COMMERCE PLANET, INC. FORM OF Convertible note
Exhibit
10.2
NEITHER
THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
COMMERCE
PLANET, INC.
FORM
OF Convertible note
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Issuance
Date: January ___, 2009
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Original
Principal
Amount: $____________
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No.
______________
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FOR VALUE RECEIVED, COMMERCE PLANET, INC., a Utah corporation (the
"Company"),
hereby promises to pay to the order of _________________ or registered assigns
(the "Holder"),
the amount set out above as the Original Principal Amount (as reduced pursuant
to the terms hereof pursuant to redemption, conversion or otherwise, the "Principal")
when due, whether upon the Maturity Date (as defined below), acceleration,
redemption or otherwise (in each case in accordance with the terms hereof) and
to pay interest ("Interest")
on any outstanding Principal at the applicable Interest Rate from the date set
out above as the Issuance Date (the "Issuance
Date") until the same becomes due and payable, whether upon an Interest
Date (as defined below), the Maturity Date or acceleration, conversion,
redemption or otherwise (in each case in accordance with the terms
hereof). This Convertible Note (including all Convertible Notes
issued in exchange, transfer or replacement hereof, this "Note")
is one of an issue of Convertible Notes issued pursuant to the Securities
Purchase Agreement (as defined herein) (collectively, the "Notes"). Certain
capitalized terms used herein are defined in Section 15.
(1) GENERAL
TERMS
(a) Payment
of Principal. On the Maturity Date, the Company shall pay to
the Holder an amount in cash representing all outstanding Principal, and accrued
and unpaid Interest. The "Maturity
Date" shall be March 31, 2009, as may be extended at the option of the
Holder (i) in the event that, and for so long as, an Event of Default (as
defined below) shall have occurred and be continuing on the Maturity Date (as
may be extended pursuant to this Section 1).
(b) Interest. Interest
shall accrue on the outstanding principal balance hereof at an annual rate equal
to twelve percent (10%) (“Interest
Rate”). Interest shall be calculated on the basis of a 365-day
year and the actual number of days elapsed, to the extent permitted by
applicable law. Interest hereunder shall be paid on the Maturity Date
(or sooner as provided herein) to the Holder or its assignee in whose name this
Note is registered on the records of the Company regarding registration and
transfers of Notes at the option of the Company in cash, or converted into
Common Stock at the Closing Bid Price on the Trading Day immediately prior to
the date paid.
(2) EVENTS
OF DEFAULT.
(a) An
“Event
of Default”, wherever used herein, means any one of the following events
(whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body):
(i) the
Company's failure to pay to the Holder any amount of Principal, Interest, or
other amounts when and as due under this Note or any other Transaction Document,
which is not cured by the Company within ninety (90) days;
(ii) The
Company shall commence, or there shall be commenced against the Company under
any applicable bankruptcy or insolvency laws as now or hereafter in effect or
any successor thereto, or the Company commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Company or any subsidiary of the Company or
there is commenced against the Company any such bankruptcy, insolvency or other
proceeding which remains undismissed for a period of ninety (90) days; or the
Company is adjudicated insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or the Company suffers
any appointment of any custodian, private or court appointed receiver or the
like for it or any substantial part of its property which continues undischarged
or unstayed for a period of ninety (90) days; or the Company makes a general
assignment for the benefit of creditors; or the Company shall fail to pay, or
shall be unable to pay, its debts generally as they become due; or the Company
shall by any act or failure to act expressly indicate its consent to, approval
of or acquiescence in any of the foregoing; or any corporate or other action is
taken by the Company for the purpose of effecting any of the
foregoing;
(iii) The
Company or any subsidiary of the Company shall default in any of its obligations
under any other note or any mortgage, credit agreement or other facility,
indenture agreement, or other instrument under which there may be issued, or by
which there may be secured or evidenced any indebtedness for borrowed money of
the Company in an amount exceeding $750,000, whether such indebtedness now
exists or shall hereafter be created and such default shall result in such
indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise become due and payable, which is not cured by the
Company within sixty (60) days;
(iv) If
the Common Stock is quoted or listed for trading on any of the following and it
ceases to be so quoted or listed for trading and shall not again be quoted or
listed for trading on any Primary Market within five (5) Trading Days of such
delisting: (a) the American Stock Exchange, (b) New York Stock Exchange, (c) the
Nasdaq Global Market, (d) the Nasdaq Capital Market, (e) the Nasdaq OTC Bulletin
Board (“OTCBB”), or (f) the Pink Sheets (each, a “Primary
Market”);
(v) the
Company's failure to cure a Conversion Failure by delivery of the required
number of shares of Common Stock within five (5) Business Days after the
applicable Conversion Failure; and
(vi) The
Company shall fail to observe or perform any other covenant, agreement or
warranty contained in, or otherwise commit any breach or default of any
provision of this Note (except as may be covered by Section 2(a)(i) through
2(a)(vii) hereof) or any Transaction Document (as defined in Section 15) which
is not cured within the time prescribed.
(b) During
the time that any portion of this Note is outstanding, if any Event of Default
has occurred, the full unpaid Principal amount of this Note, together with
interest and other amounts owing in respect thereof, to the date of acceleration
shall become at the Holder's election, immediately due and payable in cash;
provided however, the Company may pay such amounts in Common Stock of the
Company. If an Event of Default occurs and for so long as such Event
of Default remains uncured, the Interest Rate on this Note shall immediately
become twelve percent (12%) per annum and shall remain at such increased
interest rate until the applicable Event of Default is
cured. Furthermore, in addition to any other remedies, the Holder
shall have the right (but not the obligation) to convert this Note at any time
after an Event of Default at the Conversion Price. The Holder must
provide a presentment, demand, protest or other notice of an Event of
Default.
(c) COMPANY
REDEMPTION. The Company at its option shall have the right to
redeem (“Optional
Redemption”) a portion or all amounts outstanding under this Note prior
to the Maturity Date provided that as of the date of the Holder’s receipt of a
Redemption Notice (as defined herein) there is no Event of
Default. The Company shall pay an amount equal to the principal
amount being redeemed and accrued Interest, or, at the option of the Company,
issue shares of Common Stock at the Closing Bid Price on the Trading Day
immediately prior to the redemption payment date (collectively referred to as
the “Company
Redemption Amount”). In order to make a redemption pursuant to
this Section, the Company shall first provide written notice to the Holder of
its intention to make a redemption (the “Redemption
Notice”), whether in cash or in Common Stock, and setting forth the
amount of Principal it desires to redeem. After receipt of the
Redemption Notice the Holder shall have three (3) Business Days to elect to
convert all or any portion of this Note, subject to the limitations set forth in
Section 3(c). On the fourth (4th)
Business Day after the Redemption Notice, the Company shall deliver to the
Holder the Company Redemption Amount with respect to the Principal amount
redeemed after giving effect to conversions effected during the three (3)
Business Day period.
(3) CONVERSION
OF NOTE. This Note shall be convertible into shares of the
Company's Common Stock, on the terms and conditions set forth in this Section
3.
(a) Conversion
Right. Subject to the provisions of Section 3(c), at any time
or times on or after the Issuance Date, the Holder shall be entitled to convert
any portion of the outstanding and unpaid Conversion Amount (as defined below)
into fully paid and nonassessable shares of Common Stock in accordance with
Section 3(b), at the Conversion Rate (as defined below). The number
of shares of Common Stock issuable upon conversion of any Conversion Amount
pursuant to this Section 3(a) shall be determined by dividing (x) such
Conversion Amount by (y) the Conversion Price (the "Conversion
Rate"). The Company shall not issue any fraction of a share of
Common Stock upon any conversion. If the issuance would result in the
issuance of a fraction of a share of Common Stock, the Company shall round such
fraction of a share of Common Stock up to the nearest whole
share. The Company shall pay any and all transfer, stamp and similar
taxes that may be payable with respect to the issuance and delivery of Common
Stock upon conversion of any Conversion Amount.
(i) "Conversion
Amount" means the portion of the Principal and accrued Interest to be
converted, redeemed or otherwise with respect to which this determination is
being made.
(ii) "Conversion
Price" means, as of any Conversion Date (as defined below) or other date
of determination, $0.01, subject to adjustment
as provided herein.
(b) Mechanics
of Conversion.
(i) Optional
Conversion. To convert any Conversion Amount into shares of
Common Stock on any date (a "Conversion
Date"), the Holder shall (A) transmit by facsimile (or otherwise
deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a
copy of an executed notice of conversion in the form attached hereto as Exhibit
I (the "Conversion
Notice") to the Company and (B) if required, surrender this Note to a
nationally recognized overnight delivery service for delivery to the Company (or
an indemnification undertaking reasonably satisfactory to the Company with
respect to this Note in the case of its loss, theft or
destruction). On or before the fifth (5th)
Business Day following the date of receipt of a Conversion Notice (the "Share
Delivery Date"), the Company shall (X) if legends are not required to be
placed on certificates of Common Stock pursuant to the Securities Purchase
Agreement and provided that the Transfer Agent is participating in the
Depository Trust Company's ("DTC")
Fast Automated Securities Transfer Program, credit such aggregate number of
shares of Common Stock to which the Holder shall be entitled to the Holder's or
its designee's balance account with DTC through its Deposit Withdrawal Agent
Commission system or (Y) if the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, issue and deliver to the address as
specified in the Conversion Notice, a certificate, registered in the name of the
Holder or its designee, for the number of shares of Common Stock to which the
Holder shall be entitled. If this Note is physically surrendered for
conversion and the outstanding Principal of this Note is greater than the
Principal portion of the Conversion Amount being converted, then the Company
shall as soon as practicable and in no event later than five (5) Business Days
after receipt of this Note and at its own expense, issue and deliver to the
holder a new Note representing the outstanding Principal not
converted. The Person or Persons entitled to receive the shares of
Common Stock issuable upon a conversion of this Note shall be treated for all
purposes as the record holder or holders of such shares of Common Stock upon the
transmission of a Conversion Notice.
(ii) Book-Entry.
Notwithstanding anything to the contrary set forth herein, upon conversion of
any portion of this Note in accordance with the terms hereof, the Holder shall
not be required to physically surrender this Note to the Company unless (A) the
full Conversion Amount represented by this Note is being converted or (B) the
Holder has provided the Company with prior written notice (which notice may be
included in a Conversion Notice) requesting reissuance of this Note upon
physical surrender of this Note. The Holder and the Company shall
maintain records showing the Principal and Interest converted and the dates of
such conversions or shall use such other method, reasonably satisfactory to the
Holder and the Company, so as not to require physical surrender of this Note
upon conversion.
(c) Limitations
on Conversions.
(i) Beneficial
Ownership. The Company shall not effect any conversions of
this Note and the Holder shall not have the right to convert any portion of this
Note or receive shares of Common Stock as payment of interest hereunder to the
extent that after giving effect to such conversion or receipt of such interest
payment, the Holder, together with any affiliate thereof, would beneficially own
(as determined in accordance with Section 13(d) of the Exchange Act and the
rules promulgated thereunder) in excess of 9.99% of the number of shares of
Common Stock outstanding immediately after giving effect to such conversion or
receipt of shares as payment of interest. Since the
Holder will not be obligated to report to the Company the number of shares of
Common Stock it may hold at the time of a conversion hereunder, unless the
conversion at issue would result in the issuance of shares of Common Stock in
excess of 9.99% of the then outstanding shares of Common Stock without regard to
any other shares which may be beneficially owned by the Holder or an affiliate
thereof, the Holder shall have the authority and obligation to determine whether
the restriction contained in this Section will limit any particular conversion
hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of the
principal amount of this Note is convertible shall be the responsibility and
obligation of the Holder. If the Holder has delivered a Conversion
Notice for a principal amount of this Note that, without regard to any other
shares that the Holder or its affiliates may beneficially own, would result in
the issuance in excess of the permitted amount hereunder, the Company shall
notify the Holder of this fact and shall honor the conversion for the maximum
principal amount permitted to be converted on such Conversion Date in accordance
with Section 3(c) and, any principal amount tendered for conversion in excess of
the permitted amount hereunder shall remain outstanding under this
Note.
(d) Other
Provisions.
(i) The
Company shall at all times reserve and keep available out of its authorized
Common Stock the full number of shares of Common Stock issuable upon conversion
of all outstanding amounts under this Note; and within five (5) Business Days
following the receipt by the Company of a Holder's notice that such minimum
number of Underlying Shares is not so reserved, the Company shall promptly
reserve a sufficient number of shares of Common Stock to comply with such
requirement.
(ii) All
calculations under this Section 3 shall be rounded to the nearest $0.0001 or
whole share.
(iii) The
Company covenants that it will at all times reserve and keep available out of
its authorized and unissued shares of Common Stock solely for the purpose of
issuance upon conversion of this Note and payment of interest on this Note, each
as herein provided, free from preemptive rights or any other actual contingent
purchase rights of persons other than the Holder, not less than such number of
shares of the Common Stock as shall (subject to any additional requirements of
the Company as to reservation of such shares set forth in this Note or in the
Transaction Documents) be issuable (taking into account the adjustments and
restrictions set forth herein) upon the conversion of the outstanding principal
amount of this Note and payment of Interest hereunder. The Company covenants
that all shares of Common Stock that shall be so issuable shall, upon issue, be
duly and validly authorized, issued and fully paid,
nonassessable.
(iv) Nothing
herein shall limit a Holder's right to pursue actual damages or declare an Event
of Default pursuant to Section 2 herein for the Company 's failure to deliver
certificates representing shares of Common Stock upon conversion within the
period specified herein and such Holder shall have the right to pursue all
remedies available to it at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief, in each case with the
need to post a bond or provide other security. The exercise of any such rights
shall not prohibit the Holder from seeking to enforce damages pursuant to any
other Section hereof or under applicable law.
(4) Adjustments
to Conversion Price
(a) Adjustment
of Conversion Price upon Subdivision or Combination of Common
Stock. If the Company, at any time while this Note is
outstanding, shall (a) pay a stock dividend or otherwise make a
distribution or distributions on shares of its Common Stock or any other equity
or equity equivalent securities payable in shares of Common Stock, (b) subdivide
outstanding shares of Common Stock into a larger number of shares, (c) combine
(including by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or (d) issue by reclassification of shares of
the Common Stock any shares of capital stock of the Company, then the Conversion
Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding
before such event and of which the denominator shall be the number of shares of
Common Stock outstanding after such event. Any adjustment made pursuant to this
Section shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.
(b) Purchase
Rights. If at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase
Rights"), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Note (without taking into
account any limitations or restrictions on the convertibility of this Note)
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights.
(c) Other
Events. If any event occurs of the type contemplated by the
provisions of this Section 4 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then the Company's
Board of Directors will make an appropriate adjustment in the Conversion Price
so as to protect the rights of the Holder under this Note; provided that no such
adjustment will increase the Conversion Price as otherwise determined pursuant
to this Section 5.
(d) Other
Corporate Events. In addition to and not in substitution for
any other rights hereunder, prior to the consummation of any Fundamental
Transaction pursuant to which holders of shares of Common Stock are entitled to
receive securities or other assets with respect to or in exchange for shares of
Common Stock (a "Corporate
Event"), the Company shall make appropriate provision to insure that the
Holder will thereafter have the right to receive upon a conversion of this Note,
at the Holder's option, (i) in addition to the shares of Common Stock receivable
upon such conversion, such securities or other assets to which the Holder would
have been entitled with respect to such shares of Common Stock had such shares
of Common Stock been held by the Holder upon the consummation of such Corporate
Event (without taking into account any limitations or restrictions on the
convertibility of this Note) or (ii) in lieu of the shares of Common Stock
otherwise receivable upon such conversion, such securities or other assets
received by the holders of shares of Common Stock in connection with the
consummation of such Corporate Event in such amounts as the Holder would have
been entitled to receive had this Note initially been issued with conversion
rights for the form of such consideration (as opposed to shares of Common Stock)
at a conversion rate for such consideration commensurate with the Conversion
Rate. Provision made pursuant to the preceding sentence shall be in a
form and substance satisfactory to the required Holders. The
provisions of this Section shall apply similarly and equally to successive
Corporate Events and shall be applied without regard to any limitations on the
conversion or redemption of this Note.
(e) Whenever
the Conversion Price is adjusted pursuant to Section 4 hereof, the Company shall
promptly mail to the Holder a notice setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment.
(f) In
case of any (1) merger or consolidation of the Company or any subsidiary of the
Company with or into another Person, or (2) sale by the Company or any
subsidiary of the Company of more than one-half of the assets of the Company in
one or a series of related transactions, other than the proposed sale of assets
and liabilities of Legacy Media, LLC and Consumer Loyalty Group, LLC, each
wholly owned subsidiaries of the Borrower, to Superfly Advertising, Inc., a
Delaware corporation, and Superfly Advertising, Inc., an Indiana corporation, a
Holder shall have the right to (A) exercise any rights under Section 2(b), (B)
convert the aggregate amount of this Note then outstanding into the shares of
stock and other securities, cash and property receivable upon or deemed to be
held by holders of Common Stock following such merger, consolidation or sale,
and such Holder shall be entitled upon such event or series of related events to
receive such amount of securities, cash and property as the shares of Common
Stock into which such aggregate principal amount of this Note could have been
converted immediately prior to such merger, consolidation or sales would have
been entitled, or (C) in the case of a merger or consolidation, require the
surviving entity to issue to the Holder a convertible note with a principal
amount equal to the aggregate principal amount of this Note then held by such
Holder, plus all accrued and unpaid interest and other amounts owing thereon,
which such newly issued convertible Note shall have terms identical (including
with respect to conversion) to the terms of this Note, and shall be entitled to
all of the rights and privileges of the Holder of this Note set forth herein and
the agreements pursuant to which this Note was issued. In the case of clause
(C), the conversion price applicable for the newly issued shares of convertible
notes shall be based upon the amount of securities, cash and property that each
share of Common Stock would receive in such transaction and the Conversion Price
in effect immediately prior to the effectiveness or closing date for such
transaction. The terms of any such merger, sale or consolidation shall include
such terms so as to continue to give the Holder the right to receive the
securities, cash and property set forth in this Section upon any conversion or
redemption following such event.
(5) REISSUANCE
OF THIS NOTE.
(a) Transfer. If
this Note is to be transferred, the Holder shall surrender this Note to the
Company, whereupon the Company will, subject to the satisfaction of the transfer
provisions of the Securities Purchase Agreement, forthwith issue and deliver
upon the order of the Holder a new Note (in accordance with Section 5(d)),
registered in the name of the registered transferee or assignee, representing
the outstanding Principal being transferred by the Holder and, if less then the
entire outstanding Principal is being transferred, a new Note (in accordance
with Section 5(d)) to the Holder representing the outstanding Principal not
being transferred. The Holder and any assignee, by acceptance of this
Note, acknowledge and agree that, by reason of the provisions of Section 3(b)
following conversion or redemption of any portion of this Note, the outstanding
Principal represented by this Note may be less than the Principal stated on the
face of this Note.
(b) Lost,
Stolen or Mutilated Note. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Note, and, in the case of loss, theft or destruction, of
any indemnification undertaking by the Holder to the Company in customary form
and, in the case of mutilation, upon surrender and cancellation of this Note,
the Company shall execute and deliver to the Holder a new Note (in accordance
with Section 5(d)) representing the outstanding Principal.
(c) Note
Exchangeable for Different Denominations. This Note is
exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company, for a new Note or Notes (in accordance with Section 5(d))
representing in the aggregate the outstanding Principal of this Note, and each
such new Note will represent such portion of such outstanding Principal as is
designated by the Holder at the time of such surrender.
(d) Issuance
of New Notes. Whenever the Company is required to issue a new
Note pursuant to the terms of this Note, such new Note (i) shall be of like
tenor with this Note, (ii) shall represent, as indicated on the face of such new
Note, the Principal remaining outstanding (or in the case of a new Note being
issued pursuant to Section 5(a) or Section 5(c), the Principal designated by the
Holder which, when added to the principal represented by the other new Notes
issued in connection with such issuance, does not exceed the Principal remaining
outstanding under this Note immediately prior to such issuance of new Notes),
(iii) shall have an issuance date, as indicated on the face of such new Note,
which is the same as the Issuance Date of this Note, (iv) shall have the same
rights and conditions as this Note, and (v) shall represent accrued and unpaid
Interest from the Issuance Date.
(6) NOTICES. Any
notices, consents, waivers or other communications required or permitted to be
given under the terms hereof must be in writing and will be deemed to have been
delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) Trading Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
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If
to the Company, to:
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Commerce
Planet, Inc.
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Goleta,
California 93117
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Attention: ▇▇▇▇▇▇▇
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Telephone: (▇▇▇)
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Facsimile: (▇▇▇)
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With
a copy to:
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▇▇▇▇ LLP
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New
York, NY 10036
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Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, Esq.
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Telephone: (▇▇▇)
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Facsimile: (▇▇▇)
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or
at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) Business Days prior to the effectiveness of such
change. Written confirmation of receipt (i) given by the recipient of
such notice, consent, waiver or other communication, (ii) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (iii) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
(7) Except
as expressly provided herein, no provision of this Note shall alter or impair
the obligations of the Company, which are absolute and unconditional, to pay the
principal of, interest and other charges (if any) on, this Note at the time,
place, and rate, and in the coin or currency, herein prescribed. This
Note is a direct obligation of the Company. As long as this Note is outstanding,
the Company shall not and shall cause their subsidiaries not to, without the
consent of the Holder, (i) amend its certificate of incorporation, bylaws or
other charter documents so as to adversely affect any rights of the Holder; (ii)
enter into any agreement with respect to any of the
foregoing.
(8) This
Note shall not entitle the Holder to any of the rights of a stockholder of the
Company, including without limitation, the right to vote, to receive dividends
and other distributions, or to receive any notice of, or to attend, meetings of
stockholders or any other proceedings of the Company, unless and to the extent
converted into shares of Common Stock in accordance with the terms
hereof.
(9) This
Note shall be governed by and construed in accordance with the laws of the State
of New York, without giving effect to conflicts of laws thereof. Each
of the parties consents to the jurisdiction of the Courts of the State of New
York sitting in New York County, New York, and the U.S. District Court for
the Southern District of New York in connection with any dispute arising under
this Note and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens to the bringing
of any such proceeding in such jurisdictions.
(10) If
the Company fails to comply with the terms of this Note, then the Company shall
reimburse the Holder promptly for all fees, costs and expenses, including,
without limitation, reasonable attorneys’ fees and expenses incurred by the
Holder in any action in connection with this Note, including, without
limitation, those incurred: (i) during any workout, attempted workout, and/or in
connection with the rendering of legal advice as to the Holder’s rights,
remedies and obligations, (ii) collecting any sums which become due to the
Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any
proceeding or appeal; or (iv) the protection, preservation or enforcement of any
rights or remedies of the Holder.
(11) Any
waiver by the Holder of a breach of any provision of this Note shall not operate
as or be construed to be a waiver of any other breach of such provision or of
any breach of any other provision of this Note. The failure of the Holder to
insist upon strict adherence to any term of this Note on one or more occasions
shall not be considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of this Note. Any
waiver must be in writing.
(12) If
any provision of this Note is invalid, illegal or unenforceable, the balance of
this Note shall remain in effect, and if any provision is inapplicable to any
person or circumstance, it shall nevertheless remain applicable to all other
persons and circumstances. If it shall be found that any interest or other
amount deemed interest due hereunder shall violate applicable laws governing
usury, the applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum permitted rate of interest.
(13) Whenever
any payment or other obligation hereunder shall be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business
Day.
(14) THE
PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF
THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL
OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
(15) CERTAIN
DEFINITIONS. For purposes of
this Note, the following terms shall have the following
meanings:
(a) "Bloomberg"
means Bloomberg Financial Markets.
(b) “Business
Day” means any day except Saturday, Sunday and any day which shall be a
federal legal holiday in the United States or a day on which banking
institutions are authorized or required by law or other government action to
close.
(c) “Closing
Bid Price” means the price per share in the last reported trade of the
Common Stock on a Primary Market or on the exchange which the Common
Stock is then listed as quoted by Bloomberg.
(d) “Convertible
Securities” means any stock or securities (other than Options) directly
or indirectly convertible into or exercisable or exchangeable for Common
Stock.
(e) “Common
Stock” means the common stock, par value $.001, of the Company and stock
of any other class into which such shares may hereafter be changed or
reclassified.
(f) “Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
(g) “Options”
means any rights, warrants or options to subscribe for or purchase shares of
Common Stock or Convertible Securities.
(h) “Original
Issue Date” means the date of the first issuance of this Note regardless
of the number of transfers and regardless of the number of instruments, which
may be issued to evidence such Note.
(i) “Person”
means a corporation, an association, a partnership, organization, a business, an
individual, a government or political subdivision thereof or a governmental
agency.
(j) “Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
(k) “Securities
Purchase Agreement” means the Securities Purchase Agreement dated January
___, 2009 by and among the Company and the Buyers.
(l) “Trading
Day” means a day on which the shares of Common Stock are quoted on the
OTCBB or quoted or traded on such Primary Market on which the shares of Common
Stock are then quoted or listed; provided, that in the event that the shares of
Common Stock are not listed or quoted, then Trading Day shall mean a Business
Day.
(m) “Transaction
Documents” means the Securities Purchase Agreement or any other agreement
delivered in connection with the Securities Purchase
Agreement.
(n) “Underlying
Shares” means the shares of Common Stock issuable upon conversion of this
Note or as payment of interest in accordance with the terms
hereof.
(o) "Warrants"
has the meaning ascribed to such term in the Securities Purchase Agreement, and
shall include all warrants issued in exchange therefor or replacement
thereof.
[Signature
Page Follows]
IN WITNESS WHEREOF, the
Company has caused this Convertible Note to be duly executed by a duly
authorized officer as of the date set forth above.
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COMPANY:
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COMMERCE
PLANET, INC.
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By:
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Name:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇ | |
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Title:
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President | |
EXHIBIT
I
CONVERSION
NOTICE
(To
be executed by the Holder in order to Convert the Note)
TO:
The
undersigned hereby irrevocably elects to convert $ of the principal amount of
Note No. _______ into Shares of Common Stock of COMMERCE PLANET, INC.,
according to the conditions stated therein, as of the Conversion Date written
below.
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Conversion
Date:
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Conversion
Amount to be converted:
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$
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Conversion
Price:
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$
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Number
of shares of Common Stock to be issued:
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Amount
of Note Unconverted:
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$
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Please
issue the shares of Common Stock in the following name and to the
following address:
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Issue
to:
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Authorized
Signature:
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Name:
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Title:
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Broker
DTC Participant Code:
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Account
Number:
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