EXHIBIT 4.2
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED EXCEPT WITH
THE EXPRESS WRITTEN PERMISSION OF THE MAKER AND IN ACCORDANCE WITH
THE ACT OR AN EXEMPTION THEREFROM
CONVERTIBLE PROMISSORY NOTE
$1,500,000.00 September ___, 2004
INTERNATIONAL CARD ESTABLISHMENT, INC., a Delaware corporation, having
an address at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ (the "Maker"),
for value received, hereby promise to pay to the order of NEOS LIQUIDATING, LLC
(the "Trust"), having the address set forth in Section 4 hereof, pursuant to
that certain Agreement and Plan of Merger dated as of September ___, 2004 (the
"Agreement"), by and among the Maker, ICE Sub Inc., a Nevada corporation and
wholly-owned subsidiary of Maker and NEOS Merchant Solutions, Inc., a Nevada
corporation (the "Company"), one million five hundred thousand dollars
($1,500,000), payable in accordance with Section 2.8.5(i) of the Agreement (the
"Demand Date"). This Convertible Promissory Note (this "Note") is being issued
pursuant to Section 2.8.5(i) of the Agreement. Capitalized terms not otherwise
defined herein shall have the meaning set forth in the Agreement.
1. PAYMENT; EVENT OF DEFAULT.
1.1 This Note shall bear interest at a rate equal to eight percent (8%) per
annum from the date hereof until either (i) at the option of the Trust, the
principal amount of this Note has been converted into the Common Stock (as
hereinafter defined) or (ii) paid in full, on the Demand Date. The interest
accrued on this Note shall be payable or convertible into the Common Stock (as
hereinafter defined) on the first anniversary of the date of this Note (the
"First Anniversary Interest Payment Date"). Payments of the amounts due under
this Note shall be made to the Trust at its address set forth in Section 4
hereof, or such other place or places as may be specified by the Trust in a
written notice to the Maker at least ten (10) Business Days prior to the payment
date or to the order of the Trust.
1.2 If any payment on this Note becomes due and payable on a day other than
a Business Day, the due date thereof shall be extended to the next succeeding
Business Day.
1.3 The failure of the Maker to timely pay amounts due under this Note
within five (5) Business Days after notice of said nonpayment shall have been
given by or on behalf of the Trust to the Maker shall be an "Event of Default."
In the event of an Event of Default or if it shall become necessary at any time
or from time to time to enforce the payment of this Note or any of the
provisions hereof, whether or not any legal action is instituted for such
purpose, the Maker agrees to pay (in addition to all other sums to be paid
hereunder) the reasonable attorneys' fees, costs and expenses thereby incurred
by the Trust solely related to the collection hereunder.
1.4 The Maker shall have the right at any time or from time to time to
prepay this Note in whole or in part without penalty or premium. Upon prepayment
of part of the principal amount of this Note, the Maker may require the Trust to
present this Note for notation of such payment and, if this Note is paid in
full, require the holder to surrender this Note.
1.5 If the Maker fails to timely pay any amount payable hereunder, then the
unpaid principal balance shall bear interest from the due date until paid at the
rate of ten percent (10%) per annum.
2. CONVERSION.
2.1 FIRST ANNIVERSARY INTEREST PAYMENT DATE. On or prior to the First
Anniversary Interest Payment Date, the Trust may elect, by tendering a
conversion notice to the Maker in accordance with Section 4 hereof (a
"Conversion Notice"), to convert the accrued interest hereunder into a number of
fully paid and non-assessable whole shares of the Maker's Common Stock (the
"Common Stock") determined in accordance with Section 2.5 hereof at the
Conversion Price.
2.2 OPTIONAL CONVERSION. On or prior to the Demand Date, the Trust may
elect, by tendering a conversion notice to the Maker in accordance with Section
4 hereof (a "Conversion Notice"), to convert the outstanding principal and
accrued interest hereunder into a number of fully paid and non-assessable whole
shares of the Maker's Common Stock (the "Common Stock") determined in accordance
with Section 2.5 hereof at the Conversion Price.
2.3 CONVERSION PROCEDURE. Within five (5) Business Days of the earlier to
occur of (i) Maker's receipt of the Conversion Notice and (ii) the Demand Date
(the "Conversion Date"), a written notice shall be delivered to the Trust
notifying the Trust that the conversion has been effected, specifying the
Conversion Price (as hereinafter defined), the date on which such conversion
occurred (in the case of a Funding Event), and calling upon the Trust to
surrender to the Maker, in the manner and at the place designated, the Note.
2.4 CANCELLATION. Upon conversion or repayment, this Note shall be
canceled.
2.5 SHARES ISSUABLE.
(a) The number of whole shares of the Maker's capital stock into which
this Note may be converted ("Conversion Shares") shall be determined by
dividing the aggregate outstanding principal and/or accrued interest
hereunder, as applicable, by the Conversion Price (as hereinafter defined).
The Conversion Price shall be equal to seventy-five percent (75%) of the
average closing price for a share of Common Stock on the OTC Bulletin Board
on the twenty (20) Trading Days prior to the Conversion Date (as
hereinafter defined) as reported in THE WALL STREET JOURNAL (the
"Conversion Price").
(b) The Conversion Share shall be issued to the Trust upon execution
of a stock purchase agreement, together with all documents relating thereto
(each referred to as the "Purchase Documents"), upon such terms and subject
to such conditions as contained in the Purchase Documents.
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2.6 DELIVERY OF STOCK CERTIFICATES. Upon the conversion of this Note and
return of the original Note to the Maker, the Maker at its expense will issue
and deliver to the Trust a certificate or certificates (bearing such legends as
are required by applicable state and federal securities laws in the opinion of
counsel to the Company) for the number of full shares of the Maker's capital
stock issuable upon such conversion.
2.7 NO FRACTIONAL SHARES. No fractional shares of the Maker's capital stock
shall be issued upon conversion of this Note. In lieu of the Maker issuing any
fractional shares to the Trust upon the conversion of this Note, the Maker shall
pay to the Trust the amount of outstanding principal hereunder that is not so
converted.
3. LOSS, THEFT OR DESTRUCTION OF NOTE.
Upon receipt by the Maker of evidence reasonably satisfactory to it of the
loss, theft or destruction of this Note and of indemnity or security reasonably
satisfactory to it, the Maker will make and deliver a new Note which shall carry
the same rights carried by this Note, stating that such Note is issued in
replacement of this Note, making reference to the original date of issuance of
this Note (and any successors hereto) and dated as of such cancellation, in lieu
of this Note.
4. NOTICES.
Any and all notices, demands or requests required or permitted to be given
under this Note shall be given in writing and sent, by registered or certified
U.S. mail, return receipt requested, by hand, by facsimile transmission or by
private overnight courier (E.G., FedEx) or U.S. Express Mail addressed to the
parties hereto at their addresses set forth below or such other addresses as
they may from time-to-time designate by written notice, given in accordance with
the terms of this Section, together with copies thereof as follows:
In the case of the Maker:
International Card Establishment, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:__________________________________
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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In the case of the Trust:
NEOS Liquidating, LLC
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:__________________________________
With a copy to:
Pillsbury Winthrop LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Notice given as provided in this Paragraph shall be deemed effective: (i) on the
date hand delivered or sent via facsimile transmission (as evidenced by an
electronic confirmation of receipt), (ii) on the first Business Day following
the sending thereof by private overnight courier or U.S. express mail, and (iii)
on the fifth (5th) calendar day (or, if it is not a Business Day, then the next
succeeding Business Day thereafter) after the depositing thereof into the
exclusive custody of the U.S. Postal Service.
5. MISCELLANEOUS.
5.1 GOVERNING LAW. This Note shall be governed by, construed and enforced
in accordance with the internal laws of the State of California without
reference to principles of conflict of laws.
5.2 No amendment or waiver of any provision hereof, nor consent to any
departure therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Maker and the Trust; and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
5.3 The section headings contained herein are for the purposes of
convenience only and are not intended to define or limit the contents of said
sections. The plural shall mean the singular, the singular shall mean the
plural, and "it" shall refer to "him" or "his", where the context so applies.
5.4 No course of dealing between the Maker and the Trust or any delay on
the part of the holder hereof in exercising any rights hereunder shall operate
as a waiver of any right of any holder of this Note.
5.5 The Maker will not, by any voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Maker, but will at all times in good faith assist in the
carrying out of all the provisions of this Note and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Trust against impairment.
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5.6 Maker hereby waives diligence, presentment, protest, notice of protest,
notice of dishonor, and notice of nonpayment of this Note, and specifically
consent to and waive notice of any renewal or extension of this note. No delay
by the Trust in exercising any power or privilege or the single or partial
exercise of any power or privilege hereunder shall preclude any other or further
exercise thereof, or the exercise of any other power or privilege hereunder.
5.7 Any dispute or action in connection with the enforcement of this Note
shall be governed by the provisions of Article 10 of the Agreement.
5.8 Time is hereby expressly declared to the of the essence of this Note
and every provision hereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Maker has executed this Note as of the day and year
first above written.
INTERNATIONAL CARD ESTABLISHMENT, INC.
By:___________________________________
Name:
Title:
INTERNATIONAL CARD ESTABLISHMENT, INC.
CONVERTIBLE PROMISSORY NOTE
SIGNATURE PAGE
