EXHIBIT 10.44
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THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO ▇▇▇▇▇▇, INC., THAT SUCH REGISTRATION IS NOT REQUIRED.
CONVERTIBLE NOTE
FOR VALUE RECEIVED, ▇▇▇▇▇▇, INC., a Delaware corporation (hereinafter
called the "Borrower"), hereby promises to pay to LAURUS MASTER FUND, LTD., c/o
Ironshore Corporate Services Ltd., P.O. Box 1234 G.T., Queensgate House, South
Church Street, Grand Cayman, Cayman Islands, Fax: ▇▇▇-▇▇▇-▇▇▇▇ (the "Holder") or
its registered assigns or successors in interest, on order, without demand, the
sum of Six Million Dollars ($6,000,000), together with any accrued and unpaid
interest and fees on May 16, 2008 (the "Maturity Date"). Capitalized terms used
herein without definition shall have the meanings ascribed to such terms in that
certain Securities Purchase Agreement dated as of the date hereof between the
Borrower and the Holder (the "Purchase Agreement").
The following terms shall apply to this Note:
ARTICLE I
INTEREST & AMORTIZATION
1.1 (a) INTEREST RATE. Interest payable on this Note shall accrue at the
"base rate" or "prime rate" published in the WALL STREET JOURNAL from time to
time, plus four percent (4.00%) (such sum, the "Contract Rate") commencing on
June 1, 2005 and be payable in arrears on the first day of each consecutive
calendar month thereafter, and on the Maturity Date, accelerated or otherwise,
due and payable as described below. The Contract Rate shall be increased or
decreased as the case may be for each increase or decrease in the Prime Rate in
an amount equal to such increase or decrease in the Prime Rate; each change to
be effective as of the day of the change. Except pursuant to Section 1.1(b), the
Contract Rate shall not at any time be less than six percent (6.00%). Interest
shall be calculated on the basis of a 360 day year, provided however, that if
the closing price of the Common Stock shall exceed $5.82 for a period of no less
than five (5) consecutive trading days in a given calendar month, the Contract
Rate shall be reduced to the "base rate" or "prime rate" published in the Wall
Street Journal from time to time, plus two percent (2.00%) for such calendar
month.
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(b) CONTRACT RATE ADJUSTMENTS AND PAYMENTS. The Contract Rate shall be
calculated on the last business day of each calendar month hereafter (other than
for increases or decreases in the Prime Rate which shall be calculated and
become effective in accordance with the terms of Section 1.1(a)) until the
Maturity Date (each a "Determination Date") and shall be subject to adjustment
as set forth herein. If (i) the Borrower shall have registered the shares of the
Common Stock underlying the conversion of this Note and each Warrant on a
registration statement declared effective by the Securities and Exchange
Commission (the "SEC"), and (ii) the market price (the "Market Price") of the
Common Stock as reported by Bloomberg, L.P. on the Principal Market for the five
(5) trading days immediately preceding a Determination Date exceeds the then
applicable Fixed Conversion Price by at least twenty-five percent (25%), the
Contract Rate for the succeeding calendar month shall automatically be reduced
by 200 basis points (200 b.p.) (2%) for each incremental twenty-five percent
(25%) increase in the Market Price of the Common Stock above the then applicable
Fixed Conversion Price. Notwithstanding the immediately foregoing, the Contract
Rate shall not be less than 0.0%.
1.2 PRINCIPAL. The Borrower shall make repayments of principal on the Note
as follows:
---------------- ---------------------- ---------------- ----------------------
Date Principal Payment Date Principal Payment
---------------- ---------------------- ---------------- ----------------------
9/1/2005 181,818 2/1/2007 181,818
10/1/2005 181,818 3/1/2007 181,818
11/1/2005 181,818 4/1/2007 181,818
12/1/2005 181,818 5/1/2007 181,818
1/1/2006 181,818 6/1/2007 181,818
2/1/2006 181,818 7/1/2007 181,818
3/1/2006 181,818 8/1/2007 181,818
4/1/2006 181,818 9/1/2007 181,818
5/1/2006 181,818 10/1/2007 181,818
6/1/2006 181,818 11/1/2007 181,818
7/1/2006 181,818 12/1/2007 181,818
8/1/2006 181,818 1/1/2008 181,818
9/1/2006 181,818 2/1/2008 181,818
10/1/2006 181,818 3/1/2008 181,818
11/1/2006 181,818 4/1/2008 181,818
12/1/2006 181,818 5/1/2008 181,818
1/1/2007 181,818
---------------- ---------------------- ---------------- ----------------------
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ARTICLE II
BORROWER PAYMENT OPTIONS
2.1 MONTHLY PAYMENTS IN CASH OR COMMON STOCK. The Borrower shall make
monthly payments of (i) accrued and unpaid interest on the aggregate principal
of the Note (plus any payments due and owing under the Purchase Agreement and
the Note not previously paid) and (ii) payments of principal according to the
schedule set forth in Section 1.2 hereof (collectively, the "Monthly Amount")
beginning on September 1, 2005 and on the first day of each consecutive calendar
month thereafter (each a "Repayment Date"). Subject to the terms hereof, the
Borrower has the sole option to determine whether to satisfy payment of the
Monthly Amount in full on each Repayment Date either in cash or in shares of
Common Stock, or a combination of both. The Borrower shall deliver to the Holder
a written irrevocable notice in the form of Exhibit B attached hereto electing
to pay such Monthly Amount in full on such Repayment Date in either cash or
Common Stock, or a combination of both ("Repayment Election Notice"). Such
Repayment Election Notice shall be delivered to the Holder at least ten (10)
days prior to the applicable Repayment Date (the date of such notice being
hereinafter referred to as the "Notice Date"). If such Repayment Election Notice
is not delivered within the prescribed period set forth in the preceding
sentence, then the repayment shall be made in cash. If the Borrower elects or is
required to repay all or a portion of the Monthly Amount in cash on a Repayment
Date, then, with respect to the portion of the Monthly Amount to be paid in
cash, on such Repayment Date the Borrower shall pay to the Holder an amount
equal to (x) 103% of the principal portion of the Monthly Amount plus (y) any
accrued and unpaid interest in satisfaction of such obligation. If the Borrower
repays all or a portion of the Monthly Amount in shares of Common Stock, the
number of such shares to be issued for such Repayment Date shall be the number
determined by dividing (x) the portion of the Monthly Amount to be paid in
shares of Common Stock, by (y) 5.82 (the "Fixed Conversion Price").
2.2 No EFFECTIVE REGISTRATION. Notwithstanding anything to the contrary
herein, the Borrower shall be prohibited from exercising its right to repay the
Monthly Amount in shares of Common Stock (and must deliver cash in respect
thereof) on the applicable Repayment Date if at any time from the Notice Date
until the time at which the Holder receives such shares there fails to exist an
effective registration statement or an Event of Default hereunder exists or
occurs, unless otherwise waived in writing by the Holder in whole or in part at
the Holder's option.
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2.3 COMMON STOCK PAYMENT RESTRICTIONS. Notwithstanding anything to the
contrary herein, for the avoidance of doubt, (a) if the volume weighted average
price of the Common Stock as reported by Bloomberg, L.P. on the Principal Market
for each of the 10 trading days preceding a Repayment Date was greater than 120%
of the Fixed Conversion Price, the Borrower may elect to pay all or a portion of
the Monthly Amount in shares of Common Stock; (b) if the volume weighted average
price of the Common Stock as reported by ▇▇▇▇▇▇▇▇▇, L.P. on the Principal Market
for any of the 10 trading days preceding a Repayment Date was less than 120% of
the Fixed Conversion Price, and the Borrower has elected to pay all or a portion
of the Monthly Amount in shares of Common Stock, then, instead of the Borrower
delivering the required number of shares of Common Stock on the Repayment Date,
the Holder and the Borrower may mutually agree to convert an amount equal to
what the Borrower elected to pay in shares of Common Stock at a conversion price
equal to 87% of the volume weighted average price of the three (3) lowest days
during the twenty (20) trading days immediately preceding the Repayment Date.
Any part of the Monthly Amount not converted into shares of Common Stock by the
following Repayment Date shall be paid by the Borrower in cash on such following
Repayment Date. Any such cash payments not made on or before such repayment Date
shall be added to the next succeeding Monthly Amount. At any time during the
relevant month or mutual agreement per above is not attained, the Borrower shall
pay the Monthly Amount, or the unconverted part thereof, in cash and the
conversion price set forth in this Section 2.3 shall no longer be applicable.
2.4 OPTIONAL PREPAYMENTS IN COMMON STOCK. In the event that the Common
Stock trades on the Principal Market at a volume weighted average price greater
than 120% of the Fixed Conversion Price for a period of at least ten (10)
consecutive trading days, then the Borrower may, at its sole option, provide the
Holder written notice ("Call Notice") requiring the conversion at the Fixed
Conversion Price of all or a portion of the Note held by the Holder (subject to
the limitation provided for in Section 3.3) as of the date set forth in such
Call Notice (the "Call Date"). The Call Date shall be at least twenty (20)
trading days following the date of the Call Notice, provided a registration
statement covering resales of that number of Conversion Shares provided for in
the Call Notice has been declared effective and is available for use. The number
of Conversion Shares to be issued in connection with any such conversion
pursuant to a particular Call Notice pursuant to this Section 3.9 shall not
exceed 25% of the aggregate dollar trading volume of the Common Stock for the
twenty (20) trading days immediately preceding the Call Date. If the price of
the Common Stock falls below 120% of the Conversion Price during the twenty (20)
trading day period preceding the Call Date, then the Holder will no longer be
required to convert the Note pursuant to such Call Notice. The Borrower shall
not be permitted to give the Holder more than one notice during any 20-day
period.
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2.5 The Borrower may prepay this Note ("Optional Redemption") by paying to
the Holder a sum of money equal to one hundred fifteen percent (115%) of the
Principal Amount outstanding at such time together with accrued but unpaid
interest thereon and any and all other sums due, accrued or payable to the
Holder arising under this Note, the Purchase Agreement or any other Related
Agreement (the "Redemption Amount") outstanding on the Redemption Payment Date
(as defined below). The Borrower shall deliver to the Holder a written notice of
redemption (the "Notice of Redemption") specifying the date for such Optional
Redemption (the "Redemption Payment Date"), which date shall be not earlier than
seven (7) days after the date of the Notice of Redemption (the "Redemption
Period"). A Notice of Redemption shall not be effective with respect to any
portion of this Note for which the Holder has previously delivered a Notice of
Conversion (as hereinafter defined) or for conversions elected to be made by the
Holder pursuant to Section 3.3 during the Redemption Period. The Redemption
Amount shall be determined as if the Holder's conversion elections had been
completed immediately prior to the date of the Notice of Redemption. On the
Redemption Payment Date, the Redemption Amount must be paid in good funds to the
Holder. In the event the Borrower fails to pay the Redemption Amount on the
Redemption Payment Date as set forth herein, then such Redemption Notice will be
null and void A Notice of Redemption may be given by the Borrower, provided no
Event of Default, as described in the Note, shall have occurred or be
continuing.
2.6 Upon a Change of Control (as defined below) occurring with respect to
the Borrower, unless Holder shall have expressly consented to such Change of
Control in writing, Borrower shall prepay this Note in accordance with Section
2.5. A "Change of Control" shall mean any event or circumstance as a result of
which (i) any "Person" or "group" (as such terms are defined in Sections 13(d)
and 14(d) of the Exchange Act, as in effect on the date hereof), other than the
Holder, is or becomes the "beneficial owner" (as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange Act), directly or indirectly, of 35% or more on a
fully diluted basis of the then outstanding voting equity interest of the
Borrower (other than a "Person" or "group" that beneficially owns 35% or more of
such outstanding voting equity interests of the Borrower on the date hereof),
(ii) the Board of Directors of the Borrower shall cease to consist of a majority
of the Borrower's board of directors on the date hereof (or directors nominated
or elected by (x) a majority of the board of directors in effect immediately
prior to such nomination or election (y) a "Person" or "group" that beneficially
owns 35% or more of such outstanding voting equity interests of the Borrower on
the date hereof) or (iii) the Borrower or any of its Subsidiaries merges or
consolidates with, or sells all or substantially all of its assets to, any other
person or entity.
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ARTICLE III
CONVERSION RIGHTS
3.1. HOLDER'S CONVERSION RIGHTS. If the closing price of the Common Stock
is greater than the Fixed Conversion Price, and the registration statement
required by Section 10 of the Purchase Agreement has been declared effective by
the Securities Exchange Commission, the Holder shall have the right, but not the
obligation to convert the principal portion of this Note and/or interest due and
payable into fully paid and nonassessable shares of common stock of the Borrower
as such stock exists on the date of issuance of this Note.
3.2 CONVERSION MECHANICS. (a) The number of shares of Common Stock to be
issued upon each conversion of this Note shall be determined by dividing that
portion of the principal and interest and fees of the Note to be converted, if
any, by the Fixed Conversion Price as of the Conversion Date. In the event of
any conversions of outstanding principal amount under this Note in part pursuant
to this Article III, such conversions shall be deemed to constitute conversions
of outstanding principal amount applying to Monthly Amounts for the Repayment
Dates in chronological order.
By way of example, if the original principal amount of this Note is
$6,000,000 and the Holder converted $400,000 of such original principal amount
prior to the first Repayment Date, then (1) the principal amount of the Monthly
Amount due on the first Repayment Date would equal $0, (2) the principal amount
of the Monthly Amount due on the second Repayment Date would equal $0 and (3)
the principal amount of the Monthly Amount due on the third Repayment Date would
be $145,454. The Borrower shall deliver a Notice of Conversion as described in
Section 9 of the Securities Purchase Agreement entered into between the Borrower
and the Holder relating to this Note (the "Purchase Agreement") of the Holder's
written request for conversion (the date of giving such notice of conversion
being a "Conversion Date").
(b) The Fixed Conversion Price and number and kind of shares or other
securities to be issued upon conversion is subject to adjustment from time to
time upon the occurrence of certain events, as follows:
(A) RECLASSIFICATION. If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
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to evidence the right to purchase an adjusted number of such securities and kind
of securities as would have been issuable as the result of such change with
respect to the Common Stock (i) immediately prior to or (ii) immediately after,
such reclassification or other change at the sole election of the Holder;
provided however, that in the event of an election pursuant to (i), Holder shall
convert the balance of the Note within 15 days of such reclassification.
(B) STOCK SPLITS, COMBINATIONS AND DIVIDENDS. If the shares of Common Stock
are subdivided or combined into a greater or smaller number of shares of Common
Stock, or if a dividend is paid on the Common Stock or any preferred stock
issued by the Borrower in shares of Common Stock, the Fixed Conversion Price
shall be proportionately reduced in case of subdivision of shares or stock
dividend or proportionately increased in the case of combination of shares, in
each such case by the ratio which the total number of shares of Common Stock
outstanding immediately after such event bears to the total number of shares of
Common Stock outstanding immediately prior to such event.
(C) SHARE ISSUANCES. Subject to the provisions of this Section 3.2, if the
Borrower shall at any time prior to the conversion or repayment in full of the
Principal Amount issue any shares of Common Stock or securities convertible into
Common Stock to a Person other than the Holder (except (i) pursuant to Sections
3.2(b) (A) or (B) above; (ii) pursuant to options, warrants, or other
obligations to issue shares outstanding on the date hereof as disclosed to the
Holder in writing; or (iii) pursuant to options that may be issued under any
employee incentive stock option and/or any qualified stock option plan adopted
by the Borrower) for a consideration per share (the "Offer Price") less than the
Fixed Conversion Price in effect at the time of such issuance, then the Fixed
Conversion Price shall be immediately reset pursuant to the formula below. For
purposes hereof, the issuance of any security of the Borrower convertible into
or exercisable or exchangeable for Common Stock shall result in an adjustment to
the Fixed Conversion Price upon the issuance of such securities.
If the Borrower issues any additional shares of Common Stock for a
consideration per share less than the then-applicable Fixed Conversion Price
pursuant to this Section 3.2 then, and thereafter successively upon each such
issue, the Fixed Conversion Price shall be adjusted by multiplying the then
applicable Fixed Conversion Price by the following fraction:
A + B
--------------------------------------
(A + B) + [((C - D) x B) / C]
A = Total amount of shares convertible pursuant to this Note
B = Actual shares sold in the offering
C = Fixed Conversion Price
D = Offer Price
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(D) COMPUTATION OF CONSIDERATION. For purposes of any computation
respecting consideration received pursuant to Section 3.2(c) above, the
following shall apply:
(i) in the case of the issuance of shares of Common Stock
for cash, the consideration shall be the amount of such cash,
provided that in no case shall any deduction be made for any
commissions, discounts or other expenses incurred by the Borrower
for any underwriting of the issue or otherwise in connection
therewith;
(ii) in the case of the issuance of shares of Common Stock
for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair
market value thereof as determined in good faith by the Board of
Directors of the Borrower (irrespective of the accounting
treatment thereof); and
(iii) upon any such exercise, the aggregate consideration
received for such securities shall be deemed to be the
consideration received by the Borrower for the issuance of such
securities plus the additional minimum consideration, if any, to
be received by the Borrower upon the conversion or exchange
thereof (the consideration in each case to be determined in the
same manner as provided in subsections (ii) and (iii) of this
Section 3.2(d).
3.3 ISSUANCE OF NEW NOTE. This Note may be converted by the Borrower or
Holder in whole or in part as described herein and Section 9 of the Purchase
Agreement. Upon partial conversion of this Note, a new Note containing the same
date and provisions of this Note shall, at the request of the Holder and upon
the cancellation of this Note, be issued by the Borrower to the Holder for the
principal balance of this Note and interest which shall not have been converted
or paid. The Borrower will pay no costs, fees or any other consideration to the
Holder for the production and issuance of a new Note.
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ARTICLE IV
EVENTS OF DEFAULT
If an Event of Default occurs and is continuing, the Borrower's rights
under Article II shall immediately cease and be of no further effect until such
time as the Event of Default has been cured or waived by the Holder. Upon the
occurrence and continuance of an Event of Default beyond any applicable grace
period, the Holder may make all sums of principal, interest and other fees then
remaining unpaid hereon and all other amounts payable hereunder due and payable
within five (5) days of written notice from Holder to Borrower (each period
being a "Default Notice Period") of an Event of Default (as defined below). In
the event of such an acceleration, the amount due and owing to the Holder shall
be 130% of the outstanding principal amount of the Note (plus accrued and unpaid
interest and fees, if any) (the "Acceleration Rate") until such Event of Default
shall have been cured or waived in writing by the Holder, if applicable. If
during the Default Notice Period, Borrower cures the Event of Default (other
than a payment default described in section 4.1 below), the Event of Default
will no longer exist and any rights Holder had pertaining to or arising from the
Event of Default will no longer exist.
If after the Default Notice Period the Borrower has not repaid in full
amount then due hereunder, then, and only then, the conversion price hereunder
shall be reduced and shall be equal to the lower of (i) the Fixed Conversion
Price; or (ii) seventy percent (70%) of the average of the three lowest closing
prices for the Common Stock on the Principal Market, for the thirty (30) trading
days prior to but not including the Conversion Date until such Event of Default
shall have been cured or waived in writing by the Holder. The "Principal Market"
shall include the NASD OTC Bulletin Board, NASDAQ SmallCap Market, NASDAQ
National Market System, American Stock Exchange, or New York Stock Exchange
(whichever of the foregoing is at the time the principal trading exchange or
market for the Common Stock, or any securities exchange or other securities
market on which the Common Stock is then being listed or traded.
The occurrence of any of the following events is an Event of Default
("Event of Default"):
4.1 FAILURE TO PAY PRINCIPAL, INTEREST OR OTHER FEES. The Borrower fails to
pay any installment of principal, interest or other fees hereon or on any other
promissory note issued pursuant to the Purchase Agreement and this Note, when
due and such failure continues for a period of fourteen (14) business days after
the due date.
4.2 BREACH OF COVENANT. The Borrower breaches any material covenant or
other term or condition of this Note or the Purchase Agreement (other than
Section 12.7 of the Purchase Agreement) in any material respect and such breach,
if subject to cure, continues for a period of twenty (20) days after written
notice to the Borrower from the Holder.
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4.3 BREACH OF REPRESENTATIONS AND WARRANTIES. Any material representation
or warranty of the Borrower made herein, in the Purchase Agreement, or in any
agreement, statement or certificate given in writing pursuant hereto or in
connection therewith shall be false or misleading and shall not be cured for a
period of twenty (20) business days after written notice thereof is received by
the Borrower from the Holder.
4.4 BANKRUPTCY, RECEIVER OR TRUSTEE. Pledgor shall (i) apply for, consent
to, or suffer to exist the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or other fiduciary of itself or of all
or a substantial part of its property, (ii) make a general assignment for the
benefit of creditors, (iii) commence a voluntary case under any state or federal
bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt
or insolvent, (v) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vi) acquiesce to, or fail to have
dismissed, within ninety (90) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (vii) take any action for the
purpose of effecting any of the foregoing..
4.5 JUDGMENTS. Any money judgment, writ or similar final process shall be
entered or filed against the Borrower or any of its property or other assets for
more than $500,000, and shall remain unvacated, unbonded or unstayed for a
period of ninety (90) days.
4.6 An Event of Default, as defined in any Related Agreement, shall occur
and be continuing beyond any applicable grace period.
4.7 STOP TRADE. An SEC stop trade order or Principal Market trading
suspension of the Common Stock for 5 consecutive days or 5 days during a period
of 10 consecutive days, excluding in all cases a suspension of all trading on a
Principal Market, provided that the Borrower shall not have been able to cure
such trading suspension within 30 days of the notice thereof or list or trade
the Common Stock on another Principal Market within 60 days of such notice.
4.8 FAILURE TO DELIVER COMMON STOCK OR REPLACEMENT NOTE. The Borrower's
failure to timely deliver Common Stock to the Holder pursuant to and in the form
required by this Note and Section 9 of the Purchase Agreement, or if required a
replacement Note when due and such failure continues for a period of seven (7)
business days after the due date.
4.9 The Borrower or NTSI breaches the covenant contained in Section 12.7 of
the Purchase Agreement) in any material respect.
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DEFAULT RELATED PROVISIONS
4.10 PAYMENT GRACE PERIOD. The Borrower shall have a three (3) business day
grace period to pay any monetary amounts due under this Note or the Purchase
Agreement, after which grace period a default interest rate of five percent (5%)
per annum above the then applicable interest rate hereunder shall apply to the
monetary amounts due.
4.11 CONVERSION PRIVILEGES. The conversion privileges set forth in Article
III shall remain in full force and effect immediately from the date hereof and
until the Note is paid in full.
ARTICLE V
MISCELLANEOUS
5.1 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of
the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
5.2 NOTICES. Any notice herein required or permitted to be given shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party notified, (b) when sent by telephonically confirmed facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the
Borrower at the address as set forth on the signature page to the Purchase
Agreement executed in connection herewith, with a copy to ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Esq., ▇▇▇▇▇▇, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 02914 , and
to the Holder at the address set forth on the signature page to the Purchase
Agreement for such Holder, with a copy to ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., ▇▇▇ ▇▇▇ ▇▇▇. ,
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14th Floor, New York, New York 10022, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, or at
such other address as the Borrower or the Holder may designate by ten days
advance written notice to the other parties hereto. A Notice of Conversion shall
be deemed given when made to the Borrower pursuant to the Purchase Agreement.
5.3 AMENDMENT PROVISION. The term "Note" and all reference thereto, as used
throughout this instrument, shall mean this instrument as originally executed,
or if later amended or supplemented, then as so amended or supplemented.
5.4 ASSIGNABILITY. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder after written notice
to ▇▇▇▇▇▇▇▇.
5.5 GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the state of
New York. Both parties and the individual signing this Note on behalf of the
Borrower agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Note is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or unenforceability of any other provision of this
Note.
5.6 MAXIMUM PAYMENTS. Nothing contained herein shall be deemed to establish
or require the payment of a rate of interest or other charges in excess of the
maximum permitted by applicable law. In the event that the rate of interest
required to be paid or other charges hereunder exceed the maximum permitted by
such law, any payments in excess of such maximum shall be credited against
amounts owed by the Borrower to the Holder and thus refunded to the Borrower.
5.7 SECURITY INTEREST. The holder of this Note has been granted a security
interest in certain assets of the Borrower more fully described in a Security
Agreement.
5.8 CONSTRUCTION. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
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against the other. The titles of the articles and sections of this Note are for
convenience of reference only and are not to be considered in construing this
Note.
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IN WITNESS WHEREOF, each Borrower has caused this Note to be signed in its
name effective as of this 16th day of May, 2005.
▇▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
WITNESS:
/s/▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Executive Assistant
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EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the Holder in order to convert the Note)
The undersigned hereby elects to convert $_________ of the principal due on the
Note issued by ▇▇▇▇▇▇, INC. on May ___, 2005 into Shares of Common Stock of
▇▇▇▇▇▇, INC. (the "Borrower") according to the conditions set forth in such
Note, as of the date written below.
Date of Conversion:
-------------------------------------------------------------
Shares To Be Delivered:
---------------------------------------------------------
Signature:
----------------------------------------------------------------------
Print Name:
---------------------------------------------------------------------
Address:
------------------------------------------------------------------------
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EXHIBIT B
FORM OF REPAYMENT ELECTION NOTICE
To: [HOLDER AT HOLDER'S ADDRESS]
Pursuant to Section 2.1 of the Note of ▇▇▇▇▇▇, Inc. issued on July __,
2003, we hereby notify you that we are irrevocably electing to repay the
outstanding Monthly Amount (as defined in the Note) due on the Repayment Date
(as defined in the Note) which occurs on ______, 20__ (CHECK ONE):
_____ In full in cash on such Repayment Date.
_____In full in shares of the Borrower's Common Stock within three
(3) trading days following such Repayment Date.
_____In part in cash in the amount of $______ on such Repayment Date,
and in part in shares of the Borrower's Common Stock (in the amount of _________
shares) within three (3) trading days following such Repayment Date.
▇▇▇▇▇▇, Inc.
By:
------------------------------------
Name:
Title:
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