EXHIBIT 10.20
THE ISSUANCE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THIS NOTE MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS SO REGISTERED OR
UNLESS AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 IS
AVAILABLE.
INTERACTIVE NETWORK, INC.
10% CONVERTIBLE PROMISSORY NOTE
$_______________ LOS ALTOS, CALIFORNIA
________________, 2001
Interactive Network, Inc., a California corporation (the "Company"),
for value received, hereby promises to pay to ______________ or its registered
assigns (the "Holder") the principal sum of __________________________ and
___/100 Dollars ($_________) on ___________, 2002. The Company also promises to
pay interest (computed on the basis of a 360-day year) from the date hereof on
the unpaid balance of such principal amount from time to time outstanding at the
rate of ten percent (10%) per annum. Subject to the terms of Section 7, such
interest shall be due and payable on the earlier of the date this Note matures
or upon conversion of this Note, as described below. At the option of the
Company, interest may be paid by the Company either in cash or in newly-issued,
fully paid and non-assessable shares of common stock ("Common Stock") of the
Company, which shares shall have the same value as the dollar amount of interest
due. For this purpose, the value of the shares of Common Stock shall be equal to
the "Market Value" as that term is defined in the "Bridge Warrants" (as the term
"Bridge Warrants" is defined below). The Company shall give to the Holder at
least five (5) business days' notice of its intent to pay the principal amount
of this Note, in whole or in part. This Note is one of a series of promissory
notes issued by the Company in its offering of units beginning in June 2001,
with each unit consisting of a convertible promissory note in the form of this
Note in the original principal amount of $10,000.00 and a warrant (collectively,
the "Bridge Warrants") to purchase 20,000 shares of Common Stock.
1. CONVERSION. The Holder of this Note has the right, at its option, at any time
prior to the payment of the principal amount of this Note, in whole or in part,
to convert all or part of the outstanding principal amount of this Note into
fully-paid and non-assessable shares of common stock of the Company ("Common
Stock") at the rate of one share of Common Stock for $0.50 of outstanding
principal hereof, subject to adjustment as set forth herein (the "Conversion
Price"). In order to exercise this optional conversion privilege, the Holder of
this Note shall surrender this Note to the Company during normal business hours
at the Company's principal executive office, accompanied by written notice in
form satisfactory to the Company that the Holder elects to convert the principal
amount of this Note or a portion hereof specified in such notice. Such notice
shall also state the name of the Holder (with the address) in which the
certificate or certificates for shares of Common Stock issuable on such
conversion shall be issued.
2. SURRENDER OF NOTE AND DELIVERY OF CERTIFICATES. When surrendered for
conversion, this Note shall, unless the shares issuable on conversion are to be
issued in the same name as the name in which this Note is then registered, be
duly endorsed by, or accompanied by instruments of transfer duly executed by,
the Holder or his or its duly authorized attorney. As promptly as practicable
after the surrender of this Note for conversion in accordance with Section 1
above, the Company shall deliver or cause to be delivered at its principal
executive office to the Holder a certificate or certificates for the number of
shares of Common Stock issuable upon the conversion of this Note, or portion
thereof, in accordance with the provisions hereof. Such conversion shall be
deemed to have been made at the time this Note shall have been surrendered for
conversion and the notice specified above shall have been received by the
Company at its principal executive office (the "Conversion Date"), and the
Holder in whose name any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become on the
Conversion Date the holder of record of the shares represented thereby. If less
than the entire outstanding principal amount of this Note is being converted,
the Company shall promptly deliver to the Holder a new Note for the unconverted
principal balance, which Note and shall be of like tenor as to all terms as the
Note surrendered.
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3. ADJUSTMENT OF CONVERSION PRICE.
(a) In case the Company shall:
(i) declare a stock dividend on its Common Stock,
(ii) subdivide outstanding shares of Common Stock into a large
number of shares of Common Stock by reclassification, stock
split, or otherwise, or
(iii) combine outstanding shares of Common Stock into a
smaller number of shares of Common Stock by reclassification
or otherwise,
the number of shares of Common Stock issuable upon conversion of this
Note immediately prior to any such event shall be adjusted
proportionately so that thereafter the Holder shall be entitled to
receive upon conversion of this Note the number of shares of Common
Stock which such Holder would have owned after the happening of any of
the events described above had the Note been converted immediately
prior to the happening of such event, provided that the Conversion
Price shall in no event be reduced to less than the par value of the
shares issuable upon conversion. An adjustment made pursuant to this
Section shall become effective immediately after the record date in the
case of a dividend and shall become effective immediately after the
effective date in the case of a subdivision or combination.
(b) If, prior to maturity of this Note, the Company shall at any time
consolidate or merge with another corporation or entity (other than a
merger or consolidation in which the Company is the surviving
corporation), the Holder will thereafter be entitled to receive, upon
the conversion hereof, the securities or property to which a holder of
the number of shares of Common Stock then deliverable upon the
conversion hereof would have been entitled to receive upon such
consolidation or merger, and the Company shall take steps in connection
with such consolidation or merger as may be necessary to ensure that
the provisions hereof shall thereafter be applicable to any securities
or property thereafter deliverable upon the conversion of this Note.
4. NOTICE. If the Company proposes to take any action referred to in Section
3(a) or Section 3(b) above, or to effect the liquidation, dissolution, or
winding up of the Company, then the Company shall cause notice thereof to be
mailed to the registered Holder of this Note at least fifteen (15) days prior to
the date on which the transfer books of the Company shall close or a record be
taken for such stock dividend or the date when such reclassification,
liquidation, dissolution or winding up shall be effective, as the case may be.
5. STATEMENT OF ADJUSTMENT. Whenever the Conversion Price shall be adjusted as
provided in Section 3(a) above, the Company shall forthwith file and deliver by
mail, first class, postage prepaid, to the Holder a statement, signed by the
Chairman of the Board, the President, any Vice President, or Secretary of the
Company, showing in reasonable detail and certifying as to the facts requiring
such adjustment and the Conversion Price that will be effective after such
adjustment. Where appropriate, such notice may be given in advance and may be
included as part of a notice required to be mailed under the provision of
Section 4 hereof.
6. FRACTIONAL SHARES. No fractional shares of Common Stock shall be issuable
upon conversion of this Note, but a payment in cash will be made in respect of
any fraction of a share which would otherwise be issuable upon the surrender of
this Note, or portion hereof, for conversion.
7. ACCRUED INTEREST. Upon the payment or conversion of this Note, the Company
shall be required to pay in cash any accrued but unpaid interest on the amount
so converted up to the Conversion Date or date of payment.
8. PREPAYMENT OF PRINCIPAL. The principal indebtedness represented by this Note
may be prepaid in whole or in part without the prior written consent of the
Holder of this Note.
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9. DEFAULT. The entire unpaid principal of this Note and the interest then
accrued on this Note shall become and be immediately due and payable upon
written demand of the Company by the Holder of this Note, without any other
notice or demand of any kind or any presentment or protest, if any one of the
following events shall occur and be continuing at the time of such demand,
whether voluntarily or involuntarily, or, without limitation, occurring or
brought about by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
governmental body:
(a) If the Company (i) makes a composition or an assignment for the
benefit of creditors, (ii) applies for, consents to, or acquiesces in,
a petition seeking the appointment of a trustee, receiver or
liquidator, in bankruptcy or otherwise, of itself or of all or a
substantial portion of its assets, or (iii) admits in writing its
inability to pay its debts generally as they become due; or
(b) If an order for relief shall have been entered by a bankruptcy
court or if a decree, order or judgment shall have been entered
adjudging the Company insolvent, or appointing a receiver, liquidator,
custodian or trustee; or
(c) If the Company fails to pay principal and interest under this Note
when due, or otherwise breaches any of its obligations or
representations in any material respect under this Note.
10. SENIORITY. In the event of any distribution of the assets of the Company
upon dissolution, liquidation or reorganization, the Holder of this Note will be
entitled to receive payment in full of the indebtedness evidenced by this Note
prior to the payment by the Company of any other indebtedness of the Company.
11. WAIVERS. The Company waives presentment, demand, protest, notice of protest,
notice of presentment and all other notices and demands in connection with the
enforcement of the rights of the Holder of this Note. Any failure of the Holder
to exercise any right available hereunder or otherwise shall not be construed as
a waiver of the right to exercise the same right or any other right.
12. TRANSFER OR EXCHANGE. Whenever this Note shall be surrendered at the
principal executive office of the Company for transfer or exchange, accompanied
by a written instrument of transfer duly executed by the Holder hereof (or its
duly authorized attorney in writing), the Company shall execute and deliver in
exchange for this Note a new Note or Notes, as may be requested by such Holder,
in the same aggregate unpaid principal amount and payable on the same date as
the principal amount of the Note or Notes so surrendered; and each such new Note
shall be in such principal amount and registered in such name or names as such
Holder may designate in writing.
13. LOSS OR DESTRUCTION OF NOTE. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Note and of indemnity reasonably satisfactory to it, and upon reimbursement
to the Company of all reasonable expenses incidental thereto, and upon surrender
and cancellation of this Note (in case of mutilation), the Company will make and
deliver in lieu of this Note a new Note of like tenor and unpaid principal
amount.
14. SUCCESSORS AND ASSIGNS. This Note, and the obligations and rights of the
Company hereunder, shall be binding upon and inure to the benefit of the
Company, the Holder of this Note, and their respective successors and assigns.
15. ENFORCEABILITY. The Company represents that this Note is enforceable against
the Company in accordance with its terms.
16. CURRENCY. All payments shall be made in the currency of the United States of
America as at the time of payment shall be legal tender therein for the payment
of public and private debts.
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17. NOTICES. All notices, requests, consents and demands shall be made in
writing and shall be mailed postage prepaid, or delivered by hand, to the
Company or to the Holder at their respective addresses set forth below or to
such other address as may be furnished in writing to the other party hereto:
If to the Holder: _____________________________
_____________________________
_____________________________
Attention: __________________
If to the Company: Interactive Network, Inc.
180 Second Street, Suite B
Los Altos, California 94022
Attention: Mr. Bruce W. Bauer
(650) 947-3345 telephone
(650) 917-1615 facsimile
18. GOVERNING LAW. This Note shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the laws of the State of
Delaware, without reference to Delaware's choice of law provisions.
19. REGISTRATION. The Company will register the resale of the shares of the
Company's common stock into which this Note may be converted under the
Registration Statement on Form S-4 to be filed by the Company in connection with
its proposed merger with TWIN Entertainment, Inc.
IN WITNESS WHEREOF, this Note has been executed and delivered on the
date first above written by the duly authorized representative of the Company.
Interactive Network, Inc.
___________________________________
(Name)
(Title)
ATTEST: ___________________________________
Secretary
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