SENSE TECHNOLOGIES, INC. SERIES “B” 10% CONVERTIBLE SECURED PROMISSORY NOTE
Exhibit (a)(4)
SENSE TECHNOLOGIES, INC.
SERIES “B” 10% CONVERTIBLE SECURED PROMISSORY NOTE
| Note No: ******-B | Issue Date: _________________, 2003 | |||
| SAMPLE ONLY | ||||
| Name of Holder: ____________________ | Principal Amount: $**** |
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED BY THE HOLDER OF THIS NOTE IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE NOTE UNDER SUCH ACT AND APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
Sense Technologies, Inc. (the “Company”), a Yukon corporation, with an office located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, for value received, hereby promises to pay to the above named Holder the Principal Amount set out above, together with interest on the unpaid principal balance of this Series “B” 10% Convertible Secured Promissory Note. The Principal Amount shall become immediately due and payable on demand made on or after August 30, 2005 (the “Demand Date”). Payment for all amounts due under this Note shall be made by mail to the registered address of the Holder. This Note is one of an issue of the Company’s Series “B” 10% Convertible Secured Promissory Notes in the aggregate principal amount of up to $560,000 (the “Offering”).
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 hereof, by the acceptance of this Note, agrees:
| 1. | Interest. The Company shall pay
simple interest at the rate of 10% per annum on the Principal Amount of
the Note outstanding from time to time, calculated each calendar quarter
not in advance (the “Interest”). Subject to the provisions hereof,
payment of interest in respect of a calendar quarter shall be made two
weeks after the end of that quarter. If payment of accrued interest in
respect of one or more calendar quarters is not made in the time provided,
then interest shall continue to accrue and instead be payable for the
immediately following calendar quarter in the same manner. No interest
is payable in respect of any portion of the Principal Amount which has
been converted into common stock of the Company, or which has been repaid
by the Company to the Holder. |
| 2. | Conversion. The Noteholder may
at any time prior to demand for repayment being made on or after August
30, 2005, and upon 20 days prior written Notice, convert all or a portion
of the outstanding Principal Amount of the Note to the company’s
no par value common stock, at the rate of one share of common stock for
every $0.29 of the total principal amount. The Company, on due conversion
of the Note, will issue shares of its common stock for the Principal Amount
o the Note converted. Shares issued on conversion of the Note may bear
a |
legend denoting any restrictions
on transfer pursuant to applicable laws, including without limitation
Rule 144. |
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| 3. | Redemption. The Note
may be redeemed in whole or in part at the election of the Company upon
10 days of notice being sent to the Holder by regular mail, fax or courier,
at any time after August 30, 2005 at a redemption price equal to the principal
amount being redeemed, plus accrued but unpaid interest thereon. The offer
to redeem the Note will be made pro-rata to all note-holders under the
Offering. |
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| 4. | Grant of Security Interest. | |
| (i) | As security for the full and timely
payment of the Principal Amount and the Interest, the Company hereby grants,
assigns, transfers, mortgages, pledges and charges to and in favor of
the Holder, all its interest and property in all of the Company’s
inventory, from time to time, of Guardian AlertTM products
(the “Security Interest”). |
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| (ii) | The Security Interest of the Holder
will rank pari-passu to the security interests of all other holders of
Series “B” 10% Convertible Secured Promissory Notes issued pursuant
to this Offering. |
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| 5. | Events of Default.
If any of the events of default occurs (herein individually referred to
as an “Event of Default”), subject to the provisions of this
section, the Holder of the Note may, so long as such default condition
exists, declare the entire unpaid principal and unpaid accrued interest
hereon immediately due and payable. The following shall each constitute
an Event of Default: |
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| (i) | Default in the payment of any unpaid
principal and unpaid accrued interest of this Note when properly due and
payable in accordance with the terms of this Note provided that the Holder
has provided prior notice of such default in writing to the Company and
the Company has not remedied or cured such default with a period of 15
days from such notice. The Holder may not declare the unpaid principal
and unpaid accrued interest due and payable unless the notice provision
of this section has been complied with. |
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| (ii) | The institution by the Company of proceedings
to be adjudicated as bankrupt or insolvent, or the consent by it to institution
of bankruptcy or insolvency proceeding against it or the filing by it
of a petition or answer or consent seeking reorganization or release under
the Federal Bankruptcy Act, or any other applicable federal or state law,
or the consent by it to the filing of any such petition or appointment
of a receiver, liquidator, assignee, trustee or any other similar official
of the Company, or any substantial part of its property, or the making
by it of an assignment for the benefit of the creditors or the taking
of corporate action by the Company in furtherance of any such action; |
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| (iii) | If, within 60 days after the commencement
of an action against the Company (and service or process in connection
therewith on the Company) seeking any bankruptcy, |
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insolvency, reorganization, liquidation,
dissolution or similar relief under any present or future statute, law,
or regulation, such an action shall not have been resolved in favor of
the Company or all orders or proceeding thereunder affecting the operations
or the business of the Company stayed, or if the stay of any such order
or proceeding shall thereafter be set aside, or if, within 60 days after
the appointment without the consent or acquiescence of the Company of
any trustee, receiver or liquidator of the Company or of all or any substantial
part of the properties of the Company, such appointment shall not have
been vacated. |
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| 6. | Assignment. Subject
to the restrictions on transfer described in Section 6 herein, the rights
and obligations of the Company and the Holder of this Note shall be binding
upon and benefit the successors, permitted assigns, heirs, personal and
legal representatives and permitted transferees of the parties. Furthermore,
(a) the Company may not assign this Note except upon a sale of all or
substantially all of its assets and (b) the Holder may only assign this
Note to a person or entity that is (i) an accredited investor or unaccredited
investor under applicable US securities laws and (ii) either another holder
of a promissory note issued by the Company pursuant to the Offering or
a person or entity reasonably acceptable to the Company. The Company may
refuse to register a transfer or assignment of this Note where it has
a reasonable basis to believe that such transfer or assignment does not
comply with all applicable laws. |
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| 7. | Transfer of this Note.
With respect to any offer, sale or disposition of this Note, the Holder
will give written notice to the Company prior thereto describing briefly
the manner thereof together with a written opinion of such ▇▇▇▇▇▇’s
counsel, to the effect that such offer, sale or disposition may be effected
without registration or qualification (under any federal or state law
then in effect) and that the requirement of Section 5 of this Note have
been met. Upon receiving such written notice and reasonably satisfactory
opinion, the Company, as promptly as is practicable, shall notify such
Holder that such Holder may sell or otherwise dispose of this Note or
such securities, all in accordance with the terms of the notice delivered
to the Company. If a determination has been made pursuant to Section 6
that the opinion of counsel for the Holder is not reasonably satisfactory
to the Company, the Company shall so notify the Holder promptly after
such determination has been made. Each Note thus transferred shall bear
a legend as to the applicable restrictions on transferability in order
to ensure compliance with the Securities Act of 1933, as amended (the
“Act”), unless in the opinion of counsel for the Company, such
legend is not required in order to ensure compliance in the Act. The Company
may issue stop transfer orders in connection with such restrictions. |
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| 8. | Treatment of Note.
As envisioned by generally accepted accounting principles, the Company
will treat, account and report the Note as debt and not equity for accounting
purposes and with respect to any returns filed with federal, state or
local tax authorities. |
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| 9. | Notices. Any notice,
request, or other communication required or permitted hereunder shall
be in writing and shall be deemed to have been duly given if personally
delivered, or if mailed by registered or certified mail, postage prepaid,
or if delivered by a nationally recognized overnight delivery service
at the respective address of the parties as set out |
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| herein. Any party hereto may by notice so given change its address for further notice hereunder. | |
| 10. | 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 directors of the Company or any other matters or any rights whatsoever
as a stockholder of the Company; and no dividends shall be payable or
accrued in respect of this note. |
| 11. | Currency. All dollar amounts herein are in the lawful currency of the United States. |
| 12. | No Withholding. All payments
by the Company under this Note shall be made without setoff or counterclaim
and be free and clear and without deduction or withholding for any taxes
or fees of any nature whatever, unless the obligation to make such deduction
or withholding is imposed by law. |
| 13. | Legal Fees. The Company shall
pay all reasonable and customary costs of collection, including reasonable
attorney’s fees, incurred by the Holder, upon and after an Event
of Default, in enforcing the obligations of the Company under this Note. |
| 14. | Prepayment. The Company may not prepay interest or principal, in part or in full, at anytime without penalty. |
| 15. | Governing Law. This Agreement
shall be governed by and construed in accordance with the laws of the
State of North Carolina, without giving effect to applicable principles
of conflicts of law. |
| 16. | Modifications. None of the terms
or provisions of the Note may be excluded, modified, or amended except
by a written instrument duly executed on behalf of the Holder and Company
expressly referring to this Note and setting forth the provisions so excluded,
modified or amended. |
IN WITNESS WHEREOF, the Company has caused the note to be issued the date above written:
| Per: | SAMPLE ONLY |
Name of Holder:
Address of Holder:
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APPENDIX “A”
CONVERSION NOTICE
TO: Sense Technologies Inc..
The Holder hereby elects to convert $________________ of the Principal Amount outstanding of the Series “B” 10% Convertible Secured Promissory Note into common shares (the “Shares”) of Sense Technologies Inc. at a price of $0.29 per share in accordance with the terms of the Series “B”10% Convertible Secured Promissory Note, and directs that the Shares issuable and deliverable upon the conversion be issued and delivered to the person indicated below.
DATED: ___________________________________
__________________________________________
(Signature of Holder or Authorized Signatory)
[where holder is not a natural person]:
__________________________________________
Name of Holder
__________________________________________
Name of person signing above
__________________________________________
Title of person signing above
Print delivery address and name in which Shares issued on conversion are to be registered:
Name: ____________________________________________________________________________________
Delivery Address: ________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
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