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 OPINIONOFCOUNSEL (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: $100,000.00 | Issue Date: April 27, 2017 |
8% CONVERTIBLE NOTE
FOR VALUE RECEIVED,REALBIZ MEDIA GROUP, INC.,a Delaware corporation (“Borrower” or “Company”), hereby promisestopaytothe order ofEMA FINANCIAL, LLC,a Delaware limited liability company, or its registered assigns (the “Holder”),onApril 27, 2018, (subject to extension as set forth below, the “Maturity Date”), the sumof$100,000.00 as set forth herein, together with interest on the unpaid principal balance hereof at the rate of eight (8%) per annum (the “Interest Rate”) from the date of issuance hereof until this Note plus any andallamounts due hereunder are paidinfull, and any additional amounts set forth herein, including without limitation any Additional Principal (as defined herein). Interestshall becomputed on the basis of a 365-day year and the actual number of days elapsed. Any amount of principal or interest on this Note whichisnotpaidwhen due shall bear interestatthe rate of twenty-four (24%) per annum from the due date thereof until the sameispaid (“Default Interest”). All payments due hereunder shallbemadeinlawful moneyofthe United States of America. All payments shall be made at such address as the Holder shall hereafter givetothe Borrower by written notice madeinaccordance with the provisions of this Note. Whenever any amount expressedtobedue by the termsofthis Noteisdue on any day whichisnot a business day, the same shall insteadbedueonthe next succeeding day whichisa business day and,inthe case of any interest payment date whichisnot the date on which this Noteispaidinfull, the extensionofthe due date thereof shall notbetaken into account for purposes of determining the amount of interest due on such date.Asused in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banksinthe cityofNew York, New York are authorized or required by law or executive order toremainclosed. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed theretointhat certain Securities Purchase Agreement entered into by and between the Company and Holder dated on or about the date hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”). The Holdermay,by written notice to the Borrowerat least five(5) days before the MaturityDate(asmayhave been previously extended), extend the Maturity Date to up to one (1)yearfollowing the date of the original Maturity Date hereunder.
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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,inits sole and absolute discretion, at any time from timetotime, to convert all or any part of the outstanding amount due under this Noteintofully paid and non-assessable sharesofCommon Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securitiesofthe Borrower into which such Common Stock shall hereafterbechanged or reclassified at the conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”);provided,however, thatin noevent shall the Holderbeentitledtoconvert any portion of this Noteinexcess of that portionofthis Note upon conversionofwhich the sumof(1) the numberofsharesofCommon Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which maybedeemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portionofany 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 conversionofthe portion of this Note with respect to which the determinationofthis provisoisbeing made, would resultinbeneficial ownership by the Holder and its affiliatesofmore than 4.9% of the outstanding sharesofCommon Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shallbedetermined in accordance with Section 13(d) of the Securities ExchangeActof 1934, as amended (the “Exchange Act”), and Regulation 13D-G thereunder, except as otherwise providedinclause (1) of such proviso,provided,further,however, that the limitations on conversion may be waived by the Holder upon, at the electionofthe Holder, notlessthan 61 days’ prior noticetothe Borrower, and the provisions of the conversion limitation shall continuetoapply until such 61st day (or such later date, as determined by the Holder, asmay bespecifiedinsuch notice of waiver). The number of sharesofCommon Stock tobeissued upon each Conversionofthis Note (“Conversion Shares”) shallbedetermined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price thenineffect on the date specifiedinthe noticeofconversion,inthe form attached hereto asExhibitA (the “NoticeofConversion”), deliveredtothe Borrower by the Holderinaccordance with Section 1.4 below; provided that the Notice of Conversionissubmitted by facsimile or e-mail (or by other means resultingin,or reasonably expected toresultin,notice)tothe Borrower before 11:59 p.m., New York, New Yorktimeon such conversion date (the “Conversion Date”). The term “Conversion Amount”means,with respect to any Conversion of this Note, the sumof(1) the principal amount of this Note tobeconvertedinsuch Conversion,plus (2) accrued and unpaid interest,ifany, on such principal amountbeingconverted at the interest rates providedinthis Note to the Conversion Date,plus (3) at the Holder’s option, Default Interest,ifany, on the amounts referred tointhe immediately preceding clauses (1) and/or (2),plus (4) any Additional Principal for such Conversion,plus (5) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.2(c) and 1.4(g) hereof.
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1.2.Conversion Price.
a)CalculationofConversion Price. The conversion price hereunder (the “Conversion Price”) shall equal the lower of: (i) the closing sale priceofthe Common Stock on the Principal Market on the Trading Day immediately preceding the Closing Date, and (ii) 60%ofeither the lowestsaleprice for the Common Stock on the Principal Market during the fifteen (15) consecutive Trading Days immediately preceding the Conversion Date or the closing bid price, whicheverislower,provided, however,ifthe Company’s share price at any time loses the bid (ex: 0.0001 on the ask with zeromarketmakers on the bid on level 2), then the Conversion Pricemay,in the Holder’s sole and absolute discretion,bereducedtoa fixed conversion priceof0.00001 (if lower than the conversion price otherwise),and provided,thatifon the date of delivery of the Conversion Sharestothe Holder, or any date thereafter while Conversion Shares are held by the Holder, the closing bid price per shareofCommon Stock on the Principal Market on the Trading Day on which the Common Shares are tradedis lessthan thesaleprice per share of Common Stock on the Principal Market on the Trading Day used to calculate the Conversion Price hereunder, then such Conversion Price shallbeautomatically reduced such that the Conversion Price shallberecalculated using the newlowclosing bid price (“Adjusted Conversion Price”) and shall replace the Conversion Price above, and Holder shallbeissued a number of additional shares such that the aggregatenumberofshares Holder receivesisbaseduponthe Adjusted Conversion Price, andprovided, further, that the Conversion Price shall be subject to Section 1.2(b) below. For the purpose of clarity, any shares requiredtobeissued as a resultofan Adjusted Conversion Price shallbedeemedtobe“Conversion Shares” under this Note. If an Event of Default under Section 3.9 of the Note has occurred, Holder,inits sole discretion, may elect to use a Conversion Price which shall equal the lower of: (i) the closing sale price of the Common Stock on the Principal Market on the Trading Day immediately preceding the Closing Date;(ii)60% of either the lowestsaleprice or the closing bid price, whicheverislower for the Common Stock on the Principal Market during any Trading Dayinwhich the Event of Default has not been cured.Ifsuch Common Stockisnot traded on the OTCBB, OTCQB, NASDAQ or NYSE, then such sale price shallbethe sale price of such security on the principal securities exchange or trading market where such securityislisted or traded or,if nosale priceofsuch securityisavailableinanyofthe foregoing manners, the average of the closing bid prices of any marketmakersfor such security that are listedinthe “pink sheets” by the National Quotation Bureau, Inc. If such sale price cannotbecalculated for such security on such dateinthemannerprovided above, such price shall be the fair market value as mutually determined by the Borrower and the Holder. If the Borrower’s Common stockischilled for deposit at DTC, becomes chilled at any point while this Note remains outstanding or deposit or other additional fees are payable duetoa Yield Sign, Stop Sign or other trading restrictions, orifthe closing sale price at any timefallsbelow $0.01 (as appropriately and equitably adjusted for stock splits, stock dividends, stock contributions and similar events), then such 60% figure specified in clause 1.2(a)(ii) above shallbereducedto45%. In the event that the sharesofthe Borrower’s Common Stock are not deliverable via DWAC following the conversionofany amount hereunder, an additional 5% discount willbeattributed to the Conversion Price. Additionally, the Borrower acknowledges thatitwill take all reasonable steps necessary or appropriate, including providing a board of directors resolution authorizing the issuanceofcommon stock toHolder. Solongas the requestedsalemay bemadepursuant toRule144, the Company agrees to accept an opinion of counseltothe Holder confirming the rights of the Holdertosell sharesofCommon Stock issuable orissuedtoHolderon conversionofthis Note pursuant to Rule 144 as promulgated bytheSEC (“Rule 144”), as such Rule 144 may beineffect from timetotime, which opinion will be issued at the Company’s expense and the conversion dollar amount willbe reduced by $750.00 to cover the cost of such legal opinion. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded. Additionally, if the Company ceases to be a reporting company pursuant to the 1934 Act or if the Note cannot be converted into free trading shares after 181 days from the issuance date, an additional 15% discount will be attributed to the Conversion Price for any and all Conversions submitted thereafter.
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b)If at any time the Conversion Price as determined hereunder for any Conversion wouldbeless than the par valueofthe Common Stock, then the Conversion Price hereunder shall equal such par value for such Conversion and the Conversion Amount for such Conversion shall be increasedtoinclude Additional Principal, where “Additional Principal” means such additional amount tobeadded to the Conversion Amount to the extent necessarytocause the number of Conversion Shares issuable upon such Conversion to equal the same numberofConversion Shares as would have been issued had the Conversion Price not been subject to the minimum price set forthinthis Section 1.2(b).
c)Withoutinany way limiting the Holder’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree thatifdeliveryofthe Common Stock issuable upon conversion of this Noteisnot delivered by the Deadline (as defined below) the Borrowershallpaytothe Holder $1,000.00 per dayincash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shallbepaidtoHolder by the fifth dayofthe month following the monthinwhichithas accrued or, at the optionofthe Holder, shallbeaddedtothe principal amount of this Note,inwhich event interest shall accrue thereoninaccordance with the termsofthis Note and such additional principal amount shall be convertible into Common Stockinaccordance with the termsofthis Note. The Borrower agrees that therightto convert this Noteisa valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, or interference with such conversion right are difficultifnot impossible to quantify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section are justified.
1.3.Authorized Shares. The Borrower covenants that the Borrower will at all times while this Noteisoutstanding reserve from its authorized and unissued Common Stock a sufficient numberofshares,freefrom preemptive rights, to provide for the issuanceofCommon Stock upon the full conversion or adjustment of this Note. The Borrowerisrequired at all timestohave authorized and reserved eight (8) times the number of shares thatisactually issuable upon full conversion or adjustment of this Note (based on the Conversion Price of the Notesineffect from timetotime)(the “Reserved Amount”). Initially, the Company will instruct the Transfer Agenttoreserve sixty nine million (69,000,000) shares of common stockinthe nameofthe Holder for issuance upon conversion hereof. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable.Inaddition,ifthe Borrowershallissue any securities ormakeany change to its capital structure which would change the numberofsharesofCommon Stock into which this Note shallbeconvertible at the then current Conversion Price, the Borrowershallat the same time make proper provision so that thereafter there shallbea sufficient number of sharesofCommon Stock authorized and reserved,freefrom preemptive rights, for conversion of this Noteinfull. The Borrower(i)acknowledgesthatithas irrevocably instructed its transfer agent toissuecertificates for the Common Stock issuable upon conversionofthis 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.
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If,at any time the Borrower does not maintain the Reserved Amountitwillbeconsidered an Event of Default under Section 3.2 of the Note.
1.4..Method of Conversion.
a)Mechanics of Conversion. Subject to Section 1.1, this Note maybeconverted by the Holderinwhole orinpart at any time and from time to time after the Issue Date, by submittingtothe Borrower aNoticeofConversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 11:59p.m.,New York, New York time).
b)Book Entry upon Conversion. Notwithstanding anythingtothe contrary set forth herein, upon conversion of this Noteinaccordance with the terms hereof, the Holder shall notberequiredtophysically surrender this Note to the Borrower unless the entire unpaid principal amount of this Noteisso converted. The Holder and the Borrowershallmaintain recordsshowingthe principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower,soas not to require physical surrender of thisNoteupon each such conversion. In the event of any dispute or discrepancy, such records of the Borrowershall,prima facie,becontrolling and determinativeinthe absenceofmanifest error. Notwithstanding the foregoing,ifany portionofthis Noteisconverted as aforesaid, the Holdermaynot transfer this Note unless the Holderfirstphysically surrenders this Note to the Borrower, whereupon the Borrower will forthwithissueand deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holderofany applicable transfer taxes) may request, representinginthe aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reasonofthe provisionsofthis paragraph, following conversionofa portionofthis Note, the unpaid and unconverted principal amount of this Note represented by this Notemaybe less than the amount stated on theface hereof.
c)Payment of Taxes. The Borrowershallnotberequired to pay any tax which may be payableinrespect of any transfer involvedintheissueand deliveryofsharesofCommon Stock or other securities or property on conversionofthis Noteina name other than that of the Holder (orinstreet name), and the Borrower shall notberequiredtoissueor deliver any such shares or other securities or property unless and until the person or persons (other than the Holder or the custodianinwhose streetnamesuch shares are tobeheld for the Holder’s account) requesting the issuance thereof shall have paidtothe Borrower the amount of any such tax or shall have establishedtothe satisfaction of the Borrower that such tax has been paid.
d)DeliveryofCommon Stock upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable meansofcommunication) of a NoticeofConversion meeting the requirements for conversion as provided in this Section 1.4 or upon an event triggering the calculation of an Adjusted Conversion Price, the Borrowershallissue and deliver or cause tobeissuedand deliveredtoor upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt or such an event (the “Deadline”) (and, solelyin the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Purchase Agreement.
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e)ObligationofBorrower to Deliver Common Stock. Upon receipt by the Borrower of a duly and properly executed NoticeofConversion or upon an event triggering the calculationofan Adjusted Conversion Price, the Holder shallbedeemed tobethe holder of record of the Common Stock issuable upon such conversion or as aresultof an Adjusted Conversion Price, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shallbereducedtoreflect such conversion or adjustment, and, unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion of this Notebeingso converted shall forthwith terminate except therightto receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion.If theHolder shall have given a NoticeofConversion as provided herein or upon an event triggering the calculationofan Adjusted Conversion Price, the Borrower’s obligationtoissue and deliver the certificates for Common Stock shallbeabsolute 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 recoveryofany judgment against any person or any actiontoenforce the same, any failure or delayinthe enforcement of any other obligationofthe 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 obligationtothe Borrower, and irrespectiveofany other circumstance which might otherwise limit such obligation of the Borrower to the Holderinconnection with such conversion. The Conversion Date specifiedinthe NoticeofConversion shallbethe Conversion Date solongas the Notice of Conversionisreceived by the Borrower before 11:59 p.m., New York, New York time, on such date.
f)DeliveryofCommon Stock by Electronic Transfer. In lieuofdelivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrowerisparticipatinginthe Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions containedinSection 1.1 andinthis Section 1.4, the Borrowershalluse itsbestefforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion or upon an event triggering the calculation of an Adjusted Conversion Pricetothe Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.
g)Failure to Deliver Common Stock Prior to Deadline. Withoutinany way limiting the Holder’s right to pursue other remedies,includingactual damages and/or equitable relief, the parties agree thatifdeliveryofthe Common Stock issuable upon conversion or adjustment of this Noteisnot delivered by the Deadline, the Borrower shall pay to the Holder $1,000.00 per dayincash, for each day beyond the Deadline that the Borrowerfailsto deliver such Common Stock to the Holder. Such cash amount shall be paid toHolderby the fifth day of the month following the monthinwhichithas accrued or,atthe optionofthe Holder, shallbeadded to the principal amount of this Note,inwhich event interestshallaccrue thereoninaccordance with the terms of this Note and such additional principal amount shall be convertible into Common Stockinaccordance with the termsofthis Note. The Borrower agrees that therightto convert and/or receive sharesinthe event of an adjustmentisa valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, or interference with such conversion or adjustment right aredifficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section 1.4(g) are justified.
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h)The Borrower acknowledges thatitwill take all reasonable steps necessary or appropriate, including accepting an opinionofcounseltoHolderconfirming the rights of Holder to sell shares of Common Stock issued toHolderon conversion or adjustment of the Note pursuant toRule144 as promulgated by the SEC (“Rule 144”), as such Rule may beineffect from time to time. Solongas the requestedsalemaybe madepursuant to Rule 144theBorrower agrees to accept an opinion of counseltothe Holder which opinion willbeissued at the Borrower’s expense.
i)Charges and Expenses. Issuance of Common Stock to Holder, or any of its assignees, upon the conversion of this Note shallbemade without chargetothe Holder for any issuance fee, transfer tax, legal opinion and related charges, postage/mailing charge or any other expense with respect to the issuanceofsuch Common Stock. Company shall pay all Transfer Agent fees incurred from the issuance of the Common Stock to Holder, as well as any and all other fees and charges required by the Transfer Agent as a conditiontoeffectuate such issuance. Any such fees or charges as notedinthis Section that arepaidby the Holder (whether from the Company’s delays, outright refusaltopay,or otherwise), willbeautomatically addedtothe Principal Amount of the Note and tack back to the Issue Date herein for purposes of Rule 144.
1.5.Restricted Securities. The shares of Common Stock issuable upon conversion or adjustment of this Notemaynotbesold or transferred unless (i)suchshares 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 beinform, substance and scope customary for opinionsofcounselincomparable transactions) to the effect that the sharestobe soldor transferred maybesold or transferred pursuant to an exemption from such registration or (iii) such shares aresoldor transferred pursuanttoRule144 under theAct(or a successor rule) (“Rule 144”) or(iv)such shares are transferredtoan “affiliate” (as definedinRule 144) of the Borrower who agreestosell or otherwise transfer the shares onlyinaccordance with this Section 1.5 and whoisan Accredited Investor (as definedinthe Purchase Agreement). Any legend set forth on any stock certificate evidencing any Conversion Shares shall be removed and the Borrower shall issue to the Holder a new certificate thereforefreeofany transfer legend if (i) the Borrower or its transfer agent shall have received an opinionofcounsel form, substance and scope customary for opinionsofcounselincomparable transactions, to the effect that a public sale or transfer of such Common Stockmay bemade without registration under the Act, which opinion shallbereasonably acceptabletotheCompany,or(ii) inthe case of the Common Stockissuedor issuable upon conversion of this Note, such securityisregistered for sale by the Holder under an effective registration statement filed under theActor otherwise maybesold pursuant toRule144 without any restriction astothenumberofsecurities as of a particular date that can thenbeimmediately sold.
1.6..Effect of Certain Events.
a)Effect of Merger, Consolidation, Etc.Atthe option of the Holder, the sale, conveyance or disposition of all or substantially allofthe assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactionsinwhich more than 50% of the voting power of the Borrowerisdisposed of, or the consolidation,mergeror other business combination of the Borrower with orintoany other Person (as defined below) or Persons when the Borrowerisnot the survivor shall either:(i)bedeemedtobean Event of Default (as definedinArticle III) pursuant to which the Borrowershall berequiredtopaytothe Holder upon the consummation of and as a conditiontosuch transaction an amount equaltothe Default Amount (as definedinArticle III) or(ii)betreated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
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b)Adjustment DuetoMerger, Consolidation,Etc.If,at any time when this Noteisissued and outstanding and prior to conversionofallofthe Notes, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which sharesofCommon Stock of the Borrower shallbechanged into the same or a different number of sharesofanother class or classes of stock or securitiesofthe Borrower or another entity, orincaseofany sale or conveyanceofall or substantially all of the assets of the Borrower other thaninconnection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversionofthis Note, upon the basis and upon the terms and conditions specified herein andinlieu of the sharesofCommonStockimmediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitledtoreceiveinsuch transaction had this Note been convertedinfull immediately prior to such transaction (without regard to any limitations on conversion set forth herein), andinany 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 andofthe numberofshares issuable upon conversion of the Note)shallthereafterbeapplicable, as nearly as may be practicable in relationtoany securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction describedinthis Section 1.6(b) unless (a)itfirst gives,tothe extent practicable, thirty (30) days prior written notice (butinany event atleastfifteen (15) days prior written notice) of the recorddateof the special meetingofshareholderstoapprove, orifthereis nosuch record date, the consummation of, such merger, consolidation, exchangeofshares, recapitalization, reorganization or other similar event orsaleofassets (during whichtime,for clarification, the Holder shall be entitledtoconvert this Note) and (b) the resulting successor or acquiring entity assumes by written instrument the obligationsofthis Section 1.6(b). The above provisions shall similarly applytosuccessive consolidations, mergers, sales, transfers or share exchanges.
c)Adjustment Due to Distribution. If the Borrower shall declare ormakeany distribution of its assets (or rights to acquire its assets) to holdersofCommon Stock as a dividend, stock repurchase, by wayofreturn of capital or otherwise (including any dividend or distributiontothe Borrower’s shareholdersincash or shares (or rights to acquire shares)ofcapital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shallbeentitled, upon any conversionofthis 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 sharesofCommon Stock issuable upon such conversion had such Holder been the holderofsuch shares of Common Stock on the record date for the determinationofshareholders entitled to such Distribution. Such assets shall be heldinescrow by the Company pending any such conversion
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d)Purchase Rights.If,at any time when any Notes areissuedand 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 holdersofanyclassofCommon Stock, then the Holder of this Note willbeentitledtoacquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquiredifsuch Holder had held the numberofshares 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 recordistaken for the grant, issuance or sale of such Purchase Rights or,if nosuch recordistaken, the date as of which the record holdersofCommon Stock are tobedetermined for the grant,issueorsaleofsuch Purchase Rights.
e)Stock Dividends and Stock Splits. If the Company, at any time while this Noteisoutstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions payableinshares of Common Stock on sharesofCommon Stock or any securities convertible into or exercisable for Common Stock; (B) subdivides outstanding sharesofCommon Stockintoa larger number of shares; (C) combines (including by wayof a reverse stock split) outstanding shares of Common Stockintoasmallernumber of shares; or (D) issues,inthe event of a reclassificationofshares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price (and each sale or bid price usedindetermining the Conversion Price) shall be multiplied by a fraction,ofwhich the numerator shall be the numberofshares of Common Stock outstanding immediately before such event andofwhich the denominator shallbethe number of sharesofCommon Stock outstanding immediately after such event. Any adjustmentmadepursuant to this Section shall become effective immediately after the record date for the determinationofstockholders entitledtoreceive such dividend or distribution and shall become effective immediately after the effective dateinthe case of a subdivision, combination or re-classification.
f)Notice of Adjustments. Upon the occurrenceofeach adjustment or readjustment of the Conversion Price as a result of the events describedinthis Section 1.6, the Borrower,atits expense, shall promptly compute such adjustment or readjustment and prepare and furnishtothe Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustmentisbased. The Borrowershall,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 timeineffect and (iii) the number of sharesofCommon Stock and the amount,ifany, of other securities or property which at the time would be received upon conversion of the Note.
1.7.Revocation.Ifany Conversion Shares are not received by the Deadline, the Holder may revoke the applicable Conversion pursuant to which such Conversion Shares were issuable. This Note shall remain convertible after the Maturity Date hereof until this Noteisrepaid or convertedin full.
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1.8.Prepayment. Notwithstanding anythingtothe contrary containedinthis Note, subject to the terms of this Section, at any time during the period beginning on the Issue Date and ending on the date whichissix (6) months following the Issue Date (“Prepayment TerminationDate”), Borrower shall have the right, exercisable on notlessthan five (5) Trading Days prior written noticetothe Holderofthis Note, to prepay the outstanding balance on this Note (principal and accrued interest),infull,inaccordance with this Section. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be deliveredto the Holderofthe Note at its registered addresses and shall state: (1) that the Borrowerisexercising its right to prepay the Note, and (2) the date of prepayment which shallbenot more than ten (10) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Borrowershallmake payment of the Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holderinwritingtothe Borrowerat leastone (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amountincash (the “Optional Prepayment Amount”) equaltothe Prepayment Factor (as defined below), multiplied by the sum of: (w) the then outstanding principal amount of this Noteplus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Dateplus (y) Default Interest, if any, on the amounts referred toinclauses (w) and (x)plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and failstopay the Optional Prepayment Amount duetothe Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall foreverforfeitits right to prepay the Note pursuant to this Section. After the Prepayment Termination Date, the Borrower shall havenoright to prepay this Note. For purposes hereof, the “Prepayment Factor” shall equal the percentage set forth below with respect to each Optional Prepayment Date beside such Prepayment Factor:
The Prepayment Factor is: | If the Optional Prepayment Date occurs: | |
115% | 1-30 days after the Issue Date | |
120% | 31-60 days after the Issue Date | |
125% | 61-90 days after the Issue Date | |
130% | 91-120 days after the Issue Date | |
135% | 121-150 days after the Issue Date | |
140% | 151-180 days after the Issue Date |
ARTICLE II. CERTAIN COVENANTS
2.1.Distributions on Capital Stock. Solongas the Borrowershallhave any obligation under this Note, the Borrowershallnot without the Holder’s written consent (a)pay,declare or set apart for such payment, any dividend or other distribution (whetherincash, property or other securities) on sharesofcapital stock other than dividends on shares of Common Stock solelyinthe form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distributioninrespect of its capital stock except for distributions pursuant to any shareholders’ rights plan whichisapproved by a majorityofthe Borrower’s disinterested directors.
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2.2.Restriction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrowershallnot without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash orinexchange for property or other securities or otherwise)inany one transaction or series of related transactions any sharesofcapital stock of the Borrower or any warrants, rights or options topurchaseor acquire any such shares.
2.3.Borrowings; Lien. Notwithstanding section 4(m) of the Purchase Agreement, solongas the Borrowershallhave any obligation under this Note, the Borrower shall not(i)create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the obligation of any person,firm,partnership,jointventure or corporation, except by the endorsement of negotiable instruments for deposit or collection, orsufferto exist any liability for borrowedmoney,except (a) borrowingsinexistence or committed on the date hereof and of which the Borrower has informed Holderinwriting priortothe date hereof, or (b) indebtednesstotrade creditors or financial institutions incurredinthe ordinary course of business, or(ii)enter into, create orincurany liens, claims or encumbrances 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, securing any indebtedness occurring after the date hereof.
2.4.Sale of Assets. Solongas the Borrowershallhave any obligation under this Note, the Borrowershallnot, 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 dispositionofany assetsmaybe conditioned on a specified use of the proceeds of disposition.
2.5.Advances and Loans. Solongas the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent,lendmoney,give credit ormakeadvances to any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, exceptloans,credits or advancesinexistence or committed on the date hereof and which the Borrower has informed Holderinwriting prior to the date hereof.
2.6. Charter. Solongas the Borrowershallhave any obligations under this Note, the Borrower shall not amend its charter documents, including without limitation its certificate of incorporation and bylaws,inany manner that materially and adversely affects any rights of the Holder.
2.7. Transfer Agent. The Borrowershallnot change its transfer agent without the prior written consent of the Holder. Any resignation by the transfer agent without a replacement transfer agent consented to by the Holder prior to such replacement taking effect shall constitute an Event of Default hereunder.
ARTICLE III. EVENTS OF DEFAULT
Any one or more of the following events which shall occur and/or be continuing shall constitute an event of default (each, an “Event of Default”):
3.1.FailuretoPay Principal or Interest. The Borrower failstopay the principal hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise.
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3.2.Conversion and the Shares. The BorrowerfailstoissuesharesofCommon Stock to the Holder (or announces or threatensinwriting thatitwill not honor its obligationtodosoat any time following the execution hereofor)upon exercise by the Holder of the conversion rights of the Holderinaccordance with the terms of this Note, failstotransfer or cause its transfer agent to transfer (issue) (electronically orincertificated 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 agentintransferring (orissuing)(electronically orincertificated form) any certificate for shares of Common Stock tobe issuedto the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, orfailsto remove (or directs its transfer agent not to remove orimpairs,delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructionsinrespect thereof) on any certificate for any sharesofCommon Stockissuedtothe Holder upon conversionofor otherwise pursuant to this Note as and when required by thisNote(or makes any written announcement, statement or threat thatitdoes not intendtohonor the obligations describedinthis paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall notberescindedinwriting) forfive(5) business days after the Holder shall have delivered a Notice of Conversion. Itisan obligationofthe Borrower toremaincurrentinits obligationstoits transfer agent. Itshall bean event of default of this Note,ifa conversion of this Noteisdelayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the optionofthe Holder, the Holder advances any funds to the Borrower’s transfer agentinorder to process a conversion, such advanced funds shallbepaid by the Borrower to the Holder within forty eight (48) hours of a demand from the Holder.
3.3. Breach of Covenants. The Borrower breaches any material covenant or other materialtermor condition containedinthisNoteand any collateral documents including but not limitedtothe Purchase Agreement and such breach continues for a period of seven (7) days after written notice thereoftothe Borrower from the Holder.
3.4. Breach of Representations and Warranties. Any representation or warrantyofthe Borrower made herein orinany agreement, statement or certificate giveninwriting pursuant hereto orinconnection herewith (including, without limitation, the Purchase Agreement),shall befalse or misleadinginany material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rightsofthe Holder with respect to this Note or the Purchase Agreement.
3.5. Receiver or Trustee. The Borrower or any subsidiaryofthe Borrower shall make an assignment for thebenefitof creditors, or apply for orconsentto the appointment of a receiver or trustee foritor for a substantial part of its property or business, or such a receiver or trusteeshallotherwisebe appointed.
3.6. Judgments. Any money judgment, writ or similar process shallbeentered or filed against the Borrower or any subsidiaryofthe Borrower or any of its property or other assets for more than $50,000.00, 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.
3.7.Bankruptcy. Bankruptcy, insolvency, reorganization orliquidationproceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcylawor any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.
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3.8. Delisting of Common Stock. The Borrowershallfail to maintain the listing of the Common Stock on at least oneofthe OTCBB, or OTCQB, or an equivalent replacement exchange, NASDAQ, the NYSE or AMEX.
3.9. Failure to Comply with the Exchange Act. The Borrower shall failtocomplyinany material respect with the reporting requirements of the Exchange Act; and/or the Borrower shall ceasetobesubject to the reporting requirements of the Exchange Act.
3.10.Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.11.CessationofOperations. Any cessationofoperations by Borrower or Borrower admitsitisotherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s abilitytocontinue as a “going concern” shall notbean admission that the Borrower cannot pay its debts as they become due.
3.12. MaintenanceofAssets. The failure by Borrower, during the termofthis Note, to maintain any material intellectual property rights, personal, real property or other assets which are necessarytoconduct its business (whether now orinthe future).
3.13. Financial Statement Restatement. The restatement of any financial statementsfiledby the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Noteisno longeroutstanding,ifthe result of such restatement would, by comparisontothe unrestated financial statement,haveconstituted a material adverse effect on the rights of the Holder with respect tothisNote or the Purchase Agreement.
3.14. Reverse Splits. The Borrower effectuates a reversesplitofits 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 toprovide,prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructionsina form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stockinthe Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.
3.16. Cross-Default. Notwithstanding anythingtothe contrary containedinthis Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition containedinany of the Other Agreements, after the passageofall applicable notice and cure or grace periods,shall,at the optionofthe Holder,beconsidered a default under this Note and the Other Agreements,inwhich event the Holder shall be entitled (butin noevent required) to apply all rights and remedies of the Holder under the termsofthis 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 orby:(1) the Borrower, and, or for thebenefitof, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided, however, the term “Other Agreements” shall not include the related or companion documents to this Note. Each of the loan transactions willbecross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder.
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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, 3.17, 3.18 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 in 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 thesum of (w) the then outstanding principal amount of this Noteplus (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,ifany, on the amounts referredtoinclauses (w) and/or (x)plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof(thethen outstanding principal amount of this Note to the date of paymentplus the amounts referred toinclauses (x), (y) and (z) shall collectivelybeknown as the“DefaultSum”) or(ii)the “parity value” of the Default Sumtobeprepaid, where parity value means (a) the highest number of sharesofCommon Stock issuable upon conversion of or otherwise pursuant to such Default Suminaccordance 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 breachinrespect of a specific Conversion Dateinwhich case such Conversion Dateshall bethe Conversion Date),multipliedby (b) the highestClosingPrice for the Common Stock during the period beginning on the date of first occurrence of the Event ofDefaultand ending one day prior to the Mandatory Prepayment Date (the“DefaultAmount”) and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, allofwhich hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shallbeentitled to exercise all other rights and remedies available atlaworinequity.
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If the Borrower failstopay the Default Amount within five (5) business days of written notice that such amountisdue and payable, then the Holder shall have the right at any time, so long as the Borrower remainsindefault (and solongandtothe extent that there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue,in lieuofthe Default Amount, the number of sharesofCommon Stock oftheBorrower equaltothe Default Amount divided by the Conversion Price thenineffect. The Holder may still convert any amounts due hereunder, including without limitation the DefaultSum,until such time as this Note has been repaidin full.
3.17.InsideInformation. The Borrower or its officers, directors, and/or affiliates attempt to transmit, convey, disclose, or any actual transmittal, conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of, material non-public information concerning the Borrower, to the Holder or its successors and assigns, which is not immediately cured by Borrower’s filing of a Form 8-K pursuant to Regulation FD on that same date.
3.18Bid Price. The Borrower shall lose the “bid” price for its Common Stock ($0.0001 on the “Ask” with zero market makers on the “Bid” per Level 2) and/or a market (including the OTC Pink, OTCQB or an equivalent replacement exchange).
ARTICLE IV. MISCELLANEOUS
4.1.Failure or Indulgence Not Waiver. No failure or delay on the part of the Holderinthe exerciseofany power,rightor privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power,rightor 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 shallbe inwriting and, unless otherwise specified herein, shallbe(i) personally served, (ii) depositedinthemail,registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputableaircourier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, email or facsimile, addressed as set forth below or to such other address as such party shall have specifiedmostrecently by written notice. Any notice or other communication required or permitted tobegiven hereunder shallbedeemed effective (a) upon hand delivery or delivery by facsimile or email, with accurate confirmation generated by the transmitting facsimile machine or computer,atthe address, email or number designatedinthe Purchase Agreement (if delivered on a business day during normal business hours where such noticeistobereceived), or thefirstbusiness day following such delivery (if delivered other than on a business day during normal business hours where such noticeistobereceived) 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 shallfirst occur.
4.3.Amendments. This Note and any provision hereof may onlybeamended by an instrumentinwriting signed by the Borrowerandthe Holder. Theterm“Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notesissuedpursuant to the Purchase Agreement) as originally executed, oriflater amended or supplemented, then as so amended or supplemented.
4.4.Assignability. This Noteshall bebinding upon the Borrower and its successors and assigns, and shall inuretobethebenefitof the Holder and its successors and assigns. Each transfereeofthis Notemustbean “accredited investor” (as definedinRule 501(a) of the 1933 Act). Notwithstanding anythinginthis Note to the contrary, this Notemay bepledged as collateralinconnection with a bona fidemarginaccount or otherlending arrangement.
4.5.Cost of Collection.Ifdefaultismadeinthe payment of this Note, the Borrowershallpay the Holder hereof costs of collection, including reasonable attorneys’ fees.
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4.6.Governing Law. This Noteshall begoverned by and construedinaccordance with the lawsofthe State of New York without regard to conflicts of laws principles that would resultinthe applicationofthe substantive laws of another jurisdiction. Any action brought by either party against the other concerning the transactions contemplated by this Agreementmustbe brought only in the civil or state courts of New York or in the federal courts located in the State and county of New York. Both parties and the individual signing this Agreement on behalf of the Borrower agree to submit to the jurisdiction of such courts. 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 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 unenforceability of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Borrower in any other jurisdiction to collect on the Borrower’s obligations to Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other decision in favor of the Holder.This Note shall be deemed an unconditional obligation of Borrower for the payment of money and, without limitation to any other remedies of Holder, may be enforced against Borrower by summary proceeding pursuant to New York Civil Procedure Law and Rules Section 3213 or any similar rule or statute in the jurisdiction where enforcement is sought. For purposes of such rule or statute, any other document or agreement to which Holder and Borrower are parties or which Borrower delivered to Holder, which may be convenient or necessary to determine Holder’s rights hereunder or Borrower’s obligations to Holder are deemed a part of this Note, whether or not such other document or agreement was delivered together herewith or was executed apart from this Note.
4.7.Certain Amounts. Whenever pursuant to this Note the Borrowerisrequired to pay an amountinexcess of the outstanding principal amount (or the portion thereof requiredtobepaid 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 Notemay bedifficulttodetermine and the amount tobesopaidby the Borrower represents stipulated damages and not a penalty andisintendedtocompensate the Holderinpart for lossofthe opportunitytoconvert this Note and to earn a return from the sale of sharesofCommon Stock acquired upon conversion of this Noteata priceinexcess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damagesisnot plainly disproportionate to the possible losstothe Holder from the receipt of a cash payment without the opportunity to convert this Noteintoshares of Common Stock.
4.8.Disclosure. Upon receipt or delivery by the Companyofany noticeinaccordance with the termsofthis Note, unless the Company hasingood faith determined that the matters relatingtosuch notice do not constitute material, non-public information relating to the Company or anyofits Subsidiaries, the Company shall within one (1) Trading Day after any such receipt or delivery, publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non- public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to such Holder contemporaneously with delivery of such notice, andinthe absenceofany such indication, the Holder shallbeallowedtopresume that all matters relatingtosuch notice do not constitutematerial,non-public information relating to the Company or its Subsidiaries.
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4.9.NoticeofCorporate Events. Except as otherwise provided below, the Holder of this Noteshallhavenorights as a Holder of Common Stock unless and onlytothe extent thatitconverts this Note into Common Stock. The Borrowershallprovide the Holder with prior notificationofany meetingofthe Borrower’s shareholders (and copiesofproxy 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 entitledtoreceive 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 shareofany class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitledtovoteinconnection with any proposed sale,leaseor conveyanceofall or substantially allofthe assets of the Borrower or any proposed liquidation, dissolution or winding upofthe Borrower, the Borrower shall mail a noticetotheHolder, atleasttwenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whicheverisearlier), of the date on which any such recordistobetaken for the purpose of such dividend, distribution,rightor 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 Borrowershallmake a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the notificationtothe Holderinaccordance with the terms of this Section 4.9.
4.10.Remedies. The Borrower acknowledges that a breach byitof its obligations hereunder will cause irreparable harmtothe Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breachofits obligations under this Note willbeinadequate and agrees,inthe event of a breach or threatened breach by the Borrower of the provisionsofthis Note, that the Holder shallbeentitled,inadditiontoall other available remedies atlaworinequity, andinadditiontothe penalties assessable herein,toan injunction or injunctions restraining, preventing or curing any breachofthis Note andtoenforce specifically the terms and provisions thereof, without the necessity of showing economiclossand without any bond or other security being required.
4.11.Usury. This Note shallbesubject to the anti-usury limitations containedinthe Purchase Agreement.
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IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer as of the Issue Date first set forth above.
REALBIZ MEDIA GROUP, INC.
By: | /s/ Anshu Bhatnagar | |
Name: | Anshu Bhatnagar | |
Title: | CEO |
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EXHIBIT A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the 8% Convertible Note of REALBIZ MEDIA GROUP, INC., a Delaware corporation (theCompany”), 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 deliveryofthis NoticeofConversion the undersigned represents and warrants to the Company that its ownershipofthe Common Stock does not exceed the amounts specified under Section 1.1ofthis Note, as determined in accordance with Section 13(d)ofthe 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: | ||
Issue Dateof Note: | ||
Date to Effect Conversion: | ||
Conversion Price: | ||
PrincipalAmountof Note to be Converted: | ||
Less applicable fees under the Note: | ||
AmountofNote to be Converted: | ||
Interest Accrued on Account | ||
ofConversion at Issue: | ||
Additional Principal on Account of Conversion | ||
Pursuant to Section 1.2(b)ofthe Note: | ||
NumberofsharesofCommon Stock to be issued: | ||
Remaining Balance of Note*: | ||
Signature: | ||
Name: | ||
AddressforDeliveryofCommon Stock Certificates: | ||
Or | ||
DWAC Instructions: | ||
Broker No: | ||
Account No: |
*Sum provided does not include accrued interest and/or additional fees
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