Contract
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 THEUNITED
STATES ("STATE ACT"). THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND
NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THESALE
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 Staffing Group, Inc.
SERIES
A 10% CONVERTIBLE PROMISSORY NOTE
| $25,000.00 |
New York
November 23,
2004
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1.
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Promise
to Pay. FOR VALUE RECEIVED, Global IT
Staffing Group, Inc., a Nevada corporation (the
"Company") promises to pay, in lawful money of the United States
of
America, to the order of
AdvantageFund
I, L.L.C.,
or
assignee (the "Holder"), at Aventura, Florida or at such other
place
as Holder shall from time to time direct, on or before June 24, 2006,
the
principal amount of Twenty
Five Thousand Dollars and no cents ($25,000,00) plus interest on
the
unpaid principal balance
thereof at a rate of Ten percent (10%) per year from the date hereof
until
paid in full. Interest
on this note shall be computed on a 365365 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 fall, 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. Conversion.
All payments shall be applied first to accrued, unpaid interest,
next to
any collection costs,
and the remainder against principal. This note may be not be redeemed
by
the Company prior to its due date without the express permission
of the
Holder, This Note is one of a series of identical
notes, except to principal amount and due date (collectively, the
"Notes").
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2.
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Default. The Company shall be in default under this Note upon the occurrence of any of the following events: |
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2.1
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The
Company fails to timely perform any of its obligations under, or
otherwise
breaches any
covenants or warranties of this
Note;
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2.2
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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,
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| 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, Xxxxxx 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 Xxxxxx'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-judgement 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.
1
3.
Conversion.
The Holder shall have conversion rights as follows (the "Conversion
Rights"):
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3.1
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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:
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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 twenty trading days immediately
prior to the Conversion Date multiplied by .75, or (2) the average of
the
lowest of three day trading prices during the twenty trading days immediately
prior to the funding date(s) multiplied by .75.
| 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 beused
for record purposes, and the address(s)
to which the certificate(s) should
be delivered if different from the record address.
Such notice shalt 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.
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3.3
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Voting
Rights. If
at any time or from time to time there occurs matters that require
a
vote
by the shareholders of the Company, the Holder shall have the right
to
cast votes equal
to
thenumber
of shares then convertible as of the date of the vote
required.
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| 3.4 |
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
thetaking
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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2
| 3.5 |
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.
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| 3.6 |
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.
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| 3.7 |
Reservation
of Stock Issuable Upon Conversion. The
Company shall at all titres 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.
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| 3.8 |
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.
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4.
Redemption.
The Company, may not redeem this Note at any time prior to the maturity
date.
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 thirty 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. A copy of this Registration Statement is attached
hereto as
3
Exhibit
'C'.
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 ninety days from the date of its initial filing, 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.
| 7.1 |
No additional
issuance with Registration Rights. Company agrees that without
the
written
consent of the Holder, it shall not issue common shares or securities
that
are convertible
into common shares that have piggyback or demand registration rights
while
the
Note is still
outstanding.
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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.
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| 10.3 |
Timeliness. Time is of
the essence of this
Note and each and all of its
provisions.
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| 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 00 Xxxx
00xx Xxxxxx, Xxxxx 000,
Xxx Xxxx, XX 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.
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4
| 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. |
| 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.
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| 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.
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| Global IT Staffing Group, Inc. | ||
| By: | ||
|
Xxxxx Xxxxx |
||
| Chief Executive Officer | ||
5
EXHIBIT
'A'
CONVERSION
NOTICE
| TO: |
Global IT Staffing Group, Inc.
00
X. 00xx Xxxxxx,
Xxxxx 000
Xxx
Xxxx, XX 00000
Attn:
Corporate
Secretary
|
The
undersigned owner of this 10% Convertible Note due June 24, 2006 (the "Note")
issued
by
Global IT Staffing Group, 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):
___________________________
___________________________
___________________________
___________________________
6
EXHIBIT
'B'
ASSIGNMENT
FORM
|
TO:
|
Global IT Staffing Group Inc.
00
X. 00xx Xxxxxx, Xxxxx 000
Xxx
Xxxx, XX 00000
Attn: Corporate
Secretary
|
The
undersigned
owner of this 10% Convertible Note due June 24, 2006 (the "Note") issued by
Global IT Staffing
Group, Inc. (the "Company") hereby irrevocably assigns its rights, title and
ownership in $________ of
the
Note, inclusive of all principal and pro-rata interest, to the party more fully
described
below in accordance with Section 5 of the Note, Accordingly, the undersigned
directs that, if the Assignment
is for less than the outstanding principal amount of the Note that it be
reissued in the
Principal
Amount
not being surrendered for assignment hereby, to the undersigned with the amount
being assigned reissued
for the amount being assigned hereunder to the name that has been indicated
below. All capitalized
terms used and not defined herein have the respective meanings assigned to
them
in the Note. The
Assignment 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 amount
herein assigned, set forth above shall cease and the Person or Persons indicated
below shall be deemed
to
have become the holder or holders of record of any or all of the Note assigned
herein and shall have
all
voting and other rights associated with the beneficial ownership of the Note
and
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, and
social
security or tax identification
number):
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
7
