BOF BranchOut Food Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):

January 10, 2024

 

BRANCHOUT FOOD INC.

(Exact name of registrant as specified in its charter)

 

Nevada		001-41723		87-3980472
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification Number)

 

205 SE Davis Avenue, Bend Oregon		97702
(Address of principal executive offices)		(Zip Code)

 

(844) 263-6637

(Registrant’s telephone number, including area code)

 

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 per share		BOF		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 (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.

 

On January 10, 2024, BranchOut Food Inc. (the “Company”) completed the sale of $400,000 of Senior Secured Promissory Notes (“Notes”) and Warrants (“Warrants”) to purchase an aggregate of 100,000 shares of the Company’s common stock, to a group of six investors (the “Investors”) led by Eagle Vision Fund LP (“Eagle Vision”), an affiliate of John Dalfonsi, director of the Company, pursuant to a Subscription Agreement between the Company and the Investors (the “Subscription Agreement”). The transaction was effected pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended and Rule 506(b) promulgated thereunder.

 

Pursuant to the Subscription Agreement, Eagle Vision was paid a cash fee in the amount of $40,000 upon the closing of the transaction for due diligence fees.

 

The Notes mature on the earlier of December 31, 2024, or the occurrence of a Qualified Subsequent Financing or Change of Control (as such terms are defined in the Subscription Agreement) and bear interest at a rate of 15% per annum. In addition, the Notes are subject to covenants, events of defaults and other terms and conditions set forth in the Subscription Agreement. The Company’s obligations under the Notes are secured by liens on substantially all of the Company’s assets pursuant to the terms of a Security Agreement between the Company and the Investors (the “Security Agreement”).

 

Each Warrant is exercisable for a ten-year period at an exercise price of $2.00 per share.

 

Pursuant to the Subscription Agreement, the proceeds received by the Company from the sale of the Notes and Warrants were used to repay outstanding indebtedness owed by the Company to John Hinman in the principal amount of $200,000, with the balance to be used for working capital purposes.

 

The information set forth above is qualified in its entirety by reference to the actual terms of the Subscription Agreement, the Notes, the Security Agreement and the Warrants, which are filed as Exhibits 10.1, 10.2, 10.3, and 4.1 hereto, respectively, and which are incorporated herein by reference.

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information set forth under Item 1.01 is incorporated herein by reference.

 

Item 3.02. Unregistered Sales of Equity Securities.

 

The information set forth under Item 1.01 is incorporated herein by reference.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Resignation of Chris Coulter

 

On January 10, 2024, Chris Coulter resigned as the Company’s Chief Financial Officer.

 

Appointment of John Dalfonsi

 

On January 10, 2024, John Dalfonsi resigned as a member of the Company’s Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, and was appointed to serve as the Company’s Chief Financial Officer.

 

 

Mr. Dalfonsi, 58, has closed public and private equity and debt financings, merger and acquisitions, advisory and fairness opinion transactions and Nasdaq and NYSE/AMEX IPOs. He has worked with companies in the healthcare, industrial, consumer, technology, cleantech and resource sectors, bringing a wealth of experience to the Company. Mr. Dalfonsi has been the Managing Member at Eagle Vision since April 2022, was previously a Senior Managing Director at Paulson Investment Company, LLC from January 2021 through April 2022, and was a Managing Director at Roth Capital Partners from February 2002 to December 2020. Mr. Dalfonsi earned his Bachelor of Science degree in Industrial Engineering from Northwestern University and his Master of Business Administration from the University of Chicago Booth School of Business.

 

On April 12, 2022, Eagle Vision and the Company entered into a consulting agreement engagement letter pursuant to which Eagle Vision provided capital formation and initial public offering consulting services to the Company, pursuant to which the Company paid Eagle Vision $6,000 per month through June 2023, the month in which the Company completed its initial public offering.

 

There are currently no agreements between the Company and John Dalfonsi relating to his appointment as the Company’s Chief Financial Officer.

 

Appointment of Byron Riché Jones

 

On January 10, 2024, Byron Riché Jones was appointed to serve as a director of the Company and the Chairman of the Company’s Audit Committee.

 

Mr. Jones, 40, is a private investor through his firm ELEVEN03 Hospitality, LLC. There are currently no agreements between the Company and Mr. Jones relating to his appointment as a director of the Company.

 

Item 9.01. Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit 4.1	Form of Warrant issued under Subscription Agreement dated as of January 10, 2024 between BranchOut Food Inc. and the investors named therein
Exhibit 10.1	Subscription Agreement dated as of January 10, 2024 , between BranchOut Food Inc. and the investors named therein
Exhibit 10.2	Form of Senior Secured Note issued under Subscription Agreement dated as of January 10, 2024 between BranchOut Food Inc. and the investors named therein
Exhibit 10.3	Security Agreement dated as of January 10, 2024 , between BranchOut Food Inc. and the investors named therein
Exhibit 104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	BranchOut Food Inc.
Date: January 16, 2024	By:	/s/ Eric Healy
		Eric Healy, Chief Executive Officer

 

 

Exhibit 4.1

 

THIS WARRANT and the Securities that may be purchased upon the exercise of this warrant have been acquired for INVESTMENT AND NOT FOR DISTRIBUTION, AND have NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (the “Act”). Such securities may not be offered for sale, sold, pledged or hypothecated, or otherwise transferred unless and until registration under the act or an exemption from the registration requirements of the act is available for such offer, sale, pledge, hypothecation, or transfer in the opinion of legal counsel reasonably satisfactory to the company.

 

BRANCHOUT FOOD INC. (FKA AVOLOV LLC)

 

WARRANT

 

Warrant No. __

 

Date of Issuance: January 10, 2024

 

BRANCHOUT FOOD INC., a Nevada corporation (fka Avolov LLC, an Oregon limited liability company) (the “Company”), for valid consideration received, hereby certifies that ____ or its registered assigns (in each case “Holder”), is entitled pursuant to the terms of this warrant (this “Warrant”), subject to the terms set forth below, to purchase, prior to termination as provided in Section 5 hereof, up to ___________ shares of duly authorized, validly issued, fully-paid and non-assessable shares of the Company’s Common Stock (the “Common Stock”), at an exercise price of $2.00 per share (the “Exercise Price”), subject to adjustment as set forth herein. The Common Stock purchasable upon exercise of this Warrant, as adjusted from time to time pursuant to the terms of this Warrant, are hereinafter referred to as the “Warrant Stock.” This Warrant is issued pursuant to that certain Subscription Agreement of even date herewith, by and between the Company and the other parties thereto (the “Subscription Agreement”), and capitalized terms not defined herein will have the meanings set forth in the Subscription Agreement.

 

1. Exercise.

 

(a) General. This Warrant may be exercised by Holder in whole or in part prior to termination as provided in Section 5 hereof, by surrendering this Warrant, with the purchase form appended hereto as Exhibit A completed in accordance with the instructions thereto and duly executed by such Holder or by such Holder’s duly authorized attorney, at the principal office of the Company, or at such other office or agency as the Company may designate, accompanied by payment in full by cash, check or wire transfer of all or such portion of the aggregate Exercise Price as is payable in respect of the number of shares of Warrant Stock purchased upon such exercise.

 

(b) Timing. The exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in Section 1(a) above. If Holder exercises this Warrant in connection with a merger or sale of the Company other than in connection with the conversion of the Company into a corporation through conversion, merger, or similar transaction in which the relative equity ownership percentages of the owners of the Company do not change (“Change of Control Transaction”), Holder may designate that the exercise date be deemed the closing date of such Change of Control Transaction, and conditional upon the occurrence of such event.

 

 

(c) Conversion Right.

 

(i) Right to Convert Warrant; Net Issuance. In addition to and without limiting the rights of the Holder under the terms of this Warrant, but only to the extent this Warrant has not otherwise been exercised, the Holder shall have the right to convert this Warrant or any portion thereof (the “Conversion Right”) into Warrant Stock as provided in this Section 1(c) at any time or from time to time during the term of this Warrant. Upon exercise of the Conversion Right with respect to a particular number of shares of Warrant Stock set forth on the purchase form appended hereto as Exhibit A (the “Converted Warrant Stock”), the Company shall deliver to the Holder (without payment by the Holder of any exercise price or any cash or other consideration) that number of shares of Warrant Stock equal to the quotient obtained by dividing (X) the value of this Warrant (or the specified portion hereof) on the Conversion Date (as defined in subsection (ii) hereof), which value shall be determined by subtracting (A) the aggregate Exercise Price of the shares of Converted Warrant Stock immediately prior to the exercise of the Conversion Right from (B) the aggregate Fair Market Value of the Converted Warrant Stock issuable upon exercise of this Warrant (or the specified portion hereof) on the Conversion Date (as hereinafter defined) by (Y) the Fair Market Value of one share of Converted Warrant Stock on the Conversion Date (as hereinafter defined).

 

Expressed as a formula, such conversion shall be computed as follows:

 

	X =	B - A
		Y

 

	Where:	X	= the number of shares of Warrant Stock that may be issued to Holder upon exercise of the Conversion Right
		Y	= the Fair Market Value of one share of Warrant Stock
		A	= the aggregate Exercise Price (the per share Exercise Price multiplied by the number of shares of Converted Warrant Stock)
		B	= the aggregate Fair Market Value (i.e., Fair Market Value multiplied by the number of shares of Converted Warrant Stock)

 

No fractional shares of Warrant Stock shall be issuable upon exercise of the Conversion Right, and, if the number of shares of Warrant Stock to be issued determined in accordance with the foregoing formula is other than a whole number, the Company shall pay to the Holder an amount in cash equal to the Fair Market Value of the resulting fractional share of Warrant Stock on the Conversion Date.

 

(ii) Method of Exercise. The Conversion Right may be exercised by the Holder by the surrender of this Warrant at the principal office of the Company together with a written statement specifying that the Holder thereby intends to exercise the Conversion Right and indicating the number of shares of Warrant Stock which are being surrendered (referred to in subsection (i) hereof as the Converted Warrant Stock) in exercise of the Conversion Right. Such conversion shall be effective upon receipt by the Company of this Warrant together with the aforesaid written statement (the “Conversion Date”). If the shares of Warrant Stock are certificated, then certificates for the Converted Warrant Stock issuable upon exercise of the Conversion Right shall be issued as of the Conversion Date and shall be delivered to the Holder within thirty (30) days following the Conversion Date.

 

 

(iii) Determination of Fair Market Value. For purposes of this Agreement, “Fair Market Value” shall mean, as of any particular date: (a) the lowest of the five most recent closing prices of the Warrant Stock if trading on any public exchange; (b) if there have been no sales of the Warrant Stock on any such exchange on any such day, the average of the highest bid and lowest asked prices for the Warrant Stock on all such exchanges at the end of such day; (c) if on any such day the Warrant Stock is not listed on a domestic securities exchange, the closing sales price of the Warrant Stock as quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association for such day; or (d) if there have been no sales of the Warrant Stock on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association on such day, the average of the highest bid and lowest asked prices for the Warrant Stock quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association at the end of such day; in each case, averaged over twenty (20) consecutive Business Days ending on the Business Day immediately prior to the day as of which “Fair Market Value” is being determined; provided, that if the Warrant Stock is listed on any domestic securities exchange, the term “Business Day” as used in this sentence means Business Days on which such exchange is open for trading. If at any time the Warrant Stock is not listed on any domestic securities exchange or quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association, the “Fair Market Value” of the Warrant Stock shall be the fair market value per share of Warrant Stock as determined jointly by the Company and the Holder; provided, that if the Company and the Holder are unable to agree on the Fair Market Value per share of the Warrant Stock within a reasonable period of time (not to exceed ten (10) days from the Company’s receipt of the purchase form), such Fair Market Value shall be determined by a nationally recognized investment banking, accounting or valuation firm jointly selected by the Company and the Holder. The determination of such firm shall be final and conclusive, and the fees and expenses of such valuation firm shall be borne by the Company.

 

(d) Certificates. If the shares of Warrant Stock are certificated, then as soon as practicable after the exercise of this Warrant, the Company shall cause to be issued in the name of, and delivered to, Holder, or as such Holder may direct, a certificate or certificates for the number of shares of Warrant Stock to which such Holder shall be entitled. Issuance of certificates pursuant to this Section 1(d) shall be made without charge to Holder for any issue or transfer tax or other incidental expenses, all of which taxes and expenses shall be paid by the Company.

 

(e) Legends. Each certificate or other records representing the Common Stock or for any other security issued or issuable upon exercise of this Warrant shall bear the following legend:

 

“THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). SUCH SECURITIES MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY STATING THAT SUCH SALE, PLEDGE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT UNLESS SOLD PURSUANT TO RULE 144 PROMULGATED UNDER THE ACT.”

 

(f) Status of Common Stock. The Company covenants that the Common Stock, when issued pursuant to the exercise of this Warrant, will be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof.

 

 

2. Adjustments.

 

(a) Adjustment Upon Reorganization, Reclassification or Change of Control Transaction. In the event of any (i) capital reorganization of the Company, (ii) reclassification of the Capital Stock (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a distribution, dividend or subdivision, split-up or combination of Capital Stock), (iii) Change of Control Transaction, or (iv) other similar transaction (other than any such transaction covered by Section 2(b)), in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, this Warrant shall, immediately after such reorganization, reclassification, Change of Control Transaction or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of shares of Warrant Stock then exercisable under this Warrant, be exercisable for the kind and number of shares of equity or securities or assets of the Company or of the successor Person (as defined below) resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such reorganization, reclassification, Change of Control Transaction or similar transaction and acquired the applicable number of shares of Warrant Stock then issuable hereunder as a result of such exercise (without taking into account any limitations or restrictions on the exercisability of this Warrant); and, in such case, appropriate adjustment (in form and substance satisfactory to the Holder) shall be made with respect to the Holder’s rights under this Warrant to insure that the provisions of this Section 2 shall thereafter be applicable, as nearly as possible, to this Warrant in relation to any membership units, interests, shares of stock, securities or assets thereafter acquirable upon exercise of this Warrant (including, in the case of any Change of Control Transaction or similar transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment to the number of shares of Warrant Stock then acquirable upon exercise of this Warrant without regard to any limitations or restrictions on exercise). The provisions of this Section 2(a) shall similarly apply to successive reorganizations, reclassifications, Change of Control Transactions or similar transactions. The Company shall not effect any such reorganization, reclassification, Change of Control Transaction or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, Change of Control Transaction or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Warrant and satisfactory to the Holder, the obligation to deliver to the Holder such membership units, interests, shares of stock, securities or assets which, in accordance with the foregoing provisions, such Holder shall be entitled to receive upon exercise of this Warrant. Notwithstanding anything to the contrary contained herein, with respect to any corporate event or other transaction contemplated by the provisions of this Section 2(a), the Holder shall have the right to elect prior to the consummation of such event or transaction, to give effect to the exercise rights set forth in Section 1 instead of giving effect to the provisions of this Section 2(a) with respect to this Warrant

 

(b) Adjustment to Exercise Price and Warrant Shares Upon Dividend, Subdivision or Combination of Common Units. If the Company shall, at any time or from time to time after the issuance of this Warrant, (i) pay a dividend or make any other distribution upon the shares of Common Stock or any other Capital Stock of the Company payable in Common Stock, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding Common Stock into a greater number of units, the Purchase Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number of shares of Warrant Stock issuable upon exercise of this Warrant shall be proportionately increased. If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding Common Stock into a smaller number of units, the Purchase Price in effect immediately prior to such combination shall be proportionately increased and the number of shares of Warrant Stock issuable upon exercise of this Warrant shall be proportionately decreased. Any adjustment under this Section 2(b) shall become effective at the close of business on the date the dividend, subdivision or combination becomes effective.

 

 

(c) Notice of Adjustments. Whenever the Purchase Price or the number of shares of Warrant Stock purchasable hereunder shall be adjusted pursuant to Section 2 hereof, the Company shall promptly give written notice thereof to Holder in the form of a certificate, signed by the chief executive officer and the executive officer responsible for the creation of such certificate, setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Purchase Price and the number of shares of Warrant Stock purchasable hereunder after giving effect to such adjustment. Such certificate shall be delivered to Holder within thirty (30) days of such adjustment, in accordance with Section 11 hereof.

 

3. Transfers. The Holder of this Warrant acknowledges that this Warrant and the Warrant Stock have not been registered under the Securities Act of 1933, as amended (the “Act”), and agrees not to offer for sale, sell, pledge, distribute, transfer or otherwise dispose of this Warrant and agrees not to offer for sale, sell, pledge, distribute, transfer or otherwise dispose of any Warrant Stock issued upon its exercise in the absence of (i) an effective registration statement under the Act as to this Warrant and the Warrant Stock and registration or qualification of under any applicable Blue Sky or state securities law then in effect, or (ii) an opinion of counsel, reasonably satisfactory to the Company, that such registration and qualification are not required; provided, however, that no opinion need be obtained with respect to a transfer to (A) a partner or member, active or retired, of Holder, (B) the estate of any such partner or member, (C) an “affiliate” of Holder as that term is defined in Rule 405 promulgated by the U.S. Securities and Exchange Commission under the Act, or (D) the spouse, children, grandchildren or spouse of such children or grandchildren of Holder or to trusts for the benefit of Holder or such Persons, in each case if the transferee agrees to be subject to the terms hereof. Notwithstanding the foregoing, any transferee receiving Warrant Stock that (X) have been registered under the Act or (Y) are resaleable under Rule 144 promulgated under the Act shall not be required to agree in writing to be subject to the terms of this Section 3.

 

4. No Impairment. The Company will not, by amendment of its certificate of incorporation or bylaws or through reorganization, consolidation, merger, dissolution, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be reasonably necessary or appropriate in order to protect the rights of Holder of this Warrant against impairment.

 

5. Termination. This Warrant (and the right to purchase securities upon exercise hereof) shall terminate ten (10) years from the issuance of this Warrant (the “Expiration Date”).

 

6. Notices of Certain Transactions.

 

(a) In the event:

 

(i) that the Company makes any amendment to its certificate of incorporation or bylaws;

 

(ii) of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any Change of Control Transaction, any other consolidation or merger of the Company with or into another entity, or any other transaction or series of related transactions pursuant to which the Company’s equity holders immediately prior thereto will possess a minority of the voting power of the surviving or acquiring entity immediately thereafter, or any transfer of all or substantially all of the assets of the Company; or

 

 

(iii) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

then, and in each such case, the Company will send to Holder a notice specifying, as the case may be, (a) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, (b) a certified copy of the Company’s current certificate of incorporation or bylaws, or (c) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, Change of Control Transaction, dissolution, liquidation, winding-up, or redemption is to take place, and the time, if any is to be fixed, as of which Holders of record of shares of Common Stock (or such capital stock or securities at the time deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation, winding-up, or redemption) shall be determined. Such notice shall be mailed at least twenty (20) days prior to the record date or effective date for the event specified in such notice.

 

(b) The Company shall notify the Holder of the Expiration Date of the Warrant, no later than twenty (20) days prior to the Expiration Date.

 

7. Reservation of Warrant Stock. The Company will at all times reserve and keep available, solely for the issuance and delivery upon the exercise of this Warrant, such shares of Common Stock and other equity securities or property, as from time to time shall be issuable upon the exercise of this Warrant. The Company covenants and agrees that all such shares of Common Stock or other equity securities that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid (assuming payment of the Exercise Price by Holder) and nonassessable and free from all preemptive rights and free of all taxes, liens and charges with respect to the issue thereof. The Company will take all such action as may be reasonably necessary to assure that such shares of Common Stock or other equity securities may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange upon which the securities of the Company may be listed.

 

8. Exchange of Warrants. Upon the surrender by Holder of any Warrant, properly endorsed, to the Company at the principal office of the Company, the Company will, subject to the provisions of Section 4 hereof, issue and deliver to or upon the order of such Holder, at Holder’s expense, a new Warrant of like tenor, in the name of such Holder or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock or other equity securities called for on the face or faces of the Warrant so surrendered.

 

9. Registration of Common Stock. If any shares of Common Stock required to be reserved for purposes of exercise of this Warrant requires registration with or approval of any governmental authority under any applicable law (other than the Act) before such shares of Common Stock may be issued upon exercise, the Company shall, at its expense and as expeditiously as possible, use its best efforts to cause such shares of Common Stock to be duly registered or approved, as the case may be. Without limiting the foregoing, the shares of Common Stock issuable upon exercise of the Warrants shall be registered by the Company under the Act and, immediately after the Closing, the Company agrees to file the applicable registration statement under the Act covering all such shares of Common Stock (and to register or qualify such shares of Common Stock under any applicable Blue Sky or state securities law then in effect) and the Company agrees to maintain the effectiveness of such registration statement for a period of not less than ten (10) years, or if earlier, until all of the shares of Common Stock issuable upon exercise of the Warrant have been disposed of by the holder thereof. At any such time as such shares of Common Stock are listed on any national securities exchange, the Company shall, at its expense, obtain promptly and maintain the approval for listing on each such exchange, upon official notice of issuance, the shares of Common Stock issuable upon exercise of the Warrant and maintain the listing of such shares of Common Stock after their issuance; and the Company shall also list on such national securities exchange, shall register under the Securities Exchange Act of 1934, as amended and shall maintain such listing of, any other securities that at any time are issuable upon exercise of the Warrant, if and at the time that any securities of the same class shall be listed on such national securities exchange by the Company.

 

 

10. Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor at Holder’s expense.

 

11. Notices. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing and delivered by hand or overnight courier service or sent by facsimile or email as follows:

 

(a) To his, her, or its address (and email address) set forth on the signature page to this Warrant.

 

(b) Notices sent by hand or overnight courier service shall be deemed to have been given when received and notices sent by electronic communications, shall be effective upon confirmation received by the sender, including transmittal coded “advise when received” or words of similar meaning. Any party hereto may by notice so given change its address for future notice hereunder.

 

12. No Rights as Stockholder. Until the exercise of this Warrant, Holder shall not have or exercise any rights by virtue hereof as a stockholder of the Company unless otherwise acquired. Without limiting the generality of the foregoing, and except as otherwise provided in Section 3 hereof, no dividends shall accrue to the shares of Common Stock or other equity securities underlying this Warrant until the exercise hereof and the purchase of the underlying shares of Common Stock or other equity securities, at which point dividends shall begin to accrue with respect to such shares of Common Stock or other equity securities from and after the date such shares of Common Stock or other equity securities are so purchased. Nothing in this Section 12 shall limit the right of Holder to be provided the notices required to be provided pursuant to the terms of this Warrant.

 

13. Headings. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

 

14. Governing Law. This Warrant and all actions arising out of or in connection with this Warrant shall be governed by and construed in accordance with the laws of the State of Nevada, without application of conflicts of law principles thereunder.

 

15. Amendment or Waiver. Any provision of this Warrant may be amended, waived or modified (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely) only by an instrument in writing signed by the Company and Holder. Any amendment, waiver or modification effected in accordance with this Section 15 shall be binding upon Holder, each future holder of the Warrant or the Warrant Stock and the Company.

 

16. Business Days. This Warrant shall be exercisable as provided for herein, except that in the event that the Expiration Date of this Warrant shall fall on a Saturday, Sunday and/or and United States federally recognized Holiday, the Expiration Date for this Warrant shall be extended to 5:00 p.m. Pacific time on the business day following such Saturday, Sunday or recognized Holiday.

 

17. Successor and Assigns. The terms and provisions of this Warrant shall incur to the benefit of, and be binding upon, the Company and each Holder hereof and their respective permitted successors and assigns.

 

18. Attorneys’ Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Warrant the adjudicating party may in its discretion order that the non-prevailing party, as determined by such adjudicating party, reimburse the prevailing party for reasonable attorney’s fees and costs in addition to any other relief to which such prevailing party may be entitled.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer as of the date first written above.

 

	BRANCHOUT FOOD INC. (FKA AVOLOV LLC)
	By:
	Name:	Eric Healy
	Title:	Chief Executive Officer

 

	Address:	20724 Carmen Loop, Suite 120
		Bend, OR 97702
		Attn: Eric Healy
		Email: eric@branchoutfood.com

 

[Signature Page –Warrant]

 

 

By its counter-signature below, Holder hereby agrees to the foregoing terms and conditions set forth in this Warrant.

 

	HOLDER:
	By:
	Name:
	Address:

 

[Signature Page –Warrant]

 

 

EXHIBIT A

 

PURCHASE FORM

 

To:

BRANCHOUT FOOD INC. (FKA AVOLOV LLC)

Dated:

 

By checking the box below, the undersigned hereby irrevocably elects:

 

	☐	to purchase _______ shares of Common Stock, and herewith makes payment of $_________ by cash, check or wire transfer, representing the aggregate Exercise Price therefor pursuant to Section 1(a) of the attached Warrant.
	☐	to exercise the Conversion Right with respect to ___ shares of Common Stock pursuant to Section 1(c) of the attached Warrant.

 

Please issue a certificate or certificates (if the shares of Warrant Stock are certificated) reflecting the issuance of said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

 

(Name)

(Address)

 

The undersigned represents that the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares of Common Stock except in compliance with applicable securities laws.

 

	(Entity name, if applicable)
	By:
	Name:
	Title:

 

 

Exhibit 10.1

 

Subscription Agreement

 

This Subscription Agreement (this “Subscription Agreement”), dated as of January 10, 2024, is entered into among BranchOut Food Inc., a Nevada corporation (fka Avolov LLC, an Oregon limited liability company) (the “Company”), and the purchasers listed on Schedule A hereto (each, a “Purchaser” and collectively, the “Purchasers”). Certain definitions used in this Subscription Agreement shall have the meanings given to them in Section 9 below.

 

WHEREAS, the Company is conducting an offering (the “Offering”) involving the sale of Senior Secured Notes (as defined below) in the aggregate Offering amount of up to Four Hundred Thousand Dollars ($400,000) USD and detachable warrants (the “Warrants”) to purchase in aggregate up to 100,000 shares of the Company’s Common Stock (as defined below) at an exercise price of $2.00 per share.

 

WHEREAS, subject to the terms and conditions set forth herein, the Company wishes to issue and sell to each Purchaser, and each Purchaser wishes to purchase from the Company, a Senior Secured Note and Warrant in exchange for the consideration (the “Consideration”) set forth opposite such Purchaser’s name on Schedule A hereto.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.	Description Of SENIOR SECURED NoteS, WARRANTS And Commitment

 

1.1 Description of Senior Secured Notes.

 

(a) Principal Amount; Interest. The Company has authorized the issuance and sale of senior secured promissory notes that shall be dated as of the Closing Date (as defined below) and shall be in the aggregate original principal amount of up to Four Hundred Thousand Dollars ($400,000) USD in substantially the form attached hereto as Exhibit A (the “Senior Secured Notes” and each a “Senior Secured Note”), subject to the receipt by the Company or Persons as directed by the Company of the Consideration no later than the Closing Date. In exchange for the Consideration paid by each Purchaser, the Company will sell and issue to such Purchaser a Senior Secured Note. Each Senior Secured Note will have a principal balance equal to the Consideration paid by such Purchaser for such Senior Secured Note, as set forth opposite such Purchaser’s name on Schedule A, and shall accrue interest on its unpaid principal balance at an aggregate rate of fifteen percent (15%) per annum (with a minimum of one year of interest), which interest shall accrue from the Closing Date and all accrued and unpaid interest shall be due and payable in full on the first Business Day of each month (the “Interest”). There will be a three (3)-day grace period following the first Business Day of each month, after which a late payment fee of $100 (the “Late Payment Fee”) per day shall be assessed and payable in addition to the past due Interest. Any arrears in Interest or the incurrence of a Late Payment Fee shall constitute an Event of Default under the Senior Secured Notes until cured, and the Purchaser shall be entitled to all remedies available to it under the Senior Secured Notes and this Agreement. The Senior Secured Notes shall be secured pursuant to the terms of a security agreement in substantially the form attached hereto as Exhibit B (the “Security Agreement”).

 

 

(b) Maturity Date.

 

(i) Unless prepaid in full pursuant to Section 2.1 below, and subject to Section 1.1(b)(ii) below, the aggregate unpaid principal amount of the Senior Secured Notes, plus all accrued and unpaid Interest thereon, and all other amounts payable under the Senior Secured Notes shall be due and payable on the earlier of: (a) December 31, 2024, (b) the closing of a Qualified Subsequent Financing and (c) the closing of a Change of Control (any such date, the “Maturity Date”). The parties may adjust or extend the Maturity Date by written agreement.

 

(ii) Unless prepaid in full pursuant to Section 2.1, commencing as of July 1, 2024, in addition to the Interest payments described above, the Company shall make monthly payments to the Purchaser equal to 1/18th of the total principal amount outstanding under the Senior Secured Note within ten (10) days of the first day of each calendar month until the Senior Secured Note is paid in full.

 

1.2 Warrants.

 

Subject to the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth, at and subject to the Closing, the Company agrees to issue and sell to each of the Purchasers (or a designee of a Purchaser), and each of the Purchasers agrees to purchase from the Company, a Warrant to purchase that number of shares of Common Stock set forth opposite such Purchaser’s (or designee’s) name on Schedule A hereto at an exercise price of $2.00 per share, with an exercise period of ten (10) years from the Closing Date. The shares of Common Stock issuable upon exercise of the Warrants shall be registered by the Company under the Act and, immediately after the Closing, the Company agrees to file the applicable registration statement under the Act covering all such shares of Common Stock (and to register or qualify such shares of Common Stock under any applicable Blue Sky or state securities law then in effect) and the Company agrees to maintain the effectiveness of such registration statement for a period of not less than ten (10) years, or if earlier, until all of the shares of Common Stock issuable upon exercise of the Warrant have been disposed of by the holder thereof. The Warrants shall be in substantially the form attached hereto as Exhibit C.

 

1.3 Use of Proceeds.

 

The proceeds from the sale and issuance of the Senior Secured Notes and Warrants shall be used to repay the outstanding indebtedness owing to John Hinman in the principal amount of $200,000 as well as to provide working capital for the Company.

 

1.4 Closing.

 

The closing of the sale of the Senior Secured Notes and Warrants in return for the Consideration paid by Purchasers (the “Closing”) will take place remotely via the exchange of documents and signatures on the date of and simultaneously with the execution of this Subscription Agreement, or at such other time and place as mutually agreed upon in writing by the Company and the Purchasers (the “Closing Date”). At the Closing, (i) each Purchaser (other than EVP (as defined below)) will deliver to the Company the amount of Consideration set forth opposite such Purchaser’s name on Schedule A hereto (which amount shall initially be wired to the trust account of Cairncross & Hempelmann to be held until the Consideration from all Purchasers has been received, at which time the Consideration (less the amount of the Closing Fees, which the Company agrees shall be retained and distributed by Cairncross & Hempelmann as set forth in Section 12.10 below) shall be delivered to the Company), (ii) EVP will deliver to the Company the amount of the Consideration set forth opposite EVP’s name on Schedule A hereto (which amount, less the amount of the EV Fees (as defined below) shall be wired directly to the Company in such amounts and at such times as set forth on Schedule A) and (iii) the Company will (A) deliver to each Purchaser an executed Senior Secured Note and Warrant and the Other Investor Agreements in return for the Consideration provided to the Company and (B) pay the Closing Fees as set forth in Section 12.10 below (which Closing Fees shall be deducted from the Consideration as described above).

 

 

2.	PAYMENT AND PREPAYMENT OF senior secured NOTES

 

2.1 Prepayment.

 

The aggregate principal amount under the Senior Secured Notes and Interest (with a minimum of one year of interest) thereon may be prepaid in whole or in part, without any prepayment fee, at any time prior to the Maturity Date at the election of the Company, upon at least two (2) Business Days’ prior written notice to the Purchasers (a “Prepayment”); provided that partial Prepayments shall be allowed without any prepayment fee or penalty only to the extent that at the time the Senior Secured Notes is paid in full, each of the Purchasers shall have received minimum interest payments equal to at least one year’s Interest thereon in the aggregate. Any prepayment shall be made to the Purchasers on a pari passu basis.

 

2.2 Direct Payment.

 

The Company will pay all sums owing under the Senior Secured Notes to the Purchasers by same day wire transfer of immediately available funds to an account designated in writing by each Purchaser to the Company at least five (5) Business Days prior to the date of any payment. All payments by the Company shall be made without defense, set-off or counterclaim. Any payment or prepayment shall be credited first to accrued but unpaid Interest, and any remainder applied to payment of the principal amount then outstanding under the Senior Secured Notes. All payments shall be made to the Purchasers on a pari passu basis.

 

2.3 Payments Payable on Business Days.

 

Payments of all amounts due hereunder or under the Senior Secured Notes shall be made on a Business Day. Any payment due on a day that is not a Business Day shall be made on the immediately preceding Business Day, together with all interest (if any) accrued to and including such preceding Business Day.

 

3.	REPRESENTATIONS AND WARRANTIES OF PURCHASERS

 

In connection with the transactions contemplated by this Subscription Agreement, each Purchaser hereby represents and warrants to the Company as follows:

 

3.1 Authority.

 

Such Purchaser has the legal right, power and authority to enter into, execute, deliver and perform its obligations under this Subscription Agreement, the Other Investor Agreements and the agreements, documents and instruments contemplated thereby to which such Purchaser is a party and each such Purchaser’s director, partner, officer or agent executing and delivering this Subscription Agreement is authorized to do so. This Subscription Agreement, the Other Investor Agreements and the agreements, documents and instruments contemplated thereby to which such Purchaser is a party have been duly and validly executed and delivered and constitute legal, valid and binding obligations of such Purchaser, enforceable in accordance with their respective terms subject to (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (ii) rules of law governing specific performance, injunctive relief or other equitable remedies.

 

 

3.2 Investor Status.

 

Such Purchaser and each equity owner of such Purchaser (i) is an “accredited investor,” as that term is defined in Regulation D under the Securities Act, and as set forth in Schedule B attached hereto, and (ii) has such knowledge, skill, sophistication and experience in business and financial matters, based on actual participation, that it and each equity owner of such Purchaser is capable of evaluating the merits and risks of the purchase of the Senior Secured Notes, the Warrants and the Common Stock issuable upon exercise of the Warrants (collectively, the “Securities”) from the Company and the suitability thereof. Such Purchaser agrees to furnish any additional information reasonably requested by the Company to assure compliance with applicable federal and state securities laws in connection with the purchase and sale of the Securities.

 

3.3 Investment Experience.

 

Such Purchaser is an investor in securities of development-stage companies and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities.

 

3.4 Investment for Purchaser’s Own Account.

 

Such Purchaser acknowledges that this Subscription Agreement is made with such Purchaser in reliance upon such Purchaser’s representations to the Company, which such Purchaser confirms by executing this Subscription Agreement, that (a) the Securities will be acquired for investment for such Purchaser’s own account, not as a nominee or agent (unless otherwise specified on such Purchaser’s signature page hereto), and not with a view to the resale or distribution of any part thereof and (b) it 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 Securities. If other than an individual, such Purchaser also represents it has not been organized solely for the purpose of acquiring the Securities.

 

3.5 Disclosure of Information; Non-Reliance.

 

Such Purchaser acknowledges that it has received all the information it considers necessary or appropriate to enable it to make an informed decision concerning an investment in the Securities. Such Purchaser further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Offering. Such Purchaser confirms that the Company has not given any guarantee or representation as to the potential success, return, effect, or benefit (whether legal, regulatory, tax, financial, accounting, or otherwise) of an investment in the Securities. In deciding to purchase the Securities, such Purchaser is not relying on the advice or recommendations of the Company and such Purchaser has made its own independent decision that the investment in the Securities is suitable and appropriate for such Purchaser. Such Purchaser understands that no federal or state agency has passed upon the merits or risks of an investment in the Securities or made any finding or determination concerning the fairness or advisability of this investment.

 

 

3.6 Restricted Securities.

 

Such Purchaser understands that the Securities have not been, and will not be, registered under the Securities Act or any state securities laws, by reason of specific exemptions under the provisions thereof that depend upon, among other things, the bona fide nature of the investment intent and the accuracy of such Purchaser’s representations as expressed herein. Such Purchaser understands that the Securities are “restricted securities” under U.S. federal and applicable state securities laws and that, pursuant to these laws, such Purchaser must hold the Securities indefinitely unless they are registered with the Securities and Exchange Commission and registered or qualified by state authorities, or an exemption from such registration and qualification requirements is available. Except with respect to the Common Stock issuable upon exercise of the Warrants (which shall be registered with the Securities Act by the Company following the Closing), such Purchaser acknowledges that the Company has no obligation to register or qualify the Securities for resale and further acknowledges that, if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Securities, and on requirements relating to the Company that are outside of such Purchaser’s control, and that the Company is under no obligation, and may not be able, to satisfy.

 

3.7 No Public Market.

 

Such Purchaser understands that no public market now exists for the Securities and that the Company has made no assurances that a public market will ever exist for the Securities.

 

3.8 No General Solicitation.

 

Such Purchaser, and its officers, managers, directors, employees, agents, stockholders, or partners have not either directly or indirectly, including through a broker or finder, solicited offers for or offered or sold the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act. Such Purchaser acknowledges that neither the Company nor any other person offered to sell the Securities to it by means of any form of general solicitation or advertising within the meaning of Rule 502 of Regulation D under the Securities Act or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.

 

3.9 Residence.

 

Such Purchaser’s principal place of business is located in the state or province identified in the address shown on such Purchaser’s signature page hereto.

 

3.10 No “Bad Actor” Disqualifying Events.

 

No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification Event”) is applicable to such Purchaser, except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or (d)(3) is applicable.

 

4.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

To induce the Purchasers to enter into this Subscription Agreement, the Company represents and warrants to Purchasers that, after giving effect to the transactions contemplated by this Subscription Agreement and the Other Investor Agreements:

 

4.1 Valid Existence and Authority.

 

The Company (a) is a limited liability company duly organized, validly existing, and in good standing under the laws of the Oregon, (b) has all requisite power and authority to own its assets and carry on its business as now conducted; and (c) is qualified to do business in all jurisdictions in which the nature of its business makes such qualification necessary and the failure to obtain such qualification is likely to result in a Material Adverse Effect (as defined below). The Company has the requisite power and authority to execute, deliver, and perform its obligations under this Subscription Agreement, the Other Investor Agreements and all other agreements to which it is, or in connection with the transactions contemplated hereby may become, a party.

 

 

4.2 Litigation.

 

There is no action, suit, proceeding or investigation pending or, to the Company’s knowledge, currently threatened against the Company that questions the validity of this Subscription Agreement or the Other Investor Agreement, or the right of the Company to issue the Securities, or to consummate the transactions contemplated hereby or thereby, or that, if determined adversely, would reasonably be expected to, either individually or in the aggregate, result in a material adverse effect on the Business, operations, assets or condition (financial or otherwise) of the Company (a “Material Adverse Effect”). The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or which the Company intends to initiate. The Company has not received any correspondence from any third party with respect to any of the foregoing.

 

4.3 Default.

 

The Company is not in material default under any loan agreement, indenture, mortgage, security agreement, lease, franchise, permit, license or other agreement or obligation to which it is a party or any of its assets or properties are bound. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute a material default under any material contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder.

 

4.4 Capitalization.

 

(a) The authorized capital of the Company consists of 80,000,000 shares of Common Stock, of which 4,044,252 shares are issued and outstanding as of the date hereof. All of the shares of Common Stock have been duly authorized and are validly issued, fully paid and nonassessable.

 

(b) All of the outstanding shares of Common Stock were issued in compliance with applicable laws. None of the outstanding shares of Common Stock were issued in violation of any agreement or commitment to which the Company is a party or is subject or in violation of any preemptive or similar rights of any Person.

 

(c) Except as set forth on Schedule 4.4 hereto, there are no outstanding or authorized options, warrants, convertible securities, stock appreciation, phantom stock, profit participation, or other rights, agreements, or commitments relating to the Capital Stock or obligating the Company to issue or sell any Capital Stock of, or any other interest in, the Company. There are no voting trusts, stockholder agreements, voting agreements, proxies, or other agreements in effect with respect to the voting or transfer of any of the shares of Common Stock.

 

(d) All of the Company’s subsidiaries are listed on Schedule 4.4 hereto and all such subsidiaries are wholly owned by the Company.

 

 

4.5 Authorization and Compliance with Laws and Material Agreements.

 

The execution, delivery and performance by the Company of this Subscription Agreement, the Other Investor Agreements and any other agreements to which it is or may in connection with the transactions contemplated hereby become a party, have been or prior to the consummation of such transactions will be duly authorized by all requisite corporate action on the part of the Company and do not and will not violate its Articles of Incorporation or bylaws or any law or any order of any court, governmental authority or arbitrator, and do not and will not upon the consummation of the transactions contemplated hereby conflict with, result in a breach of, or constitute a default under, or result in the imposition of any Lien upon any assets of the Company pursuant to the provisions of any loan agreement, indenture, mortgage, security agreement, franchise, permit, license or other instrument or agreement by which the Company or any of its properties is bound. The Company has obtained all authorizations, approvals or consents of, and made all required filings or registrations with, any court, governmental authority or third Person that are necessary for the legally valid and enforceable execution, delivery or performance by the Company of this Subscription Agreement and the Other Investor Agreements. The Company is not in violation of any term of its Articles of Incorporation or bylaws or, in any material respect, of any contract, agreement, judgment or decree to which it is a party or by which it or any of its assets or properties are bound and is in material compliance with all applicable laws, regulations and rules.

 

4.6 Solvency.

 

After giving effect to the transactions contemplated by this Subscription Agreement and the Other Investor Agreements, the Company will be solvent, able to pay its debts as they mature, and have capital sufficient to carry on its Business and all businesses in which it is engaged.

 

4.7 Enforceability.

 

This Subscription Agreement and the Other Investor Agreements, when delivered, shall constitute legal, valid and binding obligations of the Company and shall be enforceable against the Company in accordance with their respective terms subject to (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (ii) rules of law governing specific performance, injunctive relief or other equitable remedies.

 

4.8 Securities Laws.

 

The Company has complied with or is exempt from the registration and/or qualification requirements of all federal securities laws (including, but not limited to, the Securities Act and the rules and regulations thereunder, and the Exchange Act and the regulations thereunder) and any state securities or blue sky laws applicable to the issuance or sale of the Securities.

 

5.	CLOSING DELIVERABLES

 

The parties’ obligations hereunder shall be subject to:

 

5.1 The performance by each party of its obligations hereunder which by the terms hereof are to be performed at or prior to delivery of the Senior Secured Notes and Warrants.

 

 

5.2 Each Purchaser’s delivery on the Closing Date of the full Consideration as directed in this Subscription Agreement, together with: (i) this Subscription Agreement, (ii) the Senior Secured Note issued to such Purchaser, (iii) the Security Agreement, and (iv) the Warrant issued to such Purchaser, each duly executed by such Purchaser.

 

5.3 The Company’s delivery on the Closing Date of the following, each duly executed by the Company: (i) this Subscription Agreement, (ii) the Senior Secured Notes, (iii) the Security Agreement and (iv) the Warrants.

 

6.	EVENTS OF DEFAULT

 

6.1 Events of Default.

 

The occurrence of any one or more of the following events shall constitute an “Event of Default:”

 

(a) The Company shall fail to perform or observe any material agreement, covenant, term or condition contained in this Subscription Agreement or in any of the Other Investor Agreements, other than an Economic Default (as defined below);

 

(b) The Company shall fail to pay, when due, any principal, interest, or other sums payable under either the Senior Secured Notes or this Subscription Agreement (an “Economic Default”); or

 

(c) The Company shall become subject to an Event of Bankruptcy.

 

Any Event of Default described under this Section 6.1, other than an Economic Default, shall be referred to as a “Non-Economic Default.”

 

6.2 Remedies of Holder upon Occurrence of Event of Default.

 

If any Event of Default described in Section 6.1 occurs and continues for a period of (a) ten (10) days, in the case of an Economic Default, or (b) thirty (30) days, in the case of a Non-Economic Default, after written notice thereof given by either of the Purchasers to the Company, then such Purchaser shall, by written election, elect to either (i) declare such Purchaser’s Senior Secured Note immediately due and payable, or (ii) continue to hold such Purchaser’s Senior Secured Note with the rate of Interest set forth in Section 1.1 hereof increased by 9% (from 15% to 24%), for so long as the Event of Default shall remain uncured.

 

7.

seniority

 

Notwithstanding any provision in this Subscription Agreement to the contrary, the Indebtedness evidenced by the Senior Secured Notes issued to Purchasers, and each Purchaser’s rights and remedies hereunder and under the Other Investor Agreements, shall be senior in all respects to the liens, terms, covenants and conditions of all existing debt of the Company, except for the Permitted Senior Obligations, and, to the extent of any conflict or inconsistency between the other terms of this Subscription Agreement and this Section 7, the provisions of this Section 7 shall control. Each Purchaser acknowledges and agrees that the Indebtedness evidenced by the Senior Secured Note issued to such Purchaser, and such Purchaser’s rights and remedies hereunder and under the Other Investor Agreements, shall be junior with respect to any Collateral (as defined in the Security Agreement) that is subject to the Permitted Senior Obligations (including the Permitted Senior Liens) for so long as such Permitted Senior Obligations remain outstanding.

 

 

8.	REPLACEMENT OF Senior Secured NoteS

 

Upon receipt of evidence satisfactory to the Company of the loss, theft, mutilation or destruction of a Senior Secured Note and, in the case of any such loss, theft or destruction, upon delivery of a bond of indemnity in such form and amount as shall be reasonably satisfactory to the Company or, in the event of such mutilation upon surrender and cancellation of such Senior Secured Note the Company, without charge to the Holder thereof, will make and deliver a new Senior Secured Note of like tenor in lieu of such lost, stolen, destroyed or mutilated Senior Secured Note. If any such lost, stolen or destroyed Senior Secured Note, is owned by such Purchaser or any other Holder whose credit is satisfactory to the Company, then the affidavit of such Holder, if an individual, or an authorized officer of such Holder, if an entity, setting forth the fact of loss, theft or destruction and of its ownership of such Senior Secured Note at the time of such loss, theft or destruction shall be accepted as satisfactory evidence thereof, and no further indemnity shall be required as a condition to the execution and delivery of a new Senior Secured Note other than a written indemnification agreement of such owner (in form reasonably satisfactory to the Company).

 

9.	INTERPRETATION OF AGREEMENT

 

9.1 Certain Terms Defined. Capitalized terms used in this Subscription Agreement that are not otherwise defined herein shall have the meanings given to them below:

 

(a) Business. This term means the financing, management and operation of the Company.

 

(b) Business Day. This term means each day of the week except Saturdays, Sundays, and days on which banking institutions are authorized by law to close in Oregon.

 

(c) Capital Stock. This term means any capital stock, equity interests, stock options, warrants and any other equity securities of the Company, whether authorized as of or after the date hereof.

 

(d) Change of Control. This term means: (i) the sale of more than 50% of the total outstanding equity of the Company in a non-public sale, (ii) any merger, share exchange, consolidation or other reorganization or business combination of the Company if immediately after such transaction either (x) persons who were voting directors of the Company immediately prior to such transaction do not constitute at least a majority of the directors or other comparable control group of the surviving entity immediately after such transaction, or (y) persons who hold a majority of the voting equity of the surviving entity immediately after such transaction are not persons who directly or indirectly held a majority of the voting equity of the Company immediately prior to such transaction.

 

(e) Dispose. This term means to sell, convey, license, transfer, assign, lease, abandon or otherwise dispose (including in a sale and leaseback transaction).

 

(f) Event of Bankruptcy. This term means any of (a) the filing by a Person of a voluntary petition in bankruptcy under any provision of any bankruptcy law or a petition to take advantage of any insolvency act that shall not be dismissed or stayed within ninety (90) days, (b) the admission in writing by a Person of its inability to pay its debts generally as they become due, (c) the appointment of a receiver or receivers for all or a material part of a Person’s assets with the consent of such Person, (d) the filing of any bankruptcy, arrangement or reorganization petition by or, with the consent of a Person, against such Person under any provision of any bankruptcy law, (e) a receiver, liquidator or trustee of a Person or a substantial part of its assets shall be appointed pursuant to the Federal Bankruptcy Code by the order of a court of competent jurisdiction that shall not be dismissed or stayed within seventy-five (75) days, or (f) an involuntary petition to reorganize or liquidate a Person pursuant to the Federal Bankruptcy Code shall be filed against such Person and shall not be dismissed or stayed within seventy-five (75) days.

 

 

(g) Equity Securities. This means any and all shares of Common Stock and any securities of the Company convertible into, or exchangeable or exercisable for, such shares of Common Stock, and options, warrants or other rights to acquire such shares of Common Stock.

 

(h) Exchange Act. This term means the Securities Exchange Act of 1934, as amended.

 

(i) GAAP. This term means generally accepted accounting principles, applied on a consistent basis.

 

(j) Holder. This term means, when used in reference to the Senior Secured Notes and Warrants issued pursuant to this Subscription Agreement, the Person (including each Purchaser) who, at the time of determination, is the lawful owner as the Purchaser or as permitted successor purchaser, assignee, or transferee pursuant to this Subscription Agreement, the Senior Secured Notes and the Warrants.

 

(k) Indebtedness. This term means for any Person: (a) all indebtedness, whether or not represented by bonds, debentures, notes, securities, or other evidences of indebtedness, for the repayment of money borrowed, (b) all indebtedness representing deferred payment of the purchase price of property or assets, (c) all indebtedness under any lease which, in conformity with GAAP, is required to be capitalized for balance sheet purposes and leases of property or assets made as a part of any sale and lease-back transaction if required to be capitalized, (d) all indebtedness under guaranties, endorsements, assumptions, or other contractual obligations, including any letters of credit, or the obligations in respect of, or to purchase or otherwise acquire, indebtedness of others, (e) all indebtedness secured by a Lien existing on property owned, subject to such Lien, whether or not the indebtedness secured thereby shall have been assumed by the owner thereof, (f) trade accounts payable more than ninety (90) days past due excluding trade accounts payable in an aggregate principal amount at any time outstanding of $25,000 that are being contested in good faith, (g) all amendments, renewals, extensions, modifications and refundings of any indebtedness or obligations referred to in clauses (a), (c), (d) or (e), excluding trade accounts payable in the ordinary course of business.

 

(l) Lien. This term means any lien, mortgage, security interest, tax lien, pledge, encumbrance, financing statement, or conditional sale or title retention agreement, or any other interest in property designed to secure the repayment of Indebtedness or any other obligation, whether arising by agreement, operation of law, or otherwise.

 

(m) Other Investor Agreements. This term means the Senior Secured Notes, the Security Agreement, the Warrants, and all other agreements, instruments and documents (including, without limitation, notes, guarantees, powers of attorney, consents, assignments, contracts, notices, subordination agreements and all other written matter), and all renewals, modifications and extensions thereof, whether heretofore, now or hereafter executed by or on behalf of the Company, any guarantor or any other Person and delivered to and for the benefit of such Purchaser or any Person participating with such Purchaser in the Offering.

 

(n) Permitted Senior Liens. This term means the Liens evidenced by the Permitted Senior Obligations.

 

 

(o) Permitted Senior Obligations. This term means the following obligations owing by the Company as of the date hereof: any amounts owing to the U.S. Small Business Administration as secured by that certain UCC-1 Financing Statement filed May 27, 2020.

 

(p) Person. This term means any individual, sole proprietorship, corporation, business trust, unincorporated organization, association, limited liability company, partnership, joint venture, governmental authority (whether a national, federal, state, county, municipality or otherwise, and shall include without limitation any instrumentality, division, agency, body or department thereof), or other entity.

 

(q) Property. This term means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including Equity Interests.

 

(r) Qualified Subsequent Financing. This term means the next sale (or series of related sales) by the Company, of any security that occurs prior to the Maturity Date, including a debt or equity financing in which the Company receives aggregate gross proceeds of One Million Five Hundred Thousand Dollars ($1,500,000.00) or more from any parties that do not currently own, directly or indirectly, independently or through any affiliated entities, any Capital Stock (excluding, for the avoidance of doubt, the principal amount of the Senior Secured Notes).

 

(s) Securities Act. This term means the Securities Act of 1933, as amended.

 

Terms that are defined in other Sections of this Subscription Agreement shall have the meanings specified therein. All other terms contained in this Subscription Agreement shall have, when the context so indicates, the meanings provided for by the Uniform Commercial Code as adopted and in force in Nevada, as from time to time in effect.

 

10.	AFFIRMATIVE COVENANTS

 

The Company covenants and agrees that, from the date hereof and until all of the obligations due to Purchasers under the Senior Secured Notes have been finally and irrevocably paid in full in accordance with the terms thereof unless waived in writing by the Purchasers:

 

10.1 Performance of Contractual Obligations.

 

The Company will duly and punctually pay and/or perform its obligations under this Subscription Agreement and the Other Investor Agreements.

 

10.2 Preservation of Existence and Conduct of Business.

 

The Company will preserve and maintain its existence and all of its leases, privileges, franchises, qualifications and rights that are necessary or useful in the ordinary conduct of its Business, and conduct its Business as presently conducted in an orderly and efficient manner in accordance with good business practices.

 

10.3 Financial Reporting.

 

(a) Quarterly Reporting. Prior to the exercise of its respective Warrant, each Purchaser shall be entitled to receive, as soon as available, and in any event within 45 days after the end of each fiscal quarter, reviewed consolidated balance sheets of the Company and its subsidiaries, unaudited consolidated statements of income, cash flows, and stockholders’ equity for each such quarterly period and for the current fiscal year to date, all in reasonable detail and all prepared in accordance with GAAP, consistently applied (subject to normal year-end audit adjustments and the absence of notes thereto).

 

 

(b) Annual Financial Statements. Prior to the exercise of its respective Warrant, each Purchaser shall be entitled to receive, as soon as available, and in any event within ninety (90) days after the end of each fiscal year, reviewed consolidated balance sheets of the Company and its subsidiaries as at the end of each such fiscal year and reviewed consolidated statements of income, cash flows, and stockholders’ equity for such fiscal year, in each case setting forth in comparative form the figures for the previous fiscal year, accompanied by the certification of independent certified public accountants certifying to the effect that, except as set forth therein, such financial statements have been prepared in accordance with GAAP, applied on a basis consistent with prior years, and fairly present in all material respects the financial condition of the Company and its subsidiaries as of the dates thereof and the results of their operations and changes in their cash flows and stockholders’ equity for the periods covered thereby.

 

10.4 Inspection Rights.

 

Upon reasonable notice from a Purchaser, the Company shall, and shall cause its directors, officers, and employees to, afford such Purchaser and its representatives reasonable access during normal business hours to (i) the properties, offices, plants, and other facilities of the Company and its subsidiaries, (ii) the corporate, financial and similar records, reports, and documents of the Company and its subsidiaries, and (iii) the officers, senior employees, and public accountants of the Company and its subsidiaries, and to afford such Purchaser and its representatives the opportunity to discuss and advise on the affairs, finances, and accounts of the Company and its subsidiaries with their officers, senior employees, and public accountants (and the Company hereby authorizes said accountants to discuss with such Purchaser and its representatives such affairs, finances, and accounts).

 

10.5 Budget.

 

Not later than thirty (30) days prior to the commencement of each fiscal year, the Company shall prepare and provide to the Purchasers an annual operating budget for the Company and its subsidiaries in detail for the upcoming fiscal year, including capital and operating expense budgets, cash flow projections, covenant compliance calculations of all outstanding and projected indebtedness, and profit and loss projections, all itemized in reasonable detail.

 

10.6 Reservation of Common Stock.

 

The Company will at all times reserve and keep available, solely for the issuance and delivery upon the exercise of the Warrants, such shares of Common Stock, as from time to time shall be issuable upon the exercise of the Warrants. The Company covenants and agrees that all such shares of Common Stock that may be issued upon the exercise of the rights represented by the Warrants will, upon issuance, be duly authorized, validly issued, fully paid (assuming payment of the exercise price by Holder) and nonassessable and free from all preemptive rights and free of all taxes, liens and charges with respect to the issue thereof. The Company will take all such action as may be reasonably necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange upon which the securities of the Company may be listed.

 

 

11.	NEGATIVE COVENANTS

 

The Company covenants and agrees that, from the date hereof and until all of the obligations due to Purchasers under the Senior Secured Notes have been finally and irrevocably paid in full in accordance with the terms thereof unless waived in writing by the Purchasers:

 

11.1 No Senior Indebtedness.

 

The Company shall not create, incur, issue, assume, guarantee or otherwise become liable for any Indebtedness senior in right of payment or otherwise to the Senior Secured Notes, and all outstanding current and any future obligations of the Company to its officers and/or directors and any additional debt instruments issued by the Company shall be subordinated to the Senior Secured Notes in all material respects, except for the Permitted Senior Liens (solely to the extent such Permitted Senior Liens remain outstanding).

 

11.2 Limitation on Liens.

 

The Company shall not incur, assume or permit to exist any Lien on any Property (including, without limitation, the Collateral (as defined in the Security Agreement) now owned or hereafter acquired by it or on any income or rights in respect of any thereof, except for the Senior Liens (solely to the extent such Senior Liens remain outstanding).

 

11.3 Limitations on Dispositions.

 

The Company shall not Dispose of any of its Property (including, without limitation, any Collateral), whether now owned or hereinafter acquired except:

 

(a) the sale or Disposition of machinery and equipment no longer used or useful in the business of the Company;

 

(b) the Disposition of obsolete or worn-out Property in the ordinary course of business;

 

(c) the sale of inventory and immaterial assets in the ordinary course of business; or

 

(d) Dispositions of machinery, equipment or other fixed assets to the extent that (A) such assets are exchanged for credit against the purchase price of similar replacement assets that are purchased within one hundred eighty (180) days or (B) the proceeds of such disposition are applied to the purchase price of replacement assets within one hundred eighty (180) days.

 

12.	MISCELLANEOUS

 

12.1 Notices.

 

Except as otherwise expressly provided herein, all notices and other communications provided for hereunder or the Other Investor Agreements shall be in writing and delivered by hand or overnight courier service or sent by facsimile or email as follows:

 

(a) if to the Company, to the address listed on Schedule A hereto; and

 

(b) if to a Purchaser, to it at such Purchaser’s address listed on Schedule A hereto.

 

 

Notices sent by hand or overnight courier service shall be deemed to have been given when received and notices sent by electronic communications, shall be effective upon confirmation received by the sender, including transmittal coded “advise when received” or words of similar meaning.

 

12.2 Successors and Assigns.

 

Except as otherwise provided herein, the terms and conditions of this Subscription Agreement will inure to the benefit of, and be binding upon, the respective successors and assigns of the parties. This Subscription Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or will confer upon any other person or entity any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Subscription Agreement.

 

12.3 Headings.

 

The headings of the Sections and Subsections of this Subscription Agreement are inserted for convenience only and do not constitute a part of this Subscription Agreement.

 

12.4 Counterparts.

 

This Subscription Agreement may be executed in any number of counterparts, each of which, when executed and delivered shall be an original, but such counterparts shall together constitute one and the same instrument.

 

12.5 Electronic Signatures.

 

The parties agree that the electronic signatures, whether digital or encrypted, of the parties included in this Subscription Agreement are intended to authenticate this writing and to have the same force and effect as manual signatures. Electronic signature means any electronic sound, symbol, or process attached to or logically associated with a record and executed and adopted by a party with the intent to sign such record, including facsimile or email electronic signatures.

 

12.6 Reliance on and Survival Provisions.

 

All covenants, representations and warranties made by the Company herein and in any certificates delivered pursuant hereto, whether or not in connection with the Closing, shall survive the Closing until all obligations of the Company under this Subscription Agreement and the Other Investor Agreements shall have been satisfied in full.

 

12.7 Integration and Severability.

 

This Subscription Agreement and the Other Investor Agreements embody the entire agreement and understanding between Purchasers and the Company, and supersedes all prior agreements and understandings relating to the subject matter hereof. In case any one or more of the provisions contained in this Subscription Agreement or in the Senior Secured Notes, or any application thereof, shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein, and any other application thereof, shall not in any way be affected or impaired thereby.

 

 

12.8 Governing Law.

 

This Subscription Agreement is entered into within and shall be governed by and construed under the laws of Delaware, without giving effect to conflict of laws principles thereunder.

 

12.9 WAIVERS; MODIFICATION.

 

NO PROVISION OF THIS SUBSCRIPTION AGREEMENT MAY BE WAIVED, CHANGED OR MODIFIED, OR THE DISCHARGE THEREOF ACKNOWLEDGED, ORALLY, BUT ONLY BY AN AGREEMENT IN WRITING SIGNED BY THE PARTY AGAINST WHOM THE ENFORCEMENT OF ANY WAIVER, CHANGE, MODIFICATION OR DISCHARGE IS SOUGHT.

 

12.10 Expenses.

 

The Company shall pay all costs and expenses that it and the Purchasers incur with respect to the negotiation, execution, or delivery of this Subscription Agreement, including Forty Thousand Dollars ($40,000) for due diligence and continued advisory fees (“Due Diligence Fees”) payable to Eaglevision Ventures, Inc. (“Eaglevision”) and reimbursement of Eaglevision’s legal fees (“Legal Fees” and together with the Due Diligence Fees, the “Closing Fees”), which Closing Fees shall be paid at Closing as follows: (a) EagleVision Fund L.P. (“EVP”) shall deduct an aggregate of $40,000 from the Consideration otherwise payable by EVP to the Company as payment of the EV Fees (as set forth on Schedule A hereto) and (b) the amount of Legal Fees shall be retained by Cairncross & Hempelmann from the Consideration paid by the other Purchasers (other than by EVP).

 

12.11 Attorneys’ Fees.

 

If any action at law or in equity is necessary to enforce or interpret the terms of this Subscription Agreement, the prevailing party will be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

 

12.12 Amendments; Waivers.

 

Any term of this Subscription Agreement or the Senior Secured Notes may be amended and the observance of any term of this Subscription Agreement or Senior Secured Notes may be waived with the written consent of the Company and the Purchasers. Any waiver or amendment effected in accordance with this Section 12.12 will be binding upon each party to this Subscription Agreement and each Holder of a Senior Secured Note purchased under this Subscription Agreement then outstanding and each future Holder of the Senior Secured Notes.

 

12.13 Legal Counsel.

 

The parties acknowledge that Cairncross & Hempelmann and its attorneys have acted as legal counsel to Eaglevision in the preparation and negotiation of this Subscription Agreement and the Other Investor Agreements and have not acted as counsel to any other Person, including, without limitation, the Company or the Purchasers.

 

12.14 Assignment.

 

The Purchasers and any subsequent Holder may sell, assign or transfer this Subscription Agreement, the Senior Secured Notes (upon an Event of Default that has not or cannot been cured pursuant to Section 6 hereof) or any of the Other Investor Agreements (in accordance with their terms), including, without limitation, each Purchaser’s or Holder’s rights, title, interests, remedies, powers and/or duties hereunder or thereunder, as the case may be, without the consent of the Company.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the Company and each Purchaser have caused this Subscription Agreement to be executed and delivered by their respective officers thereunto duly authorized.

 

COMPANY:
BRANCHOUT FOOD INC. (FKA AVOLOV LLC)
By:	/s/ Eric Healy
Name:	Eric Healy
Title:	Chief Executive Officer

 

Company’s Address for Notices:

 

20724 Carmen Loop, Suite 120

Bend, OR 97702

Attn: Eric Healy

Email: eric@branchoutfood.com

 

 

PURCHASER:
By:
Name:
Title:

 

 

to

Subscription Agreement

 

Common Stock – 4,044,252

 

Warrants - 447,246 at an average price $6.83 and average life of 6.9 years

 

Options – 226,911 at an average price of $3.62

 

 

SCHEDULE A

to

Subscription Agreement

 

Purchaser Information

 

Purchaser Name and Address		Principal Amount of Senior Secured Note and Consideration to be Paid:		Maximum Number of Shares of Common Stock Subject to Warrant
TOTALS		$400,000		100,000

 

 

SCHEDULE B

to

Subscription Agreement

 

Accredited Investor Definition

 

This Schedule provides the definition of an Accredited Investor, as it pertains to private offerings pursuant to Regulation D, under the Securities Act of 1933. As used in Rule 501 of Regulation D, under the Securities Act of 1933 (17 C.F.R. §230.501), an Accredited Investor shall mean any person who comes within any of the following categories, or who the issuer reasonably believes comes within any of the following categories, at the time of the sale of the securities to that person:

 

(1) Any bank as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(a)(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, that is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

 

(2) Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;

 

(3) Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;

 

(4) Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;

 

(5) Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000.(i) Except as provided in paragraph (a)(5)(ii) of this section, for purposes of calculating net worth under this paragraph (a)(5):(A) The person’s primary residence shall not be included as an asset;(B) Indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and(C) Indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability;(ii) Paragraph (a)(5)(i) of this section will not apply to any calculation of a person’s net worth made in connection with a purchase of securities in accordance with a right to purchase such securities, provided that:(A) Such right was held by the person on July 20, 2010; (B) The person qualified as an accredited investor on the basis of net worth at the time the person acquired such right; and(C) The person held securities of the same issuer, other than such right, on July 20, 2010;

 

(6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

 

(7) Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in § 230.506(b)(2)(ii);

 

(8) Any natural person who holds, in good standing, one of the following professional licenses: the General Securities Representative license (Series 7), the Private Securities Offerings Representative license (Series 82), or the Investment Adviser Representative license (Series 65); and

 

(9) Any entity in which all of the equity owners are accredited investors.

 

 

SCHEDULE C

 

CLOSING FEES

 

Name of Recipient		Amount to be Paid		Wire Transfer Instructions
Eaglevision Ventures, Inc. 19036 Mt Shasta Drive Bend, OR 97703 Attn: John Dalfonsi Email:		$40,000		Deducted from amount funded by Eaglevision Fund LP
Cairncross & Hempelmann		Amount of legal fees to be reimbursed		Deducted from amounts held in Cairncross & Hempelmann trust account

 

 

EXHIBIT A

to

Subscription Agreement

 

Form of Senior Secured Note

 

EXHIBIT B

to

Subscription Agreement

 

Form of Security Agreement

 

EXHIBIT C

to

Subscription Agreement

 

Form of Warrant

 

 

Exhibit 10.2

 

THIS INSTRUMENT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR UPON RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT.

 

SENIOR SECURED PROMISSORY NOTE

 

	Date of Issuance
$___	January10, 2024

 

FOR VALUE RECEIVED, BranchOut Food Inc., a Nevada corporation (fka Avolov LLC, an Oregon limited liability company) (the “Company”), hereby promises to pay to the order of ____ (together with its permitted successors and assigns, hereinafter referred to as the “Holder”), the principal sum of ____ Dollars ($___) together with interest thereon from the date of this note (this “Note”). Interest shall accrue on the unpaid principal balance of this Note at an aggregate rate of fifteen percent (15%) per annum (with a minimum of one year of interest), which interest shall accrue from the Closing Date and all accrued and unpaid interest shall be due and payable in full on the first Business Day of each month (the “Interest”). This Note is issued pursuant to that certain Subscription Agreement of even date herewith, by and between the Company and the other parties thereto (the “Subscription Agreement”), and capitalized terms not defined herein will have the meanings set forth in the Subscription Agreement. The Note is secured pursuant to the terms of a Security Agreement (the “Security Agreement”).

 

1. Payments; Late Payment Fee. All payments will be made in lawful money of the United States of America by same day wire transfer of immediately available funds to an account designated by Holder in writing to the Company at least five (5) Business Days prior to the date of any payment. Payment will be credited first to accrued Interest due and payable, with any remainder applied to principal. The principal and Interest may be prepaid as provided in the Subscription Agreement. There will be a three (3)-day grace period following the first Business Day of each month, after which a late payment fee of $100 (the “Late Payment Fee”) per day shall be assessed and payable in addition to the past due Interest. Any arrears in Interest or the incurrence of a Late Payment Fee shall constitute an Event of Default hereunder until cured, and the Holder shall be entitled to all remedies available to it hereunder and under the Agreement.

 

2. Maturity Date.

 

(a) Unless prepaid as provided in the Subscription Agreement, and subject to Section 2(a) below, the aggregate unpaid principal amount of this Note, plus all accrued and unpaid Interest thereon, and all other amounts payable under this Note shall be due and payable on the earlier of: (a) December 31, 2024, (b) the closing of a Qualified Subsequent Financing and (c) the closing of a Change of Control (any such date, the “Maturity Date”). The parties may adjust or extend the Maturity Date by written agreement.

 

(b) Unless prepaid as provided in the Subscription Agreement, commencing as of July 1, 2024, in addition to the Interest payments described above, the Company shall make monthly payments to Holder equal to 1/18th of the total principal amount outstanding under this Note within ten (10) days of the first day of each calendar month until this Note is paid in full.

 

 

3. Security. This Note is a general secured obligation of the Company, as set forth in the Security Agreement.

 

4. Remedies. If any Event of Default occurs and continues for a period of (a) ten (10) days, in the case of an Economic Default, or (b) thirty (30) days, in the case of a Non-Economic Default, after written notice thereof given by the Holder to the Company, then the Holder shall, by written election, elect to either (i) declare the Note immediately due and payable, or (ii) continue to hold the Note with the rate of Interest increased by 9% (from 15% to 24%), for so long as the Event of Default shall remain uncured.

 

5. Amendments and Waivers; Resolutions of Dispute; Notice. The amendment or waiver of any term of this Note, the resolution of any controversy or claim arising out of or relating to this Note, and the provision of notice between the Company and the Holder will be governed by the terms of the Subscription Agreement.

 

6. Successors and Assigns. This Note applies to, inures to the benefit of, and binds the respective successors and assigns of the parties hereto. Any transfer of this Note may be affected only pursuant to the Subscription Agreement and by surrender of this Note to the Company and reissuance of a new note to the transferee.

 

7. Limitation on Interest. In no event will any interest charged, collected, or reserved under this Note exceed the maximum rate then permitted by applicable law, and if any payment made by the Company under this Note exceeds such maximum rate, then such excess sum will be credited by the Holder as a payment of principal.

 

8. Governing Law. This Note will be governed by and construed in accordance with the internal laws of the State of Nevada without giving effect to any choice or conflict of law provision or rule.

 

9. Approval. The Company hereby represents that Company’s execution of this Note has been duly approved based upon a reasonable belief that the principal provided hereunder is appropriate for the Company after reasonable inquiry concerning the Company’s financing objectives and financial situation. In addition, the Company hereby represents that it intends to use the principal of this Note primarily for the operations of its business, and not for any personal, family, or household purpose or for the repayment of any other debt.

 

NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH HEREIN, THIS NOTE AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY AND RIGHT TO PAYMENTS HEREUNDER ARE SENIOR IN ALL RESPECTS AND SHALL BE SUBJECT TO ALL PROVISIONS OF THE SUBSCRIPTION AGREEMENT, OF WHICH SECTION 7 IS INCORPORATED HEREIN BY THIS REFERENCE, AND TO THE EXTENT OF ANY CONFLICT OR INCONSISTENCY, THE PROVISIONS OF THE SUBSCRIPTION AGREEMENT SHALL CONTROL.

 

[Signature Page Follows]

 

 

The undersigned expressly waives any presentment, demand, protest, notice of default, notice of intention to accelerate, notice of acceleration or notice of any other kind except as expressly provided in the Subscription Agreement.

 

	BRANCHOUT FOOD INC., a Nevada corporation (fka Avolov LLC, an Oregon limited liability company)
	By:
	Name:	Eric Healy
	Title:

 

[Signature Page – Senior Secured Promissory Note]

 

 

AGREED AND ACKNOWLEDGED:
HOLDER:
By:
Name:
Title:

 

[Signature Page – Senior Secured Promissory Note]

 

 

Exhibit 10.3

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT, dated as of January 10, 2024 (this “Agreement”), is made by BranchOut Food Inc., a Nevada corporation (fka Avolov LLC, an Oregon limited liability company) (the “Company”), and each of its subsidiaries set forth on Schedule 3.3 hereto (collectively, “Grantor”), in favor of the Lenders set forth on the signature page hereto (each, a “Lender” and collectively the “Lenders”).

 

RECITALS

 

A. The Lenders and the Company are parties to that certain Subscription Agreement dated January 10, 2024 (as amended, supplemented, restated or otherwise modified from time to time, the “Subscription Agreement”) pursuant to which the Lenders agreed to purchase Senior Secured Promissory Notes from the Company in the aggregate principal amount of up to $400,000 (the “Loan”).

 

B. The Loan is presently evidenced by those certain Senior Secured Promissory Notes in the aggregate principal amount of up to $400,000 of even date hereof (the “Notes”).

 

C. The Grantor, as related parties of the Company, receive a benefit from the Notes which constitutes the consideration for granting the security interests hereunder.

 

D. Under the terms of the Subscription Agreement, Grantor is required to grant to Lenders under the Notes a security interest, subject and subordinate only to security interests expressly permitted by the Subscription Agreement, in and to the Collateral hereinafter described.

 

E. This Agreement is given by Grantor in favor of the Lenders for the ratable benefit of the Lenders to secure the payment and performance of all of the Secured Obligations.

 

Accordingly, the parties hereto agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.1 Terms. The following terms herein used shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):

 

“Collateral” is defined in Section 2.1.

 

“Contract” means, collectively, all sale, service, performance, equipment lease contracts, agreements and grants and all other contracts, agreements or grants (in each case, whether written or oral, or third party or intercompany), between Grantor and any third party, and all assignments, amendments, restatements, supplements, extensions, renewals, replacements or modifications thereof.

 

“Event of Default” means the failure to pay when due, whether at stated maturity, by acceleration or otherwise, any of the Secured Obligations or any other “Event of Default” as defined in the Subscription Agreement.

 

“Lien” means any pledge, assignment, hypothecation, mortgage, security interest, deposit arrangement, option, conditional sale or title retaining contract, sale and leaseback transaction, financing statement filing, lessor’s or lessee’s interest under any lease, subordination of any claim or right, or any other type of lien, charge, encumbrance, preferential arrangement or other claim or right.

 

 

“Obligors” is defined in Section 3.6.

 

“Receivables” means all accounts, payment intangibles, chattel paper and instruments.

 

“Secured Obligations” means any and all obligations of the Company under the Notes and all obligations of the Company under the Subscription Agreement or any other loan document associated with the Notes, of any kind or nature, howsoever created or evidenced and whether now or hereafter existing, direct or indirect, absolute or contingent, joint and/or several, secured or unsecured, arising by operation of law or otherwise, and whether incurred by the Company as principal, surety, endorser, guarantor, accommodation party or otherwise, including without limitation all principal and all interest (including any interest accruing subsequent to any petition filed by or against the Company or any of them under the U.S. Bankruptcy Code, whether or not an allowed claim), indemnity and reimbursement obligations, charges, expenses, fees, attorneys’ fees and disbursements and any other amounts owing thereunder.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of Nevada; provided, that if, with respect to any UCC financing statement or by reason of any provisions of law, the perfection or the effect of perfection or non-perfection of the security interests granted to Lenders is governed by the Uniform Commercial Code as in effect in a jurisdiction of the United States other than Nevada, then “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of any UCC financing statement relating to such perfection or effect of perfection or non-perfection.

 

1.2 Subscription Agreement Definitions. Unless otherwise defined herein or the context otherwise requires, terms used in this Agreement, including its preamble and recitals, have the meanings provided in the Subscription Agreement.

 

1.3 UCC Definitions. Unless otherwise defined herein or in the Subscription Agreement or the context otherwise requires, and whether or not capitalized, terms for which meanings are provided in Article 8 or Article 9 of the UCC are used in this Agreement, including its preamble and recitals, with such meanings. Without limiting the foregoing, accounts, chattel paper, commercial tort claims, certificated security, control, deposit accounts, documents, farm products, fixtures, electronic chattel paper, equipment, general intangibles, goods, instruments, inventory, investment property, letter-of-credit rights, negotiable instruments, payment intangibles, securities and software, whether or not capitalized, shall have the meanings ascribed thereto in the UCC.

 

ARTICLE 2

GRANT OF SECURITY INTEREST

 

2.1 Grant of Security Interest. To secure the prompt and complete payment of all Secured Obligations, for value received and pursuant to the Subscription Agreement, Grantor hereby grants, assigns and transfers to Lenders a security interest in and to all of the Grantor’s assets, including but not limited to the following list of described assets whether now owned or existing or hereafter acquired or arising and wherever located (all of which is herein collectively called the “Collateral”):

 

(a) all Accounts; all Payment Intangibles; all general intangibles (including, without limitation, all patents, patent applications, trademarks, copyrights and works of authorship, know-how, inventions and all other intellectual property); all securities, equity interests, stock, membership interests held by Grantor; all personal and fixture property of every kind and nature including all goods (including inventory, equipment, and any accessions thereto); all Deposit Accounts and any and all monies credited by or due from any financial institution or any other depository; all additional amounts due to Grantor from any Account Debtors relating to the Accounts; all Contract rights, rights of payment earned under a Contract right, Instruments (including promissory notes), Chattel Paper (including electronic chattel paper), letters of credit, and money; all leasehold interests; all Supporting Obligations of the foregoing; all real and personal property of third parties in which Grantor has been granted a lien or security interest as security for the payment or enforcement of Accounts; and

 

 

(b) all proceeds and products of subsection (a) of this Section 2.1 in whatever form, including: cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds, negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, and tort claim proceeds.

 

ARTICLE 3

REPRESENTATIONS AND COVENANTS

 

Grantor further represents, warrants, covenants and agrees with Lenders as follows:

 

3.1 Ownership of Collateral; Security Interest Priority. At the time any Collateral becomes subject to a security interest of Lenders hereunder, unless Lenders shall otherwise consent, Grantor shall be deemed to have represented and warranted that (a) subject to the Permitted Senior Liens (solely to the extent such Permitted Senior Liens remain outstanding), Grantor is the lawful owner of such Collateral or has the power to transfer the Collateral and have the right and authority to subject the same to the security interest of Lenders; and (b) none of the Collateral is subject to any Lien other than the Permitted Senior Liens (solely to the extent such Permitted Senior Liens remain outstanding) and those in favor of Lenders, and there is no effective financing statement or other filing covering any of the Collateral on file in any public office, other than the Permitted Senior Liens (solely to the extent such Permitted Senior Liens remain outstanding) and those in favor of Lenders. This Agreement creates in favor of Lenders a valid security interest in the Collateral, which security interest, upon filing of financing statements in the appropriate offices in the locations listed on Schedule 3.1, will be perfected and, subject to the Permitted Senior Liens (solely to the extent such Permitted Senior Liens remain outstanding), of first priority for security interests that may be perfected by the filing of a financing statement, enforceable against Grantor and all third parties and securing the payment of the Secured Obligations. Grantor authorizes Lenders to file financing statements describing the Collateral as reasonably determined by Lenders and if requested will execute and deliver to Lenders all documents and take such other actions as may from time to time be reasonably requested by Lenders in order to maintain, subject to the Permitted Senior Liens (solely to the extent such Permitted Senior Liens remain outstanding), a perfected first priority security interest in, and if applicable, possession and control of, the Collateral. Grantor will keep the Collateral free at all times from any and all Liens, other than the Permitted Senior Liens (solely to the extent such Permitted Senior Liens remain outstanding). Grantor will not, without the prior written consent of Lenders, which will not be unreasonably withheld or delayed sell, lease, license, transfer, assign or otherwise dispose, or permit or suffer to be sold, leased, licensed, transferred, assigned or otherwise disposed, any of the Collateral, except for any assets permitted to be sold, leased, licensed, transferred, assigned or otherwise disposed under the Subscription Agreement, subject to the terms of the Subscription Agreement or sales in the ordinary course of business. Subject to any limitations in the Subscription Agreement, Lenders or their attorneys may after a prior written notice and on regular business hours inspect the Collateral and for such purpose may enter upon any and all premises where the Collateral is or might be kept or located.

 

3.2 Perfection of Security Interest and Further Assurances.

 

(a) The Grantor hereby irrevocably authorizes the Lenders at any time and from time to time to file in any relevant jurisdiction any financing statements and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including any financing or continuation statements or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by the Grantor hereunder, without the signature of the Grantor where permitted by law, including the filing of a financing statement describing the Collateral as all assets now owned or hereafter acquired by the Grantor, or words of similar effect. The Grantor agrees to provide all information required by the Lenders pursuant to this Section promptly to the Lenders upon request.

 

 

(b) The Grantor hereby further authorizes the Lenders to file with the United States Patent and Trademark Office and the United States Copyright Office (and any successor office and any similar office in any state of the United States or in any other country) this Agreement, any necessary security agreements and other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by the Grantor hereunder, without the signature of the Grantor where permitted by law.

 

(c) The Grantor agrees that at any time and from time to time, at the expense of the Grantor, the Grantor will promptly execute and deliver all further instruments and documents, obtain such agreements from third parties, and take all further action, that may be necessary or desirable, or that the Lenders may reasonably request, in order to create and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or to enable the Lenders to exercise and enforce its rights and remedies hereunder or under any other agreement with respect to any Collateral.

 

3.3 Names; Locations. Grantor represents and warrants that Schedule 3.3 sets forth the following for each Grantor: (a) the jurisdiction in which Grantor is located for purposes of Sections 9-301 and 9-307 of the UCC; (b) the address of Grantor’s chief executive office; (c) each trade name or other name (other than its name set forth on the signature page hereto) used by Grantor; and (d) Grantor’s federal taxpayer identification number (and, during the four months preceding the date hereof, Grantor has not had any other federal taxpayer identification number) and state organizational number. During the past four months preceding the date hereof, Grantor has not been known by any legal name different from the one set forth on the signature page hereto, nor has Grantor been the subject of any merger or other corporate reorganization during the past five years. The name set forth on the signature page is the true and correct name of Grantor. Grantor will not change its name or place of incorporation or organization or federal taxpayer identification number except upon 30 days’ prior written notice to Lenders.

 

3.4 Taxes, Etc. Grantor will pay any taxes, assessments and similar imposts and charges, that are now or hereafter may become a Lien upon any of the Collateral, in accordance with the terms and requirements of the Subscription Agreement.

 

3.5 Maintenance of Collateral. Grantor shall preserve and maintain all rights of Grantor and Lenders in all Collateral, and will not subordinate, supplement or otherwise modify any claim or right of Grantor with respect to any Collateral, or permit, consent or suffer to occur any of the foregoing, if the effect thereof is to impair, or is in any manner adverse to, the rights or interests of Lenders without the prior written consent of Lenders.

 

 

3.6 Special Rights Regarding Receivables. Lenders or any of their agents may, at any time and from time to time in their sole discretion upon the existence of any Event of Default, verify, directly with each Person (collectively, the “Obligors”) that owes any Receivables to Grantor, the Receivables in any reasonable manner. Lenders or any of their agents may, at any time from time to time after and during the continuance of an Event of Default, notify the Obligors of the security interest of Lenders in the Collateral and/or direct such Obligors that all payments in connection with such obligations and the Collateral be made directly to Lenders in Lenders’ names. If Lenders or any of their agents shall collect such obligations directly from the Obligors, Lenders or any of their agents shall have the right to resolve any disputes relating to returned goods directly with the Obligors in such manner and on such terms as Lenders or any of their agents shall deem appropriate. Grantor directs and authorizes any and all of its present and future Obligors to comply with requests for information from Lenders, Lenders’ designees and agents and/or auditors, relating to any and all business transactions between Grantor and the Obligors. Grantor further directs and authorizes all of its Obligors upon receiving a notice or request sent by Lenders or Lenders’ agents or designees to pay directly to Lenders any and all sums of money or proceeds now or hereafter owing by the Obligors to Grantor, and any such payment shall act as a discharge of any debt of such Obligor to Grantor in the same manner as if such payment had been made directly to Grantor. Grantor agrees to take any and all action as Lenders may reasonably request to assist Lenders in exercising the rights described in this Section.

 

ARTICLE 4

REMEDIES

 

4.1 General Remedies. Upon the occurrence and during the continuance of any Event of Default, Lenders shall have and may exercise any one or more of the rights and remedies provided to Lenders under this Agreement, the Subscription Agreement or any of the other loan documents or provided by law, including but not limited to all of the rights and remedies of a secured party under the UCC, and Grantor hereby agrees to assemble the Collateral and make it available to Lenders at a place to be designated by Lenders that is reasonably convenient to both parties, authorizes Lenders to take possession of the Collateral with or without demand and in accordance with applicable law and to sell and dispose of the same at public or private sale and to apply the proceeds of such sale to the costs and expenses thereof (including reasonable attorneys’ fees and disbursements, incurred by Lenders) and then to the payment and satisfaction of the Secured Obligations. Any requirement of reasonable notice shall be met if any Lender sends such notice to Grantor, by registered or certified mail, at least 10 days prior to the date of sale, disposition or other event giving rise to a required notice. Any Lender may be the purchaser at any such sale. Grantor expressly authorizes such sale or sales of the Collateral in advance of and to the exclusion of any sale or sales of or other realization upon any other collateral securing the Secured Obligations. No Lender shall have any obligation to preserve rights against prior parties, and no Lender shall have any obligation to clean-up or otherwise prepare the Collateral for sale. Grantor hereby waives as to Lenders any right of subrogation or marshaling of such Collateral and any other collateral for the Secured Obligations. To this end, Grantor hereby expressly agrees that any such collateral or other security of Grantor or any other party that Lenders may hold may be dealt with in all respects and particulars as though this Agreement were not in existence. The parties hereto further agree that public sale of the Collateral by auction conducted in any county in which any Collateral is located or in which Lenders or Grantor does business after advertisement of the time and place thereof shall, among other manners of public and private sale, be deemed to be a commercially reasonable disposition of the Collateral. Grantor shall be liable for any deficiency remaining after disposition of the Collateral. Lenders may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral. Lenders may specifically disclaim any warranties of title or the like. If any Lender sells any of the Collateral upon credit, Grantor will be credited only with payments actually made by the purchaser, received by Lenders and applied to the indebtedness of such purchaser. In the event any such purchaser fails to pay for the Collateral, Lenders may resell the collateral and Grantor shall be credited with the proceeds of sale.

 

4.2 Special Remedies Concerning Certain Collateral.

 

(a) Upon the occurrence and during the continuance of any Event of Default, Grantor shall, if requested to do so in writing, and to the extent so requested, promptly collect and enforce payment of all amounts due Grantor on account of, in payment of, or in connection with, any of the Collateral, hold all payments in the form received by Grantor as trustee for Lenders, without commingling with any funds belonging to Grantor, and forthwith deliver all such payments to Lenders with endorsement to Lenders’ order of any checks or similar instruments.

 

 

(b) Upon the occurrence and during the continuance of any Event of Default, Grantor shall, if requested to do so, and to the extent so requested, notify all Obligors and other Persons with obligations to Grantor on account of or in connection with any of the Collateral of the security interest of Lenders in the Collateral and direct such account debtors and other Persons that all payments in connection with such obligations and the Collateral be made directly to Lenders. Any Lender itself may, upon the occurrence and during the continuance of an Event of Default, so notify and direct any such account debtor or other Person that such payments are to be made directly to Lenders.

 

(c) Upon the occurrence and during the continuance of an Event of Default, for purposes of assisting Lenders in exercising their rights and remedies provided to Lenders under this Agreement, Grantor (i) hereby irrevocably constitutes and appoints Lenders as its true and lawful attorney, for and in Grantor’s name, place and stead, to collect, demand, receive, sue for, compromise, and give good and sufficient releases for, any monies due or to become due on account of, in payment of, or in connection with the Collateral, (ii) hereby irrevocably authorizes any Lender to endorse the name of Grantor, upon any checks, drafts, or similar items that are received in payment of, or in connection with, any of the Collateral, and to do all things necessary in order to reduce the same to money, (iii) with respect to any Collateral, hereby irrevocably assents to all extensions or postponements of the time of payment thereof or any other indulgence in connection therewith, to each substitution, exchange or release of Collateral, to the addition or release of any party primarily or secondarily liable, to the acceptance of partial payments thereon and the settlement, compromise or adjustment (including adjustment of insurance payments) thereof, all in such manner and at such time or times as Lenders shall deem advisable and (iv) hereby irrevocably authorizes each Lender to notify the post office authorities to change the address for delivery of Grantor’s mail to an address designated by such Lender, and such Lender may receive, open and dispose of all mail addressed to Grantor. Notwithstanding any other provisions of this Agreement, it is expressly understood and agreed that such Lender shall have no duty, and shall not be obligated in any manner, to make any demand or to make any inquiry as to the nature or sufficiency of any payments received by it or to present or file any claim or take any other action to collect or enforce the payment of any amounts due or to become due on account of or in connection with any of the Collateral.

 

4.3 Permitted Senior Liens. Notwithstanding anything in Section 4.1 or Section 4.2 to the contrary, the Lenders acknowledge and agree that the security interests granted hereunder are subject to and shall be subordinated to the Permitted Senior Liens only during the period in which such Permitted Senior Liens are outstanding.

 

ARTICLE 5

MISCELLANEOUS

 

5.1 Remedies Cumulative. No right or remedy conferred upon or reserved to Lenders under this Agreement, the Subscription Agreement or any other loan document is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative in addition to every other right or remedy given hereunder or now or hereafter existing under any applicable law. Every right and remedy of Lenders under this Agreement, the Subscription Agreement or any other loan document or under applicable law may be exercised from time to time and as often as may be deemed expedient by Lenders. To the extent that it lawfully may, Grantor agrees that it will not at any time insist upon, plead, or in any manner whatever claim or take any benefit or advantage of any applicable present or future stay, extension or moratorium law, that may affect observance or performance of any provisions of this Agreement, the Subscription Agreement or any other loan document; nor will it claim, take or insist upon any benefit or advantage of any present or future law providing for the valuation or appraisal of any security for its obligations under this Agreement, the Subscription Agreement or any other loan document prior to any sale or sales thereof that may be made under or by virtue of any instrument governing the same; nor will Grantor, after any such sale or sales, claim or exercise any right, under any applicable law to redeem any portion of such security so sold.

 

 

5.2 Conduct No Waiver. No waiver of default shall be effective unless in writing executed by each Lender and waiver of any default or forbearance on the part of any Lender under such Lender’s Note in enforcing any of its rights under this Agreement shall not operate as a waiver of any other default or of the same default on a future occasion or of such right.

 

5.3 Governing Law; Consent to Jurisdiction. This Agreement is a contract made under, and shall be governed by and construed in accordance with, the law of the State of Nevada applicable to contracts made and to be performed entirely within such State and without giving effect to choice of law principles of such State. Grantor agrees that any legal action or proceeding with respect to this Agreement or the transactions contemplated hereby may be brought in any court of the State of Nevada, or in any court of the United States of America sitting in Nevada, and Grantor hereby submits to and accepts generally and unconditionally the jurisdiction of those courts with respect to its person and property. Nothing in this paragraph shall affect the right of Lenders to serve process in any other manner permitted by law or limit the right of Lenders to bring any such action or proceeding against Grantor or its property in the courts of any other jurisdiction. Grantor hereby irrevocably waives any objection to the laying of venue of any such suit or proceeding in the above-described courts. The headings of the various subdivisions hereof are for convenience of reference only and shall in no way modify any of the terms or provisions hereof.

 

5.4 Notices. All notices, demands, requests, consents and other communications hereunder shall be delivered in the manner described in the Subscription Agreement.

 

5.5 Rights Not Construed as Duties. Lenders neither assume nor shall they have any duty of performance or other responsibility under any contracts in which Lenders have or obtain a security interest hereunder beyond the exercise of reasonable care. If Grantor fails to perform any agreement contained herein, Lenders may but are in no way obligated to perform, or cause performance of, such agreement, and the reasonable expenses of Lenders incurred in connection therewith shall be payable by Grantor under Section 5.8. The powers conferred on Lenders hereunder are solely to protect their interests in the Collateral and shall not impose any duty upon Lenders to exercise any such powers. Except for the safe custody of any Collateral in Lenders’ possession, a duty to exercise reasonable care, and accounting for monies actually received by it hereunder, Lenders shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. Lenders shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in their possession if the Collateral is accorded treatment substantially equal to that which is reasonable and customary in the industry for lenders.

 

5.6 Amendments. None of the terms and provisions of this Agreement may be modified or amended in any way except by an instrument in writing executed by Grantor and Lenders.

 

5.7 Severability. If any one or more provisions of this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected, impaired, prejudiced or disturbed thereby, and any provision hereunder found partially unenforceable shall be interpreted to be enforceable to the fullest extent possible.

 

 

5.8  Expenses.

 

(a) Grantor will, upon demand, jointly and severally, pay to Lenders an amount of any and all reasonable and documented expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, that Lenders may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights of Lenders hereunder or under the Subscription Agreement or any other loan document, or (iv) the failure of Grantor to perform or observe any of the provisions hereof.

 

(b) Grantor agrees to hold harmless and indemnify Lenders from and against any and all claims, losses and liabilities actually incurred or suffered growing out of or resulting from this Agreement (including, without limitation, enforcement of this Agreement), except claims, losses or liabilities resulting from Lenders’ gross negligence, breach of this Agreement, or willful misconduct.

 

5.9 Successors and Assigns; Termination. This Agreement shall create a continuing, absolute, unconditional and irrevocable security interest in the Collateral and shall be binding upon Grantor, its successors and assigns, and inure, together with the rights and remedies of Lenders hereunder, to the benefit of Lenders and their respective successors, transferees and assigns. Upon the irrevocable payment in full in immediately available funds of all of the Secured Obligations and the termination of all commitments to lend and letters of credit outstanding under this Agreement, the Subscription Agreement or any other loan document, the security interest granted hereunder shall terminate and all rights to the Collateral shall revert to Grantor.

 

5.10 Evidence of Secured Obligations. Lenders’ books and records showing the Secured Obligations shall be admissible in any action or proceeding, shall be binding upon each Grantor for the purpose of establishing the Secured Obligations due from Grantor and shall constitute prima facie proof, absent manifest error, of the Secured Obligations of Grantor to Lenders.

 

5.11 Waiver of Jury Trial. Lenders, in accepting this Agreement, and Grantor, after consulting or having had the opportunity to consult with counsel, knowingly, voluntarily and intentionally waive any right any of them may have to a trial by jury in any litigation based upon or arising out of this Agreement or any related instrument or agreement or any of the transactions contemplated by this Agreement or any course of conduct, dealing, statements (whether oral or written) or actions of any of them. Neither Lenders nor Grantor shall seek to consolidate, by counterclaim or otherwise, any such action in which a jury trial has been waived with any other action in which a jury trial cannot be or has not been waived. These provisions shall not be deemed to have been modified in any respect or relinquished by either Lenders, on the one hand, or Grantor, on the other hand, except by a written instrument executed by all of them.

 

5.12 Limitations on Damages. To the extent not prohibited by applicable law, each party hereto hereby knowingly, voluntarily, intentionally, and irrevocably waives any right such party may have to claim or recover in any dispute or controversy any special, exemplary, punitive, or consequential damages, or damages other than or in addition to actual damages; provided, however, that the limitations set forth in this Section 5.12 shall not apply to the grossly negligent acts or omissions or willful misconduct of either party in performing its obligations under this Agreement.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, Grantor has caused this Security Agreement to be duly executed as of the day and year first set forth above.

 

GRANTOR:
BRANCHOUT FOOD INC. (FKA AVOLOV LLC)
By:	/s/ Eric Healy
Name:	Eric Healy
Title:	Chief Executive Officer

 

 

Accepted and Agreed:
By:
Name:
Title:

 

 

SCHEDULE 3.1 TO SECURITY AGREEMENT

 

Locations Where Financing Statements Are to Be Filed

 

Nevada

Oregon

 

 

SCHEDULE 3.3 TO SECURITY AGREEMENT

 

List of Names and Locations of Grantor (including Subsidiaries)

 

Name and Address		Trade Names		FEIN		State Control No.
BranchOut Food Inc. 20724 Carmen Loop, Suite 120 Bend, OR 97702		Avolov, Avochips, BranchOut		82-3348824		NV20212291159 (NV Business ID)   E19226482021-8 (NV Entity Number)

 

v3.23.4

Cover	Jan. 10, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jan. 10, 2024
Entity File Number	001-41723
Entity Registrant Name	BRANCHOUT FOOD INC.
Entity Central Index Key	0001962481
Entity Tax Identification Number	87-3980472
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	205 SE Davis Avenue
Entity Address, City or Town	Bend
Entity Address, State or Province	OR
Entity Address, Postal Zip Code	97702
City Area Code	(844)
Local Phone Number	263-6637
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 per share
Trading Symbol	BOF
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false

---