement, HeartCore acquired 51% of the issued and outstanding shares of Sigmaways, and HeartCore agreed, subject
to the terms and conditions of the Exchange Agreement, to provide up to $2,000,000 to Sigmaways for the undertaking of certain projects
by Sigmaways to expand Sigmaways’ business, subject to the approval of the Board of Directors of HeartCore (the “HeartCore
Board”) as set forth therein; and
WHEREAS,
Sigmaways has requested that HeartCore provide to Sigmaways the sum of $400,000, $300,000 of which shall be loaned to Sabatini Global,
Inc., a Delaware corporation (“Sabatini”) pursuant to a promissory note between Sigmaways and Sabatini (the “Sabatini
Note”), in connection with the engagement by Sigmaways of certain employees of Sabatini and the remainder will be used by Sigmaways
to fund its operations (the “Project”), and such Project and use of proceeds has been approved by the HeartCore Board to
be provided as a loan to Sigmaways;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledge and agreed, the Parties hereby agree as follows:
Article
I. Definitions and
Interpretation
Section
1.01 Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms, as used herein, have the
following meanings:
|
(a) |
“Affiliate”
means, with respect to a specified Person, any other Person that directly or indirectly Controls, is Controlled by or is under common
Control with, the specified Person. |
|
(b) |
“Business
Day” means any day except Saturday, Sunday and any legal holiday or a day on which banking institutions in Delaware generally
are authorized or required by Law or other governmental actions to close. |
|
(c) |
“Control”
means (a) the possession, directly or indirectly, of the power to vote 10% or more of the securities or other equity interests of
a Person having ordinary voting power, (b) the possession, directly or indirectly, of the power to direct or cause the direction
of the management and policies of a Person, by contractor otherwise, or (c) being a director, officer, executor, trustee or fiduciary
(or their equivalents) of a Person or a Person that controls such Person. |
|
(d) |
“Governmental
Entity” means any federal, state, municipal, local or foreign government and any court, tribunal, arbitral body, administrative
agency, department, subdivision, entity, commission or other governmental, government appointed, quasi-governmental or regulatory
authority, reporting entity or agency, domestic, foreign or supranational. |
|
(e) |
“Law”
means any applicable foreign, federal, state or local law (including common law), statute, treaty, rule, directive, regulation, ordinances
and similar provisions having the force or effect of law or an Order of any Governmental Entity. |
|
(f) |
“Liabilities”
means liabilities, obligations or responsibilities of any nature whatsoever, whether direct or indirect, matured or un-matured, fixed
or unfixed, known or unknown, asserted or un asserted, choate or inchoate, liquidated or unliquidated, secured or unsecured, absolute,
contingent or otherwise, including any direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost
or expense. |
|
(g) |
“Lien”
means, with respect to any property or asset, any lien, security interest, mortgage, pledge, charge, claim, lease, agreement, right
of first refusal, option, limitation on transfer or use or assignment or licensing, restrictive easement, charge or any other restriction
of any kind, and any conditional sale or voting agreement or proxy, and including any restriction on the ownership, use, voting,
transfer, possession, receipt of income or other exercise of any attributes of ownership, in respect of such property or asset, and
any agreement to give any of the foregoing. |
|
(h) |
“Order”
means any judgment, writ, decree, determination, award, compliance agreement, settlement agreement, injunction, ruling, charge, judicial
or administrative order, determination or other restriction of any Governmental Entity or arbitrator. |
|
(i) |
“Person”
means a natural person, a corporation, a limited liability company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or instrumentality thereof. |
|
(j) |
“Securities
Act” means the United States Securities Act of 1933, as amended, and the rules and regulation promulgated thereunder. |
|
(k) |
“Transactions”
means the purchase and sale of the Note and the other transactions contemplated under the Transaction Documents. |
|
(l) |
“Transaction
Documents” means this Agreement, the Note and any other agreement, document, certificate or writing delivered or to be delivered
in connection with this Agreement and any other document related to the Transactions related to the forgoing, including, without
limitations, those delivered at the Closing, and specifically excluding the Exchange Agreement and the other agreements and instruments
executed in connection therewith. |
Section
1.02 Interpretive Provisions. Unless the express context otherwise requires, the words “hereof,” “herein,”
and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not
to any particular provision of this Agreement; terms defined in the singular shall have a comparable meaning when used in the plural,
and vice versa; the terms “Dollars” and “$” mean United States Dollars, unless otherwise specified herein; references
herein to a specific Section, Subsection, Recital or Exhibit shall refer, respectively, to Sections, Subsections, Recitals or Exhibits
of this Agreement; wherever the word “include,” “includes,” or “including” is used in this Agreement,
it shall be deemed to be followed by the words “without limitation”; references herein to any gender shall include each other
gender; references herein to any Person shall include such Person’s heirs, executors, personal representatives, administrators,
successors and assigns; provided, however, that nothing contained in this Section 1.02 is intended to authorize any assignment or transfer
not otherwise permitted by this Agreement; references herein to a Person in a particular capacity or capacities shall exclude such Person
in any other capacity; references herein to any contract or agreement (including this Agreement) mean such contract or agreement as amended,
supplemented or modified from time to time in accordance with the terms thereof; with respect to the determination of any period of time,
the word “from” means “from and including” and the words “to” and “until” each means
“to but excluding”; references herein to any Law or any license mean such Law or license as amended, modified, codified,
reenacted, supplemented or superseded in whole or in part, and in effect from time to time; and references herein to any Law shall be
deemed also to refer to all rules and regulations promulgated thereunder.
Article
II.
Loan; Purchase and
Sale of Note
Section
2.01 Loan; Exchange Agreement.
|
(a) |
Subject
to the terms and conditions of this Agreement, HeartCore hereby makes a loan to Sigmaways in the amount of Four Hundred Thousand
Dollars ($400,000) (the “Loan”). |
|
(b) |
The
Loan shall be evidenced by a $400,000 promissory note of Sigmaways payable to order of HeartCore, dated the Closing Date (as attached
hereto as Exhibit A, and as may be amended, renewed, increased, restated, replaced, or otherwise modified from time to time, the
“Note”). |
|
(c) |
This
Agreement and the Note are entered into, and the Loan is being made pursuant to, the Exchange Agreement, provided that the Parties
and Mr. Sadasivam acknowledge and agree that the Exchange Agreement, on the one hand, and this Agreement and the Note, on the other
hand, are independent agreements and transactions, and this Agreement and the Note shall not be “Transaction Documents”
for purposes of the Exchange Agreement and the transactions as set forth therein, and shall be interpreted and enforced independently
of the Exchange Agreement. |
|
(d) |
$300,000
of the proceeds of the Loan shall be used to make a loan to Sabatini, and the remainder will be used by Sigmaways to fund its operations. |
Section
2.02 Deliverables at Closing.
|
(a) |
At
the Closing, Sigmaways shall deliver to HeartCore a copy of the Note, duly executed by an authorized officer of Sigmaways. |
|
(b) |
At
the Closing, HeartCore shall pay the Loan amount of $400,000 to Sigmaways, via wire transfer pursuant to instructions delivered to
HeartCore by Sigmaways, and shall deliver to Sigmaways a copy of the Note, duly executed by an authorized officer of HeartCore. |
Section
2.03 Closing. On the terms set forth herein, the closing of the Transactions (the “Closing”) shall take place on the
Closing Date by conference call and electronic communication (i.e., emails/pdf) and exchange of the executed Transaction Documents.
Article
III. Representations
and Warranties of Sigmaways
Sigmaways
represents and warrants to HeartCore that the following representations and warranties contained in this Article III are true and correct
as of the Closing Date:
Section
3.01 Authorization of Transactions. Sigmaways is a corporation duly organized and in good standing in the State of California
and has the requisite power and capacity to execute and deliver the Transaction Documents to which it is are a party and to perform its
obligations hereunder and thereunder. The execution, delivery and performance by Sigmaways of the applicable Transaction Documents and
the consummation of the Transactions have been duly and validly authorized by all requisite action on the part of Sigmaways. The Transaction
Documents to which Sigmaways is a party have been duly and validly executed and delivered by Sigmaways. Each Transaction Document to
which Sigmaways is a party constitutes the valid and legally binding obligation of Sigmaways, enforceable against Sigmaways in accordance
with its terms and conditions, except to the extent enforcement thereof may be limited by applicable bankruptcy, insolvency or other
Laws affecting the enforcement of creditors’ rights or by the principles governing the availability of equitable remedies.
Section
3.02 Governmental Approvals; Non-contravention.
|
(a) |
No
consent, Order, action or non-action of, or filing, notification, declaration or registration with, any Governmental Entity is necessary
for the execution, delivery or performance by Sigmaways of this Agreement or any other Transaction Document to which Sigmaways is
a party. |
|
(b) |
The
execution, delivery and performance by Sigmaways of the Transaction Documents to which Sigmaways is a party, and the consummation
by Sigmaways of the Transactions, do not violate any Laws or Orders to which Sigmaways is subject or violate, breach or conflict
with any provision of Sigmaways’ organizational documents. |
Section
3.03 Brokers. Sigmaways has not engaged, or caused to be incurred any Liability or obligation to, any investment banker, finder,
broker or sales agent or any other Person in connection with the origin, negotiation, execution, delivery or performance of the Transaction
Documents to which it is a party, or the Transactions.
Article
IV. Representations
and Warranties of Heartcore
HeartCore
represents and warrants to Sigmaways that the following statements contained in this Article IV are true and correct as of the Closing
Date:
Section
4.01 Authorization of Transactions. HeartCore is a corporation duly organized and in good standing in the State of Delaware and
has the requisite power and capacity to execute and deliver the Transaction Documents to which it is are a party and to perform its obligations
hereunder and thereunder. The execution, delivery and performance by HeartCore of the applicable Transaction Documents and the consummation
of the Transactions have been duly and validly authorized by all requisite action on the part of HeartCore. The Transaction Documents
to which HeartCore is a party have been duly and validly executed and delivered by HeartCore. Each Transaction Document to which HeartCore
is a party constitutes the valid and legally binding obligation of HeartCore, enforceable against HeartCore in accordance with its terms
and conditions, except to the extent enforcement thereof may be limited by applicable bankruptcy, insolvency or other Laws affecting
the enforcement of creditors’ rights or by the principles governing the availability of equitable remedies.
Section
4.02 Governmental Approvals; Non-contravention.
|
(a) |
No
consent, Order, action or non-action of, or filing, notification, declaration or registration with, any Governmental Entity is necessary
for the execution, delivery or performance by HeartCore of this Agreement or any other Transaction Document to which HeartCore is
a party. |
|
(b) |
The
execution, delivery and performance by HeartCore of the Transaction Documents to which HeartCore is a party, and the consummation
by HeartCore of the Transactions, do not violate any Laws or Orders to which HeartCore is subject or violate, breach or conflict
with any provision of HeartCore’ organizational documents. |
Section
4.03 Investment Representations.
|
(a) |
HeartCore
understands and agrees that the consummation of this Agreement including the delivery of the Note as contemplated hereby constitute
the offer and sale of securities under the Securities Act and applicable state statutes and that the Note is being acquired for HeartCore’s
own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted
from registration under the Securities Act. |
|
(b) |
HeartCore
is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D under the Securities Act. |
|
(c) |
HeartCore
understands that the Note is being offered and sold to HeartCore in reliance upon specific exemptions from the registration requirements
of United States federal and state securities Laws and that Sigmaways is relying upon the truth and accuracy of, and HeartCore’s
compliance with, the representations, warranties, agreements, acknowledgments and understandings of HeartCore set forth herein in
order to determine the availability of such exemptions and the eligibility of HeartCore to acquire the Note. |
|
(d) |
At
no time was HeartCore presented with or solicited by any leaflet, newspaper or magazine article, radio or television advertisement,
or any other form of general advertising or solicited or invited to attend a promotional meeting otherwise than in connection and
concurrently with such communicated offer. HeartCore is not purchasing the Note acquired by HeartCore hereunder as a result of any
“general solicitation” or “general advertising,” as such terms are defined in Regulation D under the Securities
Act, which includes, but is not limited to, any advertisement, article, notice or other communication regarding the Note acquired
by HeartCore hereunder published in any newspaper, magazine or similar media or on the internet or broadcast over television, radio
or the internet or presented at any seminar or any other general solicitation or general advertisement. |
|
(e) |
HeartCore
is acquiring the Note for HeartCore’s own account as principal, not as a nominee or agent, for investment purposes only, and
not with a view to, or for, resale, distribution or fractionalization thereof in whole or in part and no other person has a direct
or indirect beneficial interest in the Note. Further, HeartCore does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Note. |
|
(f) |
HeartCore,
either alone or together with HeartCore’s representatives, has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Note, and has so evaluated
the merits and risks of such investment. |
|
(g) |
HeartCore
understands that until such time as the Note have been registered under the Securities Act or may be sold pursuant to any applicable
exemption without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Note
may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the
certificates for such Note): |
“NEITHER
THE ISSUANCE AND SALE OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE
HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO AN APPLICABLE
EXEMPTION UNDER SAID ACT.”
|
(h) |
HeartCore
understands that no United States federal or state agency or any other governmental or state agency has passed on or made recommendations
or endorsement of the Note or the suitability of the investment in the Note nor have such authorities passed upon or endorsed the
merits of the transactions set forth herein. |
Section
4.04 Brokers. HeartCore has not engaged any investment banker, finder, broker or sales agent or any other Person in connection
with the origin, negotiation, execution, delivery or performance of any Transaction Document to which it is a party, or the Transactions.
Article
V. Miscellaneous
Section
5.01 Indemnification; Costs. In the event either Party is subject to any action, claim or proceeding resulting from the other’s
gross negligence or intentional breach of this Agreement or the Note, the Party at fault agrees to indemnify and hold harmless the other
Party to the fullest extent permitted by applicable law from any such action, claim or proceeding. Indemnification shall include all
fees, costs and reasonable attorneys’ fees that the indemnified Party may incur. In claiming indemnification hereunder, the indemnified
Party shall promptly provide the indemnifying Party written notice of any claim that the indemnified Party reasonably believes falls
within the scope of this Agreement. The indemnified Party may, at its expense, assist in the defense if it so chooses, provided that
the indemnifying Party shall control such defense, and all negotiations relative to the settlement of any such claim. Any settlement
intended to bind the indemnified Party shall not be final without the indemnified Party’s written consent. Sigmaways shall pay
to HeartCore all costs of collection, including reasonable attorney fees HeartCore may incur in enforcing this Agreement or the Note.
Section
5.02 Notices. All notices under this Agreement shall be in writing. Notices may be served by certified or registered mail, postage
paid with return receipt requested; by private courier, prepaid; by other reliable form of electronic communication; or personally. Mailed
notices shall be deemed delivered five (5) days after mailing, properly addressed. Couriered notices shall be deemed delivered on the
date that the courier warrants that delivery will occur. Electronic communication notices shall be deemed delivered when receipt is either
confirmed by confirming transmission equipment or acknowledged by the addressee or its office. Personal delivery shall be effective when
accomplished. Any Party may change its address by giving notice, in writing, stating its new address, to the other Party. Subject to
the forgoing, notices shall be sent as follows:
If
to HeartCore:
HeartCore
Enterprises, Inc.
Attn:
Sumitaka Yamamoto
848
Jordan Ave. Apt G
Los
Altos CA 94022
Email:
kanno@heartcore.co.jp
with
a copy (which shall not constitute notice) to:
Anthony
L.G., PLLC
Attn:
John Cacomanolis
1700
Palm Beach Lakes Blvd., Suite 820
West
Palm Beach, FL 33401
jcacomanolis@anthonypllc.com
if
to Sigmaways, to:
Sigmaways,
Inc.
Attn:
Mr. Sadasivam
39737
Paseo Padre Parkway, Suite C1
Fremont,
CA 94538
E-mail:
prakash@sigmaways.com
Section
5.03 Attorneys’ Fees. In the event that any Party institutes any action or suit to enforce this Agreement or to secure relief
from any default hereunder or breach hereof, the prevailing Party shall be reimbursed by the losing Party for all costs, including reasonable
attorneys’ fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.
Section
5.04 Amendments; No Waivers; No Consequential Damages.
|
(a) |
This
Agreement may be amended, modified, superseded, terminated or cancelled, and any of the terms, covenants, representations, warranties
or conditions hereof may be waived, only by a written instrument executed by both of the Parties. |
|
(b) |
Every
right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity,
and may be enforced concurrently herewith, and no waiver by any Party of the performance of any obligation by another Party shall
be construed as a waiver of the same or any other default then, theretofore, or thereafter occurring or existing. |
|
(c) |
Neither
any failure or delay in exercising any right or remedy hereunder or in requiring satisfaction of any condition herein nor any course
of dealing shall constitute a waiver of or prevent any Party from enforcing any right or remedy or from requiring satisfaction of
any condition. No notice to or demand on a Party waives or otherwise affects any obligation of that Party or impairs any right of
the Party giving such notice or making such demand, including any right to take any action without notice or demand not otherwise
required by this Agreement. No exercise of any right or remedy with respect to a breach of this Agreement shall preclude exercise
of any other right or remedy, as appropriate to make the aggrieved Party whole with respect to such breach, or subsequent exercise
of any right or remedy with respect to any other breach. |
|
(d) |
Notwithstanding
anything else contained herein, no Party shall seek, nor shall any Party be liable for, consequential, punitive or exemplary damages,
under any tort, contract, equity, or other legal theory, with respect to any breach (or alleged breach) of this Agreement or any
provision hereof or any matter otherwise relating hereto or arising in connection herewith. |
Section
5.05 Expenses. Unless otherwise contemplated or stipulated by a Transaction Document, all costs and expenses incurred in connection
with this Agreement shall be paid by the Party incurring such cost or expense.
Section
5.06 Further Assurances. At and following the Closing, each Party shall execute and deliver such documents and other papers and
take such further action as may be reasonably required to carry out the provisions of the Transaction Documents.
Section
5.07 Successors and Assigns; Benefit. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their
respective successors and permitted assigns. Sigmaways shall not assign or transfer, in whole or in part, this Agreement, the Note or
any of its rights or any of its obligations hereunder or thereunder, including, without limitation, any right to pursue any claim for
damages pursuant to this Agreement or the Note or the transactions contemplated herein, or to pursue any claim for any breach or default
of this Agreement or the Note, or any right arising from the Sigmaways’ due performance of its obligations hereunder or thereunder,
including by merger, consolidation, operation of law, or otherwise, without the prior written consent of the HeartCore and any such purported
assignment in contravention of the provisions herein shall be null and void and of no force or effect. HeartCore may assign or transfer,
in whole or in part, this Agreement or the Note, or any of its rights or any of its obligations hereunder or thereunder, including, without
limitation, any right to pursue any claim for damages pursuant to this Agreement or the transactions contemplated herein, or to pursue
any claim for any breach or default of this Agreement or the Note, or any right arising from HeartCore’s due performance of its
obligations hereunder or thereunder, whether by merger, consolidation, operation of law, or otherwise, without the prior written consent
of the Sigmaways. Other than as specifically set forth herein, including in Section 5.01, nothing in this Agreement shall confer on any
Person other than the Parties, and their respective successors and assigns, any rights, remedies, obligations, or Liabilities under or
by reason of this Agreement.
Section
5.08 Governing Law; Etc.
|
(a) |
This
Agreement, and all matters based upon, arising out of or relating in any way to the Transactions or the Transaction Documents, including,
without limitation, tort claims, statutory claims and contract claims, shall be interpreted, construed, governed and enforced under
and in accordance with the substantive and procedural Laws of the State of Delaware in each case as in effect from time to time and
as the same may be amended from time to time, and as applied to agreements performed wholly within the State of Delaware. |
|
(b) |
Venue
for all matters related hereto or arising pursuant to the Transaction Documents shall be in the United States Federal courts or the
courts of the State of Delaware, in each case located in the State of Delaware (the “Selected Courts”). Each of the Parties
irrevocably consents and agrees that any legal or equitable action or proceedings arising under or in connection with this Agreement
shall be brought exclusively in the Selected Courts. By execution and delivery of this Agreement, each Party hereto irrevocably submits
to and accepts, with respect to any such action or proceeding, generally and unconditionally, the jurisdiction of the aforesaid court,
and irrevocably waives any and all rights such Party may now or hereafter have to object to such jurisdiction. |
|
(c) |
EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS, THE PERFORMANCE THEREOF OR THE
FINANCINGS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 5.08(c).
Each of the Parties acknowledge that each has been represented in connection with the signing of the waiver above by independent
legal counsel selected by the respective Party and that such Party has discussed the legal consequences and import of this waiver
with legal counsel. Each of the Parties further acknowledge that each has read and understands the meaning of such waiver and grants
this waiver knowingly, voluntarily, without duress and only after consideration of the consequences of this waiver with legal counsel. |
Section
5.09 Survival. The representations and warranties in this Agreement shall survive the Closing for a period of 12 months from the
Closing Date, and no claim for indemnification may be made after such time. All covenants and agreements in this Agreement, and such
provisions herein as required to give effect to the same, will survive until fully performed; provided, however, that, nothing herein
shall prevent a Party from making any claim hereunder, or relieve any other Party from any liability hereunder, after such time for any
breach thereof.
Section
5.10 Severability. If any provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the Transactions is not affected in any manner adverse to any Party. Upon such determination that any
provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the Transactions are fulfilled
to the extent possible.
Section
5.11 Entire Agreement. The Transaction Documents constitute the entire agreement between the Parties with respect to the subject
matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the Parties with respect
to the subject matter hereof and thereof.
Section
5.12 Specific Performance. Each Party agrees that irreparable damage would occur if any provision of this Agreement were not performed
in accordance with the terms hereof and that each Party shall be entitled to seek specific performance of the terms hereof in addition
to any other remedy at law or in equity.
Section
5.13 Construction. The table of contents and headings contained in this Agreement are for reference purposes only and will not
affect in any way the meaning or interpretation of this Agreement. In the event of a conflict between language or amounts contained in
the body of this Agreement and language or amounts contained in the Exhibits attached hereto, the language or amounts in the body of
the Agreement shall control. References to Articles or Sections shall refer to those portions of this Agreement. The use of the terms
“hereunder,” “hereof,” “hereto” and words of similar import shall refer to this Agreement as a whole
and not to any particular Article, Section or clause of or Exhibit to this Agreement.
Section
5.14 Counsel. The Parties acknowledge and agree that Anthony L.G., PLLC (“Counsel”) has acted as legal counsel to
HeartCore, and that Counsel has prepared this Agreement at the request of HeartCore, and that Counsel is not legal counsel to Sigmaways,
notwithstanding the fact that HeartCore is a majority shareholder of Sigmaways. Each of the Parties acknowledges and agrees that they
are aware of, and have consented to, the Counsel acting as legal counsel to HeartCore and preparing this Agreement, and that Counsel
has advised each of the Parties to retain separate counsel to review the terms and conditions of this Agreement and the other documents
to be delivered in connection herewith, and each Party has either waived such right freely or has otherwise sought such additional counsel
as it has deemed necessary. Each of the Parties acknowledges and agrees that Counsel does not owe any duties to Sigmaways in connection
with this Agreement and the transactions contemplated herein. Each of the Parties hereby waives any conflict of interest which may apply
with respect to Counsel’s actions as set forth herein, and the Parties confirm that the Parties have previously negotiated the
material terms of the agreements as set forth herein.
Section
5.15 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all
of which taken together shall be but a single instrument. 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 follows]
IN
WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the Closing Date.
|
HeartCore Enterprises, Inc. |
|
|
|
|
By: |
/s/
Sumitaka Yamamoto |
|
Name: |
Sumitaka
Yamamoto |
|
Title: |
Chief
Executive Officer |
|
|
|
|
Sigmaways, Inc. |
|
|
|
|
By: |
/s/
Prakash Sadasivam |
|
Name: |
Prakash
Sadasivam |
|
Title: |
Chief
Executive Officer |
Agreed
and accepted for the purposes herein: |
|
|
|
Prakash
Sadasivam |
|
|
|
|
By: |
/s/
Prakash Sadasivam |
|
Name: |
Prakash
Sadasivam |
|
Exhibit
A
Promissory
Note
(Attached)
Exhibit
10.2
THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A)
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH
COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
Principal
Amount: $400,000.00 |
Issue
Date: September 1, 2023 |
Sigmaways,
Inc.
PROMISSORY
NOTE
Holder:
HeartCore Enterprises, Inc.
FOR
VALUE RECEIVED, pursuant to the terms and conditions of this Promissory Note (this “Note”), Sigmaways, Inc., a California
corporation (the “Borrower”), hereby promises to pay to the order of the holder named above, or registered assigns (the “Holder”),
on the Maturity Date (as defined below) or earlier as may be required herein, the principal amount as set forth above (the “Principal
Amount”), and to pay interest on the outstanding Principal Amount at the rate of zero point one percent (0.1%) per annum, simple
interest, in each case to the extent that this Note and the Principal Amount and any accrued interest hereunder (the “Indebtedness”)
has not been earlier repaid, and subject to the limitations herein. Interest shall commence accruing on the date hereof (the “Issue
Date”), computed on the basis of a 365-day year and the actual number of days elapsed, and shall be payable as set forth herein.
The Holder and the Borrower may be referred to herein individually as a “Party” and collectively as the “Parties”.
This
Note is entered into pursuant to a Loan and Note Purchase Agreement by and between the Borrower and the Holder dated as of the Issue
Date (the “Agreement”) and is subject to the terms and conditions thereof. This Note will rank senior in right of payment
to the Borrower’s capital stock. This Note is not a certificate of deposit or similar obligation of, and is not guaranteed or insured
by, any depository institution, the Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation or any other
governmental or private fund or entity.
The
following terms shall apply to this Note:
Section
1. Definitions. Defined terms used herein without definition have the meanings given them in the Agreement.
Section
2. Interest; Payment and Prepayment.
(a)
Interest on this Note shall accrue on a simple interest, non-compounded basis, and shall be added to the outstanding Principal Amount
on the Maturity Date or such earlier date as the Indebtedness may be payable or paid hereunder or may be due hereunder pursuant to the
terms herein.
(b)
In the event that any payments are made to the Borrower by Sabatini in repayment of the Sabatini Note, the Borrower shall pay such funds
to the Holder as a payment hereunder within two (2) Business Days of receipt of such funds by the Borrower.
(c)
To the extent not earlier paid, all Indebtedness shall be due and payable on September 1, 2026 (the “Maturity Date”) or earlier
in the event of an Event of Default (as defined below) pursuant to Section 3.
(d)
Notwithstanding anything herein to the contrary, the Borrower may, at its sole option, elect to prepay all or any part of the Indebtedness
at any time, without penalty or premium of any kind, provided that the Borrower shall give the Holder at least 5 days’ prior written
notice of the Borrower’s election to so prepay any amount.
(e)
In the event that any amount due hereunder is not paid as and when due, such amounts shall accrue interest at the rate of 10% per year,
simple interest, non-compounding, until paid.
Section
3. Default.
(a)
Event of Default. Notwithstanding anything herein or in the Agreement to the contrary, it shall be an event of default hereunder
(an “Event of Default”) if, at any time prior to full repayment of all the Indebtedness:
|
(i)
|
Any
of the representations or warranties of the Borrower as set forth in the Agreement or herein fail to be true and correct at any time;
or the Borrower breaches or fails to comply with any of the terms, conditions, covenants or agreements of or applicable to the Borrower
as set forth in the Agreement or herein; and in each case which failure has not been cured by the Borrower within five days of written
notice thereof from the Holder to the Borrower; |
|
|
|
|
(ii)
|
The
occurrence of any Event of Default (for purposes of this Section 3(a)(ii), as defined in the Sabatini Note) under the Sabatini Note; |
|
|
|
|
(iii)
|
the
Borrower or any of its Affiliates or subsidiaries shall: (1) apply for or consent to the appointment of, or the taking of possession
by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or assets; (2) make a
general assignment for the benefit of its creditors; (3) commence a voluntary case under the United States Bankruptcy Code (as now
or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic); (4) file a petition seeking to take
advantage of any bankruptcy, insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors’
rights generally; (5) acquiesce in writing to any petition filed against it in an involuntary case under United States Bankruptcy
Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic); (6) issue a notice of
bankruptcy or winding down of its operations or issue a press release regarding same; or (7) take any action under the laws of any
jurisdiction (foreign or domestic) analogous to any of the foregoing; or |
|
(iv) |
a
proceeding or case shall be commenced in respect of the Borrower or any of its Affiliates or subsidiaries, without its application
or consent, in any court of competent jurisdiction, seeking: (1) the liquidation, reorganization, moratorium, dissolution, winding
up, or composition or readjustment of its debts; (2) the appointment of a trustee, receiver, custodian, liquidator or the like of
it or of all or any substantial part of its assets in connection with the liquidation or dissolution of the Borrower or any of its
Affiliates or subsidiaries; or (3) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding
or case described in clause (1), (2) or (3) shall continue undismissed, or unstayed and in effect, for a period of forty-five (45)
days or any order for relief shall be entered in an involuntary case under United States Bankruptcy Code (as now or hereafter in
effect) or under the comparable laws of any jurisdiction (foreign or domestic) against the Borrower or any of its Affiliates or subsidiaries
or action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing shall be taken with respect
to the Borrower or any of its Affiliates or subsidiaries and shall continue undismissed, or unstayed and in effect for a period of
forty-five (45) days |
(b)
Remedies Upon an Event of Default. Upon the occurrence and during the continuance of an Event of Default, the Holder may at any
time at its option (1) declare the Indebtedness due and payable, and thereupon, the same shall be accelerated and so due and payable,
without presentment, demand, protest or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Borrower
and (2) exercise all other rights and remedies available to it under the Transaction Documents; provided, however, that upon the occurrence
of an Event of Default described in Section 3(a)(ii) or Section 3(a)(iv), the Indebtedness shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.
Section
4. Transfers to Comply with the Agreement. This Note may not be sold or transferred other than in compliance with the Agreement and
all applicable securities laws.
Section
5. Miscellaneous.
(a)
Notices. Any notice or other communications required or permitted hereunder shall be in writing and shall be given in accordance
with the terms of the Agreement.
(b)
Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the
Borrower, which is absolute and unconditional, to pay principal and damages, as applicable, on this Note at the time, place, and rate,
and in the coin or currency, herein prescribed. No remedy conferred hereby shall be exclusive of any other remedy referred to herein
or now or hereafter available at law, in equity, by statute or otherwise. No course of delay on the part of the Holder shall operate
as a waiver thereof or otherwise prejudice the rights of the Holder.
(c)
Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Borrower shall execute and deliver, in
exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
Note, a new Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of this
Note, and of the ownership hereof reasonably satisfactory to the Borrower.
(d)
Governing Law; etc.
|
(i) |
This
Note, and all matters based upon, arising out of or relating in any way to this Note or the transactions contemplated herein, including,
without limitation, tort claims, statutory claims and contract claims, shall be interpreted, construed, governed and enforced under
and in accordance with the substantive and procedural Laws of the State of Delaware in each case as in effect from time to time and
as the same may be amended from time to time, and as applied to agreements performed wholly within the State of Delaware. |
|
|
|
|
(ii) |
Venue
for all matters related hereto or arising pursuant to the Transaction Documents shall be in the United States Federal courts or the
courts of the State of Delaware, in each case located in the State of Delaware (the “Selected Courts”). Each of the Parties
irrevocably consents and agrees that any legal or equitable action or proceedings arising under or in connection with this Agreement
shall be brought exclusively in the Selected Courts. By execution and delivery of this Agreement, each Party hereto irrevocably submits
to and accepts, with respect to any such action or proceeding, generally and unconditionally, the jurisdiction of the aforesaid court,
and irrevocably waives any and all rights such Party may now or hereafter have to object to such jurisdiction. |
|
|
|
|
(iii) |
EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREIN, THE PERFORMANCE
THEREOF OR THE FINANCINGS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS Section 5(d)(iii). Each of the Parties acknowledge that each has been represented in connection with the signing
of the waiver above by independent legal counsel selected by the respective Party and that such Party has discussed the legal consequences
and import of this waiver with legal counsel. Each of the Parties further acknowledge that each has read and understands the meaning
of such waiver and grants this waiver knowingly, voluntarily, without duress and only after consideration of the consequences of
this waiver with legal counsel. |
(e)
Waiver. Any waiver by the Borrower or Holder of a breach of any provision of this Note shall not operate as or be construed to
be a waiver of any other breach of such provision or of any breach of any other provision of this Note or a waiver by any other Holders.
The failure of the Borrower or Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be
considered a waiver or deprive that Party of the right thereafter to insist upon strict adherence to that term or any other term of this
Note on any other occasion. Any waiver by the Borrower or Holder must be in writing.
(f)
Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect,
and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and
circumstances. If it shall be found that any amount deemed interest due hereunder violates the applicable law governing usury, the applicable
rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.
(g)
Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
(h)
Entire Agreement. This Note (including any recitals hereto) and the Agreement set forth the entire understanding of the Parties
with respect to the subject matter hereof, and shall not be modified or affected by any offer, proposal, statement or representation,
oral or written, made by or for any party in connection with the negotiation of the terms hereof, and may be modified only by instruments
signed by both Parties.
(i)
Assignment. This Note shall be subject to the limitations and other provisions on assignment as set forth in the Agreement. This
Note shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns.
(j)
Headings. The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed
to limit or affect any of the provisions hereof.
(k)
Currency. All dollar amounts are in U.S. dollars.
(l)
Counterparts. This Note may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument. 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 FOLLOWS]
IN
WITNESS WHEREOF, the undersigned have executed this Note as of the Issue Date.
|
Sigmaways, Inc. |
|
|
|
|
By:
|
/s/
Prakash Sadasivam |
|
Name:
|
Prakash
Sadasivam |
|
Title:
|
Chief
Executive Officer |
Agreed and accepted: |
|
|
|
|
HeartCore Enterprises, Inc. |
|
|
|
|
By: |
/s/
Sumitaka Yamamoto |
|
Name: |
Sumitaka
Yamamoto |
|
Title: |
Chief
Executive Officer |
|
Exhibit
10.3
THE
SECURITIES REPRESENTED BY THIS PROMISSORY NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISPOSITION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE AFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
Promissory
Note
$300,000.00 |
Issue
Date: September 1, 2023 |
FOR
VALUE RECEIVED, pursuant to the terms and conditions of this Promissory Note (this “Note”), Lucca Unlimited LLC (the
“Debtor”), hereby promises to pay in the lawful money of the United States of America to the order of Sigmaways, Inc.
a California corporation (the “Holder”), on the first Business Day following the third annual anniversary of the Issue
Date as set forth above (the “Maturity Date”) or earlier as set forth herein, $300,000.00 (the “Principal
Amount”), and to pay interest on the outstanding Principal Amount at the rate of four percent (4%) per annum, simple interest
(the “Interest Rate”), in each case to the extent that this Note and the Principal Amount and any accrued interest
hereunder (the “Indebtedness”) has not been paid prior to the Maturity Date pr forgiven as set forth herein. Interest
shall commence accruing on the Issue Date as set forth above (the “Issue Date”), computed based on a 365-day year
and the actual number of days elapsed, and shall be payable as set forth herein. The Debtor and the Holder may be referred to herein
collectively as the “Parties” and each individually as a “Party”.
Subject
to the terms of the Agreement (as defined below), as of the date hereof this Note is an unsecured obligation of the Debtor and will rank
equally in right of payment with all the Debtor’s existing and future unsecured obligations from time to time outstanding. This
Note is not a certificate of deposit or similar obligation of, and are not guaranteed or insured by, any depository institution, the
Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation or any other governmental or private fund or entity.
This
Note is entered into pursuant to an Independent Contractor Agreement by and between the Debtor and the Holder, dated effective as of
September 1, 2023 (the “Agreement”). The Debtor represents and warrants to the Holder that the proceeds of this Promissory
Note are not being used in a consumer transaction. The Debtor and any and all endorsers and/or the guarantor of this Note hereby severally
waives all notices, demands, presentment for payment, notice of dishonor, protest and diligence in collection or bringing any action,
except as specifically set forth herein. The Debtor hereby waives the defenses of want of consideration or failure of consideration,
in any enforcement of this Note.
The
following terms shall apply to this Note:
Section
1. Definitions. Defined terms used herein without definition have the meanings given them in the Agreement.
Section
2. Payments.
(a)
Other than as set forth herein, no payments of Indebtedness shall be due or payable hereunder until the Maturity Date, other than in
the event of an Event of Default (as defined below) at the election of the Holder.
(b)
On the first Business Day following each annual anniversary of the Issue Date (each, an “Annual Payment Date”), the
Debtor shall pay to the Holder the sum of one third the total loan amount due outstanding, including all accrued and unpaid interest
as of such time (each, an “Annual Payment”), unless such particular Annual Payment has been forgiven pursuant to the
provisions of Section 3.
(c)
To the extent not repaid as of the Maturity Date of forgiven as set forth herein, all of the Indebtedness shall be due and payable on
the Maturity Date.
(d)
Notwithstanding anything herein to the contrary, the Debtor may, at its sole option, elect to prepay all or any part of the Indebtedness
at any time.
(e)
Notwithstanding any claim, demand or judgment that the Debtor may have against the Holder, the Debtor is prohibited from setting off
any such amount from the amounts due hereunder without a court order for same.
(f)
For the purposes of this Note, if at any time all or any part of any payment made by the Debtor or received by the Holder from the Debtor
under or with respect to this Note, is or must be rescinded or returned for any reason whatsoever (including, but not limited to, the
insolvency, bankruptcy or reorganization of the Debtor), then the obligations of the Debtor under this Note to the extent of the payment
rescinded or returned, shall be deemed to have continued in existence, notwithstanding such previous payment made by such Debtor, or
receipt of payment by the Holder, and the obligations of the Debtor under this Note shall continue to be effective or be reinstated,
as the case may be, as to such payment, all as though such previous payment by such Debtor had never been made. The terms and provisions
of this Section 2(f) shall survive the execution, delivery and payment of this Note.
Section
3. Forgiveness.
(a)
Subject to the terms and conditions herein, one or more of the Annual Payments may be forgiven in accordance with the terms and conditions
herein.
(b)
For purposes herein, the “Forgiveness Conditions” shall mean and be that, as of the applicable Annual Payment Date:
| (i) | The
Debtor remaining engaged by the Holder, whether pursuant to the Agreement or otherwise; |
| (ii) | No
Event of Default shall have occurred hereunder or under the Agreement; |
| (iii) | Debtor’s
efforts must have accomplished Holder’s meeting or exceeding the specified annual sales
targets set by Holder for the annual period preceding the applicable Annual Payment Date,
which shall be targets determined based on the Holder’s revenue goals and profitability
to materially exceed the Annual Payment to be then forgiven by at least $250,000 and growth
objectives; |
| (iv) | Debtor
shall have maintained a high level of customer satisfaction, as measured by feedback surveys
and client reviews, thereby demonstrating Holder’s ability to build strong and lasting
relationships with customers; |
| (v) | Debtor
shall have actively collaborated with the Holder’s sales team and other departments
to foster a cohesive and productive work environment, as collaboration and teamwork are crucial
for overall company success; |
| (vi) | Debtor
shall have actively contributed to the acquisition of new customers and business opportunities
for the Debtor, which may include generating leads, prospecting, and closing new deals; |
| (vii) | Debtor
shall have provided timely and accurate sales reports, forecasts, and other relevant data
to the Holder’s management team, which information will aid in decision-making and
strategy development; |
| (viii) | Debtor
and its personnel must have actively engaged in professional development opportunities, such
as attending industry events, workshops, and training sessions, to enhance Debtor’s
and its personnel’s skills and knowledge; and |
| (ix) | Debtor
and its personnel must have adhered to all of Holder’s company policies, ethical standards,
and legal requirements while conducting sales and business activities. |
(c)
In the event that, as of the applicable Annual Payment Date, the Forgiveness Conditions have been satisfied with respect to the prior
year, then the applicable Annual Payment that would otherwise have been due and payable on such Annual Payment Date shall be deemed forgiven
and the then-outstanding Indebtedness shall be deemed reduced by the amount of the Annual Payment which is so forgiven.
(d)
For the avoidance of doubt, each of the three Annual Payments hereunder shall be subject to payment or the determination of whether the
Forgiveness Conditions hereunder have been satisfied as of the applicable Annual Payment Date, and such determination shall be made by
the Holder in its sole discretion.
(e)
The Debtor has reviewed with its own tax advisors the federal, state, local and foreign tax consequences of its execution of this Note
and of any potential forgiveness of the obligations under this Note. The Debtor is relying solely on such advisors and not on any statements
or representations of the Holder or any counsel, advisor, officer, director, employee, shareholder, agent or representative of the Holder
(the “Holder Parties”). The Debtor expressly acknowledges and agrees that neither the Holder nor any of the Holder
Parties makes any representation to the Debtor with respect to the tax treatment of the transactions contemplated by this Note. The Debtor
understands and agrees that it shall be solely responsible for the payment of any and all federal, state, local and foreign income, capital
gain, payroll, employment, transfer and other taxes, filing and recording fees and similar charges incurred by or imposed on the Debtor,
and any income or withholding taxes or related obligations incurred with respect to payments made to (or on behalf of) the Debtor (including
interest and penalties) pursuant to the transactions contemplated by this Note (collectively, the “Tax Obligations”),
and the Debtor agrees to promptly provide to the Holder any and all documentation that the Holder reasonably requests evidencing and
certifying that the Debtor has paid its taxes with respect to the payments made pursuant to this Note. The Debtor further agrees that
the Holder shall have the right to report and withhold taxes at such times and in such amounts as it determines are proper in its sole
discretion. In addition, the Debtor agrees to indemnify and hold harmless the Holder and the Holder Parties from and against any Tax
Obligations arising, if any, as a result of forgiveness pursuant to this Note.
Section
4. Events of Default.
(a)
The Holder may elect to declare an “Event of Default” if any of the following conditions or events shall occur and
be continuing:
| (i) | the
Debtor fails to pay the then-outstanding Indebtedness on any date any such amounts become
due and payable, and any such failure is not cured within three Business Days of written
notice thereof by Holder; |
| (ii) | the
Debtor shall (i) apply for or consent to the appointment of, or the taking of possession
by, a receiver, custodian, trustee or liquidator; (ii) make a general assignment for the
benefit of the Debtor’s creditors; or (iii) commence a voluntary case under the U.S.
Bankruptcy Code as now and hereafter in effect, or any successor statute; |
| (iii) | a
proceeding or case shall be commenced, without the application or consent of the Debtor,
in any court of competent jurisdiction, seeking (1) liquidation, reorganization or other
relief with respect to it or its assets or the composition or readjustment of its debts,
or (2) the appointment of a trustee, receiver, custodian, liquidator or the like of any substantial
part of its assets, and, in each case, such proceedings or case shall continue undismissed,
or an order, judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect, for a period of 60 days, if in the United States, or
90 days, if outside of the United States; or an order for relief against the Debtor shall
be entered in an involuntary case under any bankruptcy, insolvency, composition, readjustment
of debt, liquidation of assets or similar Law of any jurisdiction; |
| (iv) | a
breach of or default by the Debtor of any of the terms and provisions of this Note (other
than those relating to payments, which are instead covered by clause (i) above) which has
not been cured within 5 days of written notice therefor from the Holder to the Debtor; or |
| (v) | a
breach of or default by the Debtor of any of the terms and provisions of the Agreement which
has not been cured within 5 days of written notice therefor from the Holder to the Debtor. |
(b)
Consequences of Events of Default. If an Event of Default has occurred and is continuing (i) the Holder may, by notice to the
Debtor, declare all or any portion of the then outstanding Indebtedness due and payable, and the Note shall thereupon become, immediately
due and payable in full and in cash; (ii) the Holder shall have the right to pursue any other remedies that the Holder may have under
applicable law and/or in equity; (iii) the Holder shall have the right to pursue any other remedies that the Holder may have in or under
the guarantees described in Section 5 below; (iv) the entire unpaid and outstanding Principal Amount together with accrued interest thereon,
shall bear interest at an interest rate equal to ten percent (10%) per annum, compounded annually; and/or (v) in the event that the Holder
incurs expenses in the enforcement of its rights hereunder, including but not limited to attorneys’ fees, then the Debtor shall
immediately reimburse the Holder the reasonable costs thereof.
Section
5. Security Interests. It is further understood that this Note is secured by a personal guarantee from Andrew Sabatini, attached
hereto as Exhibit A, and from Sabatini Global, Inc., as attached hereto as Exhibit B.
Section
6. Miscellaneous.
(a)
Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder shall be given in accordance
with the provisions of the Agreement.
(b)
Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the
Debtor, which is absolute and unconditional, to pay principal, damages and accrued interest, as applicable, on this Note at the time,
place, and rate, and in the coin or currency, herein prescribed.
(c)
Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Debtor shall execute and deliver, in exchange
and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note,
a new Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of this Note,
and of the ownership hereof reasonably satisfactory to the Debtor.
(d)
Governing Law; Etc.
| (i) | This
Note, and any and all claims, proceedings or causes of action relating to this Note or arising
from this Note or the transactions contemplated herein, including, without limitation, tort
claims, statutory claims and contract claims, shall be interpreted, construed, governed and
enforced under and solely in accordance with the substantive and procedural laws of the State
of California, in each case as in effect from time to time and as the same may be amended
from time to time, and as applied to agreements performed wholly within the State of California. |
| (ii) | Venue
for all matters shall be in the courts of the State of California and United States Courts,
in each case, located in Alameda County, California (the “Selected Courts”).
Each of the Parties irrevocably consents and agrees that any legal or equitable action or
proceedings arising under or in connection with this Note shall be brought exclusively in
the Selected Courts. By execution and delivery of this Note, each Party hereto irrevocably
submits to and accepts, with respect to any such action or proceeding, generally and unconditionally,
the jurisdiction of the aforesaid court, and irrevocably waives any and all rights such Party
may now or hereafter have to object to such jurisdiction. |
| (iii) | EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS, THE PERFORMANCE THEREOF OR THE FINANCINGS
CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS NOTE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS Section 6(d)(iii).
Each of the Parties acknowledge that each has been
represented in connection with the signing of the waiver above by independent legal counsel
selected by the respective Party and that such Party has discussed the legal consequences
and import of this waiver with legal counsel. Each of the Parties further acknowledge that
each has read and understands the meaning of such waiver and grants this waiver knowingly,
voluntarily, without duress and only after consideration of the consequences of this waiver
with legal counsel. |
(e)
Waiver. Any waiver by the Debtor or Holder of a breach of any provision of this Note shall not operate as or be construed to be
a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Debtor or Holder
to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion. Any waiver
by the Debtor or Holder must be in writing.
(f)
Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect,
and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and
circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing
usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under
applicable law.
(g)
Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
(h)
Entire Agreement; Amendment. This Note (including any recitals and exhibits hereto) and the Agreement set forth the entire understanding
of the parties with respect to the subject matter hereof, this Note shall not be modified or affected by any offer, proposal, statement
or representation, oral or written, made by or for any party in connection with the negotiation of the terms hereof, and this Note may
be modified only by instruments signed by all of the parties hereto.
(i)
Headings. The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed
to limit or affect any of the provisions hereof.
(j)
Currency. All dollar amounts are in U.S. dollars.
(k)
Assignment. The Debtor may not assign this Note without the prior written consent of the Holder, in the Holder’s sole discretion.
The Holder may freely assign this Note in whole or in part with written notice to the Debtor.
(l)
Counterparts. This Note may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument. 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 Follows)
IN
WITNESS WHEREOF, the undersigned have executed this Note as of the Issue Date.
|
Lucca
Unlimited LLC |
|
|
|
|
By: |
/s/
Andrew Sabatini |
|
Name: |
Andrew
Sabatini |
|
Title: |
|
Agreed
and accepted: |
|
|
|
|
Sigmaways,
Inc. |
|
|
|
|
By: |
/s/
Prakash Sadasivam |
|
Name: |
Prakash
Sadasivam |
|
Title: |
President |
|
Exhibit
A
For
valuable consideration, the undersigned hereby joins in the above Note solely for the purpose of unconditionally and irrevocably guarantying
all the obligations of (including amounts payable by) the Debtor thereunder, and from and after the date hereof, the undersigned shall
be jointly and severally liable with the Debtor for any and all amounts that may become due and payable to the Holder pursuant to the
Note (including payments of principal, interest, attorneys’ fees and any other amounts payable hereunder) (the “Sabatini
Guaranty”). This Sabatini Guaranty shall be binding upon the heirs, personal representatives and assigns of Andrew Sabatini.
The death of Andrew Sabatini shall not relieve his estate from any liability or obligation under the Note or the Sabatini Guaranty. The
rights, obligations, duties or responsibilities under the Sabatini Guaranty may not be assigned without the prior written consent of
the Holder, in the Holder’s sole discretion.
Exhibit
B
For
valuable consideration, the undersigned hereby joins in the above Note solely for the purpose of unconditionally and irrevocably guarantying
all the obligations of (including amounts payable by) the Debtor thereunder, and from and after the date hereof, the undersigned shall
be jointly and severally liable with the Debtor for any and all amounts that may become due and payable to the Holder pursuant to the
Note (including payments of principal, interest, attorneys’ fees and any other amounts payable hereunder) (the “SGI Guaranty”).
This SGI Guaranty shall be binding upon the successors and assigns of Sabatini Global Inc. The rights, obligations, duties or responsibilities
under the SGI Guaranty may not be assigned without the prior written consent of the Holder, in the Holder’s sole discretion.
|
Sabatini
Global Inc. |
|
|
|
|
By: |
|
|
Name: |
Andrew
Sabatini |
|
Title: |
|
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