EXHIBIT 4.1
SECURED DEMAND CONVERTIBLE PROMISSORY NOTE
$[_______________] Executed at: _____________, ____
Dated: April __, 2005
▇▇▇▇▇▇▇▇.▇▇▇, inc. a Delaware corporation (the "Company"), the principal
office of which is located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, for value received, hereby promises to pay to
________________________________, or [their] permitted assigns (the "Holder"),
the sum of ____________________ Dollars ($_______.00), or such lesser amount as
shall then equal the outstanding principal amount hereof, together with interest
thereon at the rate of ten percent (10%) per annum, on the terms and conditions
set forth hereinafter. This Note is one of several Notes issued in accordance
with, and is subject to the provisions of, that certain Note Purchase Agreement
between the Company and the Holder, among others, dated on or about April __,
2005 (the "Note Purchase Agreement"). For purposes of this Note, the holders of
Notes representing at least a majority of the outstanding principal of all the
Notes in the aggregate issued pursuant to the Note Purchase Agreement are
referred to herein as the "Majority Holders"). Other defined terms used herein
and not otherwise specifically defined herein shall have the same meanings as
set forth in the Note Purchase Agreement.
The following is a statement of the rights of the Holder and the
conditions to which this Note is subject, and to which the Holder, by the
acceptance of this Note, agrees:
1. Principal and Interest. Except as provided herein and in Section 5
hereof, all payments under this Note shall be by cashier's check, wire transfer
or other immediately available funds payable in United States currency. The
principal hereof shall be due and payable five business days following any
DEMAND for payment (the "Maturity Date"), which DEMAND may be made by the Holder
at anytime. Accrued interest, at the rate mentioned above, shall be due and
payable on the Maturity Date.
2. Events of Default. Each of the following events shall be deemed an
Event of Default hereunder: (i) the Company fails to timely pay all then
outstanding principal and accrued interest when due; (ii) the Company files a
petition or action for relief under any bankruptcy, insolvency or moratorium law
or any other law for the relief of, or relating to, debtors, now or hereafter in
effect, or makes any assignment for the benefit of creditors or takes any action
in furtherance of any of the foregoing; (iii) an involuntary petition is filed
against the Company (unless such petition is dismissed or discharged within
sixty (60) days) under any bankruptcy statute now or hereafter in effect, or a
custodian, receiver, trustee, assignee for the benefit of creditors (or other
similar official) is appointed to take possession, custody or control of any
property of the Company; or (iv) the Company defaults on any of its obligations
or breaches any of its representations, warranties or covenants in the Note
Purchase Agreement or the Security Agreement and such breach remains uncured to
the reasonable satisfaction of the Majority Holders for a period of five (5)
business days after notice thereof from the Majority Holders (whom may elect to
waive any such default or breach).
Upon the occurrence of an Event of Default hereunder, all unpaid principal,
accrued interest and other amounts owing hereunder shall: at the option of the
Holder in the case of an Event of Default of the nature specified in clause (i)
above; automatically in the case of an Event of Default pursuant to clauses (ii)
or (iii) above; and at the option of the Majority Holders in the case of an
Event of Default pursuant to clause (iv) above, be immediately due, payable and
collectible by Holder pursuant to applicable law. Subject to the foregoing,
Holder shall have all rights and may exercise any remedies available to it under
law, successively or concurrently. In addition, at any time or times during
which an Event of Default shall then exist or upon the maturity of this Note,
the interest rate under this Note shall be equal to the lesser of: (i) eighteen
percent (18%) per annum; or (ii) the maximum rate of interest permitted by
applicable law, and shall be due and payable ON DEMAND.
3. Security. The Company's obligations hereunder shall be secured by a
security interest in and upon the "Collateral" (as defined in the Security
Agreement) of the Company. The Company agrees to execute and deliver to the
Holder and for the benefit of all Holders of the Notes, in form and substance
reasonably satisfactory to Majority Holders, a security agreement, financing
statement and such other documents as the Majority Holders may reasonably
require with regards to such security interest.
4. Prepayment. The Company may not prepay this Note in whole or in part at
any time prior to April 22, 2006, without the prior written consent of the
Majority Holders. In recognition of ▇▇▇▇▇▇'s conversion rights pursuant to
Section 5 hereof, such consent may be withheld in the sole discretion of the
Majority Holders. After April 22, 2006, the Company may prepay this Note at any
time upon at least fifteen days prior written notice of the proposed date of
prepayment; provided, however, that the Holder may elect to convert all or a
portion of this Note at any time prior to such date of prepayment.
5. Conversion.
5.1 Voluntary Conversion. The Holder of this Note has the right, at
the Holder's option, at any time prior to payment in full of the principal
balance of this Note, to convert the outstanding principal under this Note, in
accordance with the provisions of Section 5.2 hereof, in whole or in part, but
in denominations of not less than Ten Thousand Dollars ($10,000) (unless the
entire principal balance of this Note is being converted), into fully paid and
nonassessable shares of Common Stock of the Company. Subject to Section 6 below,
the number of shares of Common Stock into which the outstanding principal of
this Note may be converted ("Conversion Shares") shall be determined by dividing
the principal amount for which conversion is requested by the Conversion Price
(as defined below) in effect at the time of such conversion. The initial
"Conversion Price" shall be Five Cents ($.05); provided, however, that (in
addition to the adjustments provided in Section 6 below).
5.2 Conversion Procedure. Before the Holder shall be entitled to
convert this Note into shares of Common Stock, it shall give written notice by
mail, postage prepaid, to the Company at its principal corporate office, of the
election to convert the Note, and shall state therein the name or names in which
the certificate for shares of Common Stock are to be issued. A closing for such
conversion shall be held at the offices of the Company on the fifth business day
following the date of deposit of the notice in the mail or such other date
mutually acceptable to the Holder and the Company. At such closing the Company
shall issue and deliver to the Holder of this Note a certificate or certificates
(bearing such legends as are required under applicable state and federal
securities laws in the opinion of counsel to the Company) for the number of
shares of Common Stock to which the Holder shall be entitled as aforesaid,
together with a check made payable to the Holder in the amount of any accrued
interest on the principal amount converted to the date of such conversion, and
the Holder shall surrender this Note. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of mailing of
Holder's written notice of exercise (the "Effective Date"), 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.
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5.3 Mechanics of Conversion. No fractional shares of Common Stock
shall be issued upon conversion of this Note. In lieu of the Company issuing any
fractional shares to the Holder upon the conversion of this Note, the Company
shall pay to the Holder the amount of outstanding principal that is not so
converted. If the conversion is for less than the entire outstanding principal
balance of this Note, then the Company shall issue a replacement Note to the
Holder representing the unconverted principal balance.
6. Conversion Price Adjustments.
6.1 Adjustments for Subdivision, Dividends, Combinations or
Consolidations of Common Stock. If the Company shall at any time or from time to
time after the date that this Note is issued (the "Original Issue Date") effect
a combination or consolidation of the outstanding Common Stock, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Conversion Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased. In the event the Company shall
declare or pay any dividend on the Common Stock payable in Common Stock or in
the event the outstanding shares of Common Stock shall be subdivided, by
reclassification or otherwise than by payment of a dividend in Common Stock,
into a greater number of shares of Common Stock, the Conversion Price in effect
immediately prior to such dividend or subdivision shall be proportionately
decreased. Such adjustment shall take place (i) in the case of any such
dividend, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend and (ii) in the case of any such subdivision, at the close of business
on the date immediately prior to the date upon which such corporate action
becomes effective. If such record date shall have been fixed and such dividend
shall not have been fully paid on the date fixed therefor, the adjustment
previously made in the applicable Conversion Price that became effective on such
record date shall be canceled as of the close of business on such record date,
and thereafter the applicable Conversion Price shall be adjusted as of the time
of actual payment of such dividend.
6.2 Adjustment for Other Dividends and Distributions. If the Company
at any time or from time to time after the Original Issue Date makes, or fixes a
record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities of the Company
other than shares of Common Stock, in each such event provision shall be made so
that the holder of the Note shall receive upon conversion thereof, in addition
to the number of shares of Common Stock receivable thereupon, the amount of
other securities of the Company that it would have received had its Note been
converted for Common Stock on the date of such event and had it thereafter,
during the period from the date of such event to and including the conversion
date, retained such securities receivable by them as aforesaid during such
period, subject to all other adjustments called for during such period under
this Section 6 with respect to the rights of the Holder or with respect to such
other securities by their terms.
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6.3 Adjustment for Reclassification, Exchange and Substitution. If
at any time or from time to time after the Original Issue Date, the Common Stock
issuable upon the conversion of the Note is changed into the same or a different
number of shares of any class or classes of stock, whether by recapitalization,
reclassification or otherwise (other than a subdivision or combination of shares
or stock dividend or a reorganization, merger, consolidation or sale of assets
provided for elsewhere in this Section 6), in any such event the Holder shall
have the right thereafter to convert this Note for the kind and amount of stock
and other securities and property receivable upon such recapitalization,
reclassification or other change by holders of the maximum number of shares of
Common Stock into which this Note could have been converted immediately prior to
such recapitalization, reclassification or change, all subject to further
adjustment as provided herein or with respect to such other securities or
property by the terms thereof.
6.4 Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 6,
the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each Holder a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Company
shall, upon the written request at any time of any Holder, furnish or cause to
be furnished to such Holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the Conversion Price at the time in effect,
and (iii) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of the Note;
provided, however, that no adjustment need be made hereunder until the
cumulative affect of such adjustment to the Conversion Price is at least $.01.
7. Assignment. Subject to the restrictions on transfer or assignment set
forth in the Note Purchase Agreement, the rights and obligations of the Company
and the Holder of this Note shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.
8. Notices. All notices, requests, consents and other communications
hereunder to any party, shall be deemed to be sufficient if in writing and
contained (i) delivered in person, (ii) delivered and received by telex,
telecopier, telegram, if a confirmatory mailing in accordance herewith is also
made, (iii) duly sent by registered mail return receipt requested and postage
prepaid or (iv) duly sent by overnight delivery service, addressed to such party
at the address set forth in the Note Purchase Agreement. All such notices and
communications shall be deemed to have been received: (i) at the time personally
(including delivery by telex, telecopier and telegram), (ii) three days after
mailed to the foregoing persons at the addresses set forth above; (iii) the next
day when sent by overnight delivery service; provided that rejection or other
refusal to accept or inability to deliver because of changed address for which
no notice has been received shall also constitute receipt.
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9. No Stockholder Rights. Nothing contained in this Note shall be
construed as conferring upon the Holder or any other person the right to vote or
to consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of the Company or any other matters or any rights
whatsoever as a stockholder of the Company; and no dividends or other
distributions shall be payable or accrued in respect of this Note or the
interest represented hereby or the Conversion Shares obtainable hereunder until,
and only to the extent that, this Note shall have been converted.
10. Amendment and Waiver. This Note is one of several issued pursuant to
the Note Purchase Agreement. Any term of this Note may be amended and the
observance of any term of this Note may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Majority Holders. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon the Holder, and
each future holder of the Note and the Company, provided that no such amendment
or waiver shall be binding on a Holder that does not consent thereto to the
extent such amendment or waiver treats such Holder substantially differently
than any holder of a Note that does consent thereto.
11. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Delaware, excluding that body of law
relating to conflict of laws.
IN WITNESS WHEREOF, the Company has caused this Note to be issued this ___
day of April, 2005
▇▇▇▇▇▇▇▇.▇▇▇, inc.
By: ___________________________________________
Its:___________________________________________
Name of Holder:____________________________________________
Address: ____________________________________________
____________________________________________
____________________________________________
Taxpayer ID#: ____________________________________________
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NOTICE OF CONVERSION
(To Be Signed Only Upon Conversion of the Note)
TO: ▇▇▇▇▇▇▇▇.▇▇▇, inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
14th Floor
Fort Lauderdale, Florida 33301
The undersigned, the Holder of the foregoing Note, hereby elects to
convert $____________ of the unpaid principal amount of such Note into shares of
Common Stock of ▇▇▇▇▇▇▇▇.▇▇▇, inc., and requests that the certificate for such
shares be issued in the name of ____________.
Dated: __________________________ , 200__.
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(Signature must conform in
all respects to name of ▇▇▇▇▇▇
as specified on the face of the Note)
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(Address)
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