Attached files
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8-K - RAPTOR RESOURCES HOLDINGS INC. | v195120_8-k.htm |
EX-10.1 - RAPTOR RESOURCES HOLDINGS INC. | v195120_ex10-1.htm |
Exhibit
10.2
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE
HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.
Principal Amount:
$50,000.00
|
Issue Date: August 3,
2010
|
Purchase Price:
$50,000.00
|
CONVERTIBLE
PROMISSORY NOTE
FOR VALUE
RECEIVED, LANTIS
LASER
INC., a Nevada corporation (hereinafter called the
“Borrower”), hereby promises to pay to the order of ASHER ENTERPRISES,
INC., a Delaware
corporation, or registered assigns (the “Holder”) the sum of $50,000.00 together with any interest as set forth
herein, on May 5, 2011 (the “Maturity Date”), and to pay
interest on the unpaid principal balance hereof at the rate of eight percent
(8%) (the “Interest Rate”) per annum from the date hereof (the “Issue Date”)
until the same becomes due and payable, whether at maturity or upon acceleration
or by prepayment or otherwise. This Note may not be prepaid in whole
or in part except as otherwise explicitly set forth herein with the prior
written consent of the Holder which may be withheld for any reason or no reason.
Any amount of principal or interest on this Note which is not paid when due
shall bear interest at the rate of twenty two percent (22%) per annum from the
due date thereof until the same is paid (“Default
Interest”). Interest shall commence accruing on the Issue Date, shall
be computed on the basis of a 365-day year and the actual number of days
elapsed. All payments due hereunder (to the extent not converted into
common stock, $0.001 par value per share (the “Common
Stock”) in accordance with the terms hereof) shall be made in lawful money of
the United States of America. All payments shall be made at such
address as the Holder shall hereafter give to the Borrower by written notice
made in accordance with the provisions of this Note. Whenever any
amount expressed to be due by the terms of this Note is due on any day which is
not a business day, the same shall instead be due on the next succeeding day
which is a business day and, in the case of any interest payment date which is
not the date on which this Note is paid in full, the extension of the due date
thereof shall not be taken into account for purposes of determining the amount
of interest due on such date. As used in this Note, the term
“business day” shall mean any day other than a Saturday, Sunday or a day on
which commercial banks in the city of New York, New York are authorized or required by law or
executive order to remain closed. Each capitalized term used herein,
and not otherwise defined, shall have the meaning ascribed thereto in that
certain Securities Purchase Agreement dated the date hereof, pursuant to which
this Note was originally issued (the “Purchase Agreement”).
1
This Note is free from all taxes, liens,
claims and encumbrances with respect to the issue thereof and shall not be
subject to preemptive rights or other similar rights of shareholders of the
Borrower and will not impose personal liability upon the holder
thereof.
The following terms shall apply to this
Note:
ARTICLE
I. CONVERSION
RIGHTS
1.1 Conversion
Right. The
Holder shall have the right from time to time, and at any time during the period
beginning on the date of this Note and ending on the later of: (i) the Maturity
Date and (ii) the date of payment of the Default Amount (as defined in Article
III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining
outstanding principal amount of this Note to convert all or any part of the
outstanding and unpaid principal amount of this Note into fully paid and non-
assessable shares of Common Stock, as such Common Stock exists on the Issue
Date, or any shares of capital stock or other securities of the Borrower into
which such Common Stock shall hereafter be changed or reclassified at the
conversion price (the “Conversion Price”) determined as provided
herein (a “Conversion”); provided, however, that in no event shall the Holder be
entitled to convert any portion of this Note in excess of that portion of this
Note upon conversion of which the sum of (1) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Notes or the unexercised or unconverted portion of
any other security of the Borrower subject to a limitation on conversion or
exercise analogous to the limitations contained herein) and (2) the number of
shares of Common Stock issuable upon the conversion of the portion of this Note
with respect to which the determination of this proviso is being made, would
result in beneficial ownership by the Holder and its affiliates of more than
4.99% of the outstanding shares of Common Stock. For purposes of the
proviso to the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except
as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may
be waived by the Holder upon, at the election of the Holder, not less than 61
days’ prior notice to the Borrower, and the provisions of the conversion
limitation shall continue to apply until such 61st day (or such later date, as
determined by the Holder, as may be specified in such notice of
waiver).. The number of shares of Common Stock to be issued upon each
conversion of this Note shall be determined by dividing the Conversion Amount
(as defined below) by the applicable Conversion Price then in effect on the date
specified in the notice of conversion, in the form attached hereto as Exhibit A
(the “Notice of Conversion”), delivered to the Borrower by the Holder in
accordance with Section 1.4 below; provided that the Notice of Conversion is
submitted by facsimile (or by other means resulting in, or reasonably expected
to result in, notice) to the Borrower before 6:00 p.m., New York, New York time
on such conversion date (the “Conversion Date”). The term “Conversion
Amount” means, with respect to any conversion of this Note, the sum of (1) the
principal amount of this Note to be converted in such conversion plus (2) at the Borrower’s option, accrued
and unpaid interest, if any, on such principal amount at the interest rates
provided in this Note to the Conversion Date, provided, however, that the
Company shall have the right to pay any or all interest in cash plus (3) at the Borrower’s option, Default
Interest, if any, on the amounts referred to in the immediately preceding
clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts
owed to the Holder pursuant to Sections 1.3 and 1.4(g)
hereof.
2
1.2
Conversion
Price.
(a) Calculation
of Conversion Price. The conversion price (the
“Conversion Price”) shall equal the Variable Conversion Price (as defined
herein)(subject to equitable adjustments for stock splits, stock dividends or
rights offerings by the Borrower relating to the Borrower’s securities or the
securities of any subsidiary of the Borrower, combinations, recapitalization,
reclassifications, extraordinary distributions and similar
events). The "Variable Conversion Price" shall mean 58%
multiplied by the Market Price (as defined herein)(representing a discount rate
of 42%). “Market Price” means the
average of the lowest three (3) Trading Prices (as defined below) for the Common
Stock during the ten (10) Trading Day period ending one Trading Day prior to the
date the Conversion Notice is sent by the Holder to the Borrower via facsimile
(the “Conversion Date”). “Trading Price” means, for any security as
of any date, the closing bid price on the Over-the-Counter Bulletin Board, or
applicable trading market (the “OTCBB”) as reported by a reliable reporting
service (“Reporting Service”) mutually acceptable to Borrower and Holder and
hereafter designated by Holders of a majority in interest of the Notes and the
Borrower or, if the OTCBB is not the principal trading market for such security,
the closing bid price of such security on the principal securities exchange or
trading market where such security is listed or traded or, if no closing bid
price of such security is available in any of the foregoing manners, the average
of the closing bid prices of any market makers for such security that are listed
in the “pink sheets” by the National Quotation Bureau, Inc. If the
Trading Price cannot be calculated for such security on such date in the manner
provided above, the Trading Price shall be the fair market value as mutually
determined by the Borrower and the holders of a majority in interest of the
Notes being converted for which the calculation of the Trading Price is required
in order to determine the Conversion Price of such Notes. “Trading
Day” shall mean any day on which the Common Stock is traded for any period on
the OTCBB, or on the principal securities exchange or other securities market on
which the Common Stock is then being traded.
(b) Conversion
Price During Major Announcements. Notwithstanding anything
contained in Section 1.2(a) to the contrary, in the event the Borrower (i) makes
a public announcement that it intends to consolidate or merge with any other
corporation (other than a merger in which the Borrower is the surviving or
continuing corporation and its capital stock is unchanged) or sell or transfer
all or substantially all of the assets of the Borrower or (ii) any person, group
or entity (including the Borrower) publicly announces a tender offer to purchase
50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the
date of the announcement referred to in clause (i) or (ii) is hereinafter
referred to as the “Announcement Date”), then the Conversion Price
shall, effective upon the Announcement Date and continuing through the Adjusted
Conversion Price Termination Date (as defined below), be equal to the lower of
(x) the Conversion Price which would have been applicable for a Conversion
occurring on the Announcement Date and (y) the Conversion Price that would
otherwise be in effect. From and after the Adjusted Conversion Price Termination
Date, the Conversion Price shall be determined as set forth in this Section
1.2(a). For purposes hereof, “Adjusted Conversion Price
Termination Date” shall mean, with respect to any proposed transaction or tender
offer (or takeover scheme) for which a public announcement as contemplated by
this Section 1.2(b) has been made, the date upon which the Borrower (in the case
of clause (i) above) or the person, group or entity (in the case of clause (ii)
above) consummates or publicly announces the termination or abandonment of the
proposed transaction or tender offer (or takeover scheme) which caused this
Section 1.2(b) to become operative.
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1.3 Authorized
Shares. The
Borrower covenants that during the period the conversion right exists, the
Borrower will reserve from its authorized and unissued Common Stock a sufficient
number of shares, free from preemptive rights, to provide for the issuance of
Common Stock upon the full conversion of this Note issued pursuant to the
Purchase Agreement. The Borrower is required at all times to have
authorized and reserved five times the number of shares that is
actually issuable upon full conversion of the Note (based on the Conversion
Price of the Notes in effect from time to time)(the “Reserved
Amount”). The Reserved Amount shall be increased from time to time in
accordance with the Borrower’s obligations pursuant to Section 4(g) of the
Purchase Agreement. The Borrower represents that upon issuance, such
shares will be duly and validly issued, fully paid and
non-assessable. In addition, if the Borrower shall issue any
securities or make any change to its capital structure which would change the
number of shares of Common Stock into which the Notes shall be convertible at
the then current Conversion Price, the Borrower shall at the same time make
proper provision so that thereafter there shall be a sufficient number of shares
of Common Stock authorized and reserved, free from preemptive rights, for
conversion of the outstanding Notes. The Borrower (i) acknowledges
that it has irrevocably instructed its transfer agent to issue certificates for
the Common Stock issuable upon conversion of this Note, and (ii) agrees
that its issuance of this Note shall constitute full authority to its officers
and agents who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for shares of Common Stock in
accordance with the terms and conditions of this Note.
If, at any time a Holder of this Note
submits a Notice of Conversion, and the Borrower does not have sufficient
authorized but unissued shares of Common Stock available to effect such
conversion in accordance with the provisions of this Article I (a “Conversion
Default”), the Borrower shall issue to the Holder all of the shares of Common
Stock which are then available to effect such conversion. The portion
of this Note which the Holder included in its Conversion Notice and which
exceeds the amount which is then convertible into available shares of Common
Stock (the “Excess Amount”) shall, notwithstanding anything to the contrary
contained herein, not be convertible into Common Stock in accordance with the
terms hereof until (and at the Holder’s option at any time after) the date
additional shares of Common Stock are authorized by the Borrower to permit such
conversion, at which time the Conversion Price in respect thereof shall be the
lesser of (i) the Conversion Price on the Conversion Default Date (as defined
below) and (ii) the Conversion Price on the Conversion Date thereafter elected
by the Holder in respect thereof. In addition, the Borrower shall pay
to the Holder payments (“Conversion Default Payments”) for a Conversion Default
in the amount of (x) the sum
of (1) the then outstanding
principal amount of this Note plus (2) accrued and unpaid interest on the
unpaid principal amount of this Note through the Authorization Date (as defined
below) plus (3) Default Interest, if any, on the
amounts referred to in clauses (1) and/or (2), multiplied
by (y) .24, multiplied
by (z) (N/365), where N =
the number of days from the day the holder submits a Notice of Conversion giving
rise to a Conversion Default (the “Conversion Default Date”) to the date (the
“Authorization Date”) that the Borrower authorizes a sufficient number of shares
of Common Stock to effect conversion of the full outstanding principal balance
of this Note. The Borrower shall use its best efforts to authorize a
sufficient number of shares of Common Stock as soon as practicable following the
earlier of (i) such time that the Holder notifies the Borrower or that the
Borrower otherwise becomes aware that there are or likely will be insufficient
authorized and unissued shares to allow full conversion thereof and (ii) a
Conversion Default. The Borrower shall send notice to the Holder of
the authorization of additional shares of Common Stock, the Authorization Date
and the amount of Holder’s accrued Conversion Default Payments. The
accrued Conversion Default Payments for each calendar month shall be paid in
cash or shall be convertible into Common Stock (at such time as there are
sufficient authorized shares of Common Stock) at the applicable Conversion
Price, at the Borrower’s option, as follows:
4
(a) In the event Holder elects to take such
payment in cash, cash payment shall be made to Holder by the fifth
(5th) day of the month following the month
in which it has accrued; and
(b) In the event Holder elects to take such
payment in Common Stock, the Holder may convert such payment amount into Common
Stock at the Conversion Price (as in effect at the time of conversion) at any
time after the fifth day of the month following the month in which it has
accrued in accordance with the terms of this Article I (so long as there is then
a sufficient number of authorized shares of Common Stock).
The Holder’s election shall be made in
writing to the Borrower at any time prior to 6:00 p.m., New York, New York time, on the third day of the month
following the month in which Conversion Default payments have
accrued. If no election is made, the Holder shall be deemed to have
elected to receive cash. Nothing herein shall limit the Holder’s
right to pursue actual damages (to the extent in excess of the Conversion
Default Payments) for the Borrower’s failure to maintain a sufficient number of
authorized shares of Common Stock, and each holder shall have the right to
pursue all remedies available at law or in equity (including degree of specific
performance and/or injunctive relief).
1.4 Method of
Conversion.
(a) Mechanics of
Conversion. Subject to Section 1.1,
this Note may be converted by the Holder in whole or in part at any time from
time to time after the Issue Date, by (A) submitting to the Borrower a
Notice of Conversion (by facsimile or other reasonable means of communication
dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time)
and (B) subject to Section 1.4(b), surrendering this Note at the principal
office of the Borrower.
(b) Surrender of
Note Upon Conversion. Notwithstanding anything to
the contrary set forth herein, upon conversion of this Note in accordance with
the terms hereof, the Holder shall not be required to physically surrender this
Note to the Borrower unless the entire unpaid principal amount of this Note is
so converted. The Holder and the Borrower shall maintain records
showing the principal amount so converted and the dates of such conversions or
shall use such other method, reasonably satisfactory to the Holder and the
Borrower, so as not to require physical surrender of this Note upon each such
conversion. In the event of any dispute or discrepancy, such records
of the Borrower shall, prima facie, be controlling and determinative in the
absence of manifest error. Notwithstanding the foregoing, if any
portion of this Note is converted as aforesaid, the Holder may not transfer this
Note unless the Holder first physically surrenders this Note to the Borrower,
whereupon the Borrower will forthwith issue and deliver upon the order of the
Holder a new Note of like tenor, registered as the Holder (upon payment by the
Holder of any applicable transfer taxes) may request, representing in the
aggregate the remaining unpaid principal amount of this Note. 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
represented by this Note may be less than the amount stated on the face
hereof.
5
(c) Payment of
Taxes. The
Borrower shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issue and delivery of shares of Common Stock or
other securities or property on conversion of this Note in a name other than
that of the Holder (or in street name), and the Borrower shall not be required
to issue or deliver any such shares or other securities or property unless and
until the person or persons (other than the Holder or the custodian in whose
street name such shares are to be held for the Holder’s account) requesting the
issuance thereof shall have paid to the Borrower the amount of any such tax or
shall have established to the satisfaction of the Borrower that such tax has
been paid.
(d) Delivery of
Common Stock Upon Conversion. Upon receipt by the
Borrower from the Holder of a facsimile transmission (or other reasonable means
of communication) of a Notice of Conversion meeting the requirements for
conversion as provided in this Section 1.4, the Borrower shall issue and deliver
or cause to be issued and delivered to or upon the order of the Holder
certificates for the Common Stock issuable upon such conversion within three (3)
business days after such receipt (and, solely in the case of conversion of the
entire unpaid principal amount hereof, surrender of this Note) (such second
business day being hereinafter referred to as the “Deadline”) in accordance with
the terms hereof and the Purchase Agreement (including, without limitation, in
accordance with the requirements of [Section 2(g)] of the Purchase Agreement
that certificates for shares of Common Stock issued on or after the effective
date of the Registration Statement upon conversion of this Note shall not bear
any restrictive legend).
(e) Obligation
of Borrower to Deliver Common Stock. Upon receipt by the
Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder
of record of the Common Stock issuable upon such conversion, the outstanding
principal amount and the amount of accrued and unpaid interest on this Note
shall be reduced to reflect such conversion, and, unless the Borrower defaults
on its obligations under this Article I, all rights with respect to the portion
of this Note being so converted shall forthwith terminate except the right to
receive the Common Stock or other securities, cash or other assets, as herein
provided, on such conversion. If the Holder shall have given a Notice
of Conversion as provided herein, the Borrower’s obligation to issue and deliver
the certificates for Common Stock shall be absolute and unconditional,
irrespective of the absence of any action by the Holder to enforce the same, any
waiver or consent with respect to any provision thereof, the recovery of any
judgment against any person or any action to enforce the same, any failure or
delay in the enforcement of any other obligation of the Borrower to the holder
of record, or any setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by the Holder of any obligation to the Borrower,
and irrespective of any other circumstance which might otherwise limit such
obligation of the Borrower to the Holder in connection with such
conversion. The Conversion Date specified in the Notice of Conversion
shall be the Conversion Date so long as the Notice of Conversion is received by
the Borrower before 6:00 p.m., New York, New York time, on such date.
(f) Delivery of
Common Stock by Electronic Transfer. In lieu of delivering
physical certificates representing the Common Stock issuable upon conversion,
provided the Borrower’s transfer agent is participating in the Depository Trust
Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon
request of the Holder and its compliance with the provisions contained in
Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to
cause its transfer agent to electronically transmit the Common Stock issuable
upon conversion to the Holder by crediting the account of Holder’s Prime Broker
with DTC through its Deposit Withdrawal Agent Commission (“DWAC”)
system.
6
(g) Failure to
Deliver Common Stock Prior to Deadline. Without in any way limiting
the Holder’s right to pursue other remedies, including actual damages and/or
equitable relief, the parties agree that if delivery of the Common Stock
issuable upon conversion of this Note is more than three (3) business days after
the Deadline (other than a failure due to the circumstances described in Section
1.3 above, which failure shall be governed by such Section) the Borrower shall
pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that
the Borrower fails to deliver such Common Stock. Such cash amount
shall be paid to Holder by the fifth day of the month following the month in
which it has accrued or, at the option of the Holder (by written notice to the
Borrower by the first day of the month following the month in which it has
accrued), shall be added to the principal amount of this Note, in which event
interest shall accrue thereon in accordance with the terms of this Note and such
additional principal amount shall be convertible into Common Stock in accordance
with the terms of this Note.
1.5 Concerning
the Shares. The
shares of Common Stock issuable upon conversion of this Note may not be sold or
transferred unless (i) such shares are sold pursuant to an effective
registration statement under the Act or (ii) the Borrower or its transfer agent
shall have been furnished with an opinion of counsel (which opinion
shall be in form, substance and scope customary for opinions of counsel in
comparable transactions) to the effect that the shares to be sold or transferred
may be sold or transferred pursuant to an exemption from such registration or
(iii) such shares are sold or transferred pursuant to Rule 144 under the
Act (or a successor rule) (“Rule 144”) or (iv) such shares are transferred to an
“affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or
otherwise transfer the shares only in accordance with this Section 1.5 and who
is an Accredited Investor (as defined in the Purchase
Agreement). Except as otherwise provided in the Purchase Agreement
(and subject to the removal provisions set forth below), until such time as the
shares of Common Stock issuable upon conversion of this Note have been
registered under the Act or otherwise may be sold pursuant to Rule 144 without
any restriction as to the number of securities as of a particular date that can
then be immediately sold, each certificate for shares of Common Stock issuable
upon conversion of this Note that has not been so included in an effective
registration statement or that has not been sold pursuant to an effective
registration statement or an exemption that permits removal of the legend, shall
bear a legend substantially in the following form, as
appropriate:
“NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF
(A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE
SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
7
The legend set forth above shall be
removed and the Borrower shall issue to the Holder a new certificate therefore
free of any transfer legend if (i) the Borrower or its transfer agent shall have
received an opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that a public sale
or transfer of such Common Stock may be made without registration under the Act
and the shares are so sold or transferred, (ii) such Holder provides the
Borrower or its transfer agent with reasonable assurances that the Common Stock
issuable upon conversion of this Note (to the extent such securities are deemed
to have been acquired on the same date) can be sold pursuant to Rule 144 or
(iii) in the case of the Common Stock issuable upon conversion of this Note,
such security is registered for sale by the Holder under an effective
registration statement filed under the Act or otherwise may be sold pursuant to
Rule 144 without any restriction as to the number of securities as of a
particular date that can then be immediately sold.
1.6 Effect of
Certain Events.
(a) Effect of
Merger, Consolidation, Etc. At the option of the
Holder, the sale, conveyance or disposition of all or substantially all of the
assets of the Borrower, the effectuation by the Borrower of a transaction or
series of related transactions in which more than 50% of the voting power of the
Borrower is disposed of, or the consolidation, merger or other business
combination of the Borrower with or into any other Person (as defined below) or
Persons when the Borrower is not the survivor shall either: (i) be
deemed to be an Event of Default (as defined in Article III) pursuant to which
the Borrower shall be required to pay to the Holder upon the consummation of and
as a condition to such transaction an amount equal to the Default Amount (as
defined in Article III) or (ii) be treated pursuant to Section 1.6(b)
hereof. “Person” shall mean any individual, corporation, limited
liability company, partnership, association, trust or other entity or
organization.
(b) Adjustment
Due to Merger, Consolidation, Etc. If, at any time when this
Note is issued and outstanding and prior to conversion of all of the Notes,
there shall be any merger, consolidation, exchange of shares, recapitalization,
reorganization, or other similar event, as a result of which shares of Common
Stock of the Borrower shall be changed into the same or a different number of
shares of another class or classes of stock or securities of the Borrower or
another entity, or in case of any sale or conveyance of all or substantially all
of the assets of the Borrower other than in connection with a plan of complete
liquidation of the Borrower, then the Holder of this Note shall thereafter have
the right to receive upon conversion of this Note, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such stock, securities or
assets which the Holder would have been entitled to receive in such transaction
had this Note been converted in full immediately prior to such transaction
(without regard to any limitations on conversion set forth herein), and in any
such case appropriate provisions shall be made with respect to the rights and
interests of the Holder of this Note to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Conversion
Price and of the number of shares issuable upon conversion of the Note) shall
thereafter be applicable, as nearly as may be practicable in relation to any
securities or assets thereafter deliverable upon the conversion
hereof. The Borrower shall not affect any transaction described in
this Section 1.6(b) unless (a) it first gives, to the extent practicable, thirty
(30) days prior written notice (but in any event at least fifteen (15) days
prior written notice) of the record date of the special meeting of shareholders
to approve, or if there is no such record date, the consummation of, such
merger, consolidation, exchange of shares, recapitalization, reorganization or
other similar event or sale of assets (during which time the Holder shall be
entitled to convert this Note) and (b) the resulting successor or acquiring
entity (if not the Borrower) assumes by written instrument the obligations of
this Section 1.6(b). The above provisions shall similarly apply to
successive consolidations, mergers, sales, transfers or share
exchanges.
8
(c) Adjustment
Due to Distribution. If the Borrower shall
declare or make any distribution of its assets (or rights to acquire its assets)
to holders of Common Stock as a dividend, stock repurchase, by way of return of
capital or otherwise (including any dividend or distribution to the Borrower’s
shareholders in cash or shares (or rights to acquire shares) of capital stock of
a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this
Note shall be entitled, upon any conversion of this Note after the date of
record for determining shareholders entitled to such Distribution, to receive
the amount of such assets which would have been payable to the Holder with
respect to the shares of Common Stock issuable upon such conversion had such
Holder been the holder of such shares of Common Stock on the record date for the
determination of shareholders entitled to such Distribution.
(d) Adjustment
Due to Dilutive Issuance. If, at any time when any
Notes are issued and outstanding, the Borrower issues or sells, or in accordance
with this Section 1.6(d) hereof is deemed to have issued or sold, any shares of
Common Stock for no consideration or for a consideration per share (before
deduction of reasonable expenses or commissions or underwriting discounts or
allowances in connection therewith) less than the Conversion Price in effect on
the date of such issuance (or deemed issuance) of such shares of Common Stock (a
“Dilutive Issuance”), then immediately upon the Dilutive Issuance, the
Conversion Price will be reduced to the amount of the consideration per share
received by the Borrower in such Dilutive Issuance.
The Borrower shall be deemed to have
issued or sold shares of Common Stock if the Borrower in any manner issues or
grants any warrants, rights or options (not including employee stock option
plans), whether or not immediately exercisable, to subscribe for or to purchase
Common Stock or other securities convertible into or exchangeable for Common
Stock (“Convertible Securities”) (such warrants, rights and options to purchase
Common Stock or Convertible Securities are hereinafter referred to as “Options”)
and the price per share for which Common Stock is issuable upon the exercise of
such Options is less than the Conversion Price then in effect, then the
Conversion Price shall be equal to such price per share. For purposes
of the preceding sentence, the “price per share for which Common Stock is
issuable upon the exercise of such Options” is determined by dividing (i) the
total amount, if any, received or receivable by the Borrower as consideration
for the issuance or granting of all such Options, plus the minimum aggregate
amount of additional consideration, if any, payable to the Borrower upon the
exercise of all such Options, plus, in the case of Convertible Securities
issuable upon the exercise of such Options, the minimum aggregate amount of
additional consideration payable upon the conversion or exchange thereof at the
time such Convertible Securities first become convertible or exchangeable, by
(ii) the maximum total number of shares of Common Stock issuable upon the
exercise of all such Options (assuming full conversion of Convertible
Securities, if applicable). No further adjustment to the Conversion
Price will be made upon the actual issuance of such Common Stock upon the
exercise of such Options or upon the conversion or exchange of Convertible
Securities issuable upon exercise of such Options.
9
Additionally, the Borrower shall be
deemed to have issued or sold shares of Common Stock if the Borrower in any
manner issues or sells any Convertible Securities, whether or not immediately
convertible (other than where the same are issuable upon the exercise of
Options), and the price per share for which Common Stock is issuable upon such
conversion or exchange is less than the Conversion Price then in effect, then
the Conversion Price shall be equal to such price per share. For the
purposes of the preceding sentence, the “price per share for which Common Stock
is issuable upon such conversion or exchange” is determined by dividing (i) the
total amount, if any, received or receivable by the Borrower as consideration
for the issuance or sale of all such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the Borrower
upon the conversion or exchange thereof at the time such Convertible Securities
first become convertible or exchangeable, by (ii) the maximum total number of
shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities. No further adjustment to the Conversion Price
will be made upon the actual issuance of such Common Stock upon conversion or
exchange of such Convertible Securities.
(e) Purchase
Rights. If, at
any time when any Notes are issued and outstanding, the Borrower issues any
convertible securities or rights to purchase stock, warrants, securities or
other property (the “Purchase Rights”) pro rata to the record holders of any
class of Common Stock, then the Holder of this Note will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which such Holder could have acquired if such Holder had held the number of
shares of Common Stock acquirable upon complete conversion of this Note (without
regard to any limitations on conversion contained herein) 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.
(f) Notice of
Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price as a result of the events
described in this Section 1.6, the Borrower, at its expense, shall promptly
compute such adjustment or readjustment and prepare and furnish to the Holder of
a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is
based. The Borrower shall, upon the written request at any time of
the Holder, furnish to such Holder a like certificate setting forth (i) such
adjustment or readjustment, (ii) the Conversion Price at the time in effect and
(iii) the number of shares of Common Stock and the amount, if any, of other
securities or property which at the time would be received upon conversion of
the Note.
10
1.7 Trading
Market Limitations. Unless permitted by the
applicable rules and regulations of the principal securities market on which the
Common Stock is then listed or traded, in no event shall the Borrower issue upon
conversion of or otherwise pursuant to this Note and the other Notes issued
pursuant to the Purchase Agreement more than the maximum number of shares of
Common Stock that the Borrower can issue pursuant to any rule of the principal
United States securities market on which the Common Stock is then traded (the
“Maximum Share Amount”), which shall be 4.99% of the total shares outstanding on
the Closing Date (as defined in the Purchase Agreement), subject to equitable
adjustment from time to time for stock splits, stock dividends, combinations,
capital reorganizations and similar events relating to the Common Stock
occurring after the date hereof. Once the Maximum Share Amount has
been issued (the date of which is hereinafter referred to as the “Maximum
Conversion Date”), if the Borrower fails to eliminate any prohibitions under
applicable law or the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with jurisdiction over
the Borrower or any of its securities on the Borrower’s ability to issue shares
of Common Stock in excess of the Maximum Share Amount (a “Trading Market
Prepayment Event”), in lieu of any further right to convert this Note, and in
full satisfaction of the Borrower’s obligations under this Note, the Borrower
shall pay to the Holder, within fifteen (15) business days of the Maximum
Conversion Date (the “Trading Market Prepayment Date”), an amount equal to 150%
times the sum of (a) the then outstanding principal
amount of this Note immediately following the Maximum Conversion Date,
plus (b) accrued and unpaid interest on the
unpaid principal amount of this Note to the Trading Market Prepayment Date,
plus (c) Default Interest, if any, on the
amounts referred to in clause (a) and/or (b) above, plus (d) any optional amounts that may be
added thereto at the Maximum Conversion Date by the Holder in accordance with
the terms hereof (the then outstanding principal amount of this Note immediately
following the Maximum Conversion Date, plus the amounts referred to in clauses (b),
(c) and (d) above shall collectively be referred to as the “Remaining
Convertible Amount”). In the event that the sum of (x) the aggregate
number of shares of Common Stock issued upon conversion of this Note and the
other Notes issued pursuant to the Purchase Agreement plus (y) the aggregate number of shares of
Common Stock that remain issuable upon conversion of this Note and the other
Notes issued pursuant to the Purchase Agreement, represents at least one hundred
percent (100%) of the Maximum Share Amount (the “Triggering Event”), the
Borrower will use its best efforts to seek and obtain Shareholder Approval (or
obtain such other relief as will allow conversions hereunder in excess of the
Maximum Share Amount) as soon as practicable following the Triggering Event and
before the Maximum Conversion Date. As used herein, “Shareholder
Approval” means approval by the shareholders of the Borrower to authorize the
issuance of the full number of shares of Common Stock which would be issuable
upon full conversion of the then outstanding Notes but for the Maximum Share
Amount.
1.8 Status as
Shareholder. Upon submission of a Notice
of Conversion by a Holder, (i) the shares covered thereby (other than the
shares, if any, which cannot be issued because their issuance would exceed such
Holder’s allocated portion of the Reserved Amount or Maximum Share Amount) shall
be deemed converted into shares of Common Stock and (ii) the Holder’s rights as
a Holder of such converted portion of this Note shall cease and terminate,
excepting only the right to receive certificates for such shares of Common Stock
and to any remedies provided herein or otherwise available at law or in equity
to such Holder because of a failure by the Borrower to comply with the
terms of this Note. Notwithstanding the foregoing, if a
Holder has not received certificates for all shares of Common Stock prior to the
tenth (10th) business day after the expiration of the Deadline with respect to a
conversion of any portion of this Note for any reason, then (unless the Holder
otherwise elects to retain its status as a holder of Common Stock by so
notifying the Borrower) the Holder shall regain the rights of a Holder of this
Note with respect to such unconverted portions of this Note and the Borrower
shall, as soon as practicable, return such unconverted Note to the Holder or, if
the Note has not been surrendered, adjust its records to reflect that such
portion of this Note has not been converted. In all cases, the Holder
shall retain all of its rights and remedies (including, without limitation, (i)
the right to receive Conversion Default Payments pursuant to Section 1.3 to the
extent required thereby for such Conversion Default and any subsequent
Conversion Default and (ii) the right to have the Conversion Price with respect
to subsequent conversions determined in accordance with Section 1.3) for the
Borrower’s failure to convert this Note.
11
ARTICLE
II. CERTAIN
COVENANTS
2.1 Distributions
on Capital Stock. So long as the Borrower
shall have any obligation under this Note, the Borrower shall not without the
Holder’s written consent (a) pay, declare or set apart for such payment, any
dividend or other distribution (whether in cash, property or other securities)
on shares of capital stock other than dividends on shares of Common Stock solely
in the form of additional shares of Common Stock or (b) directly or indirectly
or through any subsidiary make any other payment or distribution in respect of
its capital stock except for distributions pursuant to any shareholders’ rights
plan which is approved by a majority of the Borrower’s disinterested
directors.
2.2 Restriction
on Stock Repurchases. So long as the Borrower
shall have any obligation under this Note, the Borrower shall not without the
Holder’s written consent redeem, repurchase or otherwise acquire (whether for
cash or in exchange for property or other securities or otherwise) in any one
transaction or series of related transactions any shares of capital stock of the
Borrower or any warrants, rights or options to purchase or acquire any such
shares.
2.3 Borrowings. So long as the Borrower
shall have any obligation under this Note, the Borrower shall not, without the
Holder’s written consent, create, incur, assume or suffer to exist any liability
for borrowed money, except (a) borrowings in existence or committed on the date
hereof and of which the Borrower has informed Holder in writing prior to the
date hereof, (b) indebtedness to trade creditors or financial institutions
incurred in the ordinary course of business or (c) borrowings, the proceeds of
which shall be used to repay this Note.
2.4 Sale of
Assets. So long
as the Borrower shall have any obligation under this Note, the Borrower shall
not, without the Holder’s written consent, sell, lease or otherwise dispose of
any significant portion of its assets outside the ordinary course of
business. Any consent to the disposition of any assets may be
conditioned on a specified use of the proceeds of
disposition.
2.5 Advances and
Loans. So long
as the Borrower shall have any obligation under this Note, the Borrower shall
not, without the Holder’s written consent, lend money, give credit or make
advances to any person, firm, joint venture or corporation, including, without
limitation, officers, directors, employees, subsidiaries and affiliates of the
Borrower, except loans, credits or advances (a) in existence or committed on the
date hereof and which the Borrower has informed Holder in writing prior to the
date hereof, (b) made in the ordinary course of business or (c) not in excess of
$100,000.
2.6 Contingent
Liabilities. So
long as the Borrower shall have any obligation under this Note, the Borrower
shall not, without the Holder’s written consent, which shall not be unreasonably
withheld, assume, guarantee, endorse, contingently agree to purchase or
otherwise become liable upon the obligation of any person, firm, partnership,
joint venture or corporation, except by the endorsement of negotiable
instruments for deposit or collection and except assumptions, guarantees,
endorsements and contingencies (a) in existence or committed on the date hereof
and which the Borrower has informed Holder in writing prior to the date hereof,
and (b) similar transactions in the ordinary course of
business.
12
ARTICLE
III. EVENTS OF
DEFAULT
If any of the following events of
default (each, an “Event of Default”) shall occur:
3.1 Failure to
Pay Principal or Interest. The Borrower fails to pay
the principal hereof or interest thereon when due on this Note, whether at
maturity, upon a Trading Market Prepayment Event pursuant to Section 1.7, upon
acceleration or otherwise;
3.2 Conversion
and the Shares. The Borrower fails to issue shares of Common
Stock to the Holder (or announces or threatens in writing that it will not honor
its obligation to do so) upon exercise by the Holder of the conversion rights of
the Holder in accordance with the terms of this Note, fails to transfer or cause
its transfer agent to transfer (issue)(electronically or in certificated form)
any certificate for shares of Common Stock issued to the Holder upon conversion
of or otherwise pursuant to this Note as and when required by this Note, the
Borrower directs its transfer agent not to transfer or delays, impairs, and/or
hinders its transfer agent in transferring (or issuing)(electronically or in
certificated form) any certificate for shares of Common Stock to be issued to
the Holder upon conversion of or otherwise pursuant to this Note as and when
required by this Note, or fails to remove (or directs its transfer agent not to
remove or impairs, delays, and/or hinders its transfer agent from removing) any
restrictive legend (or to withdraw any stop transfer instructions in respect
thereof) on any certificate for any shares of Common Stock issued to the Holder
upon conversion of or otherwise pursuant to this Note as and when required by
this Note (or makes any written announcement, statement or threat that it does
not intend to honor the obligations described in this paragraph) and any such
failure shall continue uncured (or any written announcement, statement or threat
not to honor its obligations shall not be rescinded in writing) for three (3)
business days after the Holder shall have delivered a Notice of
Conversion;
3.3 Breach of
Covenants. The
Borrower breaches any material covenant or other material term or condition
contained in this Note and any collateral documents including but not limited to
the Purchase Agreement and such breach continues for a period of ten (10) days
after written notice thereof to the Borrower from the
Holder;
3.4 Breach of
Representations and Warranties. Any representation or
warranty of the Borrower made herein or in any agreement, statement or
certificate given in writing pursuant hereto or in connection herewith
(including, without limitation, the Purchase Agreement), shall be false or
misleading in any material respect when made and the breach of which has (or
with the passage of time will have) a material adverse effect on the rights of
the Holder with respect to this Note or the Purchase
Agreement;
3.5 Receiver or
Trustee. The
Borrower or any subsidiary of the Borrower shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its property or business, or such
a receiver or trustee shall otherwise be appointed;
3.6 Judgments. Any money judgment, writ or
similar process shall be entered or filed against the Borrower or any subsidiary
of the Borrower or any of its property or other assets for more than $50,000,
and shall remain unvacated, unbonded or unstayed for a period of twenty (20)
days unless otherwise consented to by the Holder, which consent will not be
unreasonably withheld;
13
3.7 Bankruptcy. Bankruptcy, insolvency,
reorganization or liquidation proceedings or other proceedings, voluntary or
involuntary, for relief under any bankruptcy law or any law for the relief of
debtors shall be instituted by or against the Borrower or any subsidiary of the
Borrower;
3.8 Delisting of
Common Stock. The Borrower shall fail to
maintain the listing of the Common Stock on at least one of the OTCBB or an
equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap
Market, the New York Stock Exchange, or the American Stock
Exchange;
3.9 Failure to
Comply with the Exchange Act. The Borrower shall fail to
comply with the reporting requirements of the Exchange Act; and/or the Borrower
shall cease to be subject to the reporting requirements of the Exchange Act;
or
3.10
Liquidation. Any dissolution, liquidation, or winding
up of Borrower or any substantial portion of its business.
3.11
Cessation of
Operations. Any cessation of operations by Borrower
or Borrower admits it is otherwise generally unable to pay its debts as such
debts become due, provided, however, that any disclosure of the Borrower’s
ability to continue as a “going concern” shall not be an admission that the
Borrower cannot pay its debts as they become due.
3.12
Maintenance
of Assets. The failure by Borrower to maintain any
material intellectual property rights, personal, real property or other assets
which are necessary to conduct its business (whether now or in the
future).
3.13
Financial
Statement Restatement. The restatement of any financial
statements filed by the Borrower with the SEC for any date or period from two
years prior to the Issue Date of this Note and until this Note is no longer
outstanding, if the result of such restatement would, by comparison to the
unrestated financial statement, have constituted a material adverse effect on
the rights of the Holder with respect to this Note or the Purchase
Agreement.
3.14
Reverse
Splits. The Borrower effectuates a reverse split
of its Common Stock without twenty (20) days prior written notice to the
Holder.
3.15 Replacement
of Transfer Agent. In the
event that the Borrower proposes to replace its transfer agent, the Borrower
fails to provide, prior to the effective date of such replacement, a fully
executed Irrevocable Transfer Agent Instructions in a form as initially
delivered pursuant to the Purchase Agreement (including but not limited to the
provision to irrevocably reserve shares of Common Stock in the Reserved Amount)
signed by the successor transfer agent to Borrower and the
Borrower.
3.16
Cross-Default.
Notwithstanding anything to the contrary contained in this Note or the other
related or companion documents, a breach or default by the Borrower of any
covenant or other term or condition contained in any of the Other Agreements,
after the passage of all applicable notice and cure or grace periods, shall, at
the option of the Borrower, be considered a default under this Note and the
Other Agreements, in which event the Holder shall be entitled (but in no event
required) to apply all rights and remedies of the Holder under the terms of this
Note and the Other Agreements by reason of a default under said Other Agreement
or hereunder.
“Other Agreements” means, collectively, all agreements and instruments
between, among or by: (1) the Borrower, and, or for the benefit of, (2) the
Holder and any affiliate of the Holder, including, without limitation,
promissory notes; provided, however, the term “Other Agreements” shall not
include the agreements and instruments defined as the Documents. Each
of the loan transactions will be cross-defaulted with each other loan
transaction and with all other existing and future debt of Borrower to the
Holder.
14
Upon the occurrence and during the
continuation of any Event of Default specified in Section 3.1 (solely with
respect to failure to pay the principal hereof or interest thereon when due at
the Maturity Date), the Note shall become immediately due and payable and the
Borrower shall pay to the Holder, in full satisfaction of its obligations
hereunder, an amount equal to the Default Sum (as defined herein). UPON
THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN
SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER
SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN
AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO
(2). Upon the occurrence and during the continuation of any Event of Default
specified in Sections 3.1 (solely with respect to failure to pay the principal
hereof or interest thereon when due on this Note upon a Trading Market
Prepayment Event pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6,
3.8, 3.9, 3.11, 3.12, 3.13, 3.14, and/or 3. 15 exercisable through the delivery
of written notice to the Borrower by such Holders (the “Default Notice”), and
upon the occurrence of an Event of Default specified the remaining sections of
Articles III (other than failure to pay the principal hereof or interest thereon
at the Maturity Date specified in Section 3,1 hereof), the Note shall become
immediately due and payable and the Borrower shall pay to the Holder, in full
satisfaction of its obligations hereunder, an amount equal to the greater of (i)
150% times the sum of (w) the then outstanding principal
amount of this Note plus (x) accrued and unpaid interest on the
unpaid principal amount of this Note to the date of payment (the “Mandatory
Prepayment Date”) plus (y) Default Interest, if any, on the
amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder
pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal
amount of this Note to the date of payment plus the amounts referred to in clauses (x),
(y) and (z) shall collectively be known as the “Default Sum”) or (ii) the
“parity value” of the Default Sum to be prepaid, where parity value means (a)
the highest number of shares of Common Stock issuable upon conversion of or
otherwise pursuant to such Default Sum in accordance with Article I, treating
the Trading Day immediately preceding the Mandatory Prepayment Date as the
“Conversion Date” for purposes of determining the lowest applicable Conversion
Price, unless the Default Event arises as a result of a breach in respect of a
specific Conversion Date in which case such Conversion Date shall be the
Conversion Date), multiplied
by (b) the highest Closing
Price for the Common Stock during the period beginning on the date of first
occurrence of the Event of Default and ending one day prior to the Mandatory
Prepayment Date (the “Default Amount”) and all other amounts payable hereunder
shall immediately become due and payable, all without demand, presentment or
notice, all of which hereby are expressly waived, together with all costs,
including, without limitation, legal fees and expenses, of collection, and the
Holder shall be entitled to exercise all other rights and remedies available at
law or in equity.
15
If the Borrower fails to pay the Default
Amount within five (5) business days of written notice that such amount is due
and payable, then the Holder shall have the right at any time, so long as the
Borrower remains in default (and so long and to the extent that there are
sufficient authorized shares), to require the Borrower, upon written notice, to
immediately issue, in lieu of the Default Amount, the number of shares of Common
Stock of the Borrower equal to the Default Amount divided by the Conversion
Price then in effect.
ARTICLE
IV. MISCELLANEOUS
4.1 Failure or
Indulgence Not Waiver. No failure or delay on the
part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privileges. All rights and remedies
existing hereunder are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
4.2 Notices. All notices, demands,
requests, consents, approvals, and other communications required or permitted
hereunder shall be in writing and, unless otherwise specified herein, shall be
(i) personally served, (ii) deposited in the mail, registered or certified,
return receipt requested, postage prepaid, (iii) delivered by reputable air
courier service with charges prepaid, or (iv) transmitted by hand delivery,
telegram, or facsimile, addressed as set forth below or to such other address as
such party shall have specified most recently by written notice. Any
notice or other communication required or permitted to be given hereunder shall
be deemed effective (a) upon hand delivery or delivery by facsimile, with
accurate confirmation generated by the transmitting facsimile machine, at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications
shall be:
If to the Borrower,
to:
LANTIS LASER INC.
11 Stonebridge Court
Denville, NJ 07834
Attn: STANLEY B. BARON, President, Chief Executive Officer,
Chairman
facsimile: (619) 789
0454
With a copy by fax only to (which copy
shall not constitute notice):
Akerman, Senterfritt LLP
Attn: Ernest Stern,
Esq.
The Victor Building
750 9th Street M.W., Suite 750
Washington D.C. 2000
e-mail:
ernest.stern@ackerman.com
16
If to the Holder:
ASHER ENTERPRISES,
INC.
1 Linden Pl., Suite
207
Great Neck, NY.
11021
Attn: Curt Kramer, President
facsimile:
516-498-9894
With a copy by fax only to (which copy
shall not constitute notice):
Naidich Wurman Birnbaum &
Maday
LLP
80 Cuttermill Road, Suite
410
Great Neck, NY 11021
Attn: Bernard S. Feldman,
Esq.
facsimile:
516-466-3555
4.3 Amendments. This Note and any provision
hereof may only be amended by an instrument in writing signed by the Borrower
and the Holder. The term “Note” and all reference thereto, as used
throughout this instrument, shall mean this instrument (and the other Notes
issued pursuant to the Purchase Agreement) as originally executed, or if later
amended or supplemented, then as so amended or supplemented.
4.4 Assignability. This Note shall be binding
upon the Borrower and its successors and assigns, and shall inure to be the
benefit of the Holder and its successors and assigns. Each transferee
of this Note must be an “accredited investor” (as defined in Rule 501(a) of the
1933 Act). Notwithstanding anything in this Note to the contrary,
this Note may be pledged as collateral in connection with a bona fide margin account or other lending
arrangement.
4.5 Cost of
Collection. If
default is made in the payment of this Note, the Borrower shall pay the Holder
hereof costs of collection, including reasonable attorneys’
fees.
4.6 Governing
Law. This Note
shall be governed by and construed in accordance with the laws of the State of
New York without regard to principles of
conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Note shall be brought
only in the state courts of New York or in the federal courts located in the
state and county of Nassau. The parties to this Note
hereby irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non
conveniens. The
Borrower and Holder waive trial by jury. The prevailing party shall
be entitled to recover from the other party its reasonable attorney's fees and
costs. In the event that any provision of this Note or any other
agreement delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any
agreement. Each party hereby irrevocably waives personal
service of process and consents to process being served in any suit, action or
proceeding in connection with this Agreement or any other Transaction Document
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 Agreement 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 law.
17
4.7 Certain
Amounts. Whenever pursuant to this
Note the Borrower is required to pay an amount in excess of the outstanding
principal amount (or the portion thereof required to be paid at that time) plus
accrued and unpaid interest plus Default Interest on such interest, the Borrower
and the Holder agree that the actual damages to the Holder from the receipt of
cash payment on this Note may be difficult to determine and the amount to be so
paid by the Borrower represents stipulated damages and not a penalty and is
intended to compensate the Holder in part for loss of the opportunity to convert
this Note and to earn a return from the sale of shares of Common Stock acquired
upon conversion of this Note at a price in excess of the price paid for such
shares pursuant to this Note. The Borrower and the Holder hereby
agree that such amount of stipulated damages is not plainly disproportionate to
the possible loss to the Holder from the receipt of a cash payment without the
opportunity to convert this Note into shares of Common
Stock.
4.8 Purchase
Agreement. By
its acceptance of this Note, each party agrees to be bound by the applicable
terms of the Purchase Agreement.
4.9 Notice of
Corporate Events. Except as otherwise
provided below, the Holder of this Note shall have no rights as a Holder of
Common Stock unless and only to the extent that it converts this Note into
Common Stock. The Borrower shall provide the Holder with prior notification of
any meeting of the Borrower’s shareholders (and copies of proxy materials and
other information sent to shareholders). In the event of any taking
by the Borrower of a record of its shareholders for the purpose of determining
shareholders who are entitled to receive payment of any dividend or other
distribution, any right to subscribe for, purchase or otherwise acquire
(including by way of merger, consolidation, reclassification or
recapitalization) any share of any class or any other securities or property, or
to receive any other right, or for the purpose of determining shareholders who
are entitled to vote in connection with any proposed sale, lease or conveyance
of all or substantially all of the assets of the Borrower or any proposed
liquidation, dissolution or winding up of the Borrower, the Borrower shall mail
a notice to the Holder, at least twenty (20) days prior to the record date
specified therein (or thirty (30) days prior to the consummation of the
transaction or event, whichever is earlier), of the date on which any such
record is to be taken for the purpose of such dividend, distribution, right or
other event, and a brief statement regarding the amount and character of such
dividend, distribution, right or other event to the extent known at such
time. The Borrower shall make a public announcement of any event
requiring notification to the Holder hereunder substantially simultaneously with
the notification to the Holder in accordance with the terms of this Section
4.10.
4.10
Remedies. The Borrower acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Holder, by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Borrower acknowledges that the remedy at law
for a breach of its obligations under this Note will be inadequate and agrees,
in the event of a breach or threatened breach by the Borrower of the provisions
of this Note, that the Holder shall be entitled, in addition to all other
available remedies at law or in equity, and in addition to the penalties
assessable herein, to an injunction or injunctions restraining, preventing or
curing any breach of this Note and to enforce specifically the terms and
provisions thereof, without the necessity of showing economic loss and without
any bond or other security being required.
18
IN WITNESS WHEREOF, Borrower has caused
this Note to be signed in its name by its duly authorized officer this
August 3, 2010.
LANTIS LASER INC.
By:
|
/s/ Stanley B.
Baron
|
|
STANLEY B. BARON
|
||
President, Chief Executive
Officer,
Chairman
|
19
EXHIBIT A
NOTICE OF
CONVERSION
The
undersigned hereby elects to convert $_________________ principal amount of the
Note (defined below) into that number of shares of Common
Stock to be issued pursuant to the conversion of the Note (“Common
Stock”) as set forth below, of LANTIS LASER, INC., a Nevada corporation (the
“Borrower”) according to the conditions of the convertible note of the Borrower
dated as of August 3, 2010 (the “Note”), as of the date written
below. No fee will be charged to the Holder for any conversion,
except for transfer taxes, if any.
Box
Checked as to applicable instructions:
|
o
|
The
Borrower shall electronically transmit the Common Stock issuable pursuant
to this Notice of Conversion to the account of the undersigned or its
nominee with DTC through its Deposit Withdrawal Agent Commission system
(“DWAC Transfer”).
|
Name of
DTC Prime Broker:
Account
Number:
|
o
|
The
undersigned hereby requests that the Borrower issue a certificate or
certificates for the number of shares of Common Stock set forth below
(which numbers are based on the Holder’s calculation attached hereto) in
the name(s) specified immediately below or, if additional space is
necessary, on an attachment hereto:
|
ASHER
ENTERPRISES, INC.
1 Linden
Pl., Suite 207
Great
Neck, NY. 11021
Attention:
Certificate Delivery
(516)
498-9890
Date
of Conversion:
|
||||
Applicable
Conversion Price:
|
$ | |||
Number
of Shares of Common Stock to be Issued
|
||||
Pursuant
to Conversion of the Notes:
|
||||
Amount
of Principal Balance Due remaning
|
||||
Under
the Note after this conversion:
|
ASHER
ENTERPRISES, INC.
By:
Name:
Curt Kramer
Title:
President
Date:
1 Linden
Pl., Suite 207
Great
Neck, NY. 11021
20