This Note has
not been registered under the Securities Act of 1933, as amended
(the "1933 Act"), or under the provisions of any applicable state
securities laws, but has been acquired by the registered holder
hereof for purposes of investment and in reliance on statutory
exemptions under the 1933 Act, and under any applicable state
securities laws. This Note may not be sold, pledged, transferred or
assigned except in a transaction which is exempt under provisions
of the 1933 Act and any applicable state securities laws or
pursuant to an effective registration statement; and in the case of
an exemption, only if the Company has received an opinion of
counsel satisfactory to the Company that such transaction does not
require registration of this Note.
THERETIREMENTSOLUTION.COM,
INC.
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[_________],
2007
|
|
$[_______]
|
12% CONVERTIBLE PROMISSORY
NOTE
TheRetirementSolution.com, Inc. (the "Company"),
for value received, hereby promises to pay to [________], or his
registered assign (the "Holder") on the earlier of (i) August 31,
2007, (ii) a Change of Control (as defined below); or (iii) the
Company shall have completed a subsequent financing with aggregate
gross proceeds to the Company of $5,000,000 or more (collectively,
the "Maturity Date"), at the principal offices of the Company, the
principal sum owed Holder on such date, and to pay interest on the
outstanding principal sum hereof at the rate of twelve percent
(12%) per annum (the "Note") and _______ shares of common stock,
par value $.001 per share, in accordance with the Subscription
Agreement, dated as of the date hereof, by and between the
Company and the Holder. Any amount of principal or interest on this
Note which is not paid when due shall bear interest at the rate of
eighteen percent (18%) per annum from the due date thereof until
the same is paid. Principal shall be payable on the Maturity Date
in cash, interest on this Note shall be payable on the Maturity
Date in cash or, at the option of the Company, in shares of
common stock of the Company to the Holder hereof at the office of
the Company as hereinafter set forth, provided that any payment
otherwise due on a Saturday, Sunday or legal Bank holiday may be
paid on the following business day. The number of shares of common
stock to be issued by the Company for payment of principal or
interest hereunder, shall be determined in accordance with the
conversion procedures provided for in Section 2 herein. In the
event that for any reason whatsoever any interest or other
consideration payable with respect to this Note shall be deemed to
be usurious by a court of competent jurisdiction under the laws of
the State of California or the laws of any other state governing
the repayment hereof, then so much of such interest or other
consideration as shall be deemed to be usurious shall be held by
the holder as security for the repayment of the principal amount
hereof and shall otherwise be waived.
For purposes of this Note, “Change of
Control” means the occurrence of one of the
following:
(i) a
“person” or “group” within the meaning of
Sections 13(d) and 14(d) of the Securities and Exchange Act of 1934
(the “Exchange Act”), becomes the “beneficial
owner” (within the meaning of Rule 13d-3 under the Exchange
Act) of securities of Employer (including options, warrants, rights
and convertible and exchangeable securities) representing 51% or
more of the combined voting power of the Company’s then
outstanding securities in any one or more transactions;
(ii) the
approval of any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the operating assets of the Company, other
than an internal restructuring of the Company;
(iii) the
approval of a merger or consolidation, or a transaction having a
similar effect unless such merger, consolidation or similar
transaction is with a subsidiary of the Company or with another
company, a majority of whose outstanding capital stock is owned by
the same persons or entities who own a majority of the
Company’s outstanding common stock at such time, where (A)
the Company is not the surviving corporation, (B) the majority of
the common stock of the Company is no longer held by the
stockholders of the Company immediately prior to the transaction,
or (C) the Company’s common stock is converted into cash,
securities or other property (other than the common stock of a
company into which the Company is merged); or
(iv) a majority
of the members of the Board of Directors of the Company are not
persons who (A) had been directors of the Company for at least the
preceding 12 consecutive months or (B) when they initially were
elected to the Board, (I) were nominated (if they were elected by
the stockholders) or elected (if they were elected by the
directors) with the affirmative vote of two-thirds of the directors
who were Continuing Directors (as defined below) at the time of the
nomination or election by the Board and (II) were not elected as a
result of an actual or threatened solicitation of proxies or
consents by a person other than the Board or an agreement intended
to avoid or settle such a proxy solicitation (the directors
described in clauses (A) and (B) being “Continuing
Directors”).
1.
Transfers of Note to
Comply with the 1933 Act
The Holder
agrees that this Note may not be sold, transferred, pledged,
hypothecated or otherwise disposed of except as follows: (1) to a
person whom the Note may legally be transferred without
registration and without delivery of a current prospectus under the
1933 Act with respect thereto and then only against receipt of an
agreement of such person to comply with the provisions of this
Section 1 with respect to any resale or other disposition of the
Note; or (2) to any person upon delivery of a prospectus then
meeting the requirements of the 1933 Act relating to such
securities and the offering thereof for such sale or disposition,
and thereafter to all successive assignees.
2.
Prepayment;
Conversion
The principal
amount of this Note may be prepaid by the Company, in whole or in
part without premium or penalty, at any time. Upon any prepayment
of the entire principal amount of this Note, all accrued, but
unpaid, interest shall be paid to the Holder on the date of
prepayment.
At any time
prior to or at the time of repayment of this Note by the Company,
the Holder may elect to convert some or all of the principal and
interest owing on this Note into shares of the Company’s
common stock at the Conversion Rate (as defined herein). The Holder
may make additional elections to convert some or all of the
principal and interest owing on this Note into shares of the
Company’s common stock, so long as any amounts shall be due
to the Holder. Such election to convert shall be evidenced by
completion of the conversion notice attached hereto and delivery of
such notice to the Company. The Holder’s right to convert the
obligations due under this Note to common stock shall supercede the
Company’s right to repay such obligations in cash.
The Conversion
Rate shall equal the greater of (i) $0.25 or (ii) a price equal to
the ten (10) day average of the closing trading price on the
Over-the-Counter Bulletin Board for the common stock of the
Company, ending one trading day prior to the date a conversion
notice is sent by the Holder to the Company, multiplied by
67.5%.
The Company
covenants and agrees that, so long as any principal of, or interest
on, this Note shall remain unpaid, unless the Holder shall
otherwise consent in writing, it will comply with the following
terms:
(a)
Reporting Requirements. The Company will furnish
to the Holder:
(i) as soon as
possible, and in any event within ten (10) days after obtaining
knowledge of t
