CONVERTIBLE PROMISSORY NOTE
$2,000,000 Las Vegas, Nevada September 23, 2004
Crystalix Group International, Inc., a Nevada corporation ("BORROWER"),
promises to pay to the order of CMKXTREME.COM ("LENDER") at 30 Princeville Lane,
Las Vegas, Nevada 89113, Two Million Dollars ($2,000,000), with interest on the
unpaid principal balance.
1. Interest Rate.
(a) Interest on the unpaid principal balance hereunder shall
accrue at the rate of ten percent (10%) per annum (the "INTEREST RATE") from the
date hereof. Default interest shall be paid in accordance with Section 6.
(b) The Interest Rate shall be calculated on the basis of the
unpaid principal balance hereunder and the actual number of days elapsed over a
365-day year. Notwithstanding anything contained in this Note to the contrary,
if collection from Borrower of interest at the Interest Rate would be contrary
to applicable laws, then the Interest Rate in effect on any day shall be the
highest interest rate which may be collected from Borrower under applicable laws
on such day.
2. Payment Schedule.
(a) Commencing on November 1, 2004, and continuing on the first
day of each month thereafter, Borrower shall make a principal payment in the
amount of $83,333, with all accrued and unpaid interest on the amounts
outstanding under this Note.
(b) All outstanding principal and accrued unpaid interest shall be
due and payable on October 1, 2007 (the "MATURITY DATE"), as such date may be
accelerated pursuant to Section 4.
3. Amounts due hereunder shall be paid by Borrower to Lender as
follows:
(a) Except as provided below in Section 3(b), all payments
(including payment and prepayments of principal of or other amounts in respect
of the Advances or fees or other amounts) required under this Note shall be made
by the Borrower to the Lender in lawful money of the United States of America
and in immediately available funds.
(b) From time to time, Lender may require Borrower to make any
payment of the Convertible Portion (as defined below) of Borrower's obligations
under this Note in shares of Common Stock of Borrower ("Common Shares") instead
of lawful money of the United States of America and thereby convert all or any
part of such Convertible Portion into that number of Common Shares, as is
obtained by dividing the dollar amount that Lender elects to convert by the
applicable Conversion Price (as defined below).
(c) Subject to adjustment as provided in this Section, the
"CONVERSION PRICE" shall be the lesser of (i) the average closing price of the
Common Shares for the five (5) business days immediately prior to Lender's
delivery of notice of conversion, or (ii) $0.08. The
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"CONVERTIBLE PORTION" means (w) any payment of principal, interest, and any
other amounts payable to Lender hereunder when due, (x) any prepayment tendered
by Borrower under Section 8 of this Note, (y) all or any portion of the entire
amount of Borrower's obligations under this Note, upon a sale of fifty-one
percent (51%) or more of the outstanding Common Stock of Borrower or a sale of
all or substantially all of Borrower's assets, or (z) if an Event of Default (as
defined below) occurs, a portion of Borrower's obligations under this Note not
exceeding One Million Dollars ($1,000,000); PROVIDED, HOWEVER, that upon the
occurrence of a second Event of Default while the first Event of Default remains
uncured, the entire amount of principal, interest and any other amounts payable
by Lender hereunder shall be the Convertible Portion.
(d) Within ten (10) days after delivery to Borrower of a notice of
conversion with respect to that portion of the outstanding and unpaid principal
or interest that Lender wishes to convert, Borrower shall (i) denote in its
corporate records the ownership by Lender of the Common Shares so purchased, and
(ii) unless this Note has been fully repaid or converted in full, issue to
Lender a new Note, in identical form hereto and duly executed by Borrower,
representing the portion of the Debt that has not been converted or repaid.
(e) If Borrower shall (i) declare a dividend or make a
distribution payable in Common Shares, (ii) subdivide or reclassify its
outstanding Common Shares into a greater number of Common Shares, or (iii)
combine its outstanding Common Shares into a smaller number of Common Shares,
the Conversion Price in effect at the time of the record date for such dividend
or distribution or the effective date of such subdivision, combination, or
reclassification shall be proportionately reduced in the case of any increase in
the number of Common Shares outstanding, and increased in the case of any
reduction in the number of Common Shares outstanding, so that Lender shall be
entitled to receive the kind and amount of Common Shares which Lender would have
owned or have been entitled to receive had this Note been converted into Common
Shares immediately prior to such time and had such Common Shares received such
dividend or other distribution or participated in such subdivision, combination,
or reclassification. Such adjustment shall be effective as of the record date
for such dividend or distribution or the effective date of such combination,
subdivision or reclassification and shall be made successively whenever any
event listed above shall occur.
(f) Whenever the Conversion Price is adjusted as provided in
Section 3(d), Borrower shall promptly deliver to Lender written notice setting
forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment and the computation thereof.
(g) In the event of any consolidation or merger of Borrower with
or into any other Person (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding Common
Shares), or in the event of any sale or transfer of all or substantially all of
the assets of Borrower or the reclassification of the Common Shares into another
form of capital stock of Borrower, whether in whole or in part, this Note shall
thereafter be convertible, in lieu of the Common Shares otherwise purchasable
and receivable upon conversion of this Note, into the kind and amount of stock
and other securities and property or cash which Lender would have been entitled
to receive upon such consolidation, merger, sale, transfer or reclassification
if Lender had held the Common Shares issuable upon the conversion of this Note
immediately prior to such consolidation, merger, sale, transfer or
reclassification.
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The provisions of this Section 3 shall similarly apply to successive
reclassification and changes of Common Shares of capital of Borrower and to
successive consolidations, mergers, sales, transfers or reclassifications.
(h) Borrower shall at all times reserve and keep available, free
from pre-emptive rights, out of its authorized but unissued shares of common
stock, solely for the purpose of issue upon conversion of this Note as herein
provided, such number of Common Shares as shall then be issuable upon the
conversion of this Note. Borrower covenants that all Common Shares which shall
be so issuable shall, upon issuance, be duly and validly issued and fully paid
and non-assessable. Borrower shall from time to time, in accordance with
applicable law, increase the authorized amount of its Common Shares if at any
time the authorized amount of its Common Shares remaining unissued shall not be
sufficient to permit the conversion of all Notes at the time outstanding.
4. Upon any Event of Default, as such term is defined in this
Section 5, Lender may accelerate the loan evidenced by this Note and declare the
entire principal balance of the Note immediately due and payable, and shall have
the rights provided herein and by applicable law. The occurrence of any of the
following events shall constitute an "EVENT OF DEFAULT" under this Note:
(a) Borrower fails to make any payment of interest or principal
within five (5) days after the date when due under this Note.
(b) The dissolution of Borrower, whether pursuant to any
applicable laws, or otherwise, or the sale, transfer or conveyance by Borrower
of fifty percent (50%) or more of the outstanding voting interests of stock of
Borrower or the equity interest in Borrower to any person or entity.
(c) Borrower commences a case or other proceeding, or if an
involuntary case or other proceeding shall be commenced against Borrower seeking
liquidation, reorganization or other relief with respect to its debts under any
bankruptcy, insolvency or other similar debtor relief law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its property, and any
such involuntary case or other proceeding shall remain undismissed and unstayed
for a period of sixty (60) days.
(d) Borrower shall make an assignment for the benefit of
creditors, or admit in writing its inability to pay its debts generally as they
become due.
(e) A notice of lien, levy or assessment is filed of record or
given to Borrower with respect to all or any of the Borrower's assets by any
federal, state, local department or agency, and such lien, levy or assessment is
not released or paid within a reasonable period of time but in no event longer
than twenty (20) days from the date such lien, levy or assessment is filed.
(f) Lender, in good faith, believes the prospect of payment or
performance by Borrower under this Note is impaired and if Borrower is unable or
unwilling to provide adequate
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written assurances to Lender of its ability to fully perform under this Note
within thirty (30) days following delivery of written notice.
(g) Any representation or warranty of Borrower is not materially
true, correct and complete, or if any material statement, report or certificate
made or delivered by Borrower or its officers, employees or agents is not true,
correct and complete when made.
5. If any Event of Default shall occur, the total of the unpaid
balance of principal and the accrued unpaid interest (past due interest being
compounded) shall then begin accruing interest at the rate stated in the first
paragraph above plus eight percent (8.00%) per annum (the "DEFAULT RATE"), until
such time as all past due payments and accrued interest are paid. Borrower
acknowledges that the effect of this Default Rate provision could operate to
compound some of the interest obligations due, and Borrower hereby expressly
assents to such compounding should it occur.
6. Borrower:
(a) waives demand, diligence, presentment for payment, protest and
demand, notice of extension, dishonor, protest, demand and non-payment of this
Note; and
(b) agrees that Borrower will pay any collection expenses, court
costs and actual attorney's fees which may be incurred by Lender in the
collection or enforcement of this Note.
8. This Note shall be construed according to the laws of the State of
Nevada.
9. All notices, requests and other communications hereunder must be
in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:
If to Borrower: Crystalix Group International, Inc
5275 South Arville Street, Suite B116
Las Vegas, Nevada 89118
Attn: Kevin T. Ryan, President
Fax No.: (702) 740-4611
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with a copy to: Snell & Wilmer L.L.P.
3800 Howard Hughes Parkway, Suite 1000
Las Vegas, Nevada 89109
Attn: Stephen B. Yoken, Esq.
Fax No.: (702) 784-5252
If to Lender: Urban Casavant
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Attn:
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Fax. No.:
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IN WITNESS WHEREOF, Borrower has caused this Note to be executed as of
the date first set forth above.
BORROWER:
Crystalix Group International, Inc.
By: /s/ KEVIN T. RYAN
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Kevin T. Ryan, President
By: /s/ PATTY HILL
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Patty Hill, Secretary
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