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THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO THE
REGISTRATION REQUIREMENTS OF THE ACT.
ADD-VISION, INC.
CONVERTIBLE PROMISSORY NOTE
December 1,
2006 $249,950
Effective as of the date set
forth above (the "Effective Date"), Add-Vision, Inc., a Delaware
corporation (the "Company"), for value received, promises to pay to
the order of Cambridge Display Technology Ltd., an English Company
(the "Holder"), the sum of $249,950, plus simple interest thereon
from the Effective Date until paid at an annual interest rate,
calculated on the basis of a 360 day year, equal to the lesser of
(i) 6.0% and (ii) the highest rate permitted by applicable law. The
principal hereof, and the interest thereon, shall be convertible
into equity securities of the Company pursuant to the terms of this
Convertible Promissory Note (this "Note"). The principal hereof,
and the interest thereon, shall be payable, on written demand by
the Holder, at the principal office of the Company or by mail to
the registered address of the Holder at any time after 18 months
after the date of this Note (the "Repayment Date"), or following an
"Event of Default" (as defined below), except that no payment shall
be required to the extent that such principal and interest is or
has been converted into equity securities of the Company pursuant
to the terms hereof.
This Note is one of one or more
Convertible Promissory Notes (collectively, the "Bridge Notes")
which have been or will be issued by the Company between October 1,
2006 and up to April 30, 2007 totaling (as to this Note and such
other Bridge Notes together) up to $1,000,000.00 in principal
amount, which other Bridge Notes are identical to this Note except
as to the purchaser thereunder and the date and principal amount
thereof.
The following is a statement of
the rights of the Holder and the conditions to which this Note is
subject, and to which the Holder, by the acceptance of this Note,
agrees:
1. Definitions. As used in this
Note, the following terms, unless the context otherwise requires,
have the following meanings:
1.1
"Company" shall mean Add-Vision, Inc., a Delaware corporation, and
shall include any corporation, partnership, limited liability
company or other entity that shall succeed to or assume the
obligations of the Company under this Note.
1.2
"Qualified Financing" shall mean an equity financing undertaken by
the Company, after the date hereof and on or prior to the Repayment
Date, principally for working capital purposes in which the
aggregate amount of gross proceeds (excluding the Debt and any debt
represented by the other Bridge Notes or any other convertible
loans) received by the Company is at least $2,000,000.
2. Conversion. The outstanding
principal hereof and all accrued but unpaid interest thereon (the
"Debt") shall automatically convert into other securities of the
Company as of the closing of a Qualified Financing. This Note shall
be canceled on the date of the closing of such Qualified Financing,
and the Debt shall be converted into the same class and series of
securities issued in the Qualified Financing at a conversion price
equal to 85% of the Qualified Financing price. In such event, the
Holder shall surrender this Note at the principal office of the
Company at the time of such closing. If upon such conversion of
this Note a fraction of a share would result, the Company will pay
in lieu thereof in cash the amount of principal and accrued
interest resulting in such fractional share. Holder agrees to
execute all necessary documents in connection with the conversion
of this Note, including a definitive stock purchase agreement and
such other financing documents contemplated to be entered into by
the other investors participating in the Qualified Financing.
3. Issuance of Stock on
Conversion. As soon as practicable after conversion of this Note
pursuant to Section 2 hereof, the Company at its expense will cause
to be issued in the name of and delivered to the Holder, a
certificate or certificates for the number of shares of securities
to which the Holder shall be entitled on such conversion (bearing
such legends as may be required by applicable state and federal
securities laws in the opinion of legal counsel for the Company),
together with any other securities and property, if any, to which
the Holder is entitled on such conversion under the terms of this
Note.
4. Defaults. Holder may declare
the entire unpaid principal and accrued interest on this Note
immediately due and payable, by a notice in writing to the Company
if any of the following events shall occur (each an "Event of
Default"):
4.1
The institution by the Company of proceedings to be adjudicated as
bankrupt or insolvent, or the involuntary institution of bankruptcy
or insolvency proceedings against it under the Bankruptcy Act, or
any other applicable federal or state law, or the involuntary
filing of any such petition or the appointment of a receiver,
liquidator, assignee, trustee, or other similar official, of the
Company, or of any substantial part of its property, or the making
by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts
generally as they become due, provided that with respect to any
proceeding or filing which is involuntary the Company shall have 60
days to have such proceeding or filing overturned, dismissed or
withdrawn, as applicable; or
4.2
Within 60 days after the commencement of proceedings against the
Company seeking any bankruptcy, insolvency, liquidation,
dissolution or similar relief under any present or future statute,
law or regulation, such action shall not have been dismissed or all
orders or proceedings thereunder affecting the operations or the
business of the Company stayed, or the stay of any such order or
proceedings shall
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