Exhibit 4.1
EXECUTION VERSION
SENIOR CONVERTIBLE NOTE
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 TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD OR ELIGIBLE TO BE 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. ANY TRANSFEREE OF THIS NOTE SHOULD
CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(C)(III) AND 17(A)
HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE
SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET
FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(C)(III) OF THIS NOTE.
STEVIA CORP.
SENIOR CONVERTIBLE NOTE
Issuance Date: May 16, 2014 Original Principal Amount: U.S. $600,000
FOR VALUE RECEIVED, Stevia Corp., a Nevada corporation (the "COMPANY"),
hereby promises to pay to the order of NOMIS BAY LTD. or its registered assigns
("HOLDER") the amount set out above as the Original Principal Amount (as reduced
pursuant to the terms hereof pursuant to redemption, conversion or otherwise,
the "PRINCIPAL") when due, whether upon the Maturity Date (as defined below),
acceleration, redemption or otherwise (in each case in accordance with the terms
hereof) and to pay interest ("INTEREST") on any outstanding Principal (as
defined below) (as such interest on any outstanding Principal may be reduced
pursuant to the terms hereof pursuant to redemption, conversion or otherwise) at
the applicable Interest Rate (as defined below) from the date set out above as
the Issuance Date (the "ISSUANCE DATE") until the same becomes due and payable,
whether upon the Maturity Date or acceleration, conversion, redemption or
otherwise (in each case in accordance with the terms hereof). This Senior
Convertible Note (this "NOTE", including all Senior Convertible Notes issued in
exchange, transfer or replacement hereof, collectively, the "NOTES") is one of a
series of Senior Convertible Notes issued pursuant to the pursuant to the
Securities Purchase Agreement (as defined below) either on the Initial Closing
Date (as defined below) or, if applicable, on the Additional Closing
Date (as defined below) (collectively, the "NOTES" and such other Senior
Convertible Notes, the "OTHER NOTES"). Certain capitalized terms used herein are
defined in Section 28.
1. PAYMENTS OF PRINCIPAL. On the Maturity Date, the Company shall pay to
the Holder an amount in cash representing all outstanding Principal, accrued and
unpaid Interest and accrued and unpaid Late Charges (as defined in Section
23(c)) on such Principal and Interest (as adjusted with respect to any Note
Reduction (as defined in Section 12)). Other than as specifically permitted by
this Note, the Company may not prepay any portion of the outstanding Principal,
accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and
Interest, if any.
2. INTEREST; INTEREST RATE.
(a) Interest on this Note shall commence accruing on the Issuance Date and
shall be computed on the basis of a 360-day year and twelve 30-day months and
shall be payable in cash on the Maturity Date or any applicable Redemption Date,
subject to adjustment with respect to any Note Reduction.
(b) Prior to the payment of Interest on the Maturity Date or any applicable
Redemption Date, Interest on this Note shall accrue at the Interest Rate and be
payable by way of inclusion of the Interest in the Conversion Amount on each
Conversion Date in accordance with Section 3(b)(i). From and after the
occurrence and during the continuance of any Event of Default, the Interest Rate
shall automatically be increased to eighteen percent (18.0%) per annum. In the
event that such Event of Default is subsequently cured, the adjustment referred
to in the preceding sentence shall cease to be effective as of the calendar day
immediately following the date of such cure; provided that the Interest as
calculated and unpaid at such increased rate during the continuance of such
Event of Default shall continue to apply to the extent relating to the days
after the occurrence of such Event of Default through and including the date of
such cure of such Event of Default.
3. CONVERSION OF NOTES. This Note shall be convertible into validly issued,
fully paid and non-assessable shares of Common Stock (as defined below), on the
terms and conditions set forth in this Section 3.
(a) Conversion Right. Subject to the provisions of Section 3(d), at any
time or times on or after the Issuance Date, the Holder shall be entitled to
convert any portion of the outstanding and unpaid Conversion Amount (as defined
below) into validly issued, fully paid and non-assessable shares of Common Stock
in accordance with Section 3(c), at the Conversion Rate (as defined below). The
Company shall not issue any fraction of a share of Common Stock upon any
conversion. If the issuance would result in the issuance of a fraction of a
share of Common Stock, the Company shall round such fraction of a share of
Common Stock up to the nearest whole share. The Company shall pay any and all
transfer, stamp, issuance and similar taxes that may be payable with respect to
the issuance and delivery of Common Stock upon conversion of any Conversion
Amount.
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(b) Conversion Rate. The number of shares of Common Stock issuable upon
conversion of any Conversion Amount pursuant to Section 3(a) shall be determined
by dividing (x) such Conversion Amount by (y) the Conversion Price (the
"CONVERSION RATE"").
(i) "CONVERSION AMOUNT" means the portion of the Principal to be
converted, redeemed or otherwise with respect to which this determination
is being made, plus all accrued and unpaid Interest with respect to such
portion of the Principal amount and accrued and unpaid Late Charges with
respect to such portion of such Principal and such Interest.
(ii) "CONVERSION PRICE"" means, for any date of determination, the
lesser of (A) the product of (x) the arithmetic average of the lowest two
(2) VWAPs of the Common Stock during the ten (10) consecutive Trading Days
ending and including the Trading Day immediately preceding the applicable
Conversion Date (the " VARIABLE CONVERSION BASE PRICE"") and (y) sixty
percent (60%), and (B) $0.30 (as adjusted for stock splits, stock
dividends, stock combinations or other similar transactions). All such
determinations to be appropriately adjusted for any stock split, stock
dividend, stock combination or other similar transaction during any such
measuring period.
(c) Mechanics of Conversion.
(i) Optional Conversion. To convert any Conversion Amount into shares
of Common Stock on any date (a "CONVERSION DATE""), the Holder shall
deliver (whether via facsimile or otherwise), for receipt on or prior to
11:59 p.m., New York time, on such date, a copy of an executed notice of
conversion in the form attached hereto as Exhibit I (the "CONVERSION
NOTICE"") to the Company. If required by Section 3(c)(iii), the Holder
shall surrender this Note to a nationally recognized overnight delivery
service for delivery to the Company (or an indemnification undertaking with
respect to this Note in the case of its loss, theft or destruction as
contemplated by Section 17(b)). On or before the first (1st) Trading Day
following the date of receipt of a Conversion Notice, the Company shall
transmit by facsimile an acknowledgment of confirmation, in the form
attached hereto as Exhibit II, of receipt of such Conversion Notice to the
Holder and the Company's transfer agent (the "TRANSFER AGENT") . On or
before the second (2nd) Trading Day following the date of receipt of a
Conversion Notice, the Company shall (1) provided that the Transfer Agent
is participating in The Depository Trust Company's ("DTC") Fast Automated
Securities Transfer Program, credit such aggregate number of shares of
Common Stock to which the Holder shall be entitled to the Holder's or its
designee's balance account with DTC through its Deposit/Withdrawal at
Custodian system or (2) if the Transfer Agent is not participating in the
DTC Fast Automated Securities Transfer Program, issue and deliver (via
reputable overnight courier) to the address as specified in the Conversion
Notice, a certificate, registered in the name of the Holder or its
designee, for the number of shares of Common Stock to which the Holder
shall be entitled. If this Note is physically surrendered for conversion as
required by Section 3(c)(iii) and the outstanding Principal of this Note is
greater than the Principal portion of the Conversion Amount being
converted, then the Company shall as soon as practicable
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and in no event later than four (4) Trading Days after receipt of this Note
and at its own expense, issue and deliver to the Holder (or its designee) a
new Note (in accordance with Section 17(d)) representing the outstanding
Principal not converted. The Person or Persons entitled to receive the
shares of Common Stock issuable upon a conversion of this Note shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on the Conversion Date.
(ii) Company's Failure to Timely Convert. If the Company shall fail,
for any reason or for no reason, to issue to the Holder within four (4)
Trading Days after the Company's receipt of a Conversion Notice (whether
via facsimile or otherwise) (the "SHARE DELIVERY DEADLINE"), a certificate
for the number of shares of Common Stock to which the Holder is entitled
and register such shares of Common Stock on the Company's share register or
to credit the Holder's or its designee's balance account with DTC for such
number of shares of Common Stock to which the Holder is entitled upon the
Holder's conversion of any Conversion Amount (as the case may be) (a
"CONVERSION FAILURE") then, in addition to all other remedies available to
the Holder, (1) the Company shall pay in cash to the Holder on each day
after such Share Delivery Deadline that the issuance of such shares of
Common Stock is not timely effected an amount equal to 2% of the product of
(A) the sum of the number of shares of Common Stock not issued to the
Holder on a timely basis and to which the Holder is entitled multiplied by
(B) the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the last possible date which the Company could have
issued such shares of Common Stock to the Holder without violating Section
3(c)(i) and (2) the Holder, upon written notice to the Company, may void
its Conversion Notice with respect to, and retain or have returned (as the
case may be) any portion of this Note that has not been converted pursuant
to such Conversion Notice, provided that the voiding of a Conversion Notice
shall not affect the Company's obligations to make any payments which have
accrued prior to the date of such notice pursuant to this Section 3(c)(ii)
or otherwise. In addition to the foregoing, if on or prior to the Share
Delivery Deadline, the Company shall fail to issue and deliver a
certificate to the Holder and register such shares of Common Stock on the
Company's share register or credit the Holder's or its designee's balance
account with DTC for the number of shares of Common Stock to which the
Holder is entitled upon the Holder's conversion hereunder (as the case may
be), and if on or after such Share Delivery Deadline the Holder purchases
(in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of all or any portion of
the number of shares of Common Stock, or a sale of a number of shares of
Common Stock equal to all or any portion of the number of shares of Common
Stock, issuable upon such conversion that the Holder so anticipated
receiving from the Company, then, in addition to all other remedies
available to the Holder, the Company shall, within three (3) Business Days
after receipt of the Holder's request and in the Holder's discretion,
either: (I) pay cash to the Holder in an amount equal to the Holder's total
purchase price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased (including,
without limitation, by any other Person in respect, or on behalf, of the
Holder) (the "BUY-IN PRICE"), at which point the Company's obligation to so
issue and deliver such certificate or credit the Holder's
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balance account with DTC for the number of shares of Common Stock to which
the Holder is entitled upon the Holder's conversion hereunder (as the case
may be) (and to issue such shares of Common Stock) shall terminate, or (II)
promptly honor its obligation to so issue and deliver to the Holder a
certificate or certificates representing such shares of Common Stock or
credit the Holder's balance account with DTC for the number of shares of
Common Stock to which the Holder is entitled upon the Holder's conversion
hereunder (as the case may be) and pay cash to the Holder in an amount
equal to the excess (if any) of the Buy-In Price over the product of (x)
such number of shares of Common Stock multiplied by (y) the lowest Closing
Sale Price of the Common Stock on any Trading Day during the period
commencing on the date of the applicable Conversion Notice and ending on
the date of such issuance and payment under this clause (II).
(iii) Book-Entry. Notwithstanding anything to the contrary set forth
in this Section 3, following conversion of any portion of this Note in
accordance with the terms hereof, the Holder shall not be required to
physically surrender this Note to the Company unless (A) the full
Conversion Amount represented by this Note is being converted (in which
event this Note shall be delivered to the Company following conversion
thereof as contemplated by Section 3(c)(i)) or (B) the Holder has provided
the Company with prior written notice (which notice may be included in a
Conversion Notice) requesting reissuance of this Note upon physical
surrender of this Note. The Holder and the Company shall maintain records
showing the Principal, Interest and Late Charges converted and/or paid
and/or adjusted (as the case may be) and the dates of such conversions
and/or payments and/or adjustments (as the case may be) or shall use such
other method, reasonably satisfactory to the Holder and the Company, so as
not to require physical surrender of this Note upon conversion.
(iv) Pro Rata Conversion; Disputes. In the event of a dispute as to
the number of shares of Common Stock issuable to the Holder in connection
with a conversion of this Note, the Company shall issue to the Holder the
number of shares of Common Stock not in dispute and resolve such dispute in
accordance with Section 22.
(d) Limitations on Conversions. Notwithstanding anything to the contrary
contained in this Note, this Note shall not be convertible by the Holder hereof,
and the Company shall not effect any conversion of this Note or otherwise issue
any shares of Common Stock pursuant hereto, to the extent (but only to the
extent) that after giving effect to such conversion or other share issuance
hereunder the Holder (together with its affiliates) would beneficially own in
excess of 4.99% (the "MAXIMUM PERCENTAGE") of the Common Stock. To the extent
the above limitation applies, the determination of whether this Note shall be
convertible (vis-a-vis other convertible, exercisable or exchangeable securities
owned by the Holder or any of its affiliates) and of which such securities shall
be convertible, exercisable or exchangeable (as among all such securities owned
by the Holder and its affiliates) shall, subject to such Maximum Percentage
limitation, be determined on the basis of the first submission to the Company
for conversion, exercise or exchange (as the case may be). No prior inability to
convert this Note, or to issue shares of Common Stock, pursuant to this
paragraph shall have any effect on the applicability of the provisions of this
paragraph with respect to any subsequent determination of
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convertibility. For purposes of this paragraph, beneficial ownership and all
determinations and calculations (including, without limitation, with respect to
calculations of percentage ownership) shall be determined in accordance with
Section 13(d) of the 1934 Act (as defined in the Securities Purchase Agreement)
and the rules and regulations promulgated thereunder. The provisions of this
paragraph shall be implemented in a manner otherwise than in strict conformity
with the terms of this paragraph to correct this paragraph (or any portion
hereof) which may be defective or inconsistent with the intended Maximum
Percentage beneficial ownership limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such Maximum
Percentage limitation. The limitations contained in this paragraph shall apply
to a successor Holder of this Note. The holders of Common Stock shall be third
party beneficiaries of this paragraph and the Company may not waive this
paragraph without the consent of holders of a majority of its Common Stock. For
any reason at any time, upon the written or oral request of the Holder, the
Company shall within one (1) Business Day confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding, including by
virtue of any prior conversion or exercise of convertible or exercisable
securities into Common Stock, including, without limitation, pursuant to this
Note or securities issued pursuant to the Securities Purchase Agreement. The
Company or its transfer agent shall advise the Holder within 24 hours to the
extent that any issuance of Common Stock hereunder, after giving effect thereto,
would result in the Holder (together with its affiliates) beneficially owning in
excess of 4.99% of the Common Stock.
4. RIGHTS UPON EVENT OF DEFAULT.
(a) Event of Default. Each of the following events shall constitute an
"EVENT OF DEFAULT":
(i) the suspension from trading or the failure of the Common Stock to
be trading or listed (as applicable) on an Eligible Market for a period of
ten (10) consecutive days or for more than an aggregate of thirty (30) days
in any 365-day period;
(ii) the Company's or any Subsidiary's (as defined in the Securities
Purchase Agreement) failure to pay to the Holder any amount of Principal,
Interest, Late Charges or other amounts when and as due under this Note
(including, without limitation, the Company's or any Subsidiary's failure
to pay any redemption payments or amounts hereunder) or any other
Transaction Document (as defined in the Securities Purchase Agreement) or
any other agreement, document, certificate or other instrument delivered in
connection with the transactions contemplated hereby and thereby, except,
in the case of a failure to pay Interest and Late Charges when and as due,
in which case only if such failure remains uncured for a period of at least
five (5) days;
(iii) the occurrence of any default under, redemption of or
acceleration prior to maturity of an aggregate of any Indebtedness (as
defined in the Securities Purchase Agreement) of the Company or any of its
Subsidiaries;
(iv) bankruptcy, insolvency, reorganization or liquidation proceedings
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or other proceedings for the relief of debtors shall be instituted by or
against the Company or any Subsidiary and, if instituted against the
Company or any Subsidiary by a third party, shall not be dismissed within
sixty (60) days of their initiation;
(v) the commencement by the Company or any Subsidiary of a voluntary
case or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree, order, judgment or other similar
document in respect of the Company or any Subsidiary in an involuntary case
or proceeding under any applicable federal, state or foreign bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief
under any applicable federal, state or foreign law, or the consent by it to
the filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or any Subsidiary or of any
substantial part of its property, or the making by it of an assignment for
the benefit of creditors, or the execution of a composition of debts, or
the occurrence of any other similar federal, state or foreign proceeding,
or the admission by it in writing of its inability to pay its debts
generally as they become due, the taking of corporate action by the Company
or any Subsidiary in furtherance of any such action or the taking of any
action by any Person to commence a Uniform Commercial Code foreclosure sale
or any other similar action under federal, state or foreign law;
(vi) the entry by a court of (i) a decree, order, judgment or other
similar document in respect of the Company or any Subsidiary of a voluntary
or involuntary case or proceeding under any applicable federal, state or
foreign bankruptcy, insolvency, reorganization or other similar law or (ii)
a decree, order, judgment or other similar document adjudging the Company
or any Subsidiary as bankrupt or insolvent, or approving as properly filed
a petition seeking liquidation, reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Subsidiary under any
applicable federal, state or foreign law or (iii) a decree, order, judgment
or other similar document appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or
any Subsidiary or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the continuance of any such
decree, order, judgment or other similar document or any such other decree,
order, judgment or other similar document unstayed and in effect for a
period of thirty (30) consecutive days;
(vii) a final judgment or judgments for the payment of money
aggregating in excess of $100,000 are rendered against the Company and/or
any of its Subsidiaries and which judgments are not, within thirty (30)
days after the entry thereof, bonded, discharged or stayed pending appeal,
or are not discharged within sixty (60) days after the expiration of such
stay; provided, however, any judgment which is covered by insurance or an
indemnity from a credit worthy party shall not be included in calculating
the $100,000 amount set forth above so long as the Company
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provides the Holder a written statement from such insurer or indemnity
provider (which written statement shall be reasonably satisfactory to the
Holder) to the effect that such judgment is covered by insurance or an
indemnity and the Company or such Subsidiary (as the case may be) will
receive the proceeds of such insurance or indemnity within thirty (30) days
of the issuance of such judgment;
(viii) the Company and/or any Subsidiary, individually or in the
aggregate, either (i) fails to pay, when due, or within any applicable
grace period, any payment with respect to any Indebtedness in excess of
$100,000 due to any third party (other than, with respect to unsecured
Indebtedness only, payments contested by the Company and/or such Subsidiary
(as the case may be) in good faith by proper proceedings and with respect
to which adequate reserves have been set aside for the payment thereof in
accordance with GAAP) or is otherwise in breach or violation of any
agreement for monies owed or owing in an amount in excess of $100,000,
which breach or violation permits the other party thereto to declare a
default or otherwise accelerate amounts due thereunder, or (ii) suffer to
exist any other circumstance or event that would, with or without the
passage of time or the giving of notice, result in a default or event of
default under any agreement binding the Company or any Subsidiary, which
default or event of default would or is likely to have a material adverse
effect on the business, assets, operations (including results thereof),
liabilities, properties, condition (including financial condition) or
prospects of the Company or any of its Subsidiaries, individually or in the
aggregate;
(ix) other than as specifically set forth in another clause of this
Section 4(a), the Company or any Subsidiary breaches any representation,
warranty, covenant or other term or condition of any Transaction Document,
except, in the case of a breach of a covenant or other term or condition
that is curable, only if such breach remains uncured for a period of three
(3) consecutive Trading Days;
(x) any Event of Default (as defined in the Other Notes) occurs with
respect to any Other Notes;
(xi) any Material Adverse Effect (as defined in the Securities
Purchase Agreement) occurs; or
(xii) any Change of Control occurs.
(b) Notice of an Event of Default; Redemption Right. Upon the occurrence of
an Event of Default with respect to this Note, the Company shall within one (1)
Business Day deliver written notice thereof via facsimile and overnight courier
(with next day delivery specified) (an "EVENT OF DEFAULT NOTICE") to the Holder.
At any time after the earlier of the Holder's receipt of an Event of Default
Notice and the Holder becoming aware of an Event of Default, the Holder may
require the Company to redeem, at any time during the period commencing on the
date the Holder first becomes aware of such Event of Default through and
including the twentieth Trading Day after the later of (x) the date the Holder
receives the applicable Event of Default Notice with respect thereto and (y) the
date such Event of Default has been cured, all or any portion of this Note by
delivering written notice thereof (the "EVENT OF
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DEFAULT REDEMPTION NOTICE") to the Company, which Event of Default Redemption
Notice shall indicate the portion of this Note the Holder is electing to redeem.
Each portion of this Note subject to redemption by the Company pursuant to this
Section 4(b) shall be redeemed by the Company at a price equal to the greater of
(i) the product of (A) the Conversion Amount to be redeemed multiplied by (B)
the Redemption Premium and (ii) the product of (X) the Conversion Rate with
respect to the Conversion Amount in effect at such time as the Holder delivers
an Event of Default Redemption Notice multiplied by (Y) the product of (1) the
Redemption Premium multiplied by (2) the greatest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the date
immediately preceding such Event of Default and ending on the date the Company
makes the entire payment required to be made under this Section 4(b) (the "EVENT
OF DEFAULT REDEMPTION PRICE"). Redemptions required by this Section 4(b) shall
be made in accordance with the provisions of Section 10. To the extent
redemptions required by this Section 4(b) are deemed or determined by a court of
competent jurisdiction to be prepayments of this Note by the Company, such
redemptions shall be deemed to be voluntary prepayments. Notwithstanding
anything to the contrary in this Section 4, but subject to Section 3(d), until
the Event of Default Redemption Price (together with any Late Charges thereon)
is paid in full, the Conversion Amount submitted for redemption under this
Section 4(b) (together with any Late Charges thereon) may be converted, in whole
or in part, by the Holder into Common Stock pursuant to the terms of this Note.
In the event of the Company's redemption of any portion of this Note under this
Section 4(b), the Holder's damages would be uncertain and difficult to estimate
because of the parties' inability to predict future interest rates and the
uncertainty of the availability of a suitable substitute investment opportunity
for the Holder. Accordingly, any redemption premium due under this Section 4(b)
is intended by the parties to be, and shall be deemed, a reasonable estimate of
the Holder's actual loss of its investment opportunity and not as a penalty.
5. RIGHTS UPON FUNDAMENTAL TRANSACTION; OTHER CORPORATE EVENTS.
(a) Assumption. The Company shall not enter into or be party to a
Fundamental Transaction unless (i) the Successor Entity assumes in writing all
of the obligations of the Company under this Note and the other Transaction
Documents in accordance with the provisions of this Section 5(a) pursuant to
written agreements in form and substance satisfactory to the Holder and approved
by the Holder prior to such Fundamental Transaction, including agreements to
deliver to each holder of Notes in exchange for such Notes a security of the
Successor Entity evidenced by a written instrument substantially similar in form
and substance to the Notes, including, without limitation, having a principal
amount and interest rate equal to the principal amounts then outstanding and the
interest rates of the Notes held by such holder, having similar conversion
rights as the Notes and having similar ranking to the Notes, and satisfactory to
the Holder and (ii) the Successor Entity (including its Parent Entity) is a
publicly traded corporation whose common stock is quoted on or listed for
trading on an Eligible Market. Upon the occurrence of any Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so
that from and after the date of such Fundamental Transaction, the provisions of
this Note and the other Transaction Documents referring to the "Company" shall
refer instead to the Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under this
Note and the other Transaction Documents with the same effect as if such
Successor Entity had been named as the Company
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herein. Upon consummation of a Fundamental Transaction, the Successor Entity
shall deliver to the Holder confirmation that there shall be issued upon
conversion or redemption of this Note at any time after the consummation of such
Fundamental Transaction, in lieu of the shares of the Company's Common Stock (or
other securities, cash, assets or other property (except such items still
issuable under Section 14, which shall continue to be receivable thereafter)
issuable upon the conversion or redemption of the Notes prior to such
Fundamental Transaction, such shares of the publicly traded common stock (or
their equivalent) of the Successor Entity (including its Parent Entity) which
the Holder would have been entitled to receive upon the happening of such
Fundamental Transaction had this Note been converted immediately prior to such
Fundamental Transaction (without regard to any limitations on the conversion of
this Note), as adjusted in accordance with the provisions of this Note.
Notwithstanding the foregoing, the Holder may elect, at its sole option, by
delivery of written notice to the Company to waive this Section 5(a) to permit
the Fundamental Transaction without the assumption of this Note.
(b) Other Corporate Events. In addition to and not in substitution for any
other rights hereunder, prior to the consummation of any Fundamental Transaction
pursuant to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for shares of Common
Stock (a "CORPORATE EVENT"), the Company shall make appropriate provision to
insure that the Holder will thereafter have the right to receive upon a
conversion of this Note (i) in addition to the shares of Common Stock receivable
upon such conversion, such securities or other assets to which the Holder would
have been entitled with respect to such shares of Common Stock had such shares
of Common Stock been held by the Holder upon the consummation of such Corporate
Event (without taking into account any limitations or restrictions on the
convertibility of this Note) or (ii) in lieu of the shares of Common Stock
otherwise receivable upon such conversion, such securities or other assets
received by the holders of shares of Common Stock in connection with the
consummation of such Corporate Event in such amounts as the Holder would have
been entitled to receive had this Note initially been issued with conversion
rights for the form of such consideration (as opposed to shares of Common Stock)
at a conversion rate for such consideration commensurate with the Conversion
Rate. Provision made pursuant to the preceding sentence shall be in a form and
substance satisfactory to the Holder.
(c) The provisions of this Section 5 shall apply similarly and equally to
successive Fundamental Transactions and Corporate Events and shall be applied
without regard to any limitations on the conversion of this Note.
6. [Intentionally Omitted!
7. NONCIRCUMVENTION. The Company hereby covenants and agrees that the
Company will not, by amendment of its Certificate of Incorporation (as defined
in the Securities Purchase Agreement), Bylaws (as defined in the Securities
Purchase Agreement) or through any reorganization, transfer of assets,
consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Note, and will at all times in good
faith carry out all of the provisions of this Note and take all action as may be
required to protect the rights of the Holder of this Note. Without limiting the
generality of the foregoing, the Company (i) shall not increase the par value of
any shares of Common Stock receivable upon conversion of this Note
10
above the Conversion Price then in effect, (ii) shall take all such actions as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock upon the
conversion of this Note, and (iii) shall, so long as any of the Notes are
outstanding, take all action necessary to reserve and keep available out of its
authorized and unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the Notes, the maximum number of shares of Common
Stock as shall from time to time be necessary to effect the conversion of the
Notes then outstanding (without regard to any limitations on conversion).
8. RESERVATION OF AUTHORIZED SHARES.
(a) Reservation. So long as any of the Notes are outstanding, the Company
shall take all action necessary to reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Notes, a number of shares of Common Stock, as of any date of
determination, for each of the Notes in accordance with the following formula:
P
---------------x 3 = Share Reserve
(T x B)
P = The aggregate Purchase Price (as defined the Securities
Purchase Agreement) of the Notes issued on or prior to such date
of determination;
T = The applicable Variable Conversion Base Price as of such date
of determination;
B = 0.85;
provided, that, the Share Reserve shall in no event be less than 150% of the
number of shares of Common Stock as shall from time to time be necessary to
effect the conversion of all of the Notes then outstanding (without regard to
any limitations on conversions) (the "REQUIRED RESERVE AMOUNT").
(b) Insufficient Authorized Shares. If, notwithstanding Section 8(a), and
not in limitation thereof, at any time while any of the Notes remain outstanding
the Company does not have a sufficient number of authorized and unreserved
shares of Common Stock to satisfy its obligation to reserve for issuance upon
conversion of the Notes at least a number of shares of Common Stock equal to the
Required Reserve Amount (an "AUTHORIZED SHARE Failure"), then the Company shall
immediately take all action necessary to increase the Company's authorized
shares of Common Stock to an amount sufficient to allow the Company to reserve
the Required Reserve Amount for the Notes then outstanding. Without limiting the
generality of the foregoing sentence, as soon as practicable after the date of
the occurrence of an Authorized Share Failure, but in no event later than sixty
(60) days after the occurrence of such Authorized Share Failure, the Company
shall hold a meeting of its stockholders for the approval of an increase in the
number of authorized shares of Common Stock. In connection with such meeting,
the Company shall provide each stockholder with a proxy statement and shall use
its best efforts to solicit its
11
stockholders' approval of such increase in authorized shares of Common Stock and
to cause its board of directors to recommend to the stockholders that they
approve such proposal. In the event that the Company is prohibited from issuing
shares of Common Stock upon any conversion due to the failure by the Company to
have sufficient shares of Common Stock available out of the authorized but
unissued shares of Common Stock (such unavailable number of shares of Common
Stock, the "AUTHORIZATION FAILURE SHARES'"), in lieu of delivering such
Authorization Failure Shares to the Holder, the Company shall pay cash in
exchange for the redemption of such portion of the Conversion Amount convertible
into such Authorized Failure Shares at a price equal to the sum of (i) the
product of (x) such number of Authorization Failure Shares and (y) the greatest
Closing Sale Price of the Common Stock on any Trading Day during the period
commencing on the date the Holder delivers the applicable Conversion Notice with
respect to such Authorization Failure Shares to the Company and ending on the
date of such issuance and payment under this Section 8(b) and (ii) to the extent
the Holder purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of Authorization
Failure Shares, any brokerage commissions and other out-of-pocket expenses, if
any, of the Holder incurred in connection therewith. Nothing contained in
Section 8(a) or this Section 8(b) shall limit any obligations of the Company
under any provision of the Securities Purchase Agreement.
9. COMPANY OPTIONAL REDEMPTION. At any time after the Issuance Date, the
Company shall have the right to redeem all, but not less than all, of the
Conversion Amount then remaining under this Note (the "COMPANY OPTIONAL
REDEMPTION AMOUNT') on the Company Optional Redemption Date (as defined below)
(a "COMPANY OPTIONAL REDEMPTION"). The portion of this Note subject to
redemption pursuant to this Section 9 shall be redeemed by the Company in cash
at a price (the "COMPANY OPTIONAL REDEMPTION PRICE") equal to 140% of the
Conversion Amount of this Note then outstanding. The Company may exercise its
right to require redemption under this Section 9 by delivering an irrevocable
written notice thereof by facsimile and overnight courier to the Holder (the
"COMPANY OPTIONAL REDEMPTION NOTICE" and the date the Holder receives such
notice is referred to as the "COMPANY OPTIONAL REDEMPTION NOTICE DATE"). The
Company may deliver only one Company Optional Redemption Notice in any ninety
(90) day period. The Company Optional Redemption Notice shall (x) state the date
on which the Company Optional Redemption shall occur (the "COMPANY OPTIONAL
REDEMPTION DATE") which date shall not be less than sixty (60) calendar days nor
more than ninety (90) calendar days following the Company Optional Redemption
Notice Date, and (y) state the aggregate Conversion Amount of the Notes which is
being redeemed in such Company Optional Redemption from the Holder pursuant to
this Section 9 on the Company Optional Redemption Date. Notwithstanding anything
herein to the contrary, at any time prior to the date the Company Optional
Redemption Price is paid, in full, the Company Optional Redemption Amount may be
converted, in whole or in part, by the Holder into shares of Common Stock
pursuant to Section 3. All Conversion Amounts converted by the Holder after the
Company Optional Redemption Notice Date shall reduce the Company Optional
Redemption Amount of this Note required to be redeemed on the Company Optional
Redemption Date. Redemptions made pursuant to this Section 9 shall be made in
accordance with Section 10.
12
10. REDEMPTIONS.
(a) Mechanics. The Company shall deliver the applicable Event of Default
Redemption Price to the Holder in cash within five (5) Business Days after the
Company's receipt of the Holder's Event of Default Redemption Notice. The
Company shall deliver the applicable Company Optional Redemption Price to the
Holder in cash on the applicable Company Optional Redemption Date. In the event
of a redemption of less than all of the Conversion Amount of this Note, the
Company shall promptly cause to be issued and delivered to the Holder a new Note
(in accordance with Section 17(d)) representing the outstanding Principal which
has not been redeemed. The Holder's delivery of a notice voiding a Redemption
Notice and exercise of its rights following such notice shall not affect the
Company's obligations to make any payments of Late Charges which have accrued
prior to the date of such notice with respect to the Conversion Amount subject
to such notice.
11. VOTING RIGHTS. The Holder shall have no voting rights as the holder of
this Note, except as required by law (including, without limitation, Chapter 78
of the Nevada Revised Statutes) and as expressly provided in this Note.
12. [Reserved]
13. COVENANTS. Until all of the Notes have been converted, redeemed or
otherwise satisfied in accordance with their terms:
(a) Rank. All payments due under this Note (i) shall rank PARI PASSU with
all Other Notes and (ii) shall be senior to all other Indebtedness of the
Company and its Subsidiaries.
(b) Incurrence of Indebtedness. The Company shall not, and the Company
shall cause each of its Subsidiaries to not, directly or indirectly, incur or
guarantee, assume or suffer to exist any Indebtedness (other than (i) the
Indebtedness evidenced by this Note and the Other Notes and (ii) other Permitted
Indebtedness.
(c) Existence of Liens. The Company shall not, and the Company shall cause
each of its Subsidiaries to not, directly or indirectly, allow or suffer to
exist any mortgage, lien, pledge, charge, security interest or other encumbrance
upon or in any property or assets (including accounts and contract rights) owned
by the Company or any of its Subsidiaries (collectively, "LIENS") other than
Permitted Liens.
(d) Restricted Payments. The Company shall not, and the Company shall cause
each of its Subsidiaries to not, directly or indirectly, redeem, defease,
repurchase, repay or make any payments in respect of, by the payment of cash or
cash equivalents (in whole or in part, whether by way of open market purchases,
tender offers, private transactions or otherwise), all or any portion of any
Indebtedness, whether by way of payment in respect of principal of (or premium,
if any) or interest on, such Indebtedness if at the time such payment is due or
is otherwise made or, after giving effect to such payment, (i) an event
constituting an Event of Default has occurred and is continuing or (ii) an event
that with the passage of time and without being cured would constitute an Event
of Default has occurred and is continuing.
13
(e) Restricted Issuances. The Company shall not, directly or indirectly,
without the prior written consent of the holders of a majority in aggregate
principal amount of the Notes then outstanding, (i) issue any Notes (other than
as contemplated by the Securities Purchase Agreement and the Notes) or (ii)
issue any other securities that would cause a breach or default under the Notes.
(f) Restriction on Redemption and Cash Dividends. The Company shall not,
and the Company shall cause each of its Subsidiaries to not, directly or
indirectly, redeem, repurchase or declare or pay any cash dividend or
distribution on any of its capital stock.
(g) Restriction on Transfer of Assets. The Company shall not, and the
Company shall cause each of its Subsidiaries to not, directly or indirectly,
sell, lease, license, assign, transfer, spin-off, split-off, close, convey or
otherwise dispose of any assets or rights of the Company or any Subsidiary owned
or hereafter acquired whether in a single transaction or a series of related
transactions, other than (i) sales, leases, licenses, assignments, transfers,
conveyances and other dispositions of such assets or rights by the Company and
its Subsidiaries in the ordinary course of business and (ii) sales of inventory
in the ordinary course of business.
(h) Maturity of Indebtedness. The Company shall not, and the Company shall
cause each of its Subsidiaries to not, directly or indirectly, permit any
Indebtedness of the Company or any of the Subsidiaries to mature or accelerate
prior to the Maturity Date.
(i) Change in Nature of Business. The Company shall not, and the Company
shall cause each of its Subsidiaries to not, directly or indirectly, engage in
any material line of business substantially different from those lines of
business conducted by the Company and each of its Subsidiaries on the Issuance
Date or any business substantially related or incidental thereto. The Company
shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, modify its or their corporate structure or purpose.
(j) Preservation of Existence, Etc. The Company shall maintain and
preserve, and cause each of its Subsidiaries to maintain and preserve, its
existence, rights and privileges, and become or remain, and cause each of its
Subsidiaries to become or remain, duly qualified and in good standing in each
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business makes such qualification necessary.
(k) Maintenance of Properties, Etc. The Company shall maintain and
preserve, and cause each of its Subsidiaries to maintain and preserve, all of
its properties which are necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and comply, and cause each of its Subsidiaries to comply, at all times with the
provisions of all leases to which it is a party as lessee or under which it
occupies property, so as to prevent any loss or forfeiture thereof or
thereunder.
(l) Maintenance of Intellectual Property. The Company will, and will cause
each of its Subsidiaries to, take all action necessary or advisable to maintain
all of the Intellectual Property Rights of the Company and/or any of its
Subsidiaries that are necessary or material to the conduct of its business in
full force and effect.
14
(m) Maintenance of Insurance. The Company shall maintain, and cause each of
its Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations (including, without limitation, comprehensive general
liability, hazard, rent and business interruption insurance) with respect to its
properties (including all real properties leased or owned by it) and business,
in such amounts and covering such risks as is required by any governmental
authority having jurisdiction with respect thereto or as is carried generally in
accordance with sound business practice by companies in similar businesses
similarly situated.
(n) Transactions with Affiliates. The Company shall not, nor shall it
permit any of its Subsidiaries to, enter into, renew, extend or be a party to,
any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease, transfer or exchange of property or
assets of any kind or the rendering of services of any kind) with any affiliate,
except in the ordinary course of business in a manner and to an extent
consistent with past practice and necessary or desirable for the prudent
operation of its business, for fair consideration and on terms no less favorable
to it or its Subsidiaries than would be obtainable in a comparable arm's length
transaction with a Person that is not an affiliate thereof.
14. PARTICIPATION. Upon any conversion of this Note, the Holder shall be
entitled to receive such dividends paid and distributions made to the holders of
Common Stock from and after the initial Issuance Date to the same extent as if
the Holder had effected such conversion and had held such shares of Common Stock
(issued or to be issued in such conversion) on the record date for such
dividends and distributions. Payments under the preceding sentence shall be made
on or prior to the applicable Share Delivery Deadline with respect to such
conversion.
15. AMENDING THE TERMS OF THIS NOTE. The prior written consent of the
Holder shall be required for any change or amendment to this Note.
16. TRANSFER. This Note and any shares of Common Stock issued upon
conversion of this Note may be offered, sold, assigned or transferred by the
Holder without the consent of the Company, subject only to the provisions of
Section 4.4 of the Securities Purchase Agreement.
17. REISSUANCE OF THIS NOTE.
(a) Transfer. If this Note is to be transferred, the Holder shall surrender
this Note to the Company, whereupon the Company will forthwith issue and deliver
upon the order of the Holder a new Note (in accordance with Section 17(d)),
registered as the Holder may request, representing the outstanding Principal
being transferred by the Holder and, if less than the entire outstanding
Principal is being transferred, a new Note (in accordance with Section 17(d)) to
the Holder representing the outstanding Principal not being transferred. The
Holder and any assignee, by acceptance of this Note, acknowledge and agree that,
by reason of the provisions of Section 3(c)(iii) following conversion or
redemption of any portion of this Note, the outstanding Principal represented by
this Note may be less than the Principal stated on the face of this Note.
15
(b) Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Note (as to which a written certification and the
indemnification contemplated below shall suffice as such evidence), and, in the
case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of
mutilation, upon surrender and cancellation of this Note, the Company shall
execute and deliver to the Holder a new Note (in accordance with Section 17(d))
representing the outstanding Principal.
(c) Note Exchangeable for Different Denominations. This Note is
exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company, for a new Note or Notes (in accordance with Section 17(d) and in
principal amounts of at least $1,000) representing in the aggregate the
outstanding Principal of this Note, and each such new Note will represent such
portion of such outstanding Principal as is designated by the Holder at the time
of such surrender.
(d) Issuance of New Notes. Whenever the Company is required to issue a new
Note pursuant to the terms of this Note, such new Note (i) shall be of like
tenor with this Note, (ii) shall represent, as indicated on the face of such new
Note, the Principal remaining outstanding (or in the case of a new Note being
issued pursuant to Section 17(a) or Section 17(c), the Principal designated by
the Holder which, when added to the principal represented by the other new Notes
issued in connection with such issuance, does not exceed the Principal remaining
outstanding under this Note immediately prior to such issuance of new Notes),
(iii) shall have an issuance date, as indicated on the face of such new Note,
which is the same as the Issuance Date of this Note, (iv) shall have the same
rights and conditions as this Note, and (v) shall represent accrued and unpaid
Interest and Late Charges on the Principal and Interest of this Note, from the
Issuance Date.
18. REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF. The remedies provided in this Note shall be cumulative and in addition
to all other remedies available under this Note and any of the other Transaction
Documents at law or in equity (including a decree of specific performance and/or
other injunctive relief), and nothing herein shall limit the Holder's right to
pursue actual and consequential damages for any failure by the Company to comply
with the terms of this Note. The Company covenants to the Holder that there
shall be no characterization concerning this instrument other than as expressly
provided herein. Amounts set forth or provided for herein with respect to
payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the Holder and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, the Holder shall be entitled, in
addition to all other available remedies, to an injunction restraining any such
breach or any such threatened breach, without the necessity of showing economic
loss and without any bond or other security being required. The Company shall
provide all information and documentation to the Holder that is requested by the
Holder to enable the Holder to confirm the Company's compliance with the terms
and conditions of this Note.
16
19. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is
placed in the hands of an attorney for collection or enforcement or is collected
or enforced through any legal proceeding or the Holder otherwise takes action to
collect amounts due under this Note or to enforce the provisions of this Note or
(b) there occurs any bankruptcy, reorganization, receivership of the Company or
other proceedings affecting Company creditors' rights and involving a claim
under this Note, then the Company shall pay the costs incurred by the Holder for
such collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other proceeding, including, without limitation,
attorneys' fees and disbursements. The Company expressly acknowledges and agrees
that no amounts due under this Note shall be affected, or limited, by the fact
that the purchase price paid for this Note was less than the original Principal
amount hereof.
20. CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted
by the Company and the Holder and shall not be construed against any Person as
the drafter hereof. The headings of this Note are for convenience of reference
and shall not form part of, or affect the interpretation of, this Note. Terms
used in this Note but defined in the other Transaction Documents shall have the
meanings ascribed to such terms on the Initial Closing Date in such other
Transaction Documents unless otherwise consented to in writing by the Holder.
21. 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 privilege. No waiver shall be effective unless it is
in writing and signed by an authorized representative of the waiving party.
22. DISPUTE RESOLUTION. In the case of a dispute as to the determination of
the Conversion Price (including, without limitation, any disputed adjustment
thereto or any dispute as to whether any issuance or sale or deemed issuance or
sale was an issuance or sale or deemed issuance or sale of Excluded Securities),
the Company Conversion Price, any Redemption Price, the Closing Bid Price, the
Closing Sale Price or fair market value (as the case may be) or the arithmetic
calculation of the Conversion Rate, any Note Reduction or the applicable
Redemption Price (as the case may be), the Company or the Holder (as the case
may be) shall submit the disputed determinations or arithmetic calculations (as
the case may be) via facsimile (i) within two (2) Business Days after receipt of
the applicable notice giving rise to such dispute to the Company or the Holder
(as the case may be) or (ii) if no notice gave rise to such dispute, at any time
after the Holder learned of the circumstances giving rise to such dispute. If
the Holder and the Company are unable to agree upon such determination or
calculation within two (2) Business Days of such disputed determination or
arithmetic calculation (as the case may be) being submitted to the Company or
the Holder (as the case may be), then the Company shall, within two (2) Business
Days, submit via facsimile (a) the disputed determination of the Conversion
Price, the Company Conversion Price, any Redemption Price, the Closing Bid
Price, the Closing Sale Price or fair market value (as the case may be) to an
independent, reputable investment bank selected by the Company and approved by
the Holder or (b) the disputed arithmetic calculation of the Conversion Rate,
any Note Reduction or any Redemption Price (as the case may be) to an
independent, outside accountant selected by the Holder that is reasonably
acceptable to the Company. The Company shall cause at its expense the investment
bank or the accountant (as the
17
case may be) to perform the determinations or calculations (as the case may be)
and notify the Company and the Holder of the results no later than ten (10)
Business Days from the time it receives such disputed determinations or
calculations (as the case may be). Such investment bank's or accountant's
determination or calculation (as the case may be) shall be binding upon all
parties absent demonstrable error.
23. NOTICES; CURRENCY; PAYMENTS.
(a) Notices. Whenever notice is required to be given under this Note,
unless otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement. The Company shall provide the
Holder with prompt written notice of all actions taken pursuant to this Note,
including in reasonable detail a description of such action and the reason
therefore. Without limiting the generality of the foregoing, the Company will
give written notice to the Holder (i) immediately upon any adjustment of the
Conversion Price, setting forth in reasonable detail, and certifying, the
calculation of such adjustment and (ii) at least fifteen (15) days prior to the
date on which the Company closes its books or takes a record (A) with respect to
any dividend or distribution upon the Common Stock, (B) with respect to any
grant, issuances, or sales of any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property to holders of shares of
Common Stock or (C)for determining rights to vote with respect to any
Fundamental Transaction, dissolution or liquidation, provided in each case that
such information shall be made known to the public prior to or in conjunction
with such notice being provided to the Holder.
(b) Currency. All dollar amounts referred to in this Note are in United
States Dollars ("U.S. DOLLARS"), and all amounts owing under this Note shall be
paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall
be converted into the U.S. Dollar equivalent amount in accordance with the
Exchange Rate on the date of calculation. "EXCHANGE RATE" means, in relation to
any amount of currency to be converted into U.S. Dollars pursuant to this Note,
the U.S. Dollar exchange rate as published in the Wall Street Journal on the
relevant date of calculation (it being understood and agreed that where an
amount is calculated with reference to, or over, a period of time, the date of
calculation shall be the final date of such period of time).
(c) Payments. Whenever any payment of cash is to be made by the Company to
any Person pursuant to this Note, unless otherwise expressly set forth herein,
such payment shall be made in lawful money of the United States of America by a
certified check drawn on the account of the Company and sent via overnight
courier service to such Person at such address as previously provided to the
Company in writing (which address, in the case of each of the Buyers, shall
initially be as set forth on the Schedule of Buyers attached to the Securities
Purchase Agreement), provided that the Holder may elect to receive a payment of
cash via wire transfer of immediately available funds by providing the Company
with prior written notice setting out such request and the Holder's wire
transfer instructions. 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. Any amount of
Principal or other amounts due under the Transaction Documents which is not paid
when due shall result in a late charge being incurred and payable by the Company
in an amount equal to interest on such
18
amount at the rate of eighteen percent (18%) per annum from the date such amount
was due until the same is paid in full ("LATE CHARGE").
24. CANCELLATION. After all Principal, accrued Interest, Late Charges and
other amounts at any time owed on this Note have been paid in full, this Note
shall automatically be deemed canceled, shall be surrendered to the Company for
cancellation and shall not be reissued.
25. WAIVER OF NOTICE. To the extent permitted by law, the Company hereby
irrevocably waives demand, notice, presentment, protest and all other demands
and notices in connection with the delivery, acceptance, performance, default or
enforcement of this Note and the Securities Purchase Agreement.
26. GOVERNING LAW. This Note shall be construed and enforced in accordance
with, and all questions concerning the construction, validity, interpretation
and performance of this Note shall be governed by, the internal laws of the
State of Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. The Company hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Chicago, Illinois, for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. 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 enforceability 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 Company in any other
jurisdiction to collect on the Company's obligations to the Holder, to realize
on any collateral or any other security for such obligations, or to enforce a
judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
27. MAXIMUM PAYMENTS. Nothing contained herein shall be deemed to establish
or require the payment of a rate of interest or other charges in excess of the
maximum permitted by applicable law. In the event that the rate of interest
required to be paid or other charges hereunder exceed the maximum permitted by
such law, any payments in excess of such maximum shall be credited against
amounts owed by the Company to the Holder and thus refunded to the Company.
28. CERTAIN DEFINITIONS. For purposes of this Note, the following terms
shall have the following meanings:
19
(a) "ADDITIONAL CLOSING DATE" shall have the meaning ascribed to such term
in the Securities Purchase Agreement, which date is the date the Company
initially issued Additional Notes (as defined in the Securities Purchase
Agreement) pursuant to the terms of the Securities Purchase Agreement.
(b) "APPROVED STOCK PLAN" means any employee benefit plan which has been
approved by the board of directors of the Company prior to or subsequent to the
date hereof pursuant to which shares of Common Stock and standard options to
purchase Common Stock may be issued to any employee, officer or director for
services provided to the Company in their capacity as such.
(c) "BLOOMBERG" means Bloomberg, L.P.
(d) "BUSINESS DAY" means any day other than Saturday, Sunday or other day
on which commercial banks in The City of New York are authorized or required by
law to remain closed.
(e) "CHANGE OF CONTROL" means any Fundamental Transaction other than (i)
any merger of the Company or any of its, direct or indirect, wholly-owned
Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization,
recapitalization or reclassification of the shares of Common Stock in which
holders of the Company's voting power immediately prior to such reorganization,
recapitalization or reclassification continue after such reorganization,
recapitalization or reclassification to hold publicly traded securities and,
directly or indirectly, are, in all material respects, the holders of the voting
power of the surviving entity (or entities with the authority or voting power to
elect the members of the board of directors (or their equivalent if other than a
corporation) of such entity or entities) after such reorganization,
recapitalization or reclassification, (iii) pursuant to a migratory merger
effected solely for the purpose of changing the jurisdiction of incorporation of
the Company or any of its Subsidiaries or (iv) any Fundamental Transaction
described on Schedule 28(g) attached hereto).
(f) "CLOSING BID PRICE" and "CLOSING SALE PRICE" means, for any security as
of any date, the last closing bid price and last closing trade price,
respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price
(as the case may be) then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing bid price or last trade price,
respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if
the foregoing do not apply, the last closing bid price or last trade price,
respectively, of such security in the over-the- counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price or last trade price, respectively, is reported for such security by
Bloomberg, the average of the bid prices, or the ask prices, respectively, of
any market makers for such security as reported in the "pink sheets" by OTC
Markets Group Inc. (formerly Pink Sheets LLC).
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(g) "CLOSING DATE" shall have the meaning set forth in the Securities
Purchase Agreement, which date is the date the Company initially issued the Note
pursuant to the terms of the Securities Purchase Agreement.
(h) "COMMON STOCK" means (i) the Company's common stock, $0.001 par value
per share, and (ii) any capital stock into which such common stock shall have
been changed or any share capital resulting from a reclassification of such
common stock.
(i) "CONVERTIBLE SECURITIES'" means any stock or other security (other than
Options) that is at any time and under any circumstances, directly or
indirectly, convertible into, exercisable or exchangeable for, or which
otherwise entitles the holder thereof to acquire, any shares of Common Stock.
(j) "ELIGIBLE MARKET " means the OTC Bulletin Board, The NASDAQ Global
Market, The NASDAQ Global Select Market, The NASDAQ Capital Market, the New York
Stock Exchange, NYSE Arca, the NYSE MKT, the OTCQX Marketplace or the OTCQB
Marketplace operated by OTC Markets Group Inc. (or any successor to any of the
foregoing).
(k) "EXCLUDED SECURITIES'" means any (i) shares of Common Stock or standard
options to purchase Common Stock to directors, officers or employees of the
Company in their capacity as such pursuant to an Approved Stock Plan (as defined
below), provided that (A) all such issuances (taking into account the shares of
Common Stock issuable upon exercise of such options granted after the date of
this Note, but not such shares issuable upon exercise of such options granted
before the date of this Note) after the date hereof pursuant to this clause (i)
do not, in the aggregate, exceed more than 5.0% of the Common Stock issued and
outstanding immediately prior to the date hereof and (B) the exercise price of
any such options is not lowered, none of such options are amended to increase
the number of shares issuable thereunder and none of the terms or conditions of
any such options are otherwise materially changed in any manner that adversely
affects any of the Buyers; (ii) shares of Common Stock issued upon the
conversion or exercise of Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan that are covered
by clause (i) above) issued prior to the date hereof, provided that the
conversion price of any such Convertible Securities (other than standard options
to purchase Common Stock issued pursuant to an Approved Stock Plan that are
covered by clause (i) above) is not lowered, none of such Convertible Securities
(other than standard options to purchase Common Stock issued pursuant to an
Approved Stock Plan that are covered by clause (i) above) are amended to
increase the number of shares issuable thereunder or extend the maturity date or
expiration date of such Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan that are covered
by clause (i) above) and none of the terms or conditions of any such Convertible
Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Stock Plan that are covered by clause (i) above) are otherwise
materially changed in any manner that adversely affects any of the Buyers; (iii)
the shares of Common Stock issuable upon conversion of the Notes or otherwise
pursuant to the terms of the Notes and (iv) any shares of Common Stock issued to
the Holder or any of its affiliates.
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(l) "FUNDAMENTAL TRANSACTION" means that (i) the Company or any of its
Subsidiaries shall, directly or indirectly, in one or more related transactions,
(1) consolidate or merge with or into (whether or not the Company or any of its
Subsidiaries is the surviving corporation) any other Person, or (2) sell, lease,
license, assign, transfer, convey or otherwise dispose of all or substantially
all of its respective properties or assets to any other Person, or (3) allow any
other Person to make a purchase, tender or exchange offer that is accepted by
the holders of more than 50% of the outstanding shares of Voting Stock of the
Company (not including any shares of Voting Stock of the Company held by the
Person or Persons making or party to, or associated or affiliated with the
Persons making or party to, such purchase, tender or exchange offer), or (4)
consummate a stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with any other Person whereby such other Person acquires
more than 50% of the outstanding shares of Voting Stock of the Company (not
including any shares of Voting Stock of the Company held by the other Person or
other Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock or share purchase agreement or other
business combination), or (ii) any "person" or "group" (as these terms are used
for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and
regulations promulgated thereunder) is or shall become the "beneficial owner"
(as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of
the aggregate ordinary voting power represented by issued and outstanding Voting
Stock of the Company.
(m) "GAAP" means United States generally accepted accounting principles,
consistently applied.
(n) "INITIAL CLOSING DATE" shall have the meaning ascribed to such term in
the Securities Purchase Agreement, which date is the date the Company initially
issued Initial Notes (as defined in the Securities Purchase Agreement) pursuant
to the terms of the Securities Purchase Agreement.
(o) "INTEREST RATE" means eight percent (8%) per annum, as may be adjusted
from time to time in accordance with Section 2.
(p) "MATURITY DATE" shall mean March 16, 2015; provided, however, the
Maturity Date may be extended at the option of the Holder (i) in the event that,
and for so long as, an Event of Default shall have occurred and be continuing or
any event shall have occurred and be continuing that with the passage of time
and the failure to cure would result in an Event of Default or (ii) through the
date that is twenty (20) Business Days after the consummation of a Fundamental
Transaction in the event that a Fundamental Transaction is publicly announced or
a Fundamental Transaction Notice is delivered prior to the Maturity Date,
provided further that if a Holder elects to convert some or all of this Note
pursuant to Section 3 hereof, and the Conversion Amount would be limited
pursuant to Section 3(d) hereunder, the Maturity Date shall automatically be
extended until such time as such provision shall not limit the conversion of
this Note.
(q) "SECURITIES PURCHASE AGREEMENT' means that certain Securities Purchase
Agreement, dated as of the Initial Closing Date, by and between the Company and
the Holder pursuant to which the Company issued this Note, as may be amended
from time to time.
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(r) "OPTIONS" means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.
(s) "PARENT ENTITY" of a Person means an entity that, directly or
indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more
than one such Person or Parent Entity, the Person or Parent Entity with the
largest public market capitalization as of the date of consummation of the
Fundamental Transaction.
(t) "PERSON" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity or a government or any department or agency
thereof.
(u) "PERMITTED INDEBTEDNESS" means (i) Indebtedness evidenced by this Note
and the Other Notes, (ii) Indebtedness described on Schedule 13(b) attached
hereto and (iii) Indebtedness secured by Permitted Liens described in clauses
(iv) and (v) of the definition of Permitted Liens, in an aggregate amount not to
exceed $100,000.
(v) "PERMITTED LIENS" means (i) any Lien for taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (ii) any
statutory Lien arising in the ordinary course of business by operation of law
with respect to a liability that is not yet due or delinquent, (iii) any Lien
created by operation of law, such as materialmen's liens, mechanics' liens and
other similar liens, arising in the ordinary course of business with respect to
a liability that is not yet due or delinquent or that are being contested in
good faith by appropriate proceedings, (iv) Liens (A) upon or in any equipment
acquired or held by the Company or any of its Subsidiaries to secure the
purchase price of such equipment or indebtedness incurred solely for the purpose
of financing the acquisition or lease of such equipment, or (B) existing on such
equipment at the time of its acquisition, provided that the Lien is confined
solely to the property so acquired and improvements thereon, and the proceeds of
such equipment, (v) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in clause
(iv) above, provided that any extension, renewal or replacement Lien shall be
limited to the property encumbered by the existing Lien and the principal amount
of the Indebtedness being extended, renewed or refinanced does not increase, and
(vi) Liens securing the Company's obligations under the Notes.
(w) "PRINCIPAL MARKET" means, as of any date of determination, the
principal securities exchange or securities market on which the Common Stock is
then traded.
(x) "REDEMPTION NOTICES" means, collectively, the Event of Default
Redemption Notices and the Company Optional Redemption Notices, and each of the
foregoing, individually, a "REDEMPTION NOTICE."
(y) "REDEMPTION PREMIUM" means (i) in the case of the Events of Default
described in Section 4(a) (other than Sections 4(a)(iv) through 4(a)(vi)), 140%
or (ii) in the case of the Events of Default described in Sections 4(a)(iv)
through 4(a)(vi), 100%.
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(z) "REDEMPTION PRICES'" means, collectively, Event of Default Redemption
Prices, and the Company Optional Redemption Prices and each of the foregoing,
individually, a "REDEMPTION PRICE."
(aa) "REGISTRATION RIGHTS AGREEMENT" means that certain registration rights
agreement, dated as of the Initial Closing Date, by and between the Company and
the Holder relating to, among other things, the registration of the resale of
the Common Stock issuable upon conversion of the Notes or otherwise pursuant to
the terms of the Notes, as may be amended from time to time.
(bb) "SEC" means the United States Securities and Exchange Commission or
the successor thereto.
(cc) "SUBSIDIARIES'" shall have the meaning as set forth in the Securities
Purchase Agreement.
(dd) "SUCCESSOR ENTITY'" means the Person (or, if so elected by the Holder,
the Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Holder, the Parent Entity)
with which such Fundamental Transaction shall have been entered into.
(ee) "TRADING DAY'" means any day on which the Common Stock is traded on
the Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded, provided that
"TRADING DAY'" shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour
ending at 4:00:00 p.m., New York time) unless such day is otherwise designated
as a Trading Day in writing by the Holder.
(ff) " VOTING STOCK'" of a Person means capital stock of such Person of the
class or classes pursuant to which the holders thereof have the general voting
power to elect, or the general power to appoint, at least a majority of the
board of directors, managers, trustees or other similar governing body of such
Person (irrespective of whether or not at the time capital stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
29. DISCLOSURE. Upon receipt or delivery by the Company of any notice in
accordance with the terms of this Note, unless the Company has in good faith
determined that the matters relating to such notice do not constitute material,
non-public information relating to the Company or any of its Subsidiaries, the
Company shall within one (1) Business 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, and
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in the absence of any such indication, the Holder shall be allowed to presume
that all matters relating to such notice do not constitute material, non-public
information relating to the Company or its Subsidiaries. Nothing contained in
this Section 29 shall limit any obligations of the Company, or any rights of the
Holder, under Section 4.3 of the Securities Purchase Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as
of the Issuance Date set out above.
STEVIA CORP.
By: /s/ George Blankenbaker
-----------------------------------------
Name: George Blankenbaker
Title: President
Senior Secured Convertible Note - Signature Page
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