EXHIBIT 10.15
THIS NOTE AND THE STOCK INTO WHICH IT IS CONVERTIBLE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE UNITED STATES OF AMERICA
(THE "ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES ("STATE
ACT"). THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OF DISTRIBUTION THEREOF, AND MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED FOR VALUE, DIRECTLY OR
INDIRECTLY, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND COMPLIANCE WITH APPLICABLE STATE ACTS, OR PURSUANT TO AN EXAMPTION FROM
REGISTRAITON UNDER THE ACT AND UNDER APPLICABLE STATE ACTS, THE AVAILABILITY OF
WHICH ARE ESTABLISHED BY MEANS OF AN OPINION TO SUCH EFFECT IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY AND RENDERED BY LEGAL COUNSEL SATISFACTORY
TO THE COMPANY.
GLOBAL IT HOLDINGS, INC.
SERIES A 6.5% CONVERTIBLE PROMISSORY NOTE
$500,000.00 NEW YORK, NEW YORK
AUGUST 25, 2004
1. Promise to Pay. FOR VALUE RECEIVED, GLOBAL IT HOLDINGS, INC, a Nevada
corporation (the "Company") promises to pay, in lawful money of the United
States of America, to the order of Advantage Capital Development Corp. or
assignee (the "Holder"), at Aventura, Florida or at such other place as
Holder shall from time to time direct, on or before December 31, 2004, the
principal amount of Five Hundred Thousand Dollars and no cents
($500,000.00) plus interest on the unpaid principal balance thereof at a
rate of Six and one-half percent (6.5%) per year from the date hereof
until paid in full. Interest on this note shall be computed on a 365/365
simple interest basis, that is, by applying the ratio of the annual
interest rate by the number of days in the year times, outstanding
principal balance times the actual number of days that the principal
balance is outstanding. This Note shall be payable interest-only, in
arrears, on the last day of each calendar months, commencing upon the
first such date subsequent to the date of execution hereof, and due and
payable in full, principal and interest, twenty-four months from the date
hereof. At the option of the Holder, the interest payable may be paid in
cash or convertible into common stock in accordance with Section 3, herein
provided, however, that in no event shall the Holder be entitled to
convert this Debenture for a number of shares of Common Stock in excess of
that number of shares of Common Stock which, upon giving effect to such
conversion, would cause the aggregate number of shares of Common Stock
beneficially owned by the Holder and its affiliates to exceed 4.99% of the
outstanding shares of the Common Stock following such conversion. All
payments shall be applied first to accrued, unpaid interest, next to any
collection costs, and the remainder against principal. The Company at its
option shall have the right to redeem the Note as set forth below.
2. Default. The Company shall be in default under this Note upon the
occurrence of any of the following events:
2.1 The Company fails to timely perform any of its obligations under, or
otherwise breaches any covenants or warranties of this Note;
2.2 Any statement, representation, or warranty made by the Company or
its agents to Holder shall prove to have been false or materially
misleading when made; and/or,
2.3 The Company shall become insolvent, or unable to meet its
obligations as they become due, or shall file or have filed against
it, voluntarily or involuntarily, a petition under the United States
Bankruptcy Code or shall procure or suffer the appointment of a
receiver for any substantial portion of its properties, or shall
make an assignment for benefit of creditors, or shall initiate or
have initiated against it, voluntarily or involuntarily, any act,
process, or proceedings under any insolvency law or other statute or
law providing for the modifications or adjustment of the rights of
creditors.
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UPON ANY EVENT OF DEFAULT, HOLDER MAY DECLARE THE ENTIRE UNPAID PRINCIPAL
BALANCE OF THIS NOTE AND ALL ACCRUED UNPAID INTEREST IMMEDIATELY DUE,
WITHOUT NOTICE, AND THE COMPANY AGREES TO PAY SUCH AMOUNT IMMEDIATELY IN
SUCH EVENT. IN THE EVENT OF DEFAULT, THE COMPANY AGREES TO PAY ALL OF
HOLDER'S COSTS OF COLLECTION, INCLUDING ATTORNEY'S FEES; THIS SHALL
INCLUDE LEGAL EXPENSES FOR THE BANKRUPTCY PROCEEDINGS OR INSOLVENCY
PROCEEDINGS (INCLUDING EFFORTS TO MODIFY OR VACATE ANY AUTOMATIC STAY OR
INJUNCTION), COURT COSTS, APPEALS, POST-JUDGMENT COLLECTION EXPENSES AND
ANY OTHER AMOUNT PROVIDED BY LAW. THE PARTIES INTEND THIS PROVISION TO BE
GIVEN THE MOST LIBERAL CONSTRUCTION POSSIBLE AND TO APPLY TO ANY
CIRCUMSTANCES IN WHICH SUCH PARTY REASONABLY INCURS EXPENSES. NO DELAY OR
OMISSION ON THE PART OF ANY HOLDER HEREOF IN EXERCISING ANY RIGHT OR
OPTION HEREIN GIVEN TO SUCH HOLDER SHALL IMPAIR SUCH RIGHT OR OPTION OR BE
CONSIDERED AS A WAIVER THEREOF OR ACQUIESCENCE IN ANY DEFAULT HEREUNDER.
THE COMPANY HEREBY WAIVES ANY APPLICABLE STATUE OF LIMITATIONS,
PRESENTMENT, DEMAND FOR PAYMENT, PROTEST AND NOTICE OF DISHONOR.
3 Conversion. The Holder shall have conversion rights as follows (the
"Conversion Rights"):
3.1 Right To Convert. Subject to subsection 3.3, this Note shall be
convertible, in whole or in part, at the option of the Holder, at
any time after the date of issuance of this Note, and from time to
time thereafter, at the office of the Company, into such number of
fully paid and non-assessable shares of Common Stock of the Company
as is determined as follows:
The Conversion Price per share shall be equal to the lesser of (1)
the average of the lowest of three day trading prices during the
five trading days immediately prior to the Conversion Date
multiplied by .80, or (2) the average of the lowest of three day
trading prices during the five trading days immediately prior to the
funding date(s).
3.2 Mechanics of Conversion. Before Holder shall be entitled to convert
this Note, in whole or in part, into shares of Common Stock, he
shall surrender this Note at the office of the Company, and shall
give written notice in person, or by facsimile, mail, postage
prepaid, to the Company at its principal corporate office, of
Xxxxxx's election to convert the Note and shall state therein the
portion of the principal amount of the Note to be converted and the
name or names in which the certificate or certificates for shares of
Common Stock are to be issued, the address of such persons to be
used for record purposes, and the address(s) to which the
certificate(s) should be delivered if different from the record
address. Such notice shall be on the form attached to this Note as
Exhibit `A'. The Company shall as soon as practicable thereafter,
issue and deliver to Holder, or to the nominee or nominees of
Holder, a certificate or certificates for the number of shares of
Common Stock to which Holder shall be entitled as aforesaid and, if
less than the full principal amount of the note is converted, a new
Note representing the uncoverted balance which remains outstanding.
Any interest accrued but unpaid on the converted portion of the Note
shall be paid upon conversion; any interest accrued but unpaid on
the non-converted portion of the Note shall be paid in due course
under the replacement Note. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of
such surrender of the Note to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock as of such date.
3.3 No Impairment. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, 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 to be
observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the provisions
of this Section 3 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights
of the Holder against impairment
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3.4 No Fractional Shares and Certificates as to Conversion. No
fractional shares shall be issued upon conversion of the Note, and
the number of shares of Common Stock to be issued shall be rounded
to the nearest whole share.
3.5 Notices of Record Date. In the event of any taking by the Company of
a record of the holders of any class of securities for the purpose
of determining the holders thereof who are entitled to receive any
dividend or other distribution, any right to subscribe for, purchase
or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company
shall mail to Holder, at least 20 days prior to the date specified
therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution, or right,
and the amount and character of such dividend, distribution, or
right. In the case of rights to acquire any shares of stock or any
other class of securities or property, Company shall grant to Holder
the same rights as if the Holder had converted his Note upon the
Record Date.
3.6 Reservation of Stock Issuable Upon Conversion. The Company shall at
all times reserve and keep available out of its authorized but
unissued shares of Common Stock solely for the purpose of effecting
the conversion of the Notes such number of shares of Common Stock as
shall from time to time be sufficient to effect the conversion of
all outstanding Notes; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then-outstanding Notes, in addition to
such other remedies as shall be available to the Holder, the Company
will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares
of Common Stock to such number of shares as shall be sufficient for
such purposes.
3.7 Notices. Any notice required by the provisions of this Section 3 to
be given to the Holder shall be deemed given if deposited in the
United States mail, postage prepaid and certified, return receipt
requested and addressed to Xxxxxx of record at his address appearing
on the books of the Company.
4 Redemption. The Company at its option shall have the right ot redeem, with
three (3) business days advance written notice (the "Redemption Notice"),
a portion or all outstanding convertible debenture. The redemption price
shall be one hundred twenty percent (120%) of the amount redeemed plus
accrued interest.
5 Assignment. Subject to the restrictions on transfer herein, the Holder may
transfer this Note in whole or in part, in the event of partial
transfer(s), the Company will exchange this Note for new Notes as
instructed by the Holder equal to the total of this Note, by endorsement
(by the Holder of this Note executing the form of assignment attached to
this Note as Exhibit `B') and delivery in the same manner as any
negotiable instrument transferable by endorsement and delivery. Until this
Note is transferred on the Company books, the Company may treat the
registered Holder of this Note as the absolute owner of this Note for all
purposes, despite any notice to the contrary. The Company's obligations
hereunder may not be transferred without prior written consent of the
Holder; any attempt to transfer without consent shall be void ab initio.
6 Restrictions on Transfer. This Note and the stock into which it is
convertible have not been registered under the Securities act of 1933, as
amended, of the United States of America (the "Act") or the securities
laws of any sate of the United States ("State Act"). This Note and the
stock into which it is convertible have been acquired for investment and
not with a view to, or in connection with, the sale or distribution
thereof, and may not be offered, sold, pledged, hypothecated. Or otherwise
transferred for value directly or indirectly, in the absence of an
effective registration statement under the Act and compliance with
applicable State Acts, or pursuant to an exemption from registration under
the Act and under applicable State Acts, the availability of which are
established by means of an opinion to such effect. In form and substance
satisfactory to the Company and rendered by legal counsel satisfactory to
the Company. The certificates representing the shares into which this Note
is convertible shall bear the foregoing legend.
7 Registration of Underlying Stock & Penalties. The Company agrees that
within ninety days of the date of this Note, the Company shall file a
registration statement with the Securities and Exchange Commission on form
SB-2 or other applicable form to register 250% of the then shares to be
issued upon conversion of the Notes. The registrations statement shall
call for, amongst other items more fully described therein, the Company to
use its best efforts to have such registration statement declared
effective at the earliest possible time. Should such registration
statement not be deemed effective within one hundred and eighty days from
the date of the date of the funding of the Note, the Company shall pay a
penalty to the Holder in an amount equal to 2% of the principal balance
and any and all accrued interest then outstanding per month or any part
thereof, until such time as the registration statement is declared
effective. Company agrees to keep such registration statement effective
until the maturity of the Note. Should there come a time when the number
of shares that have been registered is less than 200% of the total number
of shares to be issued upon conversion, the Company agrees that it will
amend such registration statement such that a minimum of 200% of the
shares to be issued upon conversion are on such registration statement.
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8 Replacement. On receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Note and, in the
event of such occurrence, on delivery of an indemnity agreement or bond
reasonably satisfactory in form and amount to the Company or, in the case
of mutilation, on surrender and cancellation of this Note, the Company at
its expense will execute and deliver, in lieu of this Note, a new Note of
like tenor. On surrender of this Note for exchange and subject to the
provisions of this Note on compliance with the Securities Act, the
Company, at its expense will issue to or on the order of the Holder of
this Note a new Note or Notes of like tenor, in the name of that Holder or
as that Holder (on payment by the Holder of any applicable transfer taxes)
may direct, in the same total principal amount as this Note.
9 Appointment of Agent. The Company may, on written notice to the Holder of
this Note, appoint an agent for the purposes of issuing Common Stock or
other securities on the conversion of this Note and of replacing or
exchanging this Note; and after that appointment occurs any such issuance,
replacement, or exchange shall be made at that office by that agent.
10 Miscellaneous.
10.1 Amendment. No supplement, modification, or amendment of this Note
shall be binding unless executed in writing by all the parties
hereto.
10.2 Waiver. No waiver of any of the provisions of this Note shall be
deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the
party making the waiver. Neither the acceptance of any partial or
delinquent payment by the Holder nor the Holder's failure to
exercise any of its rights or remedies on default by the Company
shall be a waiver by the Holder of any default or the Company
obligations under this Note, or a waiver of any subsequent default
by the Company.
10.3 Timeliness. Time is of the essence of this Note and each and all of
its provisions.
10.4 Notices. Notices given under this Note shall be in writing and shall
be delivered personally, by messenger, by certified U.S. mail,
return receipt requested, or by a common overnight carrier delivery
service. Notices shall be deemed received upon receipt of same.
Notices to the Company shall be addressed to 0000 XX 000xx Xxxxxx,
Xxxxxxxxx 0, Xxxxxxxx, Xxxxxxx 00000. Notices to the Holder shall be
directed to Xxxxxx at the Holder's address of record on the
Company's books. A party may change its address for notice by giving
written notice to the other party in accordance with this Section.
10.5 Governing Law and Venue. This Note shall be construed in accordance
with, and governed by, the laws of the State of New York, and any
action or proceeding, including arbitration, brought by any party in
which this Note is a subject shall be brought in New York.
10.6 Effect of Headings. The headings of the sections of this Note are
included for purposes of convenience only, and shall not affect the
construction or interpretation of any of its provisions.
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10.7 Invalidity. Any provision of this Note which is invalid, void, or
illegal, shall not affect, impair, or invalidate any other provision
of this Note, and such other provisions of this Note shall remain in
full force and effect.
10.8 Professional Fees and Costs. If any legal or equitable action,
arbitration, or other proceeding, whether on the merits or on
motion, are brought or undertaken, or an attorney is retained to
enforce this Note, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the
provisions of this Note, then the successful or prevailing party or
parties in such undertaking (or the party that would prevail if an
action were brought) shall be entitled to recover reasonable
attorney's fees and other professional fees and other costs incurred
in such action, proceeding or discussions, in addition to any other
relief to which such party would be entitled. The parties intend
this provision be given the most liberal construction possible and
to apply to any circumstances in which such party reasonably incurs
expenses.
Global IT Holdings, Inc.
By:
-----------------------------
Name:
Title:
5
EXHIBIT `A'
CONVERSION NOTICE
TO: Global IT Holdings, Inc.
000 0xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due December 31,
2004 (the "Note") issued by Global IT Holdings, Inc. (the "Company") hereby
irrevocably exercises its option to convert $__________ Principal Amount of the
Note into shares of Common Stock in accordance with the terms of the Note. The
undersigned hereby instructs the Company to convert the portion of the Note
specified above into ______________ shares of Common Stock Issued at Conversion
in accordance with the provisions of Article 3 of the Note. Attached hereto is
the undersigned's calculation for the Conversion Price. The undersigned directs
that the Common Stock and certificates therefore deliverable upon conversion,
the Note reissued in the Principal Amount not being surrendered for conversion
hereby, together with any check in payment for fractional Common Stock, be
registered in the name of and/or delivered to the undersigned unless a different
name has been indicated below. All capitalized terms used and not defined herein
have the respective meanings assigned to them in the Note. The conversion
pursuant hereto shall be deemed to have been effected at the date and time
specified below, and at such time the rights of the undersigned as a Holder of
the Principal Amount of the Note set forth above shall cease and the Person or
Persons in whose name or names the Common Stock Issued at Conversion shall be
registered shall be deemed to have become the holder or holders of record of the
Common Shares represented thereby and all voting and other rights associated
with the beneficial ownership of such Common Shares shall at such time vest with
such Person or Persons.
Date and time:
_____________________________
Signature
Fill in for registration of Note:
Please print name and address (including ZIP code number):
_____________________________
_____________________________
_____________________________
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