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BERMAN CENTER, INC. SECURED CONVERTIBLE PROMISSORY NOTE

Convertible Promissory Note

BERMAN CENTER, INC. SECURED CONVERTIBLE PROMISSORY NOTE | Document Parties: BERMAN CENTER, INC. | HUNTER FUND LTD. You are currently viewing:
This Convertible Promissory Note involves

BERMAN CENTER, INC. | HUNTER FUND LTD.

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Title: BERMAN CENTER, INC. SECURED CONVERTIBLE PROMISSORY NOTE
Governing Law: Delaware     Date: 10/13/2006
Industry: Recreational Products    

BERMAN CENTER, INC. SECURED CONVERTIBLE PROMISSORY NOTE, Parties: berman center  inc. , hunter fund ltd.
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THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS

 

BERMAN CENTER, INC.

 

SECURED CONVERTIBLE PROMISSORY NOTE

 

$200,000.00

October 6, 2006

 

FOR VALUE RECEIVED, the undersigned, BERMAN CENTER, INC., a company incorporated under the laws of the State of Delaware (the “ Company ”), promises to pay to the order of HUNTER FUND LTD. or its registered assigns (the “ Holder ”), the principal sum of Two Hundred Thousand Dollars ($200,000.00), with interest from the date hereof at the rate of fifteen percent (15%) per annum on the unpaid balance hereof until paid.

 

1.    Principal and Term . If not earlier converted pursuant to Section 4(a) hereof, the principal of this Note shall be payable in one installment one (1) year from the date of this Note (“ Due Date ”). This Note is subject to conversion at the option of the Holder, as described in Section 4(a).

 

2.    Interest . Interest on the unpaid principal balance of this Note shall accrue at the rate of fifteen percent (15%) per annum compounded annually (computed on the basis of a 365-366 day year (as applicable) based on actual days elapsed) commencing on the date hereof, and payable in cash on the Due Date, if not converted earlier pursuant to Section 4(a). The Company agrees to pay interest after the occurrence of an Event of Default, at a rate per annum equal to the highest rate of interest per annum permitted by applicable law (the “ Default Rate ”) until all amounts outstanding under the Note payable to Holder have been paid in full. For purposes herein, an “Event of Default” exists if the Company fails to make a payment required by Section 1 or 2 hereof, and such failure is not cured within ten (10) days following written notice from the Holder.

 

3.    Security .

 

(a)    Company . In order to secure the payment of the Note, the Company hereby grants to Holder a continuing first priority security interest in all assets of the Company now owned or at any time hereafter acquired by the Company, or in which the Company now has or at any time in the future may acquire any right, title or interest, including, without limitation: all accounts, inventory, equipment, goods, documents, instruments (including, without limitation, promissory notes), contract rights, general intangibles, chattel paper, supporting obligations, investment property, letter-of-credit rights, intellectual property rights, patents, copyrights, trademarks in which the Company now has or hereafter may acquire any right, title or interest, all proceeds and products thereof (including, without limitation, proceeds of insurance) and all additions, accessions and substitutions thereto or therefore.

 

 

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(b)    Subsidiary . In order to secure the payment of the Note, Berman Health & Media, Inc., a Delaware corporation and the wholly-owned subsidiary of the Company (the “ Subsidiary ”), hereby grants to Holder a continuing first priority security interest in all assets of the Subsidiary now owned or at any time hereafter acquired by the Subsidiary, or in which the Subsidiary now has or at any time in the future may acquire any right, title or interest, including, without limitation: all accounts, inventory, equipment, goods, documents, instruments (including, without limitation, promissory notes), contract rights, general intangibles, chattel paper, supporting obligations, investment property, letter-of-credit rights, intellectual property rights, patents, copyrights, trademarks in which the Subsidiary now has or hereafter may acquire any right, title or interest, all proceeds and products thereof (including, without limitation, proceeds of insurance) and all additions, accessions and substitutions thereto or therefore.

 

Holder shall have the rights of a secured party under the Uniform Commercial Code. To effect the foregoing, each of the Company and the Subsidiary agrees to execute promptly such additional security documentation as Holder may request and hereby authorizes Holder to file financing and other statements as Holder deems advisable to perfect the first priority security interest granted herein.

 

4.    Conversion and Mechanics of Conversion .

 

(a)    Conversion . This Note is convertible at the option of the Holder at any time prior to the Due Date by providing written notice to the Company (the “ Conversion ”). Upon the Conversion, the entire unpaid principal balance of this Note plus any unpaid interest will convert into shares of common stock of the Company, par value $.001 per share (the “ Common Stock ”), at a price equal to the Conversion Price (as hereinafter defined). For purposes hereof “Conversion Price” shall be an amount equal to the lesser of (i) fifty percent (50%) of the weighted average closing price (weighted with reference to the trading volume on each trading day) of the Common Stock on the Electronic Quotation Services (the “ Pink Sheets ”) during the thirty (30) trading days immediately preceding the date of Conversion, or (ii) $0.25 per share.

 

(b)    Mechanics of Conversion . The Company shall not be obligated to issue certificates evidencing the Common Stock issuable upon a Conversion unless this Note is either delivered to the Company, duly endorsed, at the office of the Company, or the Holder notifies the Company that this Note has been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with this Note. As soon as practicable after delivery of the Note, or delivery of an agreement and indemnification in the case of a lost Note, the Company shall issue and deliver to the Holder a certificate or certificates for the number of shares of Common Stock to which the Holder shall be entitled (the “ Conversion Shares ”).

 

(c)    Fractional Shares . No fractional shares of Common Stock shall be issued upon conversion of this Note. Any fractional shares to which the Holder would otherwise be entitled will be rounded up and an additional share of Common Stock shall be issued to the Holder.

 

 

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5.    Registration .

 

(a)    The Holder acknowledges that this Note and the Common Stock issuable upon its conversion have not been registered or qualified under federal or state securities laws.

 

(b)    The shares of Common Stock that are issuable upon Conversion of this Note or that have been issued upon any Conversion of this Note shall be eligible for registration pursuant to the Securities Act (“ Registrable Securities ”) under the following terms and conditions:

 

(i)   The Company agrees to include the Registrable Securities in the first registration statement it files with the Securities and Exchange Commission, whether on its own account or on behalf of other shareholders, excluding registration statements on Forms S-4 or S-8 (an “ Eligible Registration Statemen t”). If an Eligible Registration Statement is filed prior to full Conversion, if any, then the Company shall register two hundred percent (200%) of the shares issuable based on the exercise price for such shares calculated pursuant to Section 4(a) hereof as if the Conversion occurred on the date on which the Eligible Registration Statement is filed. If the Eligible Registration Statement is filed after a full Conversion, if any, the Company shall register the amount of shares of Common Stock issued upon such Conversion. In addition, at any time and from time to time on or after the date hereof, the Holder may make a one (1) written demand for registration under the Securities Act of all or part of their Registrable Securities (a “ Demand Registration ”). After Conversion, any demand made for a Demand Registration shall specify the number of shares of Registrable Securities proposed to be sold. If the Holder provides to the Company written demand for a Demand Registration prior to a full Conversion, if any, then the Company shall register two hundred percent (200%) of the shares issuable upon receipt of such Demand Registration based on the exercise price for such shares calculated pursuant to Section 4(a) hereof as if the Conversion occurred on the date of the Demand Registration. If the Holder provides to the Company written demand for a Demand Registration after a full Conversion, if any, the Company shall register the amount of shares of Common Stock issued upon such Conversion. In no circumstance shall a notice for Demand Registration be interpreted as a notice for Conversion. The Company shall not be obligated to effect more than one (1) Demand Registration under this Section 5(b)(i) in respect of Registrable Securities.

 

(ii)   All registration expenses will be borne by the Company, whether or not the registration statement becomes effective and whether or not any Registrable Securities are sold pursuant to such registration statement; provided, however, that such expenses shall not include (i) any underwriting discount or commissions with respect to the Holder’s shares and/or (ii) cost of special counsel for the Holder.

 

(iii)   In the event of a registration statement filed in connection with an underwritten offering, these registration rights are subject to the requirement that the Holder submits to any lock-up provisions and cut-backs, if any, as may be proposed by the underwriter(s).

 

 

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(iv)   The Company shall send to the Holder written notice of any decision to file an Eligible Registration Statement at least thirty (30) days prior to the initial filing date; if within fifteen (15) days after receipt of such notice, the Holder requests in writing that some or all of such Holder’s Registrable Securities be included in such registration statement, the Company shall then cause the registration under the Securities Act of all or part of the Holder’s Registrable Securities, as requested by holder; provided, however, that if at any time after giving written notice of its intention to register any securities and prior to the effective date of the Eligible Registration Statement, the Company shall determine for any reason not to register, or to delay registration of, such securities, the Company may, at its election, give written notice of such determination to the Holder and, thereupon, (i) in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Securities in connection with such registration and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities for the same period as the delay in registering any other securities.

 

(v)   In connection with each registration statement covering the Registrable Securities, the Holder shall be required to furnish to the Company information regarding such Holder and the distribution of such Registrable Securities as is required by law to be disclosed in the registration statement, and the Company may exclude from such registration the Registrable Securities of the Holder if it fails to furnish such information within a reasonable time prior to the filing of such registration statement or any supplemented prospectus and/or amended registration statement.

 

(c)    Indemnification by the Company Pertaining to Registration . The Company shall, notwithstanding any termination of this Note, defend, indemnify and hold harmless the Holder, each officer, director, manager, owner, agent, broker (including brokers who offer and sell Registrable Securities as principals as a result of a pledge or any failure to perform under a margin call), investment advisor and employee of the Holder, each Person who controls the Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) and each officer, director, manager, owner, agent and employee of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, reasonable costs (including, without limitation, costs of investigation, preparation and attorneys' fees) and expenses (collectively, “ Losses ”), as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in a registration statement or any prospectus or any amendment or supplement thereto, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding the Holder which was furnished in writing to the Company by the Holder expressly for use therein, which information was reasonably relied on by the Company for use therein or (ii) such information relates to the Holder or the Holder's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by the Holder for use in the registration statement or such prospectus or in any amendment or supplement thereto. The Company shall notify the Holder promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an Indemnified Party and shall survive the transfer of the Registrable Securities by the Holder.

 

 

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