NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE TUBE MEDIA CORP. THAT SUCH REGISTRATION IS NOT
Date: August 17, 2006 __, 2006
RECEIVED, THE TUBE MEDIA CORP., a Delaware corporation (hereinafter called
"Borrower"), hereby promises to pay to ________________ (the "Holder") or order,
without demand, the sum of ______________, without interest accruing thereon,
December 17, 2006 (the "Maturity Date"), if not retired sooner.
has been entered into pursuant to the terms of a subscription agreement between
the Borrower and the Holder, dated of even date herewith (the “Subscription
Agreement”), and shall be governed by the terms of such Subscription Agreement.
Unless otherwise separately defined herein, all capitalized terms used in this
Note shall have the same meaning as is set forth in the Subscription Agreement.
The following terms shall apply to this Note:
Following the occurrence and during the continuance of an Event of Default,
which, if susceptible to cure is not cured within ten (10) days, otherwise
from the first date of such occurrence, the annual interest rate on this Note
shall (subject to Section 4.7) be fifteen percent (15%) and calculated on a
Conversion Privileges set forth in Article II shall remain in full force and
effect immediately from the occurrence of an Event of Default as defined in
Article III hereof and until the Note is paid in full regardless of the
subsequent cure of the Event of Default. The Note shall be payable in full
the Maturity Date, unless previously converted into Common Stock in accordance
with Article II hereof; provided, that if an Event of Default has occurred,
Borrower may not pay this Note, without the consent of the Holder, until one
year after the later of the date the Event of Default has been cured or one
after the Maturity Date.
Holder shall have the right to convert the principal and any interest due under
this Note into Shares of the Borrower's Common Stock, $.0001 par value per
(“Common Stock”) as set forth below.
into the Borrower's Common Stock.
Holder shall have the right from and after the date of the occurrence of an
Event of Default and then at any time until this Note is fully paid, to convert
any outstanding and unpaid principal portion of this Note, and accrued interest,
at the election of the Holder (the date of giving of such notice of conversion
being a "Conversion Date") into fully paid and nonassessable shares of Common
Stock as such stock exists on the date of issuance of this Note, or any shares
of capital stock of Borrower into which such Common Stock shall hereafter be
changed or reclassified, at the conversion price as defined in Section 2.1(b)
hereof (the "Conversion Price"), determined as provided herein. Upon delivery
the Borrower of a completed Notice of Conversion, a form of which is annexed
hereto, Borrower shall issue and deliver to the Holder within three (3) business
days after the Conversion Date (such third day being the “Delivery Date”) that
number of shares of Common Stock for the portion of the Note converted in
accordance with the foregoing. At the election of the Holder, the Borrower
deliver accrued but unpaid interest on the Note, if any, through the Conversion
Date directly to the Holder on or before the Delivery Date (as defined in the
Subscription Agreement). The number of shares of Common Stock to be issued
each conversion of this Note shall be determined by dividing that portion of
principal of the Note and interest, if any, to be converted, by the Conversion
to adjustment as provided in Section 2.1(c) hereof, the Conversion Price per
share shall be the lesser of (i) $2.25 (“Fixed Conversion Price”), or (ii) fifty
percent (50%) of the average of the closing bid prices of the Common Stock
reported by Bloomberg L.P. for the Principal Market for the five trading days
preceding but not including each Conversion Date.
Fixed Conversion Price and number and kind of shares or other securities to
issued upon conversion determined pursuant to Section 2.1(a), shall be subject
to adjustment from time to time upon the happening of certain events while
conversion right remains outstanding, as follows:
Sale of Assets, etc. If the Borrower at any time shall consolidate with or
into or sell or convey all or substantially all its assets to any other
corporation, this Note, as to the unpaid principal portion thereof and accrued
interest thereon, shall thereafter be deemed to evidence the right to purchase
such number and kind of shares or other securities and property as would have
been issuable or distributable on account of such consolidation, merger, sale
conveyance, upon or with respect to the securities subject to the conversion
purchase right immediately prior to such consolidation, merger, sale or
conveyance. The foregoing provision shall similarly apply to successive
transactions of a similar nature by any such successor or purchaser. Without
limiting the generality of the foregoing, the anti-dilution provisions of this
Section shall apply to such securities of such successor or purchaser after
such consolidation, merger, sale or conveyance.
etc. If the Borrower at any time shall, by reclassification or otherwise, change
the Common Stock into the same or a different number of securities of any class
or classes that may be issued or outstanding, this Note, as to the unpaid
principal portion thereof and accrued interest thereon, shall thereafter be
deemed to evidence the right to purchase an adjusted number of such securities
and kind of securities as would have been issuable as the result of such change
with respect to the Common Stock immediately prior to such reclassification
Splits, Combinations and Dividends. If the shares of Common Stock are subdivided
or combined into a greater or smaller number of shares of Common Stock, or
dividend is paid on the Common Stock in shares of Common Stock, the Conversion
Price shall be proportionately reduced in case of subdivision of shares or
dividend or proportionately increased in the case of combination of shares,
each such case by the ratio which the total number of shares of Common Stock
outstanding immediately after such event bears to the total number of shares
Common Stock outstanding immediately prior to such event..
Issuance. So long as this Note is outstanding, if the Borrower shall issue
agree to issue any shares of Common Stock except for the Excepted Issuances
defined in the Subscription Agreement) for a consideration less than the
Conversion Price in effect at the time of such issue, then, and thereafter
successively upon each such issue, the Conversion Price shall be reduced to
other lower issue price. For purposes of this adjustment, the issuance of any
security carrying the right to convert such security into shares of Common
or of any warrant, right or option to purchase Common Stock shall result in
adjustment to the Conversion Price upon the issuance of the above-described
security and again upon the issuance of shares of Common Stock upon exercise
such conversion or purchase rights if such issuance is at a price lower than
then applicable Conversion Price. The reduction of the Conversion Price
described in this paragraph is in addition to other rights of the Holder
described in this Note and the Subscription Agreement.
the Conversion Price is adjusted pursuant to Section 2.1(c) above, the Borrower
shall promptly mail to the Holder a notice setting forth the Conversion Price
after such adjustment and setting forth a statement of the facts requiring
the period the conversion right exists, Borrower will reserve from its
authorized and unissued Common Stock not less than an amount of Common Stock
equal to 200% of the amount of shares of Common Stock issuable upon the full
conversion of this Note. Borrower represents that upon issuance, such shares
will be duly and validly issued, fully paid and non-assessable. Borrower agrees
that its issuance of this Note shall constitute full authority to its officers,
agents, and transfer agents who are charged with the duty of executing and
issuing stock certificates to execute and issue the necessary certificates
shares of Common Stock upon the conversion of this Note.
Note may be converted by the Holder in whole or in part as described in Section
2.1(a) hereof and the Subscription Agreement. Upon partial conversion of this
Note, a new Note containing the same date and provisions of this Note shall,
the request of the Holder, be issued by the Borrower to the Holder for the
principal balance of this Note and interest which shall not have been converted
Holder shall not be entitled to convert on a Conversion Date that amount of
Note in connection with that number of shares of Common Stock which would be
excess of the sum of (i) the number of shares of Common Stock beneficially
by the Holder and its affiliates on a Conversion Date, (ii) any Common Stock
issuable in connection with the unconverted portion of the Note, and (iii)
number of shares of Common Stock issuable upon the conversion of the Note with
respect to which the determination of this provision is being made on a
Conversion Date, which would result in beneficial ownership by the Holder and
its affiliates of more than 4.99% of the outstanding shares of Common Stock
the Borrower on such Conversion Date. For the purposes of the provision to
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder
shall not be limited to aggregate conversions of only 4.99% and aggregate
conversion by the Holder may exceed 4.99%. The Holder shall have the authority
and obligation to determine whether the restriction contained in this Section
2.3 will limit any conversion hereunder and to the extent that the Holder
determines that the limitation contained in this Section applies, the
determination of which portion of the Notes are convertible shall be the
responsibility and obligation of the Holder. The Holder may waive the conversion
limitation described in this Section 2.3, in whole or in part, upon and
effective after 61 days prior written notice to the Borrower to increase such
percentage to up to 9.99%.
occurrence of any of the following events of default ("Event of Default") shall,
at the option of the Holder hereof, make all sums of principal and interest
remaining unpaid hereon and all other amounts payable hereunder immediately
and payable, upon demand, without presentment, or grace period, all of which
hereby are expressly waived, except as set forth below:
to Pay Principal or Interest.
Borrower fails to pay any installment of principal, interest or other sum due
under this Note when due and such failure continues for a period of ten (10)
days after the due date. The ten (10) day period described in this Section
is the same ten (10) day period described in Section 1.1 hereof.
Borrower breaches any material covenant or other term or condition of the
Subscription Agreement or this Note in any material respect and such breach,
subject to cure, continues for a period of ten (10) business days after written
notice to the Borrower from the Holder.
of Representations and Warranties.
material representation or warranty of the Borrower made herein, in the
Subscription Agreement, or in any agreement, statement or certificate given
writing pursuant hereto or in connection therewith shall be false or misleading
in any material respect as of the date made and the Closing Date, and would
otherwise have a material adverse effect on the Borrower.
Borrower shall make an assignment for the benefit of creditors, or apply for
consent to the appointment of a receiver or trustee for it or for a substantial
part of its property or business; or such a receiver or trustee shall otherwise
money judgment, writ or similar final process shall be entered or filed against
Borrower or any of its property or other assets for more than $100,000, and
shall remain unvacated, unbonded or unstayed for a period of forty-five (45)
Bankruptcy, insolvency, reorganization or liquidation proceedings or other
proceedings or relief under any bankruptcy law or any law, or the issuance
any notice in relation to such event, for the relief of debtors shall be
instituted by or against the Borrower and if instituted against Borrower are
dismissed within 45 days of initiation.
Delisting of the Common Stock from any Principal Market; failure to comply
the requirements for continued listing on a Principal Market for a period of
seven consecutive trading days; or notification from a Principal Market that
Borrower is not in compliance with the conditions for such continued listing
such Principal Market.
default by the Borrower under any one or more obligations in an aggregate
monetary amount in excess of $100,000 for more than twenty days after the due
date, unless the Borrower is contesting the validity of such obligation in
or judicial stop trade order or Principal Market trading suspension that lasts
for five or more consecutive trading days.
to Deliver Common Stock or Replacement Note.
Borrower's failure to timely deliver Common Stock to the Holder pursuant to
in the form required by this Note and Sections 7 and 11 of the Subscription
Agreement, or, if required, a replacement Note.
occurrence of a Non-Registration Event as described in Section 11.4 of the
by the Borrower to have reserved for issuance upon conversion of the Note the
amount of Common stock as set forth in this Note and the Subscription
default by the Borrower of a material term, covenant, warranty or undertaking
any other agreement to which the Borrower and Holder are parties, or the
occurrence of a material event of default under any such other agreement which
is not cured after any required notice and/or cure period.
or Indulgence Not Waiver.
failure or delay on the part of Holder hereof 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. All
rights and remedies existing hereunder are cumulative to, and not exclusive
any rights or remedies otherwise available.
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted
given hereunder shall be deemed effective (a) upon hand delivery or delivery
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: (i) if to the Borrower to: The Tube Media Corp., 1451
West Cypress Creek Road, Ft. Lauderdale, FL 33309, Attn: David Levy, telecopier:
954-714-8500, with a copy by telecopier only to: Blank Rome LLP, 1200 N. Federal
Highway, Suite 417, Boca Raton, FL 33432, Attn: Bruce C. Rosetto, Esq.,
telecopier: (561) 417-8186, and (ii) if to the Holder, to the name, address
telecopy number set forth on the front page of this Note, with a copy by
telecopier only to _________________________________________.
term "Note" and all reference thereto, as used throughout this instrument,
mean this instrument as originally executed, or if later amended or
supplemented, then as so amended or supplemented.
Note shall be binding upon the Borrower and its successors and assigns, and
shall inure to the benefit of the Holder and its successors and
default is made in the payment of this Note, Borrower shall pay the Holder
hereof reasonable costs of collection, including reasonable attorneys'
Note shall be governed by and construed in accordance with the laws of the
of New York. Any action brought by either party against the other concerning
transactions contemplated by this Agreement shall be brought only in the state
courts of New York or in the federal courts located in the state of New York.
Both parties and the individual signing this Agreement on behalf of the Borrower
agree to submit to the jurisdiction of such courts. The prevailing party shall
be entitled to recover from the other party its reasonable attorney's fees
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
such maximum shall be credited against amounts owed by the Borrower to the
Holder and thus refunded to the Borrower.
Holder shall not have rights as a shareholder of the Borrower with respect
unconverted portions of this Note. However, the Holder will have all the rights
of a shareholder of the Borrower with respect to the shares of Common Stock
be received by Holder after delivery by the Holder of a Conversion Notice to
SPACE INTENTIONALLY LEFT BLANK]
Borrower has caused this Note to be signed in its name by an authorized officer
as of the ____day of August, 2006.
TUBE MEDIA CORP.
executed by the Registered Holder in order to convert the Note)
undersigned hereby elects to convert $_________ of the principal and $_________
of the interest due on the Note issued by The Tube Media Corp. on August ___,
2006 into Shares of Common Stock of The Tube Media Corp. (the "Borrower")
according to the conditions set forth in such Note, as of the date written