EXHIBIT 4.10
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THIS NOTE AND THE SHARES OF CAPITAL STOCK ISSUABLE UPON ANY CONVERSION HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD
OR OTHERWISE TRANSFERRED BY ANY PERSON, INCLUDING A PLEDGEE, UNLESS (1) EITHER
(A) A REGISTRATION WITH RESPECT THERETO SHALL BE EFFECTIVE UNDER THE SECURITIES
ACT, OR (B) THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL OF THE HOLDER
SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT IS AVAILABLE, AND (2) SUCH TRANSFER WOULD BE IN COMPLIANCE WITH
ALL APPLICABLE STATE SECURITIES LAWS. THERE IS NO AND THERE IS NOT EXPECTED TO
BE A PUBLIC MARKET FOR THIS NOTE AND THE SHARES OF CAPITAL STOCK ISSUABLE UPON
ANY CONVERSION HEREOF.
XXXXXXXXXX.XXX, INC.
CONVERTIBLE TERM PROMISSORY NOTE
MARCH 09, 2001 US $10,000.00
BEVERLY, MASSACHUSETTS
SECTION 1. TERMS OF NOTE: WARRANT.
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1.1 NOTE. In consideration of the wire transfer to an account
designated by XxxxxxXXXX.xxx, Inc. (the "Company"), which the Company hereby
acknowledges, and for other value received, the Company hereby promises to pay
Xxxxxx Xxxxxxxxx, or her assigns (the "Holder"), the principal sum of Ten
Thousand Dollars ($10,000.00) (the "Principal"), together with interest (as
defined herein) on the unpaid balance (the "Indebtedness"). The Principal shall
be due and payable at the Maturity (as defined herein), with payments of
interest only on the Interest Installment Dates (as defined herein), unless all
or the applicable fraction of the Indebtedness is converted into shares of
Common Stock at the option of the Holder as set forth in Section 3.
1.2 WARRANT. In further consideration of the above referenced wire
transfer and advancement of funds, the Company hereby agrees to issue the
Warrant (as defined herein).
SECTION 2. DEFINITIONS.
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The following underlined terms shall have the corresponding meanings
set forth below.
"Bankruptcy Code" means 11 U.S.C. Section 101 et seq.
"Change of Control" means a merger, consolidation, or share exchange
or series of such transactions, the result of which causes the holders of the
Company's equity on a fully diluted basis immediately prior to such transaction
or transactions to hold less than 50% of the resulting or surviving entity's
equity on a fully diluted basis after such transaction or transactions.
"Common Stock" means shares of the Common Stock, par value $0.01, of
XxxxxxXXXX.xxx, Inc.
"Company" includes XxxxxxXxxx.xxx, Inc., a Delaware corporation, and
its successors.
"Conversion" shall mean a conversion of all or a part of this Note
into shares of Common Stock as set forth in Section 3.
"Conversion Date" shall mean the date as of which the Holder gives
notice to the Company of his election to convert this Note into Common Stock as
set forth in Section 3.
"Financing" means a $1,000,000 or greater equity or
equity-equivalent financing of the Company by a third party.
"Interest" means 12% per annum compound interest.
"Interest Installment Dates" means March 31st, June 30th, September
30th, and December 31st of each year.
"Maturity" means the first to occur of (i) 90 days from the
execution of a term sheet relating to a Financing; provided that such Financing
provides for the prompt payment of this Note as a use of proceeds from such
Financing; (ii) 45 days from the execution of definitive documents relating to a
Sale or a Change of Control; provided that such transaction or series of
transactions include as a condition to closing the prompt payment of this Note;
or (iii) the six month anniversary from the date of this Note.
"Sale" means a sale of all or substantially all of the assets of the
Company.
"Warrant" refers to the right to a ten year detachable warrant to
purchase 5,000 shares of the Company's Common Stock, which is exercisable in the
event of a Financing or a sale, with an exercise price equal to $0.20 per share
of the Common Stock.
SECTION 3. CONVERSION.
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3.1 ELECTIVE CONVERSION. At any time and from time to time, the
Holder, at his option, may convert this Note (including both Principal and
Interest installments) into Common Stock at the lower of (i) 75% of the fair
market value of the Common Stock or Preferred Stock, as applicable, as
determined with reference to s Sale, Change of Control, or Financing, or (ii)
$0.20 per share, by notice to the Company as set forth herein.
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3.2 FRACTIONAL SHARES. No fractional shares of Capital Stock of
the Company shall be issued upon conversion of this Note. In lieu of any
fractional shares to which the Holder be would otherwise be entitled, the
Company shall pay cash equal to the amount that would have been applied to the
purchase of such fractional share but for the application of the preceding
sentence.
3.3 MECHANICS OF CONVERSION. On or before the Conversion Date, the
Holder shall surrender this Note for conversion at the price designated by the
Company. In the event this Note is converted in part, a replacement not shall be
issued therefore,. If required by the Company, the Note surrendered for
conversion shall be endorsed or accompanied by a written instrument or
instruments of surrender in form satisfactory to the Company duly executed by
the registered Holder. The Company shall, as soon as practicable after the
Conversion Date, issue and deliver to such Holder a certificate or certificates
for the number of shares of the Common Stock to which such Holder shall be
entitled, together with cash in lieu of any fraction of a share. Immediately
upon the Conversion Date (whether or not this Note is surrendered), this Note
shall no longer be deemed to be outstanding and all rights with respect to this
Note shall immediately cease and terminate on such Conversion Date, except only
the right of the Holder to receive the shares of Common Stock to which he is
entitled as a result of the conversion on the Conversion Date.
SECTION 4. DEFAULT.
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This Note and all amounts due hereunder shall become immediately due
and payable in cash without notice or demand, at any time, upon the occurrence
and during the continuation of any of the following events of default
(individually, an "Event of Default" and collectively, "Events of Default"):
(a) default in the payment when due of any principal or interest
under this Note;
(b) the liquidation, termination of existence, dissolution or the
appointment of a receiver or custodian for the Company or any part
of its property if such appointment is not terminated or dismissed
within thirty days;
(c) the institution against the Company of any proceedings under the
Bankruptcy Code or any other federal or state bankruptcy,
reorganization, receivership, insolvency or other similar law
affecting the rights of creditors generally, which proceeding is not
dismissed within thirty days of filing; or
(d) the institution by the Company of any proceedings under the
Bankruptcy Code or any other federal or state bankruptcy,
reorganization, receivership, insolvency or other similar law
affecting the rights of creditors generally or the making by the
Company of a composition of an assignment or trust mortgage for the
benefit of creditors.
Upon the occurrence of an Event of Default, the full indebtedness of this Note
shall be immediately due and payable, and Holder shall have then, or at any time
thereafter, all of the rights and remedies afforded by the Uniform Commercial
Code as from time to time in effect in the Commonwealth of Massachusetts.
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SECTION 5. SECURITIES LAW RESTRICTIONS ON TRANSFER OF COMMON STOCK.
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The shares of the capital stock of the Company into which the Note
may be converted shall not be assigned, sold, pledged, transferred or otherwise
disposed of except in compliance with the Securities Act of 1933, as amended
(the "Securities Act"), and applicable state securities laws.
SECTION 6. INVESTMENT INTENT.
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The Holder, by acceptance hereof, warrants and represents that (i)
this Note and any security issuable upon conversion hereof, has been and will be
acquired for investment only and not with a view to, or for sale in connection
with, a distribution thereof and not with a view to their resale, (ii) the
Holder is an accredited investor as that term is defined by the Securities Act
of 1933, as amended, and the regulations promulgated thereunder; and (iii) that
this Note and any security issuable upon conversion hereof has been and will be
acquired for the Holder's own account and not with a view to their division
among others, and that no other person has any direct or indirect beneficial
interest in this Note or any security issuable upon conversion hereof.
SECTION 7. NOTICES.
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All notices given hereunder shall be in writing and delivered in
person, by recognized courier service, by postage prepaid certified or
registered mail, return receipt requested, or by e-mail with confirmation of
receipt and display. All notices intended for the Holder hereof shall be
addressed to him as his last address as it shall then appear on the books of the
Company. Al notices intended for the Company shall be addressed to it at 000
Xxxxxxxx Xxxxxx, Xxxxx 000-X, Xxxxxxx, Xxxxxxxxxxxxx 00000. Said addresses may
be changed by notice in accordance with this Section 7.
SECTION 8. GOVERNING LAW.
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This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts, and the parties agree to the
exclusive jurisdiction and venue of federal and state courts sitting in Suffolk
County, Massachusetts.
SECTION 9. GENERAL
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9.1 Successors and Assigns. This Note, and the obligations and
rights of the Company hereunder, shall be binding upon and inure to the benefit
of the Company, the Holder, and their respective heirs, successors and permitted
assigns.
9.2 RECOURSE. Recourse under this Note shall be to the general
unsecured assets of the Company only, and in no event to the officers, directors
or stockholders of the Company.
9.3 CHANGES. Changes in or additions to this Note may be made or
compliance with any term, covenant, agreement, condition or provision set forth
herein may be omitted or waived (either generally or in a particular instance
and either retroactively or prospectively) only with the written consent of the
Company and the Holder.
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9.4 RIGHTS RESERVED. No provisions of this Note and no right or
option granted or conferred herein shall in any way limit, affect or abridge the
exercise by the corporate right and power to issue securities, recapitalize,
amend its Certificate of Incorporation, reorganize, consolidate or merge with or
into another corporation, or transfer or encumber all or any part of its
property or assets.
9.5 EXPENSES. The Costs and expenses in enforcement and collection
of this Note (including reasonable attorneys' fees), if any, shall be borne by
the Company.
[SIGNATURE PAGE FOLLOWS]
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In witness whereof, this Note has been executed and delivered as a sealed
instrument on the date first above written.
XXXXXXXXXX.XXX, INC.
By: /s/ Xxx Xxxxxxxxx
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Xxx Xxxxxxxxx
President and Chief Executive Officer
Accepted and Agreed:
/s/ Xxxxxx Xxxxxxxxx
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Signature
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