EXHIBIT 10.21
This Note and the securities issuable upon conversion of the Note have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), or under the provisions of any applicable state securities laws, but has
been and will be acquired by the registered holder hereof in reliance on
statutory exemptions under the Securities Act, and under any applicable state
securities laws. This Note and such securities may not be sold, pledged,
transferred or assigned except in a transaction which is exempt under provisions
of the Securities Act and any applicable state securities laws or pursuant to an
effective registration statement; and in the case of an exemption, only if the
Company has received an opinion of counsel satisfactory to the Company that such
transaction does not require registration.
FINANCIAL INTRANET, INC.
US$600,000
7% CONVERTIBLE PROMISSORY NOTE
DUE FEBRUARY 8, 2002
FINANCIAL INTRANET, INC., a Nevada corporation (the "Company"), for value
received, hereby promises to pay to ▇▇▇▇▇▇ ▇▇▇▇ or registered assigns (the
"Holder") on demand as set forth below, at the principal offices of the Company,
the principal sum of SIX HUNDRED THOUSAND ($600,000) Dollars, and to pay
interest on the outstanding principal sum hereof at 7% (SEVEN PERCENT) per annum
from the date hereof (the "Issuance Date") until the Company's obligation with
respect to the payment of such principal sum shall be discharged as herein
provided. The principal sum shall be payable upon demand by the Holder (in the
form of a Conversion Notice as set forth below) or upon maturity pursuant to the
following terms: the Company, upon demand by the Holder (in the form of a
Conversion Notice as set forth below) at any time or times on or after February
16, 1999 and up until maturity, shall pay to the Holder the sum of $240,000 in
shares of common stock of the Company (the "Common Stock") pursuant to the
conversion formula set forth below), and pay upon demand (in the form of a
Conversion Notice as set forth below) the remaining amount of $360,000 to the
Holder at any time or times on or after ninety (90) days following the date of
this Note. Interest hereunder shall accrue commencing the date hereof and shall
be payable by the Company to the Holder on the Conversion Date, or if not
converted or prepaid, then on the Anniversary Date (as defined below). The
calculation of interest shall be based on the actual number of days that elapse
during any period in a year of 360 days.
In the event that the Holder has not demanded payment of this Note (in the
form
of a Conversion Notice as set forth below) prior to three years from the
issuance date hereof (the "Anniversary Date"), on the Anniversary Date, the
Company shall convert any and all remaining outstanding principal and any
accrued and unpaid interest into the Company's common stock, par value $.001 per
share (the "Common Stock") based on the Conversion Price (as hereinafter
defined), with the Anniversary Date being deemed a Conversion Date and all other
conversion procedures set forth below shall apply (and in such event the Holder
expressly waives the 4.99% restriction in Section 3a(iv) below). Upon the
conversion of all or any part of the principal amount of the Promissory Note at
the option of the Holder prior to, or on the Anniversary Date, all accrued and
unpaid interest on that portion of the Promissory Note so converted shall be
payable upon conversion. The interest payable on the Anniversary Date or upon
the earlier conversion of all or a portion of the principal amount of the
Promissory Note will be paid in cash or Common Stock registered under the
Securities Act, at the option of the Company, to the Holder of the Promissory
Note. If paid in registered shares of Common Stock, the number of shares due to
the Holder shall be equal to the dollar amount of interest due divided by the
closing bid prices of the Common Stock on the date such interest has become due.
In the event that for any reason whatsoever any interest or other
consideration payable with respect to this Promissory Note shall be deemed to be
usurious by a court of competent jurisdiction under the laws of the State of New
York or the laws of any other state governing the repayment hereof, then so much
of such interest or other consideration as shall be deemed to be usurious shall
be held by the Holder as security for the repayment of the principal amount
hereof and shall otherwise be waived.
This Promissory Note is the promissory note referred to in the Pledge and
Security Agreement (the "Pledge Agreement") and Guaranty (the "Guaranty")
executed by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Guarantor") on the date hereof.
1. Transfers of Promissory Note and Securities Issuable Upon Conversion to
Comply with the Securities Act
The rights of the Holder to require the Company to enable the shares of
Common Stock issuable upon conversion of the Promissory Note to be sold pursuant
to the Securities Act and the Holder's other rights with respect to the
registration of such shares of Common Stock under the Securities Act are set
forth in a Registration Rights Agreement dated as of the date hereof (the
"Registration Rights Agreement"). The Holder agrees that this Promissory Note
and any securities issuable upon conversion pursuant to Section 4 hereof may not
be sold, transferred, pledged, hypothecated or otherwise disposed of except as
follows: (i) to a person to whom this Promissory Note and such securities may
legally be transferred without registration pursuant to the Securities Act or
otherwise and without the delivery of a current prospectus under the
Securities Act with respect thereto or (ii) to any person upon delivery of
a prospectus then meeting the requirements of the Securities Act relating to
such securities and the offering thereof for such sale or disposition, and
thereafter to all successive assignees.
2. Events of Default
a. This Promissory Note shall become due and payable upon written demand
made by the Holder hereof if one or more of the following events, herein called
"events of default", shall happen:
(i) Default in the payment of the principal (in the form of shares due upon
Conversion, or otherwise) and/or accrued interest on this Promissory Note, when
and as the same shall become due and payable, whether by acceleration or
otherwise; provided, however, that in the event of a default in the payment of
principal and accrued interest by the Company with respect to the payment due on
demand commencing February 16, 1999, the Holder shall not have the right to
demand payment of the $360,000 balance of the principal amount of the Note until
90 days from the date hereof unless the Guarantor is in default in his
obligations under the Guaranty, and\or the Pledge and Security Agreement.
(ii) Default in the due observance or performance of any covenant, term,
provision, condition or agreement on the part of the Company to be observed or
performed pursuant to the terms hereof, or the terms of the Subscription
Agreement dated as of the date hereof (the "Subscription Agreement"), and/or
Registration Rights Agreement, and\or Pledge Agreement, if such default shall
continue uncured for 15 business days after written notice, specifying such
default, shall have been given to the Company by the Holder; provided, however,
that the grace period specified in this Section 3(a)(ii) shall not apply to any
other Event of Default specified in this Section 3, and shall not relieve the
Company of its obligations to pay any liquidated damages.
(iii) Entry of a judicial order for the appointment of a receiver, trustee
or liquidator for the Company or its property or business which order shall not
have been vacated or set aside or otherwise terminated within 60 days or upon
the Company consenting to the entry of such an order;
(iv) Admission in writing of the Company's inability to pay its debts as
they mature;
(v) General assignment by the Company for the benefit of creditors;
(vi) Bankruptcy reorganization, insolvency or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for the relief
of debtors shall be instituted by or against the Company and, if instituted
against the Company, Company shall by any action or answer approve of, consent
to or acquiesce in any such proceedings or admit the material allegations of, or
default in answering a petition filed in any such proceeding or such proceedings
shall not be dismissed within sixty (60) days thereafter; or
(vii) Any of the representations or warranties made by the Company herein,
or in the Subscription Agreement, Pledge Agreement, or the Registration Rights
Agreement shall have been incorrect when made in any material respect; or
(viii) Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or control of the
whole or any substantial portion of the properties or assets of the Company and
shall not be dismissed within thirty (30) calendar days thereafter; or
(ix) The Common Stock is delisted from trading on the OTC Bulletin Board,
or the Company has received notice of final action concerning delisting from the
OTC Bulletin Board and the Common Stock has not been relisted within ten (10)
days thereafter;
(x) The effectiveness of the Registration Statement including the shares of
Common Stock underlying the Promissory Note has been suspended for a period of
five (5) business days (unless such suspension is caused by the Holder) and
effectiveness of the Registration Statement has not been reinstated within
thirty (30) days thereafter;
(xi) The Company shall have failed to deliver shares of Common Stock
issuable upon conversion of the Promissory Note and/or exercise of the Warrants
issued by the Company pursuant to the Subscription Agreement within two (2)
business days of the date due for delivery under this Promissory Note and/or the
Warrants and the Pledged Stock shall not have been timely delivered in
accordance with the Pledge Agreement;
(xii) The Registration Statement including the shares of Common Stock
underlying the Promissory Note has not been declared effective on or before the
120th day after the date of this Promissory Note (other than by reason of any
act or failure to act in a timely manner by the Holder or its counsel);
(xiii) Default in the due observance or performance of any covenant, term,
provision, condition or agreement on the part of the Guarantor/Pledgor to be
observed or performed pursuant to the terms of the Pledge Agreement and/or
Guaranty, if such
default shall continue uncured for five days after written notice,
specifying such default, shall have been given to the Guarantor by the Holder;
or
(xiv) The Company has not reserved and kept available sufficient shares of
Common Stock pursuant to Section 3(c)(v)(F).
The Company agrees that notice of the occurrence of any event of default
will be promptly given to the Holder at his or her registered address by
certified mail within five days of such event of default.
c. In case any one or more of the events of default specified above shall
happen or, the Holder may consider this Promissory Note immediately due and
payable in cash and may proceed to enforce the payment of the outstanding
principal amount and all accrued an unpaid interest and may protect and enforce
his or her right by suit for the specific performance of any covenant or
agreement contained in this Promissory Note or in aid of the exercise of any
power granted in this Promissory Note or may proceed to enforce any other legal
or equitable rights of such Holder. It is agreed that in the event of such
action, the Holder shall be entitled to receive all reasonable fees, costs and
expenses incurred, including without limitation such reasonable fees and
expenses of attorneys.
3 Conversion.
a. The Holder is entitled, at its option, at any time or times, after
February 16, 1999 to convert up to $240,000 principal amount of this Promissory
Note, and at any time or times after ninety (90) days after the date hereof to
convert the remaining unconverted portion of this Promissory Note, in accordance
with the following terms and conditions:
(i) The Holder may exercise its right to convert the Promissory Note by
telecopying an executed and completed notice of conversion (the "Notice of
Conversion") to the Company and to the Guarantor at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (facsimile (407-333-2373) (between the hours of 9:00 a.m.
and 5:30 p.m. Eastern Time) and delivering the original Notice of Conversion (in
the form attached hereto as Exhibit A) and the original Promissory Note to the
Company by express courier. Each business date on which a Notice of Conversion
is telecopied to and received by the Company in accordance with the provisions
hereof shall be deemed a "Conversion Date". The Company will transmit the
certificates representing shares of Common Stock issuable upon conversion of the
Promissory Note (together with the certificates representing the Promissory Note
not so converted) to the Holder via express courier, by electronic transfer (if
applicable) or otherwise within two business
days after the Conversion Date if the address for delivery is within the
New York City metropolitan area (or within three business days after the
Conversion Date if the address for delivery is outside the New York City
metropolitan area (but within the continental United States) provided the
Company has received the original Notice of Conversion and Promissory Note being
so converted no later than the date before the delivery date. The Notice of
Conversion and Promissory Note representing the portion of the Promissory Note
converted shall be delivered to the office of the Company as set forth in the
Subscription Agreement. In the event that the Holder fails to deliver the
original Notice of Conversion and Promissory Note to the Company later than the
date immediately prior to the delivery date, then the Conversion Date shall be
deemed to be the date of delivery of such documents.
In addition to any other remedies which may be available to the Holder, in
the event that the Company fails to effect delivery of such shares of Common
Stock within such three or two or three business day period, as the case may be,
the Holder will be entitled to revoke the Notice of Conversion by delivering a
notice to such effect to the Company whereupon the Company and the Holder shall
each be restored to their respective positions immediately prior to delivery of
the Notice of Conversion.
(ii) In the event that the Common Stock issuable upon conversion of this
Promissory Note is not delivered, within three (3) business days of receipt by
the Company of a valid Notice of Conversion (provided the Company has received
the original Promissory Note to be converted) to any address in the New York
metropolitan area designated by the Holder (or within four (4) business days to
any other address in the continental United States designated by the Holder),
the Company shall pay to the Holder, in immediately available funds, upon
demand, as liquidated damages for such failure and not as a penalty, for each
$100,000 principal amount of Promissory Note sought to be converted, $500 for
each of the first ten (10) days and $1,000 per day thereafter that the shares of
Common Stock are not delivered, which liquidated damages shall run from the
fourth business day after the Conversion Date (or the fifth business day
following the Conversion Date as the case may be) up until the time that either
the Conversion Notice is revoked or the Common Stock is delivered, at which time
such liquidated damages shall cease. In the event that shares of Common Stock
are released pursuant to the Pledge Agreement to satisfy the Company's
obligations hereunder, delivery shall not be deemed complete until delivery to
the Holder of certificates registered in the name of the Holder in accordance
with the terms of the Pledge Agreement, and the Company shall be responsible for
liquidated damages up to the date the shares are delivered to the Holder. Any
and all payments required pursuant to this paragraph shall be payable only in
cash immediately. Any and all payments required to be made, and/or made pursuant
to this Section shall not be deemed to be a waiver of the Company's obligation
to deliver the shares of Common Stock due upon conversion of this Promissory
Note.
(iii) The Holder may, in accordance with the terms of this Section, at its
sole option convert this Promissory Note into that number of shares of fully
paid and nonassessable shares of Common Stock which is to be derived from
dividing the Conversion Amount by the Conversion Price. The "Conversion Amount"
shall mean the principal dollar amount of the Promissory Note being converted.
The "Conversion Price" shall be the lessor of : (i) 75% of the average of the
five lowest closing bid prices of the Common Stock during the 30 trading days
ending on the trading day immediately preceding the Conversion Date, or (ii)
$.40 per share. The closing bid price shall be deemed to be the reported last
bid price regular way as reported by Bloomberg LP or if unavailable, on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading, or if the Common Stock is not listed or admitted to trading
on any national securities exchange, the closing bid price as reported by NASDAQ
or such other system then in use, or, if the Common Stock is not quoted by any
such organization, the closing bid price in the over-the-counter market as
furnished by the principal national securities exchange on which the Common
Stock is traded.
(iv) Notwithstanding anything else herein to the contrary, the Holder of
this Promissory Note may not convert any Promissory Note to the extent that
after such conversion, the number of shares of Common Stock owned by the Holder
and its affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unconverted portion of the
Promissory Notes and any unexercised warrants issued to the Holder and its
affiliates as of such date (the "Warrants")), would result in ownership by the
Holder and its affiliates of 4.99% or more of the Company's issued and
outstanding shares of Common Stock following such conversion. This restriction
shall be binding upon any transferee of the Promissory Note from any Holder. The
preceding shall not interfere with the Holder's right to convert this Promissory
Note over time which in the aggregate totals more than 4.99% of the then
outstanding shares of Common Stock so long as such Holder and its affiliates
does not own more than 4.99% of the then outstanding Common Stock at any given
time.
c. Adjustment of Conversion Price
(i) Adjustments for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the Issuance Date, effect a stock split of
the outstanding Common Stock, the applicable Conversion Price in effect
immediately prior to the stock split shall be proportionately decreased. If the
Company shall at any time or from time to time after the Issuance Date, combine
the outstanding shares of Common Stock, the applicable Conversion Price, in
effect immediately prior to the combination shall be proportionately increased.
Any adjustments under this Section 4(c)(i) shall be effective at the close of
business on the date the stock split or combination occurs.
(ii) Adjustment for Dividends and Distributions. If the Company shall at
any time or from time to time after the Issuance Date, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in other than shares of Common Stock,
then, and in each event, an appropriate revision to the Conversion Price shall
be made at the option of the Holder, and provision shall be made (by adjustments
of the Conversion Price or otherwise) so that the Holder of this Promissory Note
will receive upon conversions thereof, in addition to the number of shares of
Common Stock receivable thereon, the number of securities of the Company which
they would have received had their Promissory Note been converted into Common
Stock on the date of such event and had thereafter, during the period from the
date of such event to and including the Conversion Date, retained such
securities (together with any distributions payable thereon during such period),
giving application to all adjustments called for during such period under this
Section 4(c)(iii) with respect to the rights of the Holder of this Promissory
Note.
(iii) Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of the Promissory Note at any time or from
time to time after the Issuance Date shall be changed into the same or different
number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections 4(c)(i), (ii)
and (iii), or a reorganization, merger, consolidation, or sale of assets
provided for in Section 4(c)(v)), then, and in each event, an appropriate
revision to the Conversion Price shall by made and provisions shall be made (by
adjustments of the Conversion Price of otherwise) so that the Holder of this
Promissory Note shall have the right thereafter to convert such Promissory Note
into the kind and amount of shares of stock and other securities receivable upon
reclassification, exchange, substitution or other change, by holders of the
number of shares of Common Stock into which such Promissory Note might have been
converted immediately prior to such reclassification, exchange, substitution or
other change, all subject to further adjustment as provided herein.
(iv) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the Issuance Date there shall
be a capital reorganization of the Company (other than by way of a stock split
or combination of shares or stock dividends or distributions provided for in
Section 4(c)(i), (ii) and (iii), or a reclassification, exchange or substitution
of shares provided for in Section 4(c)(iv)), or a merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all of the Company's properties or assets to any other person, then as a part of
such reorganization, merger, consolidation, or sale, an appropriate revision to
the Conversion Price provision shall be made so that the Holder of this
Promissory Note shall have the right thereafter to convert such Promissory Note
into the kind and amount of shares of stock and other securities or property of
the Company or any successor corporation resulting from such reorganization,
merger, consolidation, or sale,
to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale, to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4(c)(v) with respect to the rights
of the Holder of this Promissory Note after the reorganization, merger,
consolidation, or sale to the end that the provisions of this Section 4(c)(v)
(including any adjustment in the applicable Conversion Price then in effect and
the number of shares of stock or other securities deliverable upon conversion of
the Promissory Note) shall be applied after that event in as nearly an
equivalent manner as may be practicable.
(v) Other Adjustment Events and Provisions. For the purposes of this
Section 4, the following shall also be applicable.
(A) Consideration for Stock. In case any shares of Common Stock or
convertible securities or any rights or warrants or options to purchase any such
Common Stock or convertible securities shall be issued or sold:
(1) for cash, the consideration received therefor shall be deemed to be the
amount received by the Company therefor, without deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid or allowed
by the Company in connection therewith;
(2) for a consideration other than cash, the amount of the consideration
other than cash received by the Company shall be deemed to be the fair value of
such consideration as determined by the Board of Directors of the Company in
good faith and in the exercise of reasonable business judgment, without
deduction of any expense incurred or any underwriting commissions or concessions
paid or allowed by the Company in connection therewith, which determination
shall be sent in writing by the Board of Directors to the registered Holder of
this Promissory Note;
(3) in connection with any merger or consolidation in which the Company is
the surviving corporation (other than any consolidation or merger in which the
previously outstanding shares of Common Stock of the Company shall be changed
into or exchanged for the stock or other securities of another corporation), the
amount of consideration therefor shall be deemed to be the fair value, as
determined reasonably and in good faith by the Board of Directors of the
Company, of such portion of the assets and business of the non- surviving
corporation as such Board may determine to be attributable to such shares of
Common Stock, convertible securities, rights or warrants or options, as the case
may be; or
(4) in the event of any consolidation or merger of the Company in which the
Company is not the surviving corporation or in which the previously outstanding
shares of Common Stock of the Company shall be changed into or exchanged for the
stock or other securities of another corporation or in the event of any sale of
all or substantially all of the assets of the Company for stock or other
securities of any corporation, the Company shall be deemed to have issued a
number of shares of its Common Stock for stock or securities or other property
of the other corporation computed on the basis of the actual exchange ratio on
which the transaction was predicated, and for a consideration equal to the fair
market value on the date of such transaction of all such stock or securities or
other property of the other corporation. If any such calculation results in
adjustment of the applicable Conversion Price, or the number of shares of Common
Stock issuable upon conversion of the Promissory Note, the determination of the
applicable Conversion Price, or the number of shares of Common Stock issuable
upon conversion of the Promissory Note immediately prior to such merger,
consolidation or sale, shall be made after giving effect to such adjustment of
the number of shares of Common Stock issuable upon conversion of the Promissory
Note.
(B) No Impairment. The Company shall not, by amendment of its Certificate
of Incorporation or through any reorganization, 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 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the Holder of this
Promissory Notes against impairment.
(C) Certificate as to Adjustments. Upon occurrence of each adjustment or
readjustment of the Conversion Price or number of shares of Common Stock
issuable upon conversion of the Promissory Note pursuant to this Section 4, the
Company at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish notice to the Holder of such
Promissory Note, a certificate setting forth such adjustment and readjustment,
showing in detail the facts upon which such adjustment or readjustment is based.
The Company shall, upon written request of the Holder of such affected
Promissory Note, at any time, furnish or cause to be furnished to such Holder a
like certificate setting forth such adjustments and readjustments, the
applicable Conversion Price in effect at the time, and the number of shares of
Common Stock and the amount, if any, of other securities or property which at
the time would be received upon the conversion of a share of such Promissory
Note. Notwithstanding the foregoing, the Company shall not be obligated to
deliver a certificate unless such certificate would reflect an increase or
decrease of at least one percent of such adjusted
amount.
(D) Issue Taxes. The Company shall pay any and all issue and other taxes,
excluding federal, state or local income taxes, that may be payable in respect
of any issue or delivery of shares of Common Stock on conversion of the
Promissory Note pursuant hereto; provided, however, that the Company shall not
be obligated to pay any transfer taxes resulting from any transfer requested by
any Holder in connection with any such conversion.
(E) Fractional Shares. No fractional shares of Common Stock shall be issued
upon conversion of the Promissory Note. In lieu of any fractional shares to
which the Holder would otherwise be entitled, the Company shall round the
fraction to the nearest whole number of shares such that the Company will round
up if the fraction is one-half or more, and round down if the fraction is less
than one-half.
(F) Reservation of Common Stock. The Company shall at all times reserve and
keep available, out of its authorized but unissued shares of Common Stock not
previously reserved, solely for the purpose of effecting the conversion of this
Promissory Note, the full number of shares deliverable upon conversion of the
Promissory Note from time to time outstanding. The Company shall, from time to
time in accordance with the Nevada General Business Corporations Law, as
amended, take all necessary measures to increase the authorized number of shares
of Common Stock if at any time the unissued number of authorized shares shall
not be sufficient to permit the conversion of the Promissory Note at the time
outstanding.
(G) Retirement of the Promissory Note. Conversion of the Promissory Note
shall be deemed to have been effected on the applicable Conversion Date, and
such date is referred to herein as the "Conversion Date". The converting Holder
shall be deemed to have become a stockholder of record of the Common Stock on
the applicable Conversion Date. Upon conversion of only a portion of the
Promissory Note represented by a certificate surrendered for conversion, the
Company shall issue and deliver to such Holder at the expense of the Company, a
new Promissory Note representing the unconverted portion of the certificate so
surrendered.
4. No Preemptive Rights. Except as provided in Section 4 hereof, no Holder
of this Promissory Note shall be entitled as of right to subscribe for, purchase
or receive any part of any new or additional shares of any class, whether now or
hereinafter authorized, or of bonds or Promissory Notes (except as set forth in
the Subscription Agreement), or other evidences of indebtedness convertible into
or exchangeable for shares of any class, but all such new or additional shares
of any class or bond or Promissory Notes, or other evidences of indebtedness
convertible into or exchangeable for shares may be issued and disposed of
by the Board of Directors on such terms and for such consideration (to the
extent permitted by law), and to such person or persons as the Board of
Directors in their absolute discretion may deem advisable.
5. Miscellaneous
a. This Promissory Note has been issued by the Company pursuant to
authorization of the Board of Directors of the Company.
b. The Company may consider and treat the person in whose name this
Promissory Note shall be registered as the absolute owner hereof for all
purposes whatsoever (whether or not this Promissory Note shall be overdue) and
the Company shall not be affected by any notice to the contrary. Subject to the
limitations herein stated, the registered owner of this Promissory Note shall
have the right to transfer this Promissory Note by assignment, and the
transferee thereof shall, upon his registration as owner of this Promissory
Note, become vested with all the powers and rights of the transferor.
Registration of any new owner shall take place upon presentation of this
Promissory Note to the Company at its principal offices, together with a duly
authenticated assignment. In case of transfer by operation of law, the
transferee agrees to notify the Company of such transfer and of his address, and
to submit appropriate evidence regarding the transfer so that this Promissory
Note may be registered in the name of the transferee. This Promissory Note is
transferable only on the books of the Company by the Holder hereof, in person or
by attorney, on the surrender hereof, duly endorsed. Communications sent to any
registered owner shall be effective as against all Holders or transferees of the
Promissory Note not registered at the time of sending the communication.
c. Payments of interest shall be made as specified above to the registered
owner of this Promissory Note. Payment of principal shall be made to the
registered owner of this Promissory Note upon presentation on or after maturity.
No interest shall be due on this Promissory Note for such period of time that
may elapse between the maturity of this Promissory Note and its presentation for
payment.
d. Presentment, notice of dishonor, protest and notice of protest are
hereby waived. In the event an action, suit or proceeding is brought to enforce
this Promissory Note or to protest the same, the Holder hereof shall be entitled
to all costs and disbursements, including reasonable attorney's fees and costs
of collection, incurred in connection with such action, suit or proceeding.
e. Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Promissory Note, and (in the
case of loss,
theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Promissory Note, if mutilated, the Company
shall execute and deliver a new Promissory Note of like tenor and date. Any such
new Promissory Note executed and delivered shall constitute an additional
contractual obligation on the part of the Company, whether or not this
Promissory Note so lost, stolen, destroyed or mutilated shall be at any time
enforceable by anyone.
f. This Promissory Note shall be governed by and construed in accordance
with the laws of the State of New York, with respect to contracts executed and
performed in the State of New York.
g. Any litigation based thereon, or arising out of, under, or in connection
with, this Promissory Note or any course of conduct, course of dealing,
statements (whether oral or written) or actions of the Company or Holder shall
be brought and maintained exclusively in the court of the state of New York
without reference to its conflicts of laws rules or principles. The Company and
the Holder hereby expressly and irrevocably submits to the exclusive
jurisdiction of the Federal Courts of the state of New York sitting in the
Southern District for the purpose of any such litigation as set forth above and
irrevocably agrees to be bound by any final judgment rendered thereby in
connection with such litigation. The Holder and the Company each irrevocably
consents to the service of process by registered mail, postage prepaid, or by
personal service within or without the State of New York. To the extent that the
Holder has or hereafter may acquire any immunity from jurisdiction of any court
or from any legal process (whether through service or notice, attachment prior
to judgment, attachment in aid of execution or otherwise) with respect to itself
or its property. The Holder hereby irrevocably waives such immunity in respect
of its obligations under this Promissory Note and the other documents.
h. All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally or by facsimile or three days
following being mailed by certified or registered mail, postage prepaid,
return-receipt requested, addressed (1) to the Holder at its address appearing
on the books of the Company, (2) to the Company at Financial Intranet, Inc., ▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn.: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (facsimile
914-693-5049); with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (facsimile 212-448-0066).
IN WITNESS WHEREOF, Financial Intranet, Inc. has caused this Promissory
Note to be signed in its name by its President on the 8th day of February, 1999.
FINANCIAL INTRANET, INC.
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
EXHIBIT A TO PROMISSORY NOTE
CONVERSION NOTICE
Date:
FINANCIAL INTRANET, INC.
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Ladies and Gentlemen:
The undersigned hereby elects to convert $____________ of the principal
amount of the promissory note issued to it by FINANCIAL INTRANET, INC. (the
"Company") dated as of February ___, 1998 and to convert such promissory note
into ____________________ (_________) shares of the Common Stock of the Company
at a conversion price of _________________ ($_________) per Share (the
"Conversion Price").
In the event that the Conversion Price elected by the undersigned
represents 75% of the average of the five lowest closing bid prices of the
Common Stock during the 30 trading days ending on the trading day immediately
preceding the date this notice is delivered to the Company, a calculation of the
Conversion Price is set forth below or on a page attached hereto.
The undersigned represents that as of the date hereof, the undersigned and
its affiliates own not more than ___________ shares of Common Stock of the
Company.
Very truly yours,
______________________________
By:____________________________
Title: __________________________