THIS NOTE AND THE STOCK INTO WHICH IT IS CONVERTIBLE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE UNITED STATES OF AMERICA
(THE "ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES ("STATE
ACT"). THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF, AND MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED FOR VALUE, DIRECTLY OR
INDIRECTLY, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND COMPLIANCE WITH APPLICABLE STATE ACTS, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE ACTS, THE AVAILABILITY OF
WHICH ARE ESTABLISHED BY MEANS OF AN OPINION TO SUCH EFFECT IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY AND RENDERED BY LEGAL COUNSEL SATISFACTORY
TO THE COMPANY.
CHAMPIONLYTE PRODUCTS, INC.
SERIES A 6.5% CONVERTIBLE PROMISSORY NOTE
$250,000.00 BOCA RATON, FLORIDA
JANUARY 7, 2003
1. Promise to Pay. FOR VALUE RECEIVED, CHAMPIONLYTE PRODUCTS, INC, a Florida
corporation (the "Company") promises to pay, in lawful money of the United
States of America, to the order of ADVANTAGE FUND I, LLC or assignee (the
"Holder"), at Boca Raton, Florida or at such other place as Holder shall from
time to time direct, on or before January 6, 2004, the principal amount of Two
Fifty Thousand Dollars and no cents ($250,000.00) plus interest on the unpaid
principal balance thereof at a rate of Six and one-half percent (6.5%) per year
from the date hereof until paid in full. Interest on this note shall be computed
on a 365/365 simple interest basis, that is, by applying the ratio of the annual
interest rate by the number of days in the year times, outstanding principal
balance times the actual number of days that the principal balance is
outstanding. This Note shall be payable interest-only, in arrears, on the last
day of each calendar months, commencing upon the first such date subsequent to
the date of execution hereof, and due and payable in full, principal and
interest, twenty-four months from the date hereof. All payments shall be applied
first to accrued, unpaid interest, next to any collection costs, and the
remainder against principal. This note may be not be redeemed by the Company
prior to its due date without the express permission of the Holder. This Note is
one of a series of identical notes, except to principal amount and due date
(collectively, the "Notes").
2. Default. The Company shall be in default under this Note upon the occurrence
of any of the following events:
2.1 The Company fails to timely perform any of its obligations under, or
otherwise breaches any covenants or warranties of this Note;
2.2 Any statement, representation, or warranty made by the Company or its agents
to Holder shall prove to have been false or materially misleading when made;
and/or,
2.3 The Company shall become insolvent, or unable to meet its obligations as
they become due, or shall file or have filed against it, voluntarily or
involuntarily, a petition under the United States Bankruptcy Code or shall
procure or suffer the appointment of a receiver for any substantial portion of
its properties, or shall make an assignment for benefit of creditors, or shall
initiate or have initiated against it, voluntarily or involuntarily, any act,
process, or proceedings under any insolvency law or other statute or law
providing for the modifications or adjustment of the rights of creditors.
UPON ANY EVENT OF DEFAULT, HOLDER MAY DECLARE THE ENTIRE UNPAID PRINCIPAL
BALANCE OF THIS NOTE AND ALL ACCRUED UNPAID INTEREST IMMEDIATELY DUE, WITHOUT
NOTICE, AND THE COMPANY AGREES TO PAY SUCH AMOUNT IMMEDIATELY IN SUCH EVENT. IN
THE EVENT OF DEFAULT, THE COMPANY
1
AGREES TO PAY ALL OF HOLDER'S COSTS OF COLLECTION, INCLUDING ATTORNEY'S FEES;
THIS SHALL INCLUDE LEGAL EXPENSES FOR THE BANKRUPTCY PROCEEDINGS OR INSOLVENCY
PROCEEDINGS (INCLUDING EFFORTS TO MODIFY OR VACATE ANY AUTOMATIC STAY OR
INJUNCTION), COURT COSTS, APPEALS, POST-JUDGEMENT COLLECTION EXPENSES AND ANY
OTHER AMOUNT PROVIDED BY LAW. THE PARTIES INTEND THIS PROVISION TO BE GIVEN THE
MOST LIBERAL CONSTRUCTION POSSIBLE AND TO APPLY TO ANY CIRCUMSTANCES IN WHICH
SUCH PARTY REASONABLY INCURS EXPENSES. NO DELAY OR OMISSION ON THE PART OF ANY
HOLDER HEREOF IN EXERCISING ANY RIGHT OR OPTION HEREIN GIVEN TO SUCH HOLDER
SHALL IMPAIR SUCH RIGHT OR OPTION OR BE CONSIDERED AS A WAIVER THEREOF OR
ACQUIESCENCE IN ANY DEFAULT HEREUNDER. THE COMPANY HEREBY WAIVES ANY APPLICABLE
STATUtE OF LIMITATIONS, PRESENTMENT, DEMAND FOR PAYMENT, PROTEST AND NOTICE OF
DISHONOR.
3. Conversion. The Holder shall have conversion rights as follows (the
"Conversion Rights"):
3.1 Right To Convert. Subject to subsection 3.3, this Note shall be convertible,
in whole or in part, at any time after the date of issuance of this Note, and
from time to time thereafter, at the office of the Company, into such number of
fully paid and non-assessable shares of Common Stock of the Company as is
determined as follows:
The Conversion Price per share shall be equal to the lesser of (1) the average
of the lowest of three day trading prices during the five trading days
immediately prior to the Conversion Date multiplied by .80, or (2) the average
of the lowest of three day trading prices during the five trading days
immediately prior to the funding date(s).
3.2 Mechanics of Conversion. Before Holder shall be entitled to convert this
Note, in whole or in part, into shares of Common Stock, he shall surrender this
Note at the office of the Company, and shall give written notice in person, or
by facsimile, mail, postage prepaid, to the Company at its principal corporate
office, of ▇▇▇▇▇▇'s election to convert the Note and shall state therein the
portion of the principal amount of the Note to be converted and the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued, the address of such persons to be used for record purposes, and the
address(s) to which the certificate(s) should be delivered if different from the
record address. Such notice shall be on the form attached to this Note as
Exhibit `A'. The Company shall as soon as practicable thereafter, issue and
deliver to Holder, or to the nominee or nominees of Holder, a certificate or
certificates for the number of shares of Common Stock to which Holder shall be
entitled as aforesaid and, if less than the full principal amount of the note is
converted, a new Note representing the uncoverted balance which remains
outstanding. Any interest accrued but unpaid on the converted portion of the
Note shall be paid upon conversion; any interest accrued but unpaid on the
non-converted portion of the Note shall be paid in due course under the
replacement Note. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the Note to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date.
3.3 No Impairment. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all the provisions of
this Section 3 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the Holder against
impairment
3.4 No Fractional Shares and Certificates as to Conversion. No fractional shares
shall be issued upon conversion of the Note, and the number of shares of Common
Stock to be issued shall be rounded to the nearest whole share.
2
3.5 Notices of Record Date. In the event of any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, the Company shall mail to Holder, at least 20 days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution, or right, and the
amount and character of such dividend, distribution, or right. In the case of
rights to acquire any shares of stock or any other class of securities or
property, Company shall grant to Holder the same rights as if the Holder had
converted his Note upon the Record Date.
3.6 Reservation of Stock Issuable Upon Conversion. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock solely for the purpose of effecting the conversion of the Notes
such number of shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all outstanding Notes; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then-outstanding Notes, in addition to such other
remedies as shall be available to the Holder, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes.
3.7 Notices. Any notice required by the provisions of this Section 3 to be given
to the Holder shall be deemed given if deposited in the United States mail,
postage prepaid and certified, return receipt requested and addressed to ▇▇▇▇▇▇
of record at his address appearing on the books of the Company.
4. Redemption. The Company, may not redeem this Note at any time prior to the
maturity date.
5. Assignment. Subject to the restrictions on transfer herein, the Holder may
transfer this Note in whole or in part, in the event of partial transfer(s), the
Company will exchange this Note for new Notes as instructed by the Holder equal
to the total of this Note, by endorsement (by the Holder of this Note executing
the form of assignment attached to this Note as Exhibit `B') and delivery in the
same manner as any negotiable instrument transferable by endorsement and
delivery. Until this Note is transferred on the Company books, the Company may
treat the registered Holder of this Note as the absolute owner of this Note for
all purposes, despite any notice to the contrary. The Company's obligations
hereunder may not be transferred without prior written consent of the Holder;
any attempt to transfer without consent shall be void ab initio.
6. Restrictions on Transfer. This Note and the stock into which it is
convertible have not been registered under the Securities act of 1933, as
amended, of the United States of America (the "Act") or the securities laws of
any sTate of the United States ("State Act"). This Note and the stock into which
it is convertible have been acquired for investment and not with a view to, or
in connection with, the sale or distribution thereof, and may not be offered,
sold, pledged, hypothecated or otherwise transferred for value directly or
indirectly, in the absence of an effective registration statement under the Act
and compliance with applicable State Acts, or pursuant to an exemption from
registration under the Act and under applicable State Acts, the availability of
which are established by means of an opinion to such effect in form and
substance satisfactory to the Company and rendered by legal counsel satisfactory
to the Company. The certificates representing the shares into which this Note is
convertible shall bear the foregoing legend.
7. Registration of Underlying Stock & Penalties. The Company agrees that within
thirty days of the date of this Note, the Company shall file a registration
statement with the Securities and Exchange Commission on Form SB-2, or shall
amend its present SB-2 registration statement to register 250% of the then
shares to be issued upon conversion of the Notes. A copy of this Registration
Statement is attached hereto as Exhibit `C'. The registration statement shall
call for, amongst other items more fully described therein, the Company to use
its best efforts to have such registration statement declared effective at the
earliest possible time. Should such registration statement not be deemed
effective within one hundred twenty days from the date of the date of the
funding of the Note, the
3
Company shall pay a penalty to the Holder in an amount equal to 2% of the
principal balance and any and all accrued interest then outstanding per month or
any part thereof, until such time as the registration statement is declared
effective. Company agrees to keep such registration statement effective until
the maturity of the Note. Should there come a time when the number of shares
that have been registered is less than 200% of the total number of shares to be
issued upon conversion, the Company agrees that it will amend such registration
statement such that a minimum of 200% of the shares to be issued upon conversion
are on such registration statement.
8. Replacement. On receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Note and, in the event of
such occurrence, on delivery of an indemnity agreement or bond reasonably
satisfactory in form and amount to the Company or, in the case of mutilation, on
surrender and cancellation of this Note, the Company at its expense will execute
and deliver, in lieu of this Note, a new Note of like tenor. On surrender of
this Note for exchange and subject to the provisions of this Note on compliance
with the Securities Act, the Company, at its expense will issue to or on the
order of the Holder of this Note a new Note or Notes of like tenor, in the name
of that Holder or as that Holder (on payment by the Holder of any applicable
transfer taxes) may direct, in the same total principal amount as this Note.
9. Appointment of Agent. The Company may, on written notice to the Holder of
this Note, appoint an agent for the purposes of issuing Common Stock or other
securities on the conversion of this Note and of replacing or exchanging this
Note; and after that appointment occurs any such issuance, replacement, or
exchange shall be made at that office by that agent.
10. Miscellaneous.
10.1 Amendment. No supplement, modification, or amendment of this Note shall be
binding unless executed in writing by all the parties hereto.
10.2 Waiver. No waiver of any of the provisions of this Note shall be deemed, or
shall constitute, a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver. Neither the
acceptance of any partial or delinquent payment by the Holder nor the Holder's
failure to exercise any of its rights or remedies on default by the Company
shall be a waiver by the Holder of any default or the Company obligations under
this Note, or a waiver of any subsequent default by the Company.
10.3 Timeliness. Time is of the essence of this Note and each and all of its
provisions.
10.4 Notices. Notices given under this Note shall be in writing and shall be
delivered personally, by messenger, by certified U.S. mail, return receipt
requested, or by a common overnight carrier delivery service. Notices shall be
deemed received upon receipt of same. Notices to the Company shall be addressed
to 1356 N.W. Boca Raton Blvd., Boca Raton, FL 33432. Notices to the Holder shall
be directed to ▇▇▇▇▇▇ at the Holder's address of record on the Company's books.
A party may change its address for notice by giving written notice to the other
party in accordance with this Section.
10.5 Governing Law and Venue. This Note shall be construed in accordance with,
and governed by, the laws of the State of Florida, and any action or proceeding,
including arbitration, brought by any party in which this Note is a subject
shall be brought in Florida
4
10.6 Effect of Headings. The headings of the sections of this Note are included
for purposes of convenience only, and shall not affect the construction or
interpretation of any of its provisions.
10.7 Invalidity. Any provision of this Note which is invalid, void, or illegal,
shall not affect, impair, or invalidate any other provision of this Note, and
such other provisions of this Note shall remain in full force and effect.
10.8 Professional Fees and Costs. If any legal or equitable action, arbitration,
or other proceeding, whether on the merits or on motion, are brought or
undertaken, or an attorney is retained to enforce this Note, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Note, then the successful or prevailing party or parties
in such undertaking (or the party that would prevail if an action were brought)
shall be entitled to recover reasonable attorney's fees and other professional
fees and other costs incurred in such action, proceeding or discussions, in
addition to any other relief to which such party would be entitled. The parties
intend this provision be given the most liberal construction possible and to
apply to any circumstances in which such party reasonably incurs expenses.
ChampionLyte Products, Inc.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Interim Chief Operating Officer
5
EXHIBIT `A'
CONVERSION NOTICE
TO: ChampionLyte Products, Inc.
1356 N.W. Boca Raton Blvd.
Boca Raton, FL 33432
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due January 6, 2004 (the
"Note") issued by ChampionLyte Products, Inc. (the "Company") hereby irrevocably
exercises the option to convert $__________ Principal Amount of the Note into
shares of Common Stock in accordance with the terms of the Note. The undersigned
hereby instructs the Company to convert the portion of the Note specified above
into ______________ shares of Common Stock Issued at Conversion in accordance
with the provisions of Article 3 of the Note. Attached hereto is the
undersigned's calculation for the Conversion Price. The undersigned directs that
the Common Stock and certificates therefore deliverable upon conversion, the
Note reissued in the Principal Amount not being surrendered for conversion
hereby, together with any check in payment for fractional Common Stock, be
registered in the name of and/or delivered to the undersigned unless a different
name has been indicated below. All capitalized terms used and not defined herein
have the respective meanings assigned to them in the Note. The conversion
pursuant hereto shall be deemed to have been effected at the date and time
specified below, and at such time the rights of the undersigned as a Holder of
the Principal Amount of the Note set forth above shall cease and the Person or
Persons in whose name or names the Common Stock Issued at Conversion shall be
registered shall be deemed to have become the holder or holders of record of the
Common Shares represented thereby and all voting and other rights associated
with the beneficial ownership of such Common Shares shall at such time vest with
such Person or Persons.
Date and time:
Signature
Fill in for registration of Note:
Please print name and address
(including ZIP code number):
6
EXHIBIT 'B'
ASSIGNMENT FORM
TO: ChampionLyte Products, Inc.
1356 N.W. Boca Raton Blvd.
Boca Raton, FL 33432
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due January 6, 2004 (the
"Note") issued by ChampionLyte Products, Inc. (the "Company") hereby irrevocably
assigns its rights, title and ownership in $ of the Note, inclusive of all
principal and pro-rata interest, to the party more fully described below in
accordance with Section 5 of the Note. Accordingly, the undersigned directs
that, if the Assignment is for less than the outstanding principal amount of the
Note that it be reissued in the Principal Amount not being surrendered for
assignment hereby, to the undersigned with the amount being assigned reissued
for the amount being assigned hereunder to the name that has been indicated
below. All capitalized terms used and not defined herein have the respective
meanings assigned to them in the Note. The Assignment pursuant hereto shall be
deemed to have been effected at the date and time specified below, and at such
time the rights of the undersigned as a Holder of the principal Amount of the
Note amount herein assigned, set forth above shall cease and the Person or
Persons indicated below shall be deemed to have become the holder or holders of
record of any or all of the Note assigned herein and shall have all voting and
other rights associated with the beneficial ownership of the Note and shall at
such time vest with such Person or Persons.
Date and time:
Signature
Fill in for registration of Note:
Please print name and address
(including ZIP code number, and
social security or tax
identification number):
7
ASSIGNEE:
ALPHA CAPITAL AKTIENGESELLSCHAFT
Pradafant 7
9490 Furstentums
Vaduz, Lichtenstein
Fax: ▇▇▇-▇▇-▇▇▇▇▇▇▇▇
THIS NOTE AND THE STOCK INTO WHICH IT IS CONVERTIBLE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE UNITED STATES OF AMERICA
(THE "ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES ("STATE
ACT"). THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OF DISTRIBUTION THEREOF, AND MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED FOR VALUE, DIRECTLY OR
INDIRECTLY, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND COMPLIANCE WITH APPLICABLE STATE ACTS, OR PURSUANT TO AN EXAMPTION FROM
REGISTRAITON UNDER THE ACT AND UNDER APPLICABLE STATE ACTS, THE AVAILABILITY OF
WHICH ARE ESTABLISHED BY MEANS OF AN OPINION TO SUCH EFFECT IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY AND RENDERED BY LEGAL COUNSEL SATISFACTORY
TO THE COMPANY.
CHAMPIONLYTE HOLDINGS, INC.
(formerly known as Championlyte Products, Inc.)
SERIES A 6.5% CONVERTIBLE PROMISSORY NOTE
$200,000.00 Aventura, Florida
October 20, 2003
THIS PROMISSORY NOTE REPRESENTS THE INITIAL $200,000 OF NOTE PRINCIPAL OF THAT
CERTAIN ORIGINAL SERIES A 6.5% CONVERTIBLE PROMISSORY NOTE IN THE PRINCIPAL
AMOUNT OF $250,000 ORIGINALLY ISSUED ON JANUARY 7, 2003 AND AMENDED JULY 3, 2003
TO INCREASE THE PRINCIPAL AMOUNT TO $350,000, AND FURTHER AMENDED OCTOBER 16,
2003 TO INCREASE THE PRINCIPAL AMOUNT TO $400,000 AND EXTEND THE DATE BY WHICH
THE CURRENT REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION NEEDS TO BECOME EFFECTIVE BEFORE PENALTIES APPLY TO 180 DAYS FROM
OCTOBER 16, 2003.
1. Promise to Pay. FOR VALUE RECEIVED, CHAMPIONLYTE PRODUCTS, INC, a Florida
corporation (the "Company") promises to pay, in lawful money of the United
States of America, to the order of Alpha Capital Aktiengesellschaft or assignee
(the "Holder"), at Boca Raton, Florida or at such other place as Holder shall
from time to time direct, on or before December 31, 2004, the principal amount
of Two Hundred Thousand Dollars and no cents ($200,000.00) plus interest on the
unpaid principal balance thereof at a rate of Six and one-half percent (6.5%)
per year from the date hereof until paid in full. Interest on this note shall be
computed on a 365/365 simple interest basis, that is, by applying the ratio of
the annual interest rate by the number of days in the year times, outstanding
principal balance times the actual number of days that the principal balance is
outstanding. This Note shall be payable interest-only, in arrears, on the last
day of each calendar months, commencing upon the first such date subsequent to
the date of execution hereof, and due and payable in full, principal and
interest, twenty-four months from the date hereof. All payments shall be applied
first to accrued, unpaid interest, next to any collection costs, and the
remainder against principal. This note may be not be redeemed by the Company
prior to its due date without the express permission of the Holder. This Note is
one of a series of identical notes, except to principal amount and due date
(collectively, the "Notes").
2. Default. The Company shall be in default under this Note upon the occurrence
of any of the following events:
2.1 The Company fails to timely perform any of its obligations under, or
otherwise breaches any covenants or warranties of this Note;
2.2 Any statement, representation, or warranty made by the Company or its agents
to Holder shall prove to have been false or materially misleading when made;
and/or,
1
2.3 The Company shall become insolvent, or unable to meet its obligations as
they become due, or shall file or have filed against it, voluntarily or
involuntarily, a petition under the United States Bankruptcy Code or shall
procure or suffer the appointment of a receiver for any substantial portion of
its properties, or shall make an assignment for benefit of creditors, or shall
initiate or have initiated against it, voluntarily or involuntarily, any act,
process, or proceedings under any insolvency law or other statute or law
providing for the modifications or adjustment of the rights of creditors.
Upon any event of default, ▇▇▇▇▇▇ may declare the entire unpaid principal
balance of this Note and all accrued unpaid interest immediately due, without
notice, and the Company agrees to pay such amount immediately in such event. In
the event of default, the Company agrees to pay all of ▇▇▇▇▇▇'s costs of
collection, including attorney's fees; this shall include legal expenses for the
bankruptcy proceedings or insolvency proceedings (including efforts to modify or
vacate any automatic stay or injunction), court costs, appeals, post-judgement
collection expenses and any other amount provided by law. The parties intend
this provision to be given the most liberal construction possible and to apply
to any circumstances in which such party reasonably incurs expenses. No delay or
omission on the part of any Holder hereof in exercising any right or option
herein given to such Holder shall impair such right or option or be considered
as a waiver thereof or acquiescence in any default hereunder. The Company hereby
waives any applicable statue of limitations, presentment, demand for payment,
protest and notice of dishonor.
3 Conversion. The Holder shall have conversion rights as follows (the
"Conversion Rights"):
3.1 Right To Convert. Subject to subsection 3.3, this Note shall be convertible,
in whole or in part, at any time after the date of issuance of this Note, and
from time to time thereafter, at the office of the Company, into such number of
fully paid and non-assessable shares of Common Stock of the Company as is
determined as follows:
The Conversion Price per share shall be equal to the lesser of (1) the average
of the lowest of three day trading prices during the five trading days
immediately prior to the Conversion Date multiplied by .80, or (2) the average
of the lowest of three day trading prices during the five trading days
immediately prior to the funding date(s).
3.2 Mechanics of Conversion. Before Holder shall be entitled to convert this
Note, in whole or in part, into shares of Common Stock, he shall surrender this
Note at the office of the Company, and shall give written notice in person, or
by facsimile, mail, postage prepaid, to the Company at its principal corporate
office, of ▇▇▇▇▇▇'s election to convert the Note and shall state therein the
portion of the principal amount of the Note to be converted and the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued, the address of such persons to be used for record purposes, and the
address(s) to which the certificate(s) should be delivered if different from the
record address. Such notice shall be on the form attached to this Note as
Exhibit `A'. The Company shall as soon as practicable thereafter, issue and
deliver to Holder, or to the nominee or nominees of Holder, a certificate or
certificates for the number of shares of Common Stock to which Holder shall be
entitled as aforesaid and, if less than the full principal amount of the note is
converted, a new Note representing the uncoverted balance which remains
outstanding. Any interest accrued but unpaid on the converted portion of the
Note shall be paid upon conversion; any interest accrued but unpaid on the
non-converted portion of the Note shall be paid in due course under the
replacement Note. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the Note to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date.
3.3 No Impairment. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek
2
to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all the provisions of this Section 3 and in the taking of
all such action as may be necessary or appropriate in order to protect the
Conversion Rights of the Holder against impairment
3.4 No Fractional Shares and Certificates as to Conversion. No fractional shares
shall be issued upon conversion of the Note, and the number of shares of Common
Stock to be issued shall be rounded to the nearest whole share.
3.5 Notices of Record Date. In the event of any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, the Company shall mail to Holder, at least 20 days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution, or right, and the
amount and character of such dividend, distribution, or right. In the case of
rights to acquire any shares of stock or any other class of securities or
property, Company shall grant to Holder the same rights as if the Holder had
converted his Note upon the Record Date.
3.6 Reservation of Stock Issuable Upon Conversion. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock solely for the purpose of effecting the conversion of the Notes
such number of shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all outstanding Notes; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then-outstanding Notes, in addition to such other
remedies as shall be available to the Holder, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes.
3.7 Notices. Any notice required by the provisions of this Section 3 to be given
to the Holder shall be deemed given if deposited in the United States mail,
postage prepaid and certified, return receipt requested and addressed to ▇▇▇▇▇▇
of record at his address appearing on the books of the Company.
4 Redemption. The Company, may not redeem this Note at any time prior to the
maturity date.
5 Assignment. Subject to the restrictions on transfer herein, the Holder may
transfer this Note in whole or in part, in the event of partial transfer(s), the
Company will exchange this Note for new Notes as instructed by the Holder equal
to the total of this Note, by endorsement (by the Holder of this Note executing
the form of assignment attached to this Note as Exhibit `B') and delivery in the
same manner as any negotiable instrument transferable by endorsement and
delivery. Until this Note is transferred on the Company books, the Company may
treat the registered Holder of this Note as the absolute owner of this Note for
all purposes, despite any notice to the contrary. The Company's obligations
hereunder may not be transferred without prior written consent of the Holder;
any attempt to transfer without consent shall be void ab initio.
6 Restrictions on Transfer. This Note and the stock into which it is convertible
have not been registered under the Securities act of 1933, as amended, of the
United States of America (the "Act") or the securities laws of any sate of the
United States ("State Act"). This Note and the stock into which it is
convertible have been acquired for investment and not with a view to, or in
connection with, the sale or distribution thereof, and may not be offered, sold,
pledged, hypothecated. Or otherwise transferred for value directly or
indirectly, in the absence of an effective registration statement under the Act
and compliance with applicable State Acts, or pursuant to an exemption from
registration under the Act and under applicable State Acts, the availability of
which are established by means of an opinion to such effect. In form and
substance satisfactory to the Company and rendered by legal counsel satisfactory
to the Company. The certificates representing the shares into which this Note is
convertible shall bear the foregoing legend.
3
7 Registration of Underlying Stock & Penalties. The Company agrees that within
ninety days of the date of this Note, the Company shall file a registration
statement with the Securities and Exchange Commission on form SB-2 or other
applicable form to register 250% of the then shares to be issued upon conversion
of the Notes. A copy of this Registration Statement is attached hereto as
Exhibit `C'. The registrations statement shall call for, amongst other items
more fully described therein, the Company to use its best efforts to have such
registration statement declared effective at the earliest possible time. Should
such registration statement not be deemed effective within one hundred and
twenty days from the date of the date of the funding of the Note, the Company
shall pay a penalty to the Holder in an amount equal to 2% of the principal
balance and any and all accrued interest then outstanding per month or any part
thereof, until such time as the registration statement is declared effective.
Company agrees to keep such registration statement effective until the maturity
of the Note. Should there come a time when the number of shares that have been
registered is less than 200% of the total number of shares to be issued upon
conversion, the Company agrees that it will amend such registration statement
such that a minimum of 200% of the shares to be issued upon conversion are on
such registration statement.
8 Replacement. On receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Note and, in the event of
such occurrence, on delivery of an indemnity agreement or bond reasonably
satisfactory in form and amount to the Company or, in the case of mutilation, on
surrender and cancellation of this Note, the Company at its expense will execute
and deliver, in lieu of this Note, a new Note of like tenor. On surrender of
this Note for exchange and subject to the provisions of this Note on compliance
with the Securities Act, the Company, at its expense will issue to or on the
order of the Holder of this Note a new Note or Notes of like tenor, in the name
of that Holder or as that Holder (on payment by the Holder of any applicable
transfer taxes) may direct, in the same total principal amount as this Note.
9 Appointment of Agent. The Company may, on written notice to the Holder of this
Note, appoint an agent for the purposes of issuing Common Stock or other
securities on the conversion of this Note and of replacing or exchanging this
Note; and after that appointment occurs any such issuance, replacement, or
exchange shall be made at that office by that agent.
10 Miscellaneous.
10.1 Amendment. No supplement, modification, or amendment of this Note shall be
binding unless executed in writing by all the parties hereto.
10.2 Waiver. No waiver of any of the provisions of this Note shall be deemed, or
shall constitute, a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver. Neither the
acceptance of any partial or delinquent payment by the Holder nor the Holder's
failure to exercise any of its rights or remedies on default by the Company
shall be a waiver by the Holder of any default or the Company obligations under
this Note, or a waiver of any subsequent default by the Company.
10.3 Timeliness. Time is of the essence of this Note and each and all of its
provisions.
10.4 Notices. Notices given under this Note shall be in writing and shall be
delivered personally, by messenger, by certified U.S. mail, return receipt
requested, or by a common overnight carrier delivery service. Notices shall be
deemed received upon receipt of same. Notices to the Company shall be addressed
to 1356 N.W. Boca Raton Blvd., Boca Raton, FL 33432. Notices to the Holder shall
be directed to ▇▇▇▇▇▇ at the Holder's address of record on the Company's books.
A party may change its address for notice by giving written notice to the other
party in accordance with this Section.
10.5 Governing Law and Venue. This Note shall be construed in accordance with,
and governed by, the laws of the State of Florida, and any action or proceeding,
including arbitration, brought by any party in which this Note is a subject
shall be brought in Florida
4
10.6 Effect of Headings. The headings of the sections of this Note are included
for purposes of convenience only, and shall not affect the construction or
interpretation of any of its provisions.
10.7 Invalidity. Any provision of this Note which is invalid, void, or illegal,
shall not affect, impair, or invalidate any other provision of this Note, and
such other provisions of this Note shall remain in full force and effect.
10.8 Professional Fees and Costs. If any legal or equitable action, arbitration,
or other proceeding, whether on the merits or on motion, are brought or
undertaken, or an attorney is retained to enforce this Note, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Note, then the successful or prevailing party or parties
in such undertaking (or the party that would prevail if an action were brought)
shall be entitled to recover reasonable attorney's fees and other professional
fees and other costs incurred in such action, proceeding or discussions, in
addition to any other relief to which such party would be entitled. The parties
intend this provision be given the most liberal construction possible and to
apply to any circumstances in which such party reasonably incurs expenses.
ChampionLyte Holdings, Inc.
By: s/s ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
President
5
EXHIBIT `A'
CONVERSION NOTICE
TO: ChampionLyte Products, Inc.
1356 N.W. Boca Raton Blvd.
Boca Raton, FL 33432
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due January 6, 2004 (the
"Note") issued by ChampionLyte Products, Inc. (the "Company") hereby irrevocably
exercises the option to convert $__________ Principal Amount of the Note into
shares of Common Stock in accordance with the terms of the Note. The undersigned
hereby instructs the Company to convert the portion of the Note specified above
into ______________ shares of Common Stock Issued at Conversion in accordance
with the provisions of Article 3 of the Note. Attached hereto is the
undersigned's calculation for the Conversion Price. The undersigned directs that
the Common Stock and certificates therefore deliverable upon conversion, the
Note reissued in the Principal Amount not being surrendered for conversion
hereby, together with any check in payment for fractional Common Stock, be
registered in the name of and/or delivered to the undersigned unless a different
name has been indicated below. All capitalized terms used and not defined herein
have the respective meanings assigned to them in the Note. The conversion
pursuant hereto shall be deemed to have been effected at the date and time
specified below, and at such time the rights of the undersigned as a Holder of
the Principal Amount of the Note set forth above shall cease and the Person or
Persons in whose name or names the Common Stock Issued at Conversion shall be
registered shall be deemed to have become the holder or holders of record of the
Common Shares represented thereby and all voting and other rights associated
with the beneficial ownership of such Common Shares shall at such time vest with
such Person or Persons.
Date and time:
Signature
Fill in for registration of Note:
Please print name and address
(including ZIP code number):
6
EXHIBIT `B'
ASSIGNMENT FORM
TO: ChampionLyte Products, Inc.
1356 N.W. Boca Raton Blvd.
Boca Raton, FL 33432
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due January 6, 2004 (the
"Note") issued by ChampionLyte Products, Inc. (the "Company") hereby irrevocably
assigns its rights, title and ownership in $_____________________- of the Note,
inclusive of all principal and pro-rata interest, to the party more fully
described below in accordance with Section 5 of the Note. Accordingly, the
undersigned directs that, if the Assignment is for less than the outstanding
principal amount of the Note that it be reissued in the Principal Amount not
being surrendered for assignment hereby, to the undersigned with the amount
being assigned reissued for the amount being assigned hereunder to the name that
has been indicated below. All capitalized terms used and not defined herein have
the respective meanings assigned to them in the Note. The Assignment pursuant
hereto shall be deemed to have been effected at the date and time specified
below, and at such time the rights of the undersigned as a Holder of the
principal Amount of the Note amount herein assigned, set forth above shall cease
and the Person or Persons indicated below shall be deemed to have become the
holder or holders of record of any or all of the Note assigned herein and shall
have all voting and other rights associated with the beneficial ownership of the
Note and shall at such time vest with such Person or Persons.
Date and time:
Signature
Fill in for registration of Note:
Please print name and address
(including ZIP code number, and
social security or tax
identification number):
7
ASSIGNMENT FORM
TO: ChampionLyte Holdings, Inc.
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Corporate Secretary
The undersigned owner of that certain 6.5% Convertible Note originally issued
January 6, 2003, amended and reissued on July 3, 2003 and October 16, 2003,
which is due December 31, 2004 in the principal amount of $400,000 (the "Note")
issued by ChampionLyte Holdings, Inc. (formerly ChampionLyte Products, Inc.)
(the "Company") hereby irrevocably assigns its rights, title and ownership in
$50,000 of the principal amount of the Note, exclusive of accrued interest,
damages and penalties, to the party more fully described below in accordance
with Section 5 of the Note. Accordingly, the undersigned directs that, since the
Assignment is for less than the outstanding principal amount of the Note that it
be reissued in the Principal Amount not being surrendered for assignment hereby,
to the undersigned with the amount being assigned reissued for the amount being
assigned hereunder to the name that has been indicated below. All capitalized
terms used and not defined herein have the respective meanings assigned to them
in the Note. The Assignment pursuant hereto shall be deemed to have been
effected at the date and time specified below, and at such time the rights of
the undersigned as a Holder of the principal Amount of the Note amount herein
assigned, set forth above shall cease and the Person or Persons indicated below
shall be deemed to have become the holder or holders of record of any or all of
the Note assigned herein and shall have all voting and other rights associated
with the beneficial ownership of the Note and shall at such time vest with such
Person or Persons.
In addition, Advantage Fund I, LLC and the Company hereby agree that any and all
security granted by the Company to Advantage Fund I, LLC and Alpha Capital
Aktiengesellschaft, respectively, pursuant to that certain Security Agreement
entered into amongst the parties on October 20, 2003 shall be amended on
Schedule A so that it shall add Assignee as a secured party and be securitized
proportionately based on each party's respective interests in the Note, or
specifically, Advantage Fund I, LLC - 37.50%; Alpha Capital Aktiengesellschaft -
50% and Assignee - 12.50%. In addition that certain Collatreal Agent Agreement
entered into amongst the parties on October 20, 2003 shall also be amended on
Schedule A to proportionately state the parties respective interests in the
Note, or specifically, Advantage Fund I, LLC - 37.50%, Alpha Capital
Aktiengesellschaft - 50% and Assignee - 12.50%.
Date: November 3, 2003
ADVANTAGE FUND I, LLC
s/s ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Signature: President
8
Fill in for registration of Note:
ASSIGNEE:
GAMMA OPPORTUNITY CAPITAL PARTNERS, LP
British Colonial Centre of Commerce
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ (NP), The Bahamas
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
THIS NOTE AND THE STOCK INTO WHICH IT IS CONVERTIBLE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE UNITED STATES OF AMERICA
(THE "ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES ("STATE
ACT"). THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OF DISTRIBUTION THEREOF, AND MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED FOR VALUE, DIRECTLY OR
INDIRECTLY, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND COMPLIANCE WITH APPLICABLE STATE ACTS, OR PURSUANT TO AN EXAMPTION FROM
REGISTRAITON UNDER THE ACT AND UNDER APPLICABLE STATE ACTS, THE AVAILABILITY OF
WHICH ARE ESTABLISHED BY MEANS OF AN OPINION TO SUCH EFFECT IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY AND RENDERED BY LEGAL COUNSEL SATISFACTORY
TO THE COMPANY.
CHAMPIONLYTE HOLDINGS, INC.
(formerly known as Championlyte Products, Inc.)
SERIES A 6.5% CONVERTIBLE PROMISSORY NOTE
$50,000.00 Aventura, Florida November 3, 2003
THIS PROMISSORY NOTE REPRESENTS $50,000 OF THE INITIAL $250,000 OF NOTE
PRINCIPAL OF THAT CERTAIN ORIGINAL SERIES A 6.5% CONVERTIBLE PROMISSORY NOTE IN
THE PRINCIPAL AMOUNT OF $250,000 ORIGINALLY ISSUED ON JANUARY 7, 2003 AND
AMENDED JULY 3, 2003 TO INCREASE THE PRINCIPAL AMOUNT TO $350,000, AND FURTHER
AMENDED OCTOBER 16, 2003 TO INCREASE THE PRINCIPAL AMOUNT TO $400,000 AND EXTEND
THE DATE BY WHICH THE CURRENT REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION NEEDS TO BECOME EFFECTIVE BEFORE PENALTIES APPLY TO 180
DAYS FROM OCTOBER 16, 2003.
1. Promise to Pay. FOR VALUE RECEIVED, CHAMPIONLYTE PRODUCTS, INC, a Florida
corporation (the "Company") promises to pay, in lawful money of the United
States of America, to the order of Gamma Opportunity Capital Partners, L.P. or
assignee (the "Holder"), at Boca Raton, Florida or at such other place as Holder
shall from time to time direct, on or before December 31, 2004, the principal
amount of Fifty Thousand Dollars and no cents ($50,000.00) plus interest on the
unpaid principal balance thereof at a rate of Six and one-half percent (6.5%)
per year from the date hereof until paid in full. Interest on this note shall be
computed on a 365/365 simple interest basis, that is, by applying the ratio of
the annual interest rate by the number of days in the year times, outstanding
principal balance times the actual number of days that the principal balance is
outstanding. This Note shall be payable interest-only, in arrears, on the last
day of each calendar months, commencing upon the first such date subsequent to
the date of execution hereof, and due and payable in full, principal and
interest, twenty-four months from the date hereof. All payments shall be applied
first to accrued, unpaid interest, next to any collection costs, and the
remainder against principal. This note may be not be redeemed by the Company
prior to its due date without the express permission of the Holder. This Note is
one of a series of identical notes, except to principal amount and due date
(collectively, the "Notes").
2. Default. The Company shall be in default under this Note upon the occurrence
of any of the following events:
2.1 The Company fails to timely perform any of its obligations under, or
otherwise breaches any covenants or warranties of this Note;
2.2 Any statement, representation, or warranty made by the Company or its agents
to Holder shall prove to have been false or materially misleading when made;
and/or,
1
2.3 The Company shall become insolvent, or unable to meet its obligations as
they become due, or shall file or have filed against it, voluntarily or
involuntarily, a petition under the United States Bankruptcy Code or shall
procure or suffer the appointment of a receiver for any substantial portion of
its properties, or shall make an assignment for benefit of creditors, or shall
initiate or have initiated against it, voluntarily or involuntarily, any act,
process, or proceedings under any insolvency law or other statute or law
providing for the modifications or adjustment of the rights of creditors.
Upon any event of default, ▇▇▇▇▇▇ may declare the entire unpaid principal
balance of this Note and all accrued unpaid interest immediately due, without
notice, and the Company agrees to pay such amount immediately in such event. In
the event of default, the Company agrees to pay all of ▇▇▇▇▇▇'s costs of
collection, including attorney's fees; this shall include legal expenses for the
bankruptcy proceedings or insolvency proceedings (including efforts to modify or
vacate any automatic stay or injunction), court costs, appeals, post-judgement
collection expenses and any other amount provided by law. The parties intend
this provision to be given the most liberal construction possible and to apply
to any circumstances in which such party reasonably incurs expenses. No delay or
omission on the part of any Holder hereof in exercising any right or option
herein given to such Holder shall impair such right or option or be considered
as a waiver thereof or acquiescence in any default hereunder. The Company hereby
waives any applicable statue of limitations, presentment, demand for payment,
protest and notice of dishonor.
3 Conversion. The Holder shall have conversion rights as follows (the
"Conversion Rights"):
3.1 Right To Convert. Subject to subsection 3.3, this Note shall be convertible,
in whole or in part, at any time after the date of issuance of this Note, and
from time to time thereafter, at the office of the Company, into such number of
fully paid and non-assessable shares of Common Stock of the Company as is
determined as follows:
The Conversion Price per share shall be equal to the lesser of (1) the average
of the lowest of three day trading prices during the five trading days
immediately prior to the Conversion Date multiplied by .80, or (2) the average
of the lowest of three day trading prices during the five trading days
immediately prior to the funding date(s).
3.2 Mechanics of Conversion. Before Holder shall be entitled to convert this
Note, in whole or in part, into shares of Common Stock, he shall surrender this
Note at the office of the Company, and shall give written notice in person, or
by facsimile, mail, postage prepaid, to the Company at its principal corporate
office, of ▇▇▇▇▇▇'s election to convert the Note and shall state therein the
portion of the principal amount of the Note to be converted and the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued, the address of such persons to be used for record purposes, and the
address(s) to which the certificate(s) should be delivered if different from the
record address. Such notice shall be on the form attached to this Note as
Exhibit `A'. The Company shall as soon as practicable thereafter, issue and
deliver to Holder, or to the nominee or nominees of Holder, a certificate or
certificates for the number of shares of Common Stock to which Holder shall be
entitled as aforesaid and, if less than the full principal amount of the note is
converted, a new Note representing the uncoverted balance which remains
outstanding. Any interest accrued but unpaid on the converted portion of the
Note shall be paid upon conversion; any interest accrued but unpaid on the
non-converted portion of the Note shall be paid in due course under the
replacement Note. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the Note to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date.
3.3 No Impairment. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek
2
to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all the provisions of this Section 3 and in the taking of
all such action as may be necessary or appropriate in order to protect the
Conversion Rights of the Holder against impairment
3.4 No Fractional Shares and Certificates as to Conversion. No fractional shares
shall be issued upon conversion of the Note, and the number of shares of Common
Stock to be issued shall be rounded to the nearest whole share.
3.5 Notices of Record Date. In the event of any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, the Company shall mail to Holder, at least 20 days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution, or right, and the
amount and character of such dividend, distribution, or right. In the case of
rights to acquire any shares of stock or any other class of securities or
property, Company shall grant to Holder the same rights as if the Holder had
converted his Note upon the Record Date.
3.6 Reservation of Stock Issuable Upon Conversion. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock solely for the purpose of effecting the conversion of the Notes
such number of shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all outstanding Notes; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then-outstanding Notes, in addition to such other
remedies as shall be available to the Holder, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes.
3.7 Notices. Any notice required by the provisions of this Section 3 to be given
to the Holder shall be deemed given if deposited in the United States mail,
postage prepaid and certified, return receipt requested and addressed to ▇▇▇▇▇▇
of record at his address appearing on the books of the Company.
4 Redemption. The Company, may not redeem this Note at any time prior to the
maturity date.
5 Assignment. Subject to the restrictions on transfer herein, the Holder may
transfer this Note in whole or in part, in the event of partial transfer(s), the
Company will exchange this Note for new Notes as instructed by the Holder equal
to the total of this Note, by endorsement (by the Holder of this Note executing
the form of assignment attached to this Note as Exhibit `B') and delivery in the
same manner as any negotiable instrument transferable by endorsement and
delivery. Until this Note is transferred on the Company books, the Company may
treat the registered Holder of this Note as the absolute owner of this Note for
all purposes, despite any notice to the contrary. The Company's obligations
hereunder may not be transferred without prior written consent of the Holder;
any attempt to transfer without consent shall be void ab initio.
6 Restrictions on Transfer. This Note and the stock into which it is convertible
have not been registered under the Securities act of 1933, as amended, of the
United States of America (the "Act") or the securities laws of any sate of the
United States ("State Act"). This Note and the stock into which it is
convertible have been acquired for investment and not with a view to, or in
connection with, the sale or distribution thereof, and may not be offered, sold,
pledged, hypothecated. Or otherwise transferred for value directly or
indirectly, in the absence of an effective registration statement under the Act
and compliance with applicable State Acts, or pursuant to an exemption from
registration under the Act and under applicable State Acts, the availability of
which are established by means of an opinion to such effect. In form and
substance satisfactory to the Company and rendered by legal counsel satisfactory
to the Company. The certificates representing the shares into which this Note is
convertible shall bear the foregoing legend.
3
7 Registration of Underlying Stock & Penalties. The Company agrees that within
ninety days of the date of this Note, the Company shall file a registration
statement with the Securities and Exchange Commission on form SB-2 or other
applicable form to register 250% of the then shares to be issued upon conversion
of the Notes. A copy of this Registration Statement is attached hereto as
Exhibit `C'. The registrations statement shall call for, amongst other items
more fully described therein, the Company to use its best efforts to have such
registration statement declared effective at the earliest possible time. Should
such registration statement not be deemed effective within one hundred and
twenty days from the date of the date of the funding of the Note, the Company
shall pay a penalty to the Holder in an amount equal to 2% of the principal
balance and any and all accrued interest then outstanding per month or any part
thereof, until such time as the registration statement is declared effective.
Company agrees to keep such registration statement effective until the maturity
of the Note. Should there come a time when the number of shares that have been
registered is less than 200% of the total number of shares to be issued upon
conversion, the Company agrees that it will amend such registration statement
such that a minimum of 200% of the shares to be issued upon conversion are on
such registration statement.
8 Replacement. On receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Note and, in the event of
such occurrence, on delivery of an indemnity agreement or bond reasonably
satisfactory in form and amount to the Company or, in the case of mutilation, on
surrender and cancellation of this Note, the Company at its expense will execute
and deliver, in lieu of this Note, a new Note of like tenor. On surrender of
this Note for exchange and subject to the provisions of this Note on compliance
with the Securities Act, the Company, at its expense will issue to or on the
order of the Holder of this Note a new Note or Notes of like tenor, in the name
of that Holder or as that Holder (on payment by the Holder of any applicable
transfer taxes) may direct, in the same total principal amount as this Note.
9 Appointment of Agent. The Company may, on written notice to the Holder of this
Note, appoint an agent for the purposes of issuing Common Stock or other
securities on the conversion of this Note and of replacing or exchanging this
Note; and after that appointment occurs any such issuance, replacement, or
exchange shall be made at that office by that agent.
10 Miscellaneous.
10.1 Amendment. No supplement, modification, or amendment of this Note shall be
binding unless executed in writing by all the parties hereto.
10.2 Waiver. No waiver of any of the provisions of this Note shall be deemed, or
shall constitute, a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver. Neither the
acceptance of any partial or delinquent payment by the Holder nor the Holder's
failure to exercise any of its rights or remedies on default by the Company
shall be a waiver by the Holder of any default or the Company obligations under
this Note, or a waiver of any subsequent default by the Company.
10.3 Timeliness. Time is of the essence of this Note and each and all of its
provisions.
10.4 Notices. Notices given under this Note shall be in writing and shall be
delivered personally, by messenger, by certified U.S. mail, return receipt
requested, or by a common overnight carrier delivery service. Notices shall be
deemed received upon receipt of same. Notices to the Company shall be addressed
to 1356 N.W. Boca Raton Blvd., Boca Raton, FL 33432. Notices to the Holder shall
be directed to ▇▇▇▇▇▇ at the Holder's address of record on the Company's books.
A party may change its address for notice by giving written notice to the other
party in accordance with this Section.
10.5 Governing Law and Venue. This Note shall be construed in accordance with,
and governed by, the laws of the State of Florida, and any action or proceeding,
including arbitration, brought by any party in which this Note is a subject
shall be brought in Florida
4
10.6 Effect of Headings. The headings of the sections of this Note are included
for purposes of convenience only, and shall not affect the construction or
interpretation of any of its provisions.
10.7 Invalidity. Any provision of this Note which is invalid, void, or illegal,
shall not affect, impair, or invalidate any other provision of this Note, and
such other provisions of this Note shall remain in full force and effect.
10.8 Professional Fees and Costs. If any legal or equitable action, arbitration,
or other proceeding, whether on the merits or on motion, are brought or
undertaken, or an attorney is retained to enforce this Note, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Note, then the successful or prevailing party or parties
in such undertaking (or the party that would prevail if an action were brought)
shall be entitled to recover reasonable attorney's fees and other professional
fees and other costs incurred in such action, proceeding or discussions, in
addition to any other relief to which such party would be entitled. The parties
intend this provision be given the most liberal construction possible and to
apply to any circumstances in which such party reasonably incurs expenses.
ChampionLyte Holdings, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
President
5
EXHIBIT `A'
CONVERSION NOTICE
TO: ChampionLyte Products, Inc.
1356 N.W. Boca Raton Blvd.
Boca Raton, FL 33432
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due January 6, 2004 (the
"Note") issued by ChampionLyte Products, Inc. (the "Company") hereby irrevocably
exercises the option to convert $__________ Principal Amount of the Note into
shares of Common Stock in accordance with the terms of the Note. The undersigned
hereby instructs the Company to convert the portion of the Note specified above
into ______________ shares of Common Stock Issued at Conversion in accordance
with the provisions of Article 3 of the Note. Attached hereto is the
undersigned's calculation for the Conversion Price. The undersigned directs that
the Common Stock and certificates therefore deliverable upon conversion, the
Note reissued in the Principal Amount not being surrendered for conversion
hereby, together with any check in payment for fractional Common Stock, be
registered in the name of and/or delivered to the undersigned unless a different
name has been indicated below. All capitalized terms used and not defined herein
have the respective meanings assigned to them in the Note. The conversion
pursuant hereto shall be deemed to have been effected at the date and time
specified below, and at such time the rights of the undersigned as a Holder of
the Principal Amount of the Note set forth above shall cease and the Person or
Persons in whose name or names the Common Stock Issued at Conversion shall be
registered shall be deemed to have become the holder or holders of record of the
Common Shares represented thereby and all voting and other rights associated
with the beneficial ownership of such Common Shares shall at such time vest with
such Person or Persons.
Date and time:
Signature
Fill in for registration of Note:
Please print name and address (including ZIP code number):
6
EXHIBIT `B'
ASSIGNMENT FORM
TO: ChampionLyte Products, Inc.
1356 N.W. Boca Raton Blvd.
Boca Raton, FL 33432
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due January 6, 2004 (the
"Note") issued by ChampionLyte Products, Inc. (the "Company") hereby irrevocably
assigns its rights, title and ownership in $________________________ of the
Note, inclusive of all principal and pro-rata interest, to the party more fully
described below in accordance with Section 5 of the Note. Accordingly, the
undersigned directs that, if the Assignment is for less than the outstanding
principal amount of the Note that it be reissued in the Principal Amount not
being surrendered for assignment hereby, to the undersigned with the amount
being assigned reissued for the amount being assigned hereunder to the name that
has been indicated below. All capitalized terms used and not defined herein have
the respective meanings assigned to them in the Note. The Assignment pursuant
hereto shall be deemed to have been effected at the date and time specified
below, and at such time the rights of the undersigned as a Holder of the
principal Amount of the Note amount herein assigned, set forth above shall cease
and the Person or Persons indicated below shall be deemed to have become the
holder or holders of record of any or all of the Note assigned herein and shall
have all voting and other rights associated with the beneficial ownership of the
Note and shall at such time vest with such Person or Persons.
Date and time:
Signature
Fill in for registration of Note:
Please print name and address
(including ZIP code number, and
social security or tax
identification number):
7