Form 8-K - Current report

 

 

 

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): October 3, 2023

 

HUMBL, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware		000-31267		27-1296318
(State of other jurisdiction		(Commission		(IRS Employer
of incorporation)		File Number)		Identification No.)

 

101 W. Broadway
Suite 1450
San Diego, CA		92101
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code: [phone]

 

 

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

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

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		HMBL		OTC Pink

 

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 October 3, 2023, the registrant, HUMBL, Inc. (“HUMBL”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Pacific Lion LLC (“Pacific Lion”). Pursuant to the Purchase Agreement, Pacific Lion agreed to purchase shares of to-be-created Series C Preferred Stock (“Series C Stock”) in accordance with a set funding schedule. Pacific Lion agreed to purchase $300,000 in Series C Stock for each month from October 2023 through March 2024, as well as purchase an additional $240,000 in Series C Stock for the month of November 2023. Under the terms of the Purchase Agreement, HUMBL and Pacific Lion also entered into an Investor Rights Agreement.

 

In accordance with the terms of the Purchase Agreement and the Investors Rights Agreement, (i) 20,000 shares of Series C Stock have been designated that have no voting rights and that have mandatory conversion upon HUMBL listing on a national exchange within two years from the date the first Series C Stock is first issued and voluntary conversion if such shares are not listed on a national exchange but not earlier than the end of such two year period and in each case at a 25% discount from the listing price and public trading price, respectively, (ii) a prohibition on variable discount rate financings with any new investors, (iii) a 12-month lock-up/leak-out agreement for holders of the Series C Stock s that will take effect subsequent to HUMBL uplisting on a national exchange and (iv) registration rights after conversion of the Series C Stock following an uplist of HUMBL’s common stock to a national exchange.

 

The foregoing description of the Purchase Agreement, the Investor Rights Agreement and the Series C designation under the HUMBL’s Certificate of Incorporation does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, the Investor Rights Agreement and the Certificate of Designation which are filed as Exhibits 10.,1, 10.2 and 10.3, respectively, to this Current Report on Form 8-K.

 

HUMBL issued a press release addressing the terms of the Purchase Agreement, the Investor Rights Agreement and the Series C Certificate of Designation which is attached hereto as Exhibit 99.1.

 

In addition, HUMBL entered into a Letter Agreement dated October 9, 2023, providing Pacific Lion with a right of first refusal prior to issuing any shares of HUMBL’s common stock in connection with HUMBL’s debt consolidation efforts. The foregoing description of the Letter Agreement does not purport to be complete and is qualified in its entirety by reference to the Letter Agreement filed as Exhibit 10.4 to this Current Report on Form 8-K.

 

Item 9.01 Financial Statements and Exhibits.

 

	Exhibits
	10.1		Securities Purchase Agreement dated October 3, 2023 between HUMBL and Pacific Lion LLC
	10.2		Investor Rights Agreement dated October 11, 2023, between HUMBL and Pacific Lion LLC
	10.3		Certificate of Designation
	10.4		Letter Agreement dated October 9, 2023 between HUMBL and Pacific Lion LLC
	99.1		Press Release Dated October 11, 2023
	104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURES

 

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

 

Date: October 13, 2023	HUMBL, Inc.
	By:	/s/ Brian Foote
		Brian Foote
		President and CEO

 

 

 

Exhibit 10.1

 

Securities Purchase Agreement

 

This Securities Purchase Agreement (this “Agreement”), dated as of October 3, 2023, is entered into by and between HUMBL, Inc., a Delaware corporation, its successors and/or assigns (“Company”), and Pacific Lion LLC, a Florida limited liability company, its successors and/or assigns (“Investor”).

 

A. Company and Investor are executing and delivering this Agreement in reliance upon an exemption from securities registration afforded by the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations promulgated thereunder by the United States Securities and Exchange Commission (the “SEC”).

 

B. Investor desires to purchase and Company desires to issue and sell, upon the terms and conditions set forth in this Agreement shares of Series C Preferred Stock, $0.00001 par value per share, of Company (the “Shares”).

 

C. This Agreement and all other certificates, documents, agreements, resolutions and instruments delivered to any party under or in connection with this Agreement, as the same may be amended from time to time, are collectively referred to herein as the “Transaction Documents”.

 

NOW, THEREFORE, in consideration of the above recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Company and Investor hereby agree as follows:

 

1. Purchase and Sale of Shares

 

1.1. Purchase of Shares. Company shall issue and sell to Investor and Investor shall purchase from Company the Shares as set forth in accordance set forth on Exhibit A. In consideration thereof, Investor shall pay $1,000.00 per Share to Company set forth on Exhibit A (the “Purchase Price”) for each tranche of Shares via wire transfer of immediately available funds.

 

1.2. Form of Payment. On the Closing Date (as defined below), Investor shall pay the Purchase Price to Company via wire transfer of immediately available funds against delivery of the Shares.

 

1.3. Closing Date. Subject to the satisfaction (or written waiver) of the conditions set forth in Section 3 and Section 4 below, the date of the issuance and sale of the Shares pursuant to this Agreement (the “Closing Date”) shall be October 3, 2023, or such other mutually agreed upon date. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date by means of the exchange by email of signed .pdf documents.

 

2. Investor’s Representations and Warranties.

 

2.1. Existence and Power. Investor is a limited liability company duly organized, validly existing and in good standing under the laws of the state of its formation and has the requisite corporate power to own its properties and to carry on its business as now being conducted.

 

2.2. Authorization; No Contravention. The execution, delivery and performance by Investor of this Agreement and the transactions contemplated hereby (a) have been duly authorized by all necessary officers, partners, managers or members of Investor, (b) do not contravene the terms of Investor’s organizational documents, or any amendment thereof, (c) do not materially violate, conflict with or result in any material breach or contravention of, or the creation of any lien under, any contractual obligation of Investor or any requirement of law applicable to Investor, and (d) do not materially violate any orders of any governmental authority against, or binding upon, Investor to the knowledge of Investor.

 

 

 

2.3. Binding Effect. This Agreement has been duly executed and delivered by Investor and constitutes the legal, valid and binding obligations of Investor, enforceable against Investor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability (regardless of whether considered in a proceeding at law or in equity).

 

2.4. Restricted Securities. Investor understands that Shares will not be registered under the Securities Act at the time of purchase and, therefore, cannot be resold unless registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available. Investor is aware that Company is under no obligation to effect any such registration with respect to the Shares or to file for or comply with any exemption from registration.

 

2.5. Accredited Investor. Investor is an “Accredited Investor” within the meaning of Rule 501 of Regulation D under the Securities Act, as presently in effect.

 

2.6. Disclosure of Information. Investor has been furnished with, and has had access to, such information as it considers necessary or appropriate for deciding whether to enter into this Agreement, and Investor has had an opportunity to ask questions and receive answers from Company and its officers concerning Company’s financial situation, business, prospects, and any other matter that Investor has deemed relevant or important in determining whether to enter into this Agreement. Among other things, Investor is aware that Company’s business prospects are speculative. Investor has had the opportunity to consult with counsel of its choosing with respect to this Agreement and the transactions contemplated herein. No representations or warranties have been made to Investor by Company, or any of its respective officers, directors, employees, agents, sub-agents, affiliates or subsidiaries, other than the representations of Company contained herein, and in purchasing the Shares hereunder, Investor is not relying upon any representations of Company other than those contained herein.

 

2.7. Investment Risk. Investor is aware that its purchase of the Shares pursuant to this Agreement is a speculative investment that is subject to the risk of complete loss. Investor is able, without impairing Investor’s financial condition, to suffer a complete loss of such investment in Company.

 

2.8. Sophisticated Investor. Investor has such knowledge and experience in financial and business matters that Investor is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment and is able to bear the economic risk of such investment for an indefinite period of time. Investor has not been formed solely for the purpose of making this investment and is purchasing the Shares for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof.

 

2.9. No General Solicitation. Investor is not purchasing the Shares as a result of any advertisement, article, notice or communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or, to Investor’s knowledge, any other general solicitation or general advertisement.

 

2.10. Share Reserve. In the event Investor fails to make a required payment hereunder and fails to cure such failure within five (5) business days, in addition to any other rights and remedies, Company will have the right to terminate thirty percent (30%) of any share reserve held by Investor. In addition, Investor agrees to release shares from its share reserve if necessary to meet existing obligations of Company.

 

2.11. Forced Conversion. At such as time as Company has no authorized but unissued or unreserved shares of common stock (after exhausting any share reserve held by Investor), any outstanding debt of Company purchased by Investor or its affiliates on or after the date of this Agreement will automatically convert in Shares.

 

 

 

3. Company’s Representations; Warranties and Covenants.

 

3.1. Legal Capacity; Existence and Power. Company is a corporation, duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, with the requisite power and authority to enter into this Agreement and perform its obligations hereunder and each other document contemplated hereby to which Company is or will be a party, and to consummate the transactions contemplated hereby and thereby.

 

3.2. Authorization; No Contravention. The execution, delivery and performance by Company of this Agreement and the transactions contemplated hereby (a) have been duly authorized by all necessary officers, managers or members of Company, (b) do not contravene the terms of Company’s charter documents, or any amendment thereof, and (c) do not materially violate, conflict with or result in any material breach or contravention of, or the creation of any lien under, any contractual obligation of Company.

 

3.3. Governmental Authorization; Third Party Consents. To the best of Company’s knowledge, no approval, consent, compliance, exemption, authorization or other action by, or notice to, or filing with, any governmental authority or any other person, and no lapse of a waiting period under any requirement of law, is necessary or required in connection with the execution, delivery or performance by, or enforcement against, Company, of this Agreement.

 

3.4. Binding Effect. This Agreement has been duly executed and delivered by Company and constitutes the legal, valid and binding obligations of Company, enforceable against Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability (regardless of whether considered in a proceeding at law or in equity).

 

3.5. Reporting. Company has filed all reports, schedules, forms, statements and other documents required to be filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for the last 12 months (or such shorter period Company was required by law or regulation to file such material) (the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Exchange Act, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Exchange Act with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

3.6. No Material Adverse Effect. No change or event has occurred since the filing of Company’s last SEC Report that could reasonably be expected to result in a material adverse effect to Company’s business. Except as disclosed in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of Company, threatened against or affecting Company, any subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) that could reasonably be expected to have a material adverse effect on Company. Except as disclosed in the SEC Reports, neither Company nor any subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of Company, there is not pending or contemplated, any investigation by the SEC involving Company or any current or former director or officer of Company. OTC Markets has not issued any stop order or other order suspending trading of Company’s common stock.

 

3.7. Funding Acknowledgement. Upon each purchase of Shares hereunder by Investor, Company agrees to acknowledge receipt of the applicable Purchase Price on a form reasonably acceptable to Investor.

 

 

 

3.8. Series C Designation. Company agrees to file a mutually acceptable Certificate of Designation with the State of Delaware designating the rights and preferences of the Shares within thirty (30) days of the Closing Date.

 

4. Conditions to Company’s Obligation to Sell. The obligation of Company hereunder to issue and sell the Shares to Investor at the Closing is subject to the satisfaction, on or before the Closing Date, of each of the following conditions:

 

4.1. Investor shall have executed this Agreement and delivered the same to Company.

 

4.2. Investor shall have delivered the Purchase Price to Company.

 

5. Conditions to Investor’s Obligation to Purchase. The obligation of Investor hereunder to purchase the Shares at the Closing is subject to the satisfaction, on or before the Closing Date, of each of the following conditions, provided that these conditions are for Investor’s sole benefit and may be waived by Investor at any time in its sole discretion:

 

5.1. Company shall have executed this Agreement and delivered the same to Company.

 

6. Miscellaneous. The provisions set forth in this Section 6 shall apply to this Agreement, as well as all other Transaction Documents as if these terms were fully set forth therein; provided, however, that in the event there is a conflict between any provision set forth in this Section 6 and any provision in any other Transaction Document, the provision in such other Transaction Document shall govern.

 

6.1. Governing Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of California, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California. Each party hereto hereby (i) consents to and expressly submits to the exclusive personal jurisdiction of any state or federal court sitting in San Diego County, California, (ii) expressly submits to the exclusive venue of any such court for the purposes hereof, and (iii) waives any claim of improper venue and any claim or objection that such courts are an inconvenient forum or any other claim, defense or objection to the bringing of any such proceeding in such jurisdiction or to any claim that such venue of the suit, action or proceeding is improper.

 

6.2. Counterparts. Each Transaction Document may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. The parties acknowledge and agree that this Agreement and all other Transaction Documents may be executed by electronic signature, which shall be considered as an original signature for all purposes and shall have the same force and effect as an original signature. The parties hereto confirm that any electronic copy of another party’s executed counterpart of a Transaction Document (or such party’s signature page thereof) will be deemed to be an executed original thereof.

 

6.3. Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.

 

6.4. Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform to such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

 

 

 

6.5. Entire Agreement. This Agreement, together with the other Transaction Documents, contains the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Company nor Investor makes any representation, warranty, covenant or undertaking with respect to such matters. For the avoidance of doubt, all prior term sheets or other documents between Company and Investor, or any affiliate thereof, related to the transactions contemplated by the Transaction Documents (collectively, “Prior Agreements”), that may have been entered into between Company and Investor, or any affiliate thereof, are hereby null and void and deemed to be replaced in their entirety by the Transaction Documents. To the extent there is a conflict between any term set forth in any Prior Agreement and the term(s) of the Transaction Documents, the Transaction Documents shall govern.

 

6.6. Amendments. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by both parties hereto.

 

6.7. Notices. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given on the earliest of: (i) the date delivered, if delivered by personal delivery as against written receipt therefor or by email to an executive officer, or by facsimile (with successful transmission confirmation), (ii) the earlier of the date delivered or the third business day after deposit, postage prepaid, in the United States Postal Service by certified mail, or (iii) the earlier of the date delivered or the third business day after mailing by express courier, with delivery costs and fees prepaid, in each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by five (5) calendar days’ advance written notice similarly given to each of the other parties hereto):

 

If to Company:

 

HUMBL, Inc.

Attn: Brian Foote

600 B Street

San Diego, California 92101

 

If to Investor:

 

Pacific Lion LLC

Attn: Jacob Fernane

7901 4^th St. N 10184

St. Petersburg, Florida 33702

 

6.8. Successors and Assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Investor hereunder may be assigned by Investor to its affiliates, in whole or in part, without the need to obtain Company’s consent thereto. Except as set forth above, neither Investor nor Company may assign its rights or obligations under this Agreement or delegate its duties hereunder without the prior written consent of the other party.

 

6.9. Survival. The representations and warranties of the parties and the agreements and covenants set forth in this Agreement shall survive the Closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of each party. Each party agrees to indemnify and hold harmless the other and all its respective officers, directors, employees, attorneys, and agents for loss or damage arising as a result of or related to any breach or alleged breach by the other party of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.

 

6.10. Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

 

 

6.11. Attorneys’ Fees. In the event any action is filed by either party against the other to interpret or enforce any of the Transaction Documents, the unsuccessful party to such action agrees to pay to the prevailing party all costs and expenses, including reasonable attorneys’ fees incurred therein, including the same with respect to an appeal. The “prevailing party” shall be the party in whose favor a judgment is entered, regardless of whether judgment is entered on all claims asserted by such party and regardless of the amount of the judgment; or where, due to the assertion of counterclaims, judgments are entered in favor of and against both parties, then the judge shall determine the “prevailing party” by taking into account the relative dollar amounts of the judgments or, if the judgments involve nonmonetary relief, the relative importance and value of such relief.

 

6.12. Waiver. No waiver of any provision of this Agreement shall be effective unless it is in the form of a writing signed by the party granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in writing.

 

6.13. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY’S RIGHT TO DEMAND TRIAL BY JURY.

 

6.14. Time is of the Essence. Time is expressly made of the essence with respect to each and every provision of this Agreement and the other Transaction Documents.

 

6.15. Voluntary Agreement. Investor has carefully read this Agreement and each of the other Transaction Documents and has asked any questions needed for Investor to understand the terms, consequences and binding effect of this Agreement and the Shares and fully understand them. Investor has had the opportunity to seek the advice of an attorney of Investor’s choosing, or has waived the right to do so, and is executing this Agreement and the Shares voluntarily and without any duress or undue influence by Company or anyone else.

 

[Remainder of page intentionally left blank; signature page follows]

 

 

 

IN WITNESS WHEREOF, the undersigned Investor and Company have caused this Agreement to be duly executed as of the date first above written.

 

	INVESTOR:
	Pacific Lion LLC
	By:
		Jacob Fernane, Manager

 

	COMPANY:
	HUMBL, Inc.
	By:
		Brian Foote, CEO

 

 

 

EXHIBIT A

 

FUNDING SCHEDULE

 

Date		Purchase Price				Shares
September 29, 2023		$	150,000				150
October 3, 2023		$	150,000				150
November 1, 2023		$	540,000				540
December 1, 2023		$	300,000				300
January 2, 2024		$	300,000				300
February 1, 2024		$	300,000				300
March 1, 2024		$	300,000				300

 

 

 

Exhibit 10.2

 

INVESTOR RIGHTS AGREEMENT

 

This INVESTOR RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of October 11, 2023, by and between HUMBL, Inc., a Delaware corporation (the “Company”), and Pacific Lion, LLC, a Florida limited liability company (the “Investor”) (individually a “Party” and collectively the “Parties”).

 

RECITALS:

 

WHEREAS, the Investor is acquiring an aggregate of 2,040 shares of the Company’s Series C Convertible Preferred Stock (the “Series C Preferred Stock”) pursuant to the terms of a Securities Purchase Agreement dated October 3, 2023, by and among the Company and the Investor (the “Purchase Agreement”); and

 

WHEREAS, in order to induce the Investor to enter into the Purchase Agreement, the Company hereby agrees that this Agreement shall govern certain rights of the Investor including the right to cause the Company to register shares of common stock issuable to the Investor upon conversion of the Series C Preferred Stock, the right to access similar benefits offered to subsequent investors with convertible share rights, and certain other matters as set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and other consideration, the receipt and adequacy of which is hereby acknowledged, the Parties hereto agree as follows:

 

AGREEMENT:

 

1. Definitions. For purposes of this Agreement:

 

1.1 “Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

1.2 “Board of Directors” means the board of directors of the Company.

 

1.3 “Closing” has the meaning provided in the Purchase Agreement.

 

1.4 “Common Stock” means the common stock of the Company and any other common equity securities issued by the Company (whether voting or non-voting).

 

1.5 “days” refer to calendar days unless otherwise specified.

 

1.6 “Demand Registration” means a process initiated by the Investor, as provided in Section 2.1 of this Agreement, whereby the Investor submits a request to the Company, expressing the desire to register the Registrable Securities with the SEC.

 

1

 

 

1.7 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

1.8 “Person” means any individual, corporation, partnership, trust, limited liability company, association, or other entity.

 

1.9 “Prospectus” means the prospectus or prospectuses included in any Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus or prospectuses.

 

1.10 “Registrable Securities” means (a) any shares of Common Stock held by the Investor that is issuable upon conversion of the Series C Preferred Stock, and (b) any shares of Common Stock issued or issuable with respect to any shares described in subsection (a) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization (it being understood that for purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities whenever such Person has the right to then acquire or obtain from the Company any Registrable Securities, whether or not such acquisition has actually been effected). As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (i) a Registration Statement covering such securities has been declared effective by the SEC and such securities have been disposed of pursuant to such effective Registration Statement, (ii) such securities are sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act are met, (iii) such securities are otherwise transferred and such securities may be resold without subsequent registration under the Securities Act, or (iv) such securities shall have ceased to be outstanding.

 

1.11 “Registration Statement” means any registration statement registering the securities of the Company under the Securities Act. which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments, and supplements to such Registration Statement, including post-effective amendments, all exhibits, and all materials incorporated by reference in such Registration Statement.

 

1.12 “SEC” means the Securities and Exchange Commission.

 

1.13 “Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.

 

1.14 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

1.15 “Selling Expenses” means all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities, and any fees and disbursements to Investor’s counsel.

 

2

 

 

1.16 “Uplist” means when the Company is listed for trading on a U.S. national securities exchange, including but not limited to the New York Stock Exchange, the NASDAQ Stock Market, or any other national exchange recognized by the relevant regulatory authorities.

 

1.17 “Variable Rate Transaction” has the meaning provided in Section 7.

 

2. Registration Rights

 

2.1. Concurrently with the Uplist or at any time after the consummation of the Uplist, unless the Registrable Securities are eligible for legend removal pursuant to Rule 144 at such time (as further set forth in Section 3), the Investor may request registration under the Securities Act of all of the Registrable Securities on a Registration Statement. The Company shall then cause a Registration Statement to be filed and shall use its commercially reasonable efforts to cause such Registration Statement to be declared effective by the SEC as soon as practicable thereafter. The Company shall not be required to effect a registration of the Registrable Securities more than once, and the Investor agrees and acknowledges that it shall only be allowed one Demand Registration for not less than ALL of the Registrable Securities held by Investor subject to one Company delay period in processing the demand or any cutbacks from any underwriter associated with the Registration Statement, if any, and as further set forth in Sections 2.2 and 2.3.

 

2.2. The Company may postpone for up to 120 days the filing or effectiveness of a Registration Statement for a Demand Registration if the Board of Directors determines in its good faith judgment that such Demand Registration would (i) materially interfere with a significant acquisition, corporate organization or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act; provided, that in such event the Investor shall be entitled to withdraw the Demand Registration and, if such request is withdrawn, such Demand Registration shall not count against the Investor as a complete and effective Demand Registration. Following the withdrawal of the request, the Investor shall be entitled to resubmit a Demand Registration in respect of the Registrable Securities in accordance with the provisions of this Agreement.

 

2.3. If the Investor elects to distribute the Registrable Securities in an underwritten offering, the Investor shall inform the Company of this election in its request for registration made pursuant to Section 2.1. Investor may not participate in any registration hereunder which is underwritten unless Investor (a) agrees to sell Investor’s securities on the basis provided in any underwriting arrangements approved by the Investor; (b) agrees to any reduction in the number of shares suggested by any underwriter to be included in a registration under a Registration Statement; and (c) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

 

3. Termination of Registration Rights. The Investor shall not be entitled to exercise any right provided in this Agreement with respect to the Registrable Securities (i) after the date on which the Registrable Securities has been registered under a Registration Statement filed in accordance with this Agreement or (ii) if all Registrable Securities held by the Investor (and any Affiliate of the Investor with whom the Investor must aggregate its sales under Rule 144) can be sold without registration in compliance with Rule 144 under the Securities Act.

 

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4. Registration Procedure. If and whenever the Investor requests that any Registrable Securities be registered pursuant to the provisions of this Agreement, the Company shall use its reasonable best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof with the assessment of reasonableness made by both parties hereto.

 

5. Expenses. All expenses (other than Selling Expenses) incurred by the Company in complying with its obligations pursuant to this Agreement and in connection with the registration and disposition of Registrable Securities, including, without limitation, all registration and filing fees, underwriting expenses (other than fees, commissions or discounts), expenses of any audits incident to or required by any such registration, fees and expenses of complying with securities and “blue sky” laws, printing expenses, and fees or expenses of the Company’s counsel and accountants, shall be paid by the Company. All Selling Expenses relating to Registrable Securities registered pursuant to this Agreement shall be borne and paid by the Investor.

 

6. Leak Out and Maximum Sale. For a one-year period following the consummation of the Uplist (the “Leak-Out Period”), the Investor agrees that the maximum aggregate number of Common Stock that all holders of the Series C Preferred Stock may sell in each calendar month, as a group, shall be limited to one-twelfth (1/12^th) of the total number of Common Stock that was automatically converted at the time of the Uplist. The calculation of the maximum number of shares the Investor can sell shall be based on the total number of Common Stock resulting from the automatic conversion, as set forth and provided for in the Certificate of Designation of the Series C Preferred Stock. The Investor agrees to consider prevailing market conditions and the potential impact on the Company’s stock price when determining the timing and quantity of shares to sell during the Leak-Out Period. Following the expiration of the Leak-Out Period, there shall be no restrictions on the sale or transfer of the Common Stock held by the Investor, and the Investor shall be free to sell, transfer, or otherwise dispose of its shares.

 

7. Variable Rate Transactions. From the Closing until the consummation of the Uplist, the Company shall be prohibited from effecting or entering into a Variable Rate Transaction (except for issuances to the Investor or its affiliates). For the purpose of this Section, a “Variable Rate Transaction” means a transaction in which the Company issues or sells any debt securities that are convertible into Common Stock either (i) at a conversion price that is based upon and/or varies with the trading prices for the shares of Common Stock at any time after the initial issuance of such securities; or (ii) with a conversion price that is subject to being reset at some future date after its initial issuance or upon the occurrence of specified events related to the business of the Company or the market for the Common Stock.

 

8. Availability of Rule 144. With a view to making available to the Investor the benefits of Rule 144 under the Securities Act and any other rule or regulation of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration or pursuant to a Registration Statement, the Company shall use best efforts to file with the SEC in a timely manner all required reports under Sections 13 or 15(d) of the Exchange Act, if the Company is then subject to such reporting requirements.

 

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9. Most Favored Nation. From the later of the (i) consummation of the Uplist and (ii) the one year anniversary of the Closing, if the Company offers or grants to a purchaser or investor any rights or preferences in any subsequent issuance of securities convertible into Common Stock, which rights or preferences are more favorable than those granted to the Investor in this Agreement (collectively, the “Benefit”), the Company agrees to notify the Investor of the Benefit within ten days of the grant of the Benefit to such purchaser. Upon receiving the Company’s notification, the Investor shall have a period of ten days to notify the Company of its desire to receive the Benefit. Where the Investor provides the Company with a timely notice of its desire to receive the Benefit, this Agreement shall be deemed amended and modified in an economically and legally equivalent manner such that the Investor shall receive the Benefit. The Investor acknowledges and agrees that failure to provide timely notice within the stipulated ten day period shall be deemed a waiver of the Investor’s right to receive the Benefit.

 

10. Confidentiality. The Investor agrees to keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor or make decisions with respect to its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of the Company’s intention to file a Registration Statement), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Section by the Investor),(b) is or has been independently developed or conceived by the Investor without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that the Investor may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent reasonably necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any prospective purchaser of any Registrable Securities from the Investor, if such prospective purchaser agrees to be bound by the provisions of this Section; (iii) to any existing or prospective Affiliate, partner, member, stockholder, or wholly owned subsidiary of the Investor in the ordinary course of business, provided that the Investor informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information; or (iv) as may otherwise be required by law, regulation, rule, court order or subpoena, provided that the Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.

 

11. Miscellaneous

 

11.1. Successors and Assigns. The rights under this Agreement may be assigned (but only with all related obligations) by the Investor to a transferee of Registrable Securities that is (i) a subsidiary, parent, current or former partner, current or former limited partner, current or former member, current or former manager or stockholder of the Investor, or (ii) an entity controlling, controlled by or under common control with the Investor, including without limitation a corporation or limited liability company that is a direct or indirect parent or subsidiary of the Investor; provided, however, that the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement. The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided herein.

 

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11.2. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

11.3. Titles and Subtitles. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.

 

11.4. Notices.

 

Any notice, request, instruction, or other document required by the terms of this Agreement, or deemed by any of the Parties hereto to be desirable, to be given to any other Party hereto shall be in writing and shall be given by personal delivery, overnight delivery, mailed by registered or certified mail, postage prepaid, with return receipt requested, or sent by electronic mail (with receipt confirmed) to the addresses of the parties as follows:

 

If to Investor:	To the address set forth on the signature page of this Agreement.
If to Company:	HUMBL, Inc.
	Attn: Brian Foote
	101 W. Broadway, Suite 1450,
	San Diego, California 92101
	Email: [e-mail]
with a copy to:	FitzGerald Kreditor Bolduc Risbrough LLP
	Attn: Lynne Bolduc
	2 Park Plaza, Suite 850
	Irvine, CA 92614
	[e-mail]

 

The persons and addresses set forth above may be changed from time to time by a notice sent as aforesaid. If notice is given by personal delivery or overnight delivery in accordance with the provisions of this Section, such notice shall be conclusively deemed given at the time of such delivery provided a receipt is obtained from the recipient. If notice is given by mail in accordance with the provisions of this Section, such notice shall be conclusively deemed given upon receipt and delivery or refusal. If notice is given by electronic mail transmission in accordance with the provisions of this Section, such notice shall be conclusively deemed given at the time of delivery if between the hours of 9:00 a.m. and 5:00 p.m. Pacific time on a business day (“business hours”) and if not during business hours, at 9:00 a.m. on the next business day following delivery, provided a delivery confirmation is obtained by the sender.

 

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11.5. Amendments. Any term of this Agreement may be amended, modified, or terminated only with the written consent of the Company and the Investor.

 

11.6. Waiver. No waiver of any of the provisions of this Agreement will be deemed, or will constitute, a waiver of any other provision, whether or not similar. No waiver will constitute a continuing waiver. No waiver will be binding unless executed in writing by the party charged with the waiver. Failure by either party to exercise any right hereunder shall not operate or be construed as a waiver of any breach of that right or a waiver of any other right.

 

11.7. Severability. In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

 

11.8. Entire Agreement. This Agreement, together with the Purchase Agreement and any related exhibits and schedules thereto, constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. Notwithstanding the foregoing, in the event of any conflict between the terms and provisions of this Agreement and those of the Purchase Agreement, the terms and conditions of this Agreement shall control.

 

11.9. Dispute Resolution.

 

a) Governing Law. This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of California including all matters of construction, validity, performance, and enforcement and without giving effect to the principles of conflict of laws.

 

b) Exclusive Jurisdiction and Venue. The parties agree that the state and federal courts in the County of Orange, State of California shall have sole and exclusive jurisdiction and venue for the resolution of all disputes arising under the terms of this Agreement and the transactions contemplated herein.

 

c) Attorneys’ Fees. In the event any party hereto shall commence legal proceedings against the other to enforce the terms hereof, or to declare rights hereunder, as the result of a breach of any covenant or condition of this Agreement, the prevailing party in any such proceeding shall be entitled to recover from the losing party its costs of suit, including reasonable attorneys’ fees, as may be fixed by the court.

 

d) Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or non-defaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties have executed this Investor Rights Agreement as of the date first written above.

 

	COMPANY:
	HUMBL, INC.,
	a Delaware corporation
	By:
		Brian Foote
		Chief Executive Officer
	INVESTOR:
	PACIFIC LION, LLC,
	a Florida limited liability company
	By:
	Name:	Jacob Fernane
	Title:	Manager
	Address:	7901 4th St N, 10184
		St. Petersburg, GL 33702
	Email:	[e-mail]

 

 

 

Exhibit 10.3

 

CERTIFICATE OF DESIGNATION

OF THE

SERIES C PREFERRED STOCK

OF

HUMBL, INC.

 

It is hereby certified that:

 

1. The name of the corporation is HUMBL, Inc. (the “Corporation”).

 

2. The Certificate of Incorporation of the Corporation designates 12,500,000,000 shares of Common Stock, $0.00001 par value, and 10,000,000 shares as Preferred Stock, $.00001 par value, 7,000,000 of which have been designated as Series A Preferred Stock and 570,000 of which have been designated as Series B Preferred Stock.

 

3. The Certificate of Incorporation expressly vests in the Board of Directors of the Corporation the authority to provide, out of the unissued shares of preferred stock, for one or more series of Preferred Stock and, with respect to each such series, to fix the number of shares constituting such series and the designation of such series, the voting powers, if any, of the shares of such series, and the preferences and relative, participating, optional, or other special rights, if any, and any qualifications, limitations, or restrictions thereof, of the shares of such series.

 

4. The Board of Directors of the Corporation, pursuant to the authority expressly vested in it as aforesaid, has adopted the following resolutions creating a Series C issue of Preferred Stock:

 

RESOLVED, that the Board of Directors hereby fixes and determines the designation of the number of shares and the rights, preferences, privileges, and restrictions relating to the Series C Preferred Stock:

 

(a) Designation. The series of Preferred Stock created hereby shall be designated the Series C Preferred Stock.

 

(b) Authorized Shares. The number of shares of Series C Preferred Stock shall be 20,000 shares.

 

(c) Dividends. The Series C Preferred Stock shall not be entitled to receive any dividend.

 

(d) Liquidation Rights.

 

1. Liquidation. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary (each, a “Liquidation Event”), before any distribution or payment shall be made to the holders of any Common Stock, and after the distribution or payment to the Series A Preferred Stock and Series B Preferred Stock, in accordance with their respective terms, the holders of Series C Preferred Stock shall be entitled to receive an amount per share equal to the sum of the Initial Issuance Price (as defined below) applicable to such Series C Preferred Stock for each outstanding share of Series C of Preferred Stock plus any declared but unpaid dividends on such share (the “Liquidation Preference”). For purposes of this Certificate, “Initial Issuance Price” shall mean $1,000 per share (as adjusted for stock splits, stock dividends, recapitalizations, and similar transactions with respect to such series of Preferred Stock after the date of this Certificate). If, upon any Liquidation Event, the assets of the Corporation shall be insufficient to make payment in full to the holders of Series C Preferred Stock of the applicable Liquidation Preference, then such assets shall be distributed among the holders of Series C Preferred Stock at the time outstanding, ratably in proportion to the full preferential amounts to which they would otherwise be entitled.

 

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(i) Unless holders of a majority of the outstanding shares of Series C Preferred Stock shall elect otherwise by a majority affirmative vote or by a majority written consent, each of the following (each, a “Change of Control”) shall be deemed to be a Liquidation Event: (A) the closing of the sale, transfer or other disposition of all or substantially all of the Corporation’s assets, (B) the consummation of a merger, reorganization, consolidation or share transfer which results in the voting securities of the Corporation outstanding immediately prior thereto or the voting securities issued with respect to the voting securities of the Corporation outstanding immediately prior thereto representing immediately thereafter less than a majority of the combined voting power of the voting securities of the Corporation or such surviving or acquiring entity outstanding immediately after such merger, reorganization, consolidation or share transfer or (C) the closing of the transfer (whether by merger, consolidation or otherwise), in one transaction or a series of related transactions, to a person or group of affiliated persons (other than an underwriter of the Corporation’s securities), of the Corporation’s securities if, after such closing, such person or group of affiliated persons would hold 50% or more of the outstanding voting stock of the Corporation (or the surviving or acquiring entity).

 

2. Remaining Assets. After the payment to (i) the Series A Preferred Stock and Series B Preferred Stock, in accordance with their respective terms, and (ii) the full Liquidation Preference, as applicable, as set forth in Section 1 above, the assets of the Corporation legally available for distribution to the Shareholders, if any, shall be distributed ratably to the holders of the Common Stock based on the number of shares of Common Stock held by each holder of Common Stock.

 

3. Valuation of Consideration. If the consideration received by the Corporation is other than cash in connection with any of the events set forth above, its value will be deemed its “Fair Market Value” as determined in good faith by the Board of Directors. Fair Market Value of any securities shall be determined as follows:

 

(i) If traded on a U.S. national securities exchange or an over-the-counter market, the closing price of the stock as of the day of determination (or, if such day is not a trading day in the principal securities market or markets for such stock, on the nearest preceding trading day), as reported with respect to the market (or the composite of markets, if more than one) in which shares of such stock are then traded, or, if no such closing prices are reported, on the basis of the mean between the high bid and low asked prices that day on the principal market or quotation system on which shares of such stock are then quoted, or, if not so quoted, as furnished by a professional securities dealer making a market in such stock selected by the Board; or

 

(ii) If at any time such security is not listed on any U.S. national securities exchange or traded on an over-the-counter market, the Fair Market Value shall be the fair value thereof, as determined by the Board of Directors.

 

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4. Notice of Liquidation Event. The Corporation shall give each record holder of Series C Preferred Stock written notice of any impending Liquidation Event no later than ten calendar days prior to the Shareholders’ meeting called to approve such transaction, or ten calendar days prior to the closing of such Liquidation Event, whichever is earlier, and shall also notify such holders in writing promptly upon the final approval of such Liquidation Event. The first of such notices shall describe the material terms and conditions of the impending Liquidation Event (including, without limitation, the amount of proceeds to be paid to each share in connection with the Liquidation Event) and the provisions of this Section 4, and the Corporation shall thereafter give such holders prompt notice of any material changes. The Liquidation Event shall in no event take place sooner than ten calendar days after the Corporation has given the first notice provided for herein or sooner than five calendar days after the Corporation has given notice of any material changes provided for herein; provided, however, that such periods may be shortened upon the written consent of the holders of a majority of the shares of outstanding Series C Preferred Stock that are entitled to such notice rights or similar notice rights.

 

5. Effect of Noncompliance. In the event the requirements of Section 4 are not complied with, the Corporation shall forthwith either cause the closing of the transaction to be postponed until such requirements have been complied with, or cancel such transaction, in which event the rights, preferences and privileges of the holders of the Series C Preferred Stock shall revert to and be the same as such rights, preferences and privileges existing immediately prior to the date of the first notice referred to in Section 4 hereof.

 

(e) Voting Rights. Except as otherwise expressly provided herein or as required by law, the holders of shares of Series C Preferred Stock shall have no voting rights.

 

(f) Protective Provisions. At any time when shares of Series C Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, amend, alter, or repeal any provision of the Certificate of Incorporation or Bylaws of the Corporation in a manner that adversely affects the powers, preferences, or rights of the Series C Preferred Stock, without (in addition to any other vote required by law or the Certificate of Incorporation) the written consent or affirmative vote of the holders of at least 50% of the then outstanding shares of Series C Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.

 

(g) Conversion Rights. The Series C Preferred Stock shall be convertible into Common Stock, as follows:

 

1. Automatic Conversion. Upon such time as the Corporation shall become listed for trading on a U.S. national securities exchange (an “Uplist”), the Series C Preferred Stock shall automatically convert into shares of the Corporation’s Common Stock at a conversion rate equal to a 25% discount to the Public Offering (defined herein) price, if the Uplist occurs in connection with an underwritten effective registration statement registering the offer and sale of the Corporation’s Common Stock under the Securities Act of 1933, as amended (a “Public Offering”); or, in the event that the Uplist occurs without a Public Offering, then the conversion rate shall be at a 25% discount to the opening trading price on such U.S. national securities exchange. In connection with a Public Offering, each holder hereby consents to a cutback and/or lockup not to exceed 180 calendar days of its as-converted Common if such cutback and/or lockup is required by the underwriter(s) of such Public Offering.

 

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2. Voluntary Conversion. After the two year anniversary of the issuance of any share of Series C Preferred Stock, and provided that an Uplist has not been consummated, the holder may convert their shares of Series C Preferred Stock, at their sole and absolute discretion, into shares of Common Stock at the then Fair Market Value of the Common Stock.

 

3. Conversion Procedure. The holder shall effect conversions by surrendering the certificate(s) representing the Series C Preferred Stock to be converted to the Corporation, together with a form of conversion notice satisfactory to the Corporation, which shall be irrevocable (a “Conversion Notice”).

 

4. Issuance of Certificates; Time Conversion Effected. Promptly, but in no event more than five trading days, after the receipt of the Conversion Notice referred to in Section 3 and surrender of the Series C Preferred Stock certificates (if required), the Corporation shall issue and deliver, or cause to be issued and delivered, to the holder, registered in such name or names as such holder may direct, a certificate or certificates for the number of whole shares of common stock into which such shares of Series C Preferred Stock have been converted. In the alternative, if the Corporation’s transfer agent is a participant in the electronic book transfer program, the transfer agent shall credit such aggregate number of shares of Common Stock to which the holder shall be entitled to the holder’s or its designee’s balance account with the depository trust company. Such conversion shall be deemed to have been effected, and the Conversion Date shall be deemed to have occurred, on the date on which such Conversion Notice shall have been received by the Corporation and at the time specified stated in such Conversion Notice, which must be during the calendar day of such notice. If the holder is converting fewer than all of the shares of Series C Preferred Stock represented by the certificate tendered, the Corporation shall follow the procedure set forth in this Section 4 to deliver to the holder a new certificate or electronic book entry representing the Series C Preferred Stock not converted.

 

5. Adjustments on Stock Splits, Dividends and Distributions. If the Corporation, at any time while any Series C Preferred Stock is outstanding, (a) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock payable in shares of its capital stock (whether payable in shares of its Common Stock or of capital stock of any class), (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine outstanding shares of Common Stock into a smaller number of shares, or (d) issue reclassification of shares of any Common Stock shares of capital stock of the Corporation, then immediately after such date of such dividend, subdivision, combination, or reclassification, the number of shares of Series C Preferred Stock held shall be appropriately adjusted so that the holder of any shares of Series C Preferred Stock thereafter converted shall be entitled to receive the number of shares of Comon Stock which they would have owned immediately following such action had such shares of Series C Preferred Stock been converted immediately prior thereto.

 

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6. Adjustments on Reclassifications, Consolidations and Mergers. In case of reclassification of the Common Stock, any consolidation or merger of the Corporation with or into another person, the sale or transfer of all or substantially all of the assets of the Corporation or any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property, then each holder of Series C Preferred Stock then outstanding shall have the right thereafter to convert such Series C Preferred Stock only into the shares of stock and other securities and property receivable upon or deemed to be held by holders of Common Stock following such reclassification, consolidation, merger, sale, transfer or share exchange, and the holder shall be entitled upon such event to receive such amount of securities or property as the shares of the Common Stock into which such Series C Preferred Stock could have been converted immediately prior to such reclassification, consolidation, merger, sale, transfer or share exchange would have been entitled. The terms of any such consolidation, merger, sale, transfer or share exchange shall include such terms so as to continue to give to the holder the right to receive the securities or property set forth in this Section 6 upon any conversion following such consolidation, merger, sale, transfer or share exchange. This provision shall similarly apply to successive reclassifications, consolidations, mergers, sales, transfers, or share exchanges.

 

7. Fractional Shares; Issuance Expenses. Upon a conversion of Series C Preferred Stock, the Corporation shall not be required to issue stock certificates representing fractions of shares of Common Stock or Series C Preferred Stock, but shall issue that number of shares of Common Stock rounded up to the nearest whole number. The issuance of certificates for shares of Common Stock or Series C Preferred Stock upon conversion of Series C Preferred Stock shall be made without charge to the holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the holder, and the Corporation shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

 

(g) Reservation of Shares of Common Stock. The Corporation covenants that it will keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of Series C Preferred Stock as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the holders of Series C Preferred Stock, such number of shares of Common Stock as shall be issuable upon the conversion of the outstanding Series C Preferred Stock. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all outstanding Series C Preferred Stock, the Corporation will take such corporate action necessary to increase its authorized shares of Common Stock to such number as shall be sufficient for such purpose. The Corporation covenants that all shares of Common Stock that shall be so issuable will, upon issue, be duly and validly authorized, issued, fully paid, and non-assessable. The holder of the Series C Preferred Stock may waive this requirement at its discretion,

 

(h) No Reissuance of Series C Preferred Stock. No shares of Series C Preferred Stock acquired by the Corporation because of redemption, purchase, conversion, or otherwise shall be reissued, and all such acquired shares shall be cancelled, retired, and eliminated from the shares of capital stock which the Corporation shall be authorized to issue.

 

(i) Redemption. The Series C Preferred Stock shall not be subject to mandatory redemption.

 

(Signature on Following Page)

 

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The statements contained in the foregoing were adopted by Resolution of the Board of Directors of the Corporation to create and designate the Series C Preferred Stock and fixing the number, voting powers, preferences and relative, participating, optional, and other special rights and the qualifications, limitations, restrictions, and other distinguishing characteristics thereof, and upon the effective date of such series, be deemed to be included in and be a part of the Certificate of Incorporation of the Corporation pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware and the Certificate of Incorporation.

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate on October 10, 2023.

 

By:	Brian Foote
Its:	Chief Executive Officer

 

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Exhibit 10.4

 

Letter Agreement

 

This letter agreement (this “Letter Agreement”) is entered into by and between Pacific Lion LLC, a Florida limited liability company (“Investor”), and HUMBL, Inc., a Delaware corporation (the “Company”).

 

1. Right of First Refusal. For a period of nine (9) months from the date of this Letter Agreement, Company agrees not to issue any shares of common stock to settle any debt without giving Investor a ten (10) day right of first refusal to acquire the debt or provide Company with sufficient funding to repay the debt. Company also agrees during such period not to settle any debt without the approval of Company’s board of directors.

 

2. Entire Agreement. This Letter Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes any prior understandings, agreements or representations, written or oral, relating to the subject matter hereof.

 

3. Counterparts. This Letter Agreement may be executed in two or more counterparts, each of which when executed and delivered shall be deemed an original and all of which, taken together, shall constitute the same agreement. This Letter Agreement may be executed by facsimile or email signature, which shall be considered legally binding for all purposes.

 

4. Further Assurances. Each party to this Letter Agreement agrees to perform any further acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Letter Agreement.

 

[Remainder of page intentionally left blank; signature page to follow]

 

 

IN WITNESS WHEREOF, Investor and Company have duly executed and delivered this Letter Agreement to be effective as of the date first set forth above.

 

	PACIFIC LI:
	By:	/s/ Jacob Fernane
		Jacob Fernane, Manager
	COMPANY:
	HUMBL, INC.
	By:	/s/ Jeff Hinshaw
		Jeff Hinshaw, CFO

 

[Signature Page to Letter Agreement]

 

 

 

Exhibit 99.1

 

 

HUMBL Announces That It Has Entered Into a Securities Purchase Agreement For Over $2 Million In Financing With Pacific Lion

 

San Diego, California, October 11, 2023 (GLOBE NEWSWIRE) — HUMBL, Inc. (OTC: HMBL) (“HUMBL” or the “Company”) announced today that it has signed a Securities Purchase Agreement (“SPA”) with Pacific Lion that will provide the Company with $2,040,000 in capital over the next six months.

 

The Company has received the first monthly installment of $300,000 in financing from Pacific Lion under this new funding structure. This financing necessitates the creation of a new Class C Preferred Stock that the Company will achieve through an amendment to its charter that it expects to file this week with the Delaware Secretary of State.

 

Key features of the new Class C Preferred Stock include:

 

	-	No conversion into common shares for two years;
	-	Automatic conversion at a 25% discount if listed on a national exchange; and
	-	Prohibition on variable discount rate financings with any new investors.

 

To mitigate shareholder dilution, a 12-month lock-up / leak-out agreement will be implemented for Class C Preferred holders that will take effect subsequent to uplisting on a major national exchange.

 

In FY 2023, the Company has retired over $20 million in legacy debts and expects to continue to consolidate its remaining debt with the assistance of Pacific Lion.

 

The Company expects this funding to support its operational and development needs through the beginning of April 2024, by which time it anticipates generating further revenue streams from its new AFL contract and other core product lines.

 

“This enhanced financing partnership with Pacific Lion not only provides $2M in additional financing, but also places us in a strong position to achieve our key milestones around Q4 2023 product launches, client program fulfillments and sales expansion,” said HUMBL CEO, Brian Foote. “We’re poised for growth and appreciate the strong and continued support of our HUMBL shareholders as we drive forward into the new year.”

 

About HUMBL

 

HUMBL is a Web 3 technology platform with product lines including the HUMBL Wallet^™, HUMBL Search Engine^™, HUMBL Social^™, HUMBL Tickets^™, HUMBL Marketplace^™ and HUMBL Authentics^™. For more information, please visit: HUMBL.com.

 

 

 

HUMBL has performed digital integrations with athletes and teams from the NCAA, MLB, UFC, WNFC, NASCAR Xfinity, World Surfing, World Rugby and more.

 

Safe Harbor Statement

 

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by the use of the words “may,” “will,” “should,” “plans,” “expects,” “anticipates,” “continue,” “estimates,” “projects,” “intends,” and similar expressions. Forward-looking statements involve risks and uncertainties that could cause results to differ materially from those projected or anticipated. These risks and uncertainties include, but are not limited to, the Company’s ability to successfully execute its expanded business strategy, including by entering into definitive agreements with suppliers, commercial partners and customers; general economic and business conditions, effects of continued geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing various engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technical advances and delivering technological innovations, shortages in components, production delays due to performance quality issues with outsourced components, regulatory requirements and the ability to meet them, government agency rules and changes, and various other factors beyond the Company’s control. Except as may be required by law, HUMBL undertakes no obligation, and does not intend, to update these forward-looking statements after the date of this release.

 

Company Information

 

HUMBL, Inc.

Email: [e-mail]

Website: HUMBL.com

 

Investor Relations

 

Contact: Stuart T. Smith

Phone: [phone]

Email: [e-mail]

Contact: Kevin Gray

Email: [e-mail]

SmallCapVoice.com

 

 

Cover	Oct. 03, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 03, 2023
Entity File Number	000-31267
Entity Registrant Name	HUMBL, Inc.
Entity Central Index Key	0001119190
Entity Tax Identification Number	27-1296318
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	101 W. Broadway
Entity Address, Address Line Two	Suite 1450
Entity Address, City or Town	San Diego
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92101
City Area Code	(786)
Local Phone Number	738-9012
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	HMBL
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false

---