CDEX INC. 10% SENIOR CONVERTIBLE NOTE
EXHIBIT
10.2
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE 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. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF
THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES.
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Original
Issue Date: ______________, 2010
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Original
Principal
Amount: $____________
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10%
SENIOR CONVERTIBLE NOTE
THIS NOTE
is one of a series of duly authorized and validly issued 10% Senior Convertible
Notes of CDEX Inc., a Nevada corporation (the “Company”), having its
principal place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, designated as its 10% Senior Convertible Notes (this Note, the “Note” and,
collectively with the other Notes of such series, the “Notes”).
FOR VALUE
RECEIVED, the Company promises to pay to the order of __________________________
or its registered assigns (the “Holder”), or shall
have paid pursuant to the terms hereunder, the principal sum of
US$_______________ on February 1, 2012 (subject to acceleration as set forth
herein, the “Maturity
Date”) or such earlier date as this Note is required or permitted to be
repaid as provided hereunder, and to pay accrued and unpaid interest to the
Holder on the aggregate unconverted and then outstanding principal amount of
this Note in accordance with the provisions hereof.
The
Company’s obligations under this Note and the other Transaction Documents shall
be, effective as of the Security Effective Date (if it occurs), secured by the
Collateral (as defined in the Security Agreement, including without limitation
all of the Company’s Intellectual Property) pursuant to the terms of the
Security Documents.
This Note
is subject to the following additional provisions:
Section
1.
Definitions. For
the purposes hereof, in addition to the terms defined elsewhere in this Note (a)
initially capitalized terms not otherwise defined herein shall have the meanings
set forth in the Purchase Agreement (including without limitation those
incorporated therein by reference) and (b) the following terms shall have the
following meanings:
“Alternate
Consideration” shall have the meaning set forth in Section
5(e).
“Buy-In” shall have
the meaning set forth in Section 4(d)(v).
1
“Cash Flow Positive”
means that, for a fiscal period, the Company’s cash flows from operating
activities is positive (i.e., net cash is provided by operating activities as
opposed to net cash being used by operating activities) for such period, as
determined in accordance with generally accepted accounting principles
consistently applied.
“Common Stock
Equivalents” mean Convertible Securities and/or Options.
“Conversion Date”
shall have the meaning set forth in Section 4(a).
“Conversion Price”
shall have the meaning set forth in Section 4(b).
“Conversion Shares”
means, collectively, the shares of Common Stock issued or issuable upon
conversion or redemption of this Note in accordance with the terms hereof,
including without limitation shares of Common Stock issued or issuable as
interest hereunder or as damages under the Transaction Documents.
“Note Register” shall
have the meaning set forth in Section 2(c).
“Event of Default”
shall have the meaning set forth in Section 8.
“Forced Conversion”
shall have the meaning set forth in Section 6(b).
“Forced Conversion
Amount” shall have the meaning set forth in Section 6(b).
“Forced Conversion
Date” shall have the meaning set forth in Section 6(b).
“Forced Conversion
Notice” shall have the meaning set forth in Section 6(b).
“Forced Conversion Notice
Date” shall have the meaning set forth in Section 6(b).
“Late Fees” shall have
the meaning set forth in Section 2(c).
“Mandatory Default
Amount” means the sum of (i) the greater of (A) 130% of the
outstanding principal amount of this Note, plus 100% of accrued and unpaid
interest hereon, or (B) the outstanding principal amount of this Note, plus all
accrued and unpaid interest hereon, divided by the Conversion Price on the date
the Mandatory Default Amount is either (a) demanded (if demand or notice is
required to create an Event of Default) or otherwise due or (b) paid in full,
whichever has a lower price, multiplied by the VWAP on the date the Mandatory
Default Amount is either (x) demanded or otherwise due or (y) paid in full,
whichever has a higher VWAP, and (ii) all other amounts, costs, expenses and
liquidated damages due in respect of this Note.
“New York Courts”
shall have the meaning set forth in Section 9(d).
“Notice of Conversion”
shall have the meaning set forth in Section 4(a).
2
“Original Issue Date”
means the date of the issuance of this Note, regardless of any transfers of any
Note and regardless of the number of instruments which may be issued to evidence
this Note.
“Permitted
Indebtedness” means (a) the indebtedness evidenced by the Notes, (b) the
Indebtedness existing on the first Closing Date, provided that the terms of any
such Indebtedness have not been changed from the terms existing on the first
Closing Date, (c) lease obligations and purchase money indebtedness of up to
$100,000, in the aggregate, incurred in connection with the acquisition of
capital assets and lease obligations with respect to newly acquired or leased
assets, (d)
Indebtedness that (i) is expressly subordinate to the Notes pursuant to a
written subordination agreement with the Purchasers that is acceptable to the
Requisite Purchasers in their sole and absolute discretion and (ii) matures at a
date later than the Maturity Date, and (iii) is approved in advance in writing
by Requisite Purchasers (which approval may be denied in the Purchasers’ sole
discretion) and (e) up to the Permitted Principal Amount of unsecured
Indebtedness which is pari
passu with the Notes, provided such Indebtedness (1) is issued on or
prior to August 1, 2010, (2) is on terms not in any material way more favorable
to the lender thereof than the terms to the holders of Notes under the Notes and
Transaction Documents, and (3) contains a longer maturity term than the Notes
for all payments thereunder and a conversion price of no less than $0.10 per
share, where the “Permitted Principal Amount” means $4 million less the amount
of Notes issued prior to April 1, 2010 (whether for cash or exchange of existing
notes or debt or otherwise).
“Permitted Lien” means
the individual and collective reference to the following: (a) Liens for taxes,
assessments and other governmental charges or levies not yet due or Liens for
taxes, assessments and other governmental charges or levies being contested in
good faith and by appropriate proceedings for which adequate reserves (in the
good faith judgment of the management of the Company) have been established in
accordance with GAAP; (b) Liens imposed by law which were incurred in the
ordinary course of the Company’s business, such as carriers’, warehousemen’s and
mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in
the ordinary course of the Company’s business, and which (x) do not individually
or in the aggregate materially detract from the value of such property or assets
or materially impair the use thereof in the operation of the business of the
Company and its consolidated Subsidiaries or (y) are being contested in good
faith by appropriate proceedings, which proceedings have the effect of
preventing for the foreseeable future the forfeiture or sale of the property or
asset subject to such Lien; and (c) Liens created pursuant to the Security
Documents entered into in connection with the issuance of the
Notes.
“Purchase Agreement”
means the Securities Purchase Agreement pursuant to which this Note was issued,
dated on or about the date hereof, among the Company and the original purchasers
of Notes, as amended, modified or supplemented from time to time in accordance
with its terms.
“Registration
Statement” means an effective registration statement under the Securities
Act that registers the resale of all Conversion Shares of the Holder, names the
Holder as a “selling stockholder” therein, and contains a current prospectus not
subject to any blackout, suspension or stop order.
3
“Share Delivery Date”
shall have the meaning set forth in Section 4(d).
“Threshold Period”
shall have the meaning set forth in Section 6(b).
Section
2.
Maturity Date; Interest;
Late Fees.
a)
Maturity
Date. The Maturity Date shall be the date set forth on the
first page hereof as the Maturity Date, provided that if the Company is not Cash
Flow Positive:
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i.
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for
at least one fiscal quarter ending on or prior to January 31, 2011, in
each case as disclosed in the Company’s Quarterly Report for such quarter
(“Milestone
1”); or
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ii.
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for
3 out of the 4 consecutive fiscal quarters ending October 31, 2011, as
disclosed in the Company’s Annual Report covering such quarters (or as
disclosed in the Company’s earlier Quarterly Reports for such quarters if
the Company should have two fiscal quarters which are not Cash Flow
Positive during such period) (“Milestone
2”);
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then,
at the Holder’s option, the Holder may elect to accelerate the Maturity
Date such that this Note shall become immediately due and
payable. The Company shall disclose the Company’s cash flow
position to all the Holders of Notes at the same time, provided that
nothing contained herein shall limit the Company’s restrictions in the
Transaction Documents with respect to the disclosure of material
non-public information. The Holder may elect such acceleration
as soon as it is able to reasonably determine that any such Milestone
cannot be satisfied.
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b)
Interest. Interest
shall accrue daily on the outstanding principal amount of this Note at a rate
per annum equal to 10%. On the Maturity Date, the Company shall pay
to the Holder all accrued but unpaid interest hereunder. Interest
shall be calculated on the basis of a 365-day year and actual days elapsed and
shall accrue daily commencing on the Original Issue Date until payment in full
of the outstanding principal, together with all accrued and unpaid interest,
liquidated damages and other amounts which may become due hereunder, has been
made. Interest hereunder will be paid to the Person in whose name
this Note is registered on the records of the Company regarding registration and
transfers of this Note (the “Note
Register”).
c)
Late
Fees. All overdue accrued and unpaid amounts to be paid
hereunder shall entail a late fee at an interest rate equal to the lesser of 24%
per annum or the maximum rate permitted by applicable law (“Late Fees”) which
shall accrue daily from the date such amount is due hereunder through and
including the date of actual payment in full.
Section
3.
Registration of Transfers
and Exchanges.
4
a)
Different
Denominations. This Note is exchangeable for an equal aggregate principal
amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be payable for
such exchange.
b) Investment
Representations. This Note has been issued subject to certain
investment representations of the original Holder set forth in the Purchase
Agreement and may be transferred or exchanged only in compliance with the
Purchase Agreement and applicable federal and state securities laws and
regulations.
c) Reliance on Note
Register. Prior to due presentment for transfer to the Company
of this Note, the Company and any agent of the Company may treat the Person in
whose name this Note is duly registered on the Note Register as the owner hereof
for the purpose of receiving payment as herein provided and for all other
purposes, whether or not this Note is overdue, and neither the Company nor any
such agent shall be affected by notice to the contrary.
Section
4.
Conversion.
a) Voluntary Conversion.
At any time after the Original Issue Date until this Note is no longer
outstanding, this Note shall be convertible, in whole or in part, into shares of
Common Stock at the option of the Holder, at any time and from time to time
(subject to the conversion limitations set forth in Section 4(c)
hereof). The Holder shall effect conversions by delivering to the
Company a Notice of Conversion, the form of which is attached hereto as Annex A (a “Notice of
Conversion”), specifying therein the principal amount of this Note to be
converted and the date on which such conversion shall be effected (such date,
the “Conversion
Date”). If no Conversion Date is specified in a Notice of
Conversion, the Conversion Date shall be the date that such Notice of Conversion
is deemed delivered hereunder. To effect conversions hereunder, the
Holder shall not be required to physically surrender this Note to the Company
unless the entire principal amount of this Note, plus all accrued and unpaid
interest thereon, has been so converted. Conversions hereunder shall have the
effect of lowering the outstanding principal amount of this Note in an amount
equal to the applicable conversion. The Holder and the Company shall
maintain records showing the principal amount(s) converted and the date of such
conversion(s). In the event of any dispute or discrepancy, the
records of the Holder shall be controlling and determinative in the absence of
manifest error. The Holder, and any assignee by acceptance of this Note,
acknowledge and agree that, by reason of the provisions of this paragraph,
following conversion of a portion of this Note, the unpaid and unconverted
principal amount of this Note may be less than the amount stated on the face
hereof.
b) Conversion
Price. The conversion price shall be equal to [$0.08,]
[[$0.05, provided that after the first $800,000 in principal amount hereunder
has been converted, the conversion price hereunder shall be increased to equal
$0.08,]1 subject
in each case to adjustment herein (the “Conversion
Price”).
1 The
Conversion Price is $0.08, except $800,000 of principal under the Note issued to
Gemini Master Fund, Ltd. is convertible at $0.05.
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c) Conversion Limitation –
Holder’s Restriction on Conversion. Notwithstanding anything to the
contrary contained herein, the Company shall not effect any conversion of this
Note, and the Holder shall not have the right to convert any portion of this
Note (or otherwise acquire Conversion Shares with respect to this Note), to the
extent that after giving effect to the issuance of Common Stock upon such
conversion (or other issuance), the Holder Group would beneficially own in
excess of the Maximum Ownership Percentage of the number of shares of the Common
Stock outstanding immediately after giving effect to the issuance of shares of
Common Stock upon such conversion (including for such purpose the shares of
Common Stock issuable upon such conversion or issuance) (“Beneficial Ownership
Limitation”). For purposes of calculating the Beneficial
Ownership Limitation, the number of shares of Common Stock beneficially owned by
the Holder Group shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder (including
without limitation Regulation 13D-G), provided, however, that such
beneficial ownership shall exclude any shares of Common Stock issuable upon
conversion, exchange or exercise of (or purchase of Common Stock under) any
Convertible Securities or Options outstanding at the time of determination and
beneficially owned by the Holder Group which contain a limitation on conversion,
exchange, exercise or purchase analogous to the Beneficial Ownership Limitation
contained herein. To the extent that the Beneficial Ownership
Limitation contained herein applies, the determination of whether and to what
extent this Note is convertible (vis-à-vis other Convertible Securities or
Options, including without limitation other Notes, beneficially owned by the
Holder Group) shall be on the basis of first submission to the Company for
conversion, exchange, exercise or purchase, as the case may be, or as otherwise
determined in the sole discretion of the Holder, and the submission of a Notice
of Conversion shall be deemed to be the Holder’s determination of whether and to
what extent this Note is convertible (vis-à-vis such other Convertible
Securities or Options), in each case subject to the Beneficial Ownership
Limitation. In determining the number of outstanding shares of Common
Stock for purposes of calculating the Beneficial Ownership Limitation, the
Holder may rely on the number of outstanding shares of Common Stock as reflected
in (i) the Company’s most recent Periodic Report containing such information,
(ii) a more recent public announcement by the Company, or (iii) any other notice
or disclosure by the Company or the Company’s Transfer Agent setting forth the
number of shares of Common Stock outstanding, and the Holder may rely on
knowledge it may have concerning any shares of Common Stock issued which are not
reflected in the preceding clauses (i) through (iii) (e.g., issuances to the Holder
upon a prior Note conversion since the date as of which such number of
outstanding shares of Common Stock was reported). Upon the written or
oral request of the Holder, the Company shall within two (2) Business Days
confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. Each delivery of a Notice of Conversion by the
Holder will constitute a representation by the Holder that it has evaluated the
limitation set forth in this Section 4(c) and determined, based on this Section
4(c), that the issuance of the full number of Conversion Shares requested in
such Notice of Conversion is permitted under this Section 4(c), and the Company
shall have no obligation to verify or confirm such determination. No
conversion of this Note in violation of this Section 4(c) but otherwise in
accordance with this Note shall affect the status of the Conversion Shares as
validly issued, fully-paid and nonassessable. By written notice to
the Company, the Holder may at any time and from time to time increase or
decrease the Maximum Ownership Percentage to any other percentage specified in
such notice (or specify that the Beneficial Ownership Limitation shall no longer
be applicable), provided,
however, that (A) any such increase (or inapplicability) shall not be
effective until the sixty-first (61st) day after such notice is delivered to the
Company, (B) any such increase or decrease shall apply only to the Holder and
not to any other holder of Notes, and (C) the Maximum Ownership Percentage shall
not be less than 4.9%. The provisions of this Section 4(c) shall be
construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 4(c) to correct this provision (or any portion hereof)
which may be defective or inconsistent with the intended Beneficial Ownership
Limitation contained herein or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The Beneficial
Ownership Limitation contained in this Section shall apply to a successor Holder
of this Note. If at any time the Beneficial Ownership Limitation
makes this Note unconvertible in whole or in part, the Company shall not by
reason thereof be relieved of its obligation to issue shares of Common Stock at
any time or from time to time thereafter upon conversion of this Note as and
when shares of Common Stock may be issued in compliance with such
limitation.
6
d) Mechanics of
Conversion.
i. Conversion Shares Issuable
Upon Conversion of Principal Amount. The number of Conversion
Shares issuable upon a conversion hereunder shall be determined by the quotient
obtained by dividing (x) the outstanding principal amount of this Note to be
converted plus any accrued but unpaid interest thereon, by (y) the Conversion
Price.
ii. Delivery of Certificate Upon
Conversion. Not later than three Trading Days after each Conversion Date
(the “Share Delivery
Date”), the Company shall deliver, or cause to be delivered, to the
Holder a certificate or certificates representing the Conversion Shares which,
on or after the Legend Removal Date, shall be free of restrictive legends and
trading restrictions (other than those which may then be required by the
Purchase Agreement) representing the number of Conversion Shares being acquired
upon the conversion of this Note. On or after the date which is six
months following the Original Issue Date on which this Note is issued, the
Company shall use its best efforts to deliver any certificate(s) or shares
required to be delivered by the Company under this Section 4 electronically
through the Depository Trust Company or another established clearing corporation
performing similar functions.
iii. Failure to Deliver
Certificates. If in the case of any Notice of Conversion such
certificate(s) or shares are not delivered to or as directed by the applicable
Holder by the third Trading Day after the Conversion Date, the Holder shall be
entitled to elect by written notice to the Company at any time on or before its
receipt of such certificate or certificates, to rescind such Conversion, in
which event the Company shall promptly return to the Holder any original Note
delivered to the Company and the Holder shall promptly return to the Company the
Common Stock certificates representing the principal amount of this Note
unsuccessfully tendered for conversion to the Company.
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iv. Obligation Absolute; Partial
Liquidated Damages. The Company’s obligations to issue and
deliver the Conversion Shares upon conversion of this Note in accordance with
the terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation of
law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the
Holder in connection with the issuance of such Conversion Shares; provided, however, that such
delivery shall not operate as a waiver by the Company of any such action the
Company may have against the Holder. In the event the Holder of this
Note shall elect to convert any or all of the outstanding principal amount
hereof, the Company may not refuse conversion based on any claim that the Holder
or anyone associated or affiliated with the Holder has been engaged in any
violation of law, agreement or for any other reason, unless an injunction from a
court, on notice to the Holder, restraining and or enjoining conversion of all
or part of this Note shall have been sought and obtained, and the Company posts
a surety bond for the benefit of the Holder in the amount of 150% of the
outstanding principal amount of this Note, which is subject to the injunction,
which bond shall remain in effect until the completion of arbitration/litigation
of the underlying dispute and the proceeds of which shall be payable to the
Holder to the extent it obtains judgment. In the absence of such
injunction, the Company shall issue Conversion Shares or, if applicable, cash,
upon a properly noticed conversion. If the Company fails for any
reason to deliver to the Holder such certificate(s) or shares pursuant to
Section 4(d)(ii) by the second Trading Day after the Share Delivery Date, the
Company shall pay to the Holder, in cash, as liquidated damages and not as a
penalty, for each $1,000 of principal amount being converted, $10 per Trading
Day (increasing to $20 per Trading Day on the fifth Trading Day after such
liquidated damages begin to accrue) for each Trading Day after such second
Trading Day after the Share Delivery Date until such certificates are
delivered. Nothing herein shall limit a ▇▇▇▇▇▇’s right to pursue
actual damages or declare an Event of Default pursuant to Section 8 hereof for
the Company’s failure to deliver Conversion Shares within the period specified
herein and the Holder shall have the right to pursue all remedies available to
it hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief. 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.
8
v. Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Conversion. In addition to
any other rights available to the Holder, if the Company fails for any reason to
deliver to the Holder such certificate(s) or shares by the Share Delivery Date
pursuant to Section 4(d)(ii), and if after such Share Delivery Date the Holder
is required by its brokerage firm to purchase (in an open market transaction or
otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the Conversion
Shares which the Holder was entitled to receive upon the conversion relating to
such Share Delivery Date (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder (in addition to any other remedies
available to or elected by the Holder) the amount by which (x) the Holder’s
total purchase price (including any brokerage commissions) for the Common Stock
so purchased exceeds (y) the product of (1) the aggregate number of shares of
Common Stock that the Holder was entitled to receive from the conversion at
issue multiplied by (2) the actual sale price at which the sell order giving
rise to such purchase obligation was executed (including any brokerage
commissions) and (B) at the option of the Holder, either reissue (if
surrendered) this Note in a principal amount equal to the principal amount of
the attempted conversion or deliver to the Holder the number of shares of Common
Stock that would have been issued if the Company had timely complied with its
delivery requirements under Section 4(d)(ii). For example, if the
Holder purchases Common Stock having a total purchase price of $11,000 to cover
a Buy-In with respect to an attempted conversion of this Note with respect to
which the actual sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of $10,000
under clause (A) of the immediately preceding sentence, the Company shall be
required to pay the Holder $1,000. The Holder shall provide the
Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In and, upon request of the Company, evidence of the amount of such
loss. Nothing herein shall limit a ▇▇▇▇▇▇’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon conversion of this Note as required pursuant to the
terms hereof.
vi. Reservation of Shares
Issuable Upon Conversion. The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued shares of Common
Stock for the sole 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
(and the other holders of the Notes), not less than such aggregate number of
shares of the Common Stock as shall (subject to the terms and conditions set
forth in the Purchase Agreement) be issuable (taking into account the
adjustments of Section 5) 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 authorized, validly issued, fully paid and nonassessable and, if
the Registration Statement is then effective under the Securities Act, shall be
registered for public sale in accordance with such Registration
Statement.
9
vii. Fractional Shares. No
fractional shares or scrip representing fractional shares shall be issued upon
the conversion of this Note. As to any fraction of a share which the
Holder would otherwise be entitled to purchase upon such conversion, the Company
shall at its election, either pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the Conversion Price
or round up to the next whole share.
viii. Transfer
Taxes. The issuance of certificates for shares of the Common
Stock on conversion of this Note shall be made without charge to the Holder
hereof for any documentary stamp or similar taxes that may be payable in respect
of the issue or delivery of such certificates, provided that the Company shall
not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion in
a name other than that of the Holder of this Note and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
Section
5.
Certain
Adjustments.
a) Stock Dividends and Stock
Splits. If the Company, at any time while this Note is
outstanding: (A) pays a stock dividend or otherwise makes a distribution or
distributions payable in shares of Common Stock on shares of Common Stock or any
Common Stock Equivalents (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon conversion of, or payment of
interest on, the Notes); (B) subdivides outstanding shares of Common Stock into
a larger number of shares; (C) combines (including by way of a reverse stock
split) outstanding shares of Common Stock into a smaller number of shares; or
(D) issues, in the event of a 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 any treasury shares of the Company) outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately 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) Subsequent Equity
Sales. The Conversion Price is subject to Full Ratchet
Anti-Dilution Adjustment.
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c) Subsequent Rights
Offerings. If the Company, at any time while the Note is
outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to Holders) entitling them to subscribe for or purchase shares of
Common Stock at a price per share that is lower than the VWAP on the record date
referenced below, then the Conversion Price shall be multiplied by a fraction of
which the denominator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of additional shares of Common Stock offered for subscription or purchase, and
of which the numerator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of shares which the aggregate offering price of the total number of shares
issued (assuming delivery to the Company in full of all consideration payable
upon exercise of such rights, options or warrants) would purchase at such
VWAP. Such adjustment shall be made whenever such rights or warrants
are issued, and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights, options or
warrants.
d) Pro Rata
Distributions. If the Company, at any time while this Note is
outstanding, distributes to all holders of Common Stock (and not to the Holders
in their capacity as holders of Notes) evidences of its indebtedness or assets
(including cash and cash dividends) or rights or warrants to subscribe for or
purchase any security (other than the Common Stock, which shall be subject to
Section 5(b)), then in each such case the Conversion Price shall be adjusted by
multiplying such Conversion Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the VWAP determined as of the
record date mentioned above, and of which the numerator shall be such VWAP on
such record date less the then fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed applicable to
1 outstanding share of the Common Stock as determined by the Board of Directors
of the Company in good faith. In either case the adjustments shall be
described in a statement delivered to the Holder describing the portion of
assets or evidences of indebtedness so distributed or such subscription rights
applicable to 1 share of Common Stock. Such adjustment shall be made
whenever any such distribution is made and shall become effective immediately
after the record date mentioned above.
e) Fundamental
Transaction. If, at any time while this Note is outstanding, the Company
effects or there otherwise occurs a Fundamental Transaction, then, upon any
subsequent conversion of this Note, the Holder shall have the right to receive,
for each Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such Fundamental Transaction, the same
kind and amount of securities, cash or property as it would have been entitled
to receive upon the occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the holder of 1 share of
Common Stock (the “Alternate
Consideration”). For purposes of any such conversion, the
determination of the Conversion Price shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of 1 share of Common Stock in such Fundamental Transaction,
and the Company shall apportion the Conversion Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any
different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any conversion of this
Note following such Fundamental Transaction. To the extent necessary
to effectuate the foregoing provisions, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder a new
Note consistent with the foregoing provisions and evidencing the Holder’s right
to convert such Note into Alternate Consideration. The terms of any agreement
pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the provisions
of this Section 5(e) and insuring that this Note (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous
to a Fundamental Transaction.
11
f) Calculations. All
calculations under this Section 5 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this
Section 5, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding any treasury shares of the Company) issued and
outstanding.
g) Notice to the
Holder.
i. Adjustment to Conversion
Price. Whenever the Conversion Price is adjusted pursuant to
any provision of this Section 5, the Company shall promptly deliver to each
Holder a notice setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such
adjustment.
ii. Notice to Allow Conversion
by ▇▇▇▇▇▇. If (A) the Company shall declare a dividend (or any
other distribution in whatever form) on the Common Stock, (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common
Stock of rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property or (E) the Company
shall authorize the voluntary or involuntary dissolution, liquidation or winding
up of the affairs of the Company, then, in each case, the Company shall cause to
be filed at each office or agency maintained for the purpose of conversion of
this Note, and shall cause to be delivered
to the Holder at its last address as it shall appear upon the Note Register, at
least 20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution, redemption, rights
or warrants, or if a record is not to be taken, the date as of which the holders
of the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange, provided that the failure to deliver such notice or any defect
therein or in the delivery thereof shall not affect the validity of the
corporate action required to be specified in such notice. The Holder
is entitled to convert this Note during the 20-day period commencing on the date
of such notice through the effective date of the event triggering such
notice.
12
Section
6.
Redemption and Forced
Conversion.
a) No
Prepayment/Redemption. The
Company may not prepay or redeem this Note in whole or in part without the prior
written consent of the Holder, and to the extent the Company agrees with any
other holder of Notes to prepay or redeem such holder’s Notes in whole or in
part, the Company shall offer such prepayment or redemption of this Note on a
pro rata basis on the same terms and conditions as agreed upon for such other
Notes.
b) Forced Conversion.
Notwithstanding anything contained herein to the contrary, if after the date which is six months following the
Original Issue Date (i) the Daily VWAP for any 20 out of 30 consecutive Trading
Days (such 30 Trading Day period being the “Threshold Period”)
exceeds $0.15 (“Threshold Price”),
and (ii) the average number of shares of Common Stock traded per day on the
Principal Market during such Threshold Period exceeds 250,000 (“Threshold Volume”)
(such Threshold Price and Threshold Volume subject to appropriate and equitable
adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after
the date of the Purchase Agreement), then the Company may, within 1
Trading Day after the end of any such Threshold Period, deliver a written notice
to the Holder (a “Forced Conversion
Notice” and the date such notice is delivered to the Holder, the “Forced Conversion Notice
Date”) to cause the Holder to convert all or part of the then outstanding
principal amount of this Note as specified in such Forced Conversion Notice
(“Forced Conversion
Amount”) at the Conversion Price then in effect (“Forced Conversion”)
on or prior to the twentieth (20th)
Trading Day following the Holder’s receipt of such Forced Conversion Notice
(such date, the “Forced Conversion
Date”). The Company may not deliver a Forced Conversion
Notice, and any Forced Conversion Notice delivered by the Company shall not be
effective, unless all Equity Conditions are met (unless waived in writing by the
Holder) on each Trading Day occurring during the applicable Threshold Period
through and including the later of the Forced Conversion Date and the Trading
Day after the date such Conversion Shares pursuant to such conversion are
delivered to the Holder. Any Forced Conversion shall be applied
ratably to all Holders based on their original principal amount of Notes,
provided that any voluntary conversions by a Holder shall be applied against the
Holder’s pro rata allocation, thereby decreasing the aggregate amount forcibly
converted hereunder if only a portion of this Note is forcibly
converted. For purposes of clarification, a Forced Conversion shall
be subject to all of the provisions of Section 4, including without limitation
the provision requiring payment of liquidated damages and limitations on
conversions.
13
Section
7.
Negative Covenants.
As long as any portion of this Note remains outstanding, unless the holders of
at least 67% in principal amount of the then outstanding Notes shall have
otherwise given prior written consent, the Company shall not, and shall not
permit any of its subsidiaries (whether or not a Subsidiary on any Closing Date)
to, directly or indirectly:
a) other
than Permitted Indebtedness, enter into, create, incur, assume, guarantee or
suffer to exist any indebtedness for borrowed money of any kind, including but
not limited to, a guarantee, on or with respect to any of its property or assets
now owned or hereafter acquired or any interest therein or any income or profits
therefrom;
b) other
than Permitted Liens, enter into, create, incur, assume or suffer to exist any
Liens of any kind, on or with respect to any of its property or assets now owned
or hereafter acquired or any interest therein or any income or profits
therefrom;
c) amend its charter documents, including, without
limitation, its certificate of incorporation and bylaws, in any manner that
materially and adversely affects any rights of the Holder;
d) repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of
shares of its Common Stock or Common Stock Equivalents other than as to the
Conversion Shares as permitted or required under the Transaction Documents
(except to the extent provided for in the Purchase Agreement);
e) repay, repurchase or offer to repay, repurchase or
otherwise acquire any Indebtedness, other than regularly scheduled principal and
interest payments as such terms are in effect as of the Closing Date (and
except for the Notes in accordance with the terms
of the Notes and except to the extent provided for in the Purchase
Agreement);
f)
repay, repurchase or offer
to repay, repurchase or otherwise acquire any indebtedness to any current or
former employees, officers or directors of the Company (except to the
extent provided for in the Purchase Agreement);
g) pay cash dividends or distributions on any equity
securities of the Company;
h) enter
into any transaction with any Affiliate of the Company which would be required
to be disclosed in any public filing with the Commission, unless such
transaction is made on an arm’s-length basis and expressly approved by a
majority of the disinterested directors of the Company (even if less than a
quorum otherwise required for board approval); or
i)
enter into any agreement with respect to any of the foregoing.
14
Section
8.
Events of
Default.
a) “Event of Default”
means, wherever used herein, any of the following events (whatever the reason
for such event and whether such event 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.
any default in the payment of (A) the principal amount of any Note
or (B) interest, liquidated damages and other amounts owing to a Holder on any
Note, as and when the same shall become due and payable (whether on a Conversion
Date or the Maturity Date or by acceleration or otherwise) which default, solely
in the case of an interest payment or other default under clause (B) above, is
not cured within 3 Trading Days;
ii. the
Company shall fail to observe or perform any other covenant or agreement
contained in the Notes (other than a breach by the Company of its obligations to
deliver shares of Common Stock to the Holder upon conversion, which breach is
addressed in clause (xiii) below) which failure is not cured, if possible to
cure, within 5 Trading Days after notice of such failure sent by the
Holder or by any other Holder;
iii. a
default or event of default (subject to any grace or cure period provided in the
applicable agreement, document or instrument) in any material respect shall
occur under (A) any of the Transaction Documents or (B) any other material
agreement, lease, document or instrument to which the Company or any Subsidiary
is obligated (and not covered by clause (vi) below);
iv. any representation
or warranty made in this Note, any other Transaction Document, any written
statement pursuant hereto or thereto or any other report, financial statement or
certificate made or delivered to the Holder or any other Holder shall be untrue or incorrect in any material respect as
of the date when made or deemed made;
v. the
Company or any Subsidiary shall be subject to a Bankruptcy Event;
vi. the
Company or any Subsidiary shall default on any of its obligations under any
mortgage, credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by which there
may be secured or evidenced, any indebtedness for borrowed money or money due
under any long term leasing or factoring arrangement that (a) involves an
obligation greater than $100,000, whether such indebtedness now exists or shall
hereafter be created, and (b) results in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise become
due and payable;
15
vii. if
at any time the Common Stock shall not be eligible for listing or quotation for
trading on an Eligible Market and shall not be eligible to resume listing or
quotation for trading thereon within five (5) Trading Days;
viii. the
Company shall be a party to any Change of Control Transaction or Fundamental
Transaction or shall agree to sell or dispose of all or in excess of 33% of its
assets in one transaction or a series of related transactions (whether or not
such sale would constitute a Change of Control Transaction) (except to the
extent provided for in the Purchase Agreement);
ix. if at any time after three months following the Closing
Date the Company is not subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act or has failed to file all reports required to be
filed thereunder during the then preceding 12 months (or such shorter period
that the Company was required to file such reports);
x. any material adverse change in the condition, value or
operation of a material portion of the Intellectual
Property;
xi. the
Company shall fail for any reason to deliver certificates to a Holder prior to
the fifth Trading Day after a Conversion Date or any Forced Conversion Date
pursuant to Section 4(d) or the Company shall provide at any time notice to the
Holder, including by way of public announcement, of the Company’s intention to
not honor requests for conversions of any Notes in accordance with the terms
hereof; or
xii. any
monetary judgment, writ or similar final judicial or arbitration process shall
be entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $100,000, and such judgment,
writ or similar final process shall remain unvacated, unbonded or unstayed for a
period of 45 calendar days.
b) Remedies Upon Event of
Default. If any Event of Default occurs, the outstanding principal amount
of this Note, plus accrued but unpaid interest, liquidated damages and other
amounts owing in respect thereof through the date of acceleration, shall become,
at the Holder’s election, immediately due and payable in cash at the Mandatory
Default Amount. After the occurrence and during the continuance of
any Event of Default, the interest rate on this Note shall accrue at an interest
rate equal to the lesser of 24% per annum or the maximum rate permitted under
applicable law. Upon the payment in full of the Mandatory Default
Amount, the Holder shall promptly surrender this Note to or as directed by the
Company. In connection with such acceleration described herein, the
Holder need not provide, and the Company hereby waives, any presentment, demand,
protest or other notice of any kind, and the Holder may immediately and without
expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable
law. Such acceleration may be rescinded and annulled by ▇▇▇▇▇▇ at any
time prior to payment hereunder and the Holder shall have all rights as a holder
of the Note until such time, if any, as the Holder receives full payment
pursuant to this Section 8(b). No such rescission or annulment shall
affect any subsequent Event of Default or impair any right consequent
thereon.
16
Section
9.
Miscellaneous.
a) Notices. Any
and all notices or other communications or deliveries to be provided by the
Holder hereunder, including, without limitation, any Notice of Conversion, shall
be in writing and delivered personally, by facsimile, by email, or sent by a
nationally recognized overnight courier service, addressed to the Company, at
the address set forth above, or such other facsimile number, email address or
mailing address as the Company may specify for such purpose by notice to the
Holder delivered in accordance with this Section 9. Any and all
notices or other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile, by email
or sent by a nationally recognized overnight courier service addressed to each
Holder at the facsimile number or address of the Holder appearing on the books
of the Company, or if no such facsimile number or address appears, at the
principal place of business of the Holder. Except as may otherwise be
provided herein, any notice or other communication or deliveries hereunder shall
be deemed given and effective on the earliest of (i) the date of transmission,
if such notice or communication is delivered via facsimile or by email prior to
5:30 p.m. (New York City time) on a Trading Day, with
electronic confirmation of such delivery, (ii) the first Trading Day immediately
following the date of transmission, if such notice or communication is delivered
via facsimile or by email not on a Trading Day or between 5:30 p.m. (New York
City time) and 11:59 p.m. (New York City time) on any date, with
electronic confirmation of such delivery, (iii) the second Business Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The address, facsimile and email address for
such notices and communications shall be as set forth on the signature pages
attached to the Purchase Agreement.
b) Absolute Obligation.
Except as expressly provided herein, no provision of this Note shall alter or
impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of, liquidated damages and accrued interest, as applicable, on
this Note at the time, place, and rate, and in the coin or currency, herein
prescribed. This Note is a direct debt obligation of the
Company. This Note ranks pari passu with all other
Notes now or hereafter issued under the terms set forth herein.
c) Lost or Mutilated
Note. If this Note shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Note, or in lieu of or in substitution
for a lost, stolen or destroyed Note, a new Note for the principal amount of
this Note so mutilated, lost, stolen or destroyed, but only upon receipt of
evidence of such loss, theft or destruction of such Note, and of the ownership
hereof, reasonably satisfactory to the Company.
17
d) Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Note shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflict of laws thereof. Each
party agrees that all legal proceedings concerning the interpretation,
enforcement and defense of the transactions contemplated by any of the
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, employees or agents) shall be
commenced in the state and federal courts sitting in the City of New York,
Borough of Manhattan (the “New York
Courts”). Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such New York Courts, or such New York Courts are
improper or inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Note and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any other manner permitted by
applicable law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Note or the transactions
contemplated hereby. If either party shall commence an action or proceeding to
enforce any provisions of this Note, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its reasonable attorney’s
fees and other reasonable costs and expenses reasonably incurred in the
investigation, preparation and prosecution of such action or
proceeding.
e) Waiver. Any
waiver by the Company or 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 Company or 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 by the Company
or the Holder must be in writing.
18
f) Severability. 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 violates the applicable law governing
usury, the applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum rate of interest permitted under applicable law.
The Company covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on this Note as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this indenture, and the Company (to the extent it may lawfully do
so) hereby expressly waives all benefits or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impeded
the execution of any power herein granted to the Holder, but will suffer and
permit the execution of every such as though no such law has been
enacted.
g) Next Business
Day. 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.
h) Headings. The
headings contained herein are for convenience only, do not constitute a part of
this Note and shall not be deemed to limit or affect any of the provisions
hereof.
i) Assumption. Any
successor to the Company or any surviving entity in a Fundamental Transaction
shall (i) assume, prior to such Fundamental Transaction, all of the obligations
of the Company under this Note and the other Transaction Documents pursuant to
written agreements in form and substance satisfactory to the Holder (such
approval not to be unreasonably withheld or delayed) and (ii) issue to the
Holder a new Note of such successor entity evidenced by a written instrument
substantially similar in form and substance to this Note, including, without
limitation, having a principal amount and interest rate equal to the principal
amount and the interest rate of this Note and having similar ranking to this
Note, which shall be satisfactory to the Holder (any such approval not to be
unreasonably withheld or delayed). The provisions of this Section 9(i)
shall apply similarly and equally to successive Fundamental Transactions and
shall be applied without regard to any limitations of this Note.
j) Usury. This
Note shall be subject to the anti-usury limitations contained in the Purchase
Agreement.
*********************
19
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly
authorized officer as of the date first above indicated.
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By:
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Name: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
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Title: CFO
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ANNEX
A
NOTICE
OF CONVERSION
The
undersigned hereby elects to convert principal under the 10% Senior Convertible
Note due _______________________ of CDEX Inc., a Nevada corporation (the Company”), into
shares of common stock (the “Common Stock”), of
the Company according to the conditions hereof, as of the date written
below. If shares of Common Stock are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion,
except for such transfer taxes, if any.
By the delivery of this Notice of
Conversion the undersigned represents and warrants to the Company that its
ownership of the Common Stock does not exceed the amounts specified under
Section 4 of this Note, as determined in accordance with Section 13(d) of the
Exchange Act.
The undersigned agrees to comply with
the prospectus delivery requirements under the applicable securities laws in
connection with any transfer of the aforesaid shares of Common Stock pursuant to
any prospectus.
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Conversion
calculations:
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Date
to Effect Conversion:
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Principal
Amount of Note to be Converted:
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Interest
Accrued on Account
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of
Conversion at Issue:
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Number
of shares of Common Stock to be issued:
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Signature:
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Name:
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Address
for Delivery of Common Stock Certificates:
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Or
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DWAC
Instructions:
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Broker
No:
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Account
No:
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