Exhibit 10.2
THIS NOTE HAS BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND NEITHER THIS NOTE NOR THE SECURITIES
ISSUABLE UPON CONVERSION OF THIS NOTE HAS BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES
ACT ”), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS.
NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY BE SOLD OR OTHERWISE TRANSFERRED OR PLEDGED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION OR EXCLUSION
FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE
WITH APPLICABLE STATE SECURITIES LAWS.
BULLDOG TECHNOLOGIES INC.
6.0% CONVERTIBLE NOTE DUE AUGUST 29,
2010
FOR VALUE RECEIVED, Bulldog
Technologies Inc., a Nevada corporation (the “ Company
”), hereby promises to pay to the order of
___________________________, or its registered assigns (the “
Purchaser ”), the principal sum of
____________________________ DOLLARS AND ZERO CENTS ($_________),
or such lesser amount as shall then equal the outstanding principal
amount hereof, together with interest thereon at a rate equal to 6%
(the “ Interest Rate ”) per annum, simple
interest computed on the basis of the actual number of days elapsed
and a year of 360 days comprised of twelve 30 day months. Unless
earlier converted in accordance with Section 4, all unpaid
principal, together with any then unpaid and accrued interest and
other amounts payable hereunder, shall be due and payable on the
earlier of (i) August 29, 2010 (the “ Maturity
Date ”); or (ii) when such amounts become due and payable
as a result of, and following, an Event of Default in accordance
with Section 2. This Note is prepayable at 120% of the principal
amount from the 30 days post effectiveness of a registration
statement covering the underlying securities through August 29,
2006, 115% of the principal amount from August 29, 2006 through
August 29, 2007, 110% of the principal amount from August 29, 2007
through August 29, 2008, 105% of the principal amount from August
29, 2008 to August 29, 2009 and 100% of the principal amount
thereafter. Except as otherwise provided herein, all payments
required to be made hereunder, if any, shall be made in such coin
or currency of the United States of America as at the time of
payment shall be legal tender therein for the payment of public and
private debts. Interest shall accrue on the unpaid balance of the
principal amount of this Note (without any compounding) from and
including the date hereof to, but excluding, the date on which the
principal amount of this Note is paid in full (or converted in
accordance with Section 4 hereof) and shall be payable on November
30, February 28, May 31 and August 31 (each, an
“Interest Payment Date”) of each year until the
outstanding principal amount hereof shall be paid in full, with the
first such payment of interest being due November 30, 2005.
Interest payments shall be made either in such coin or currency of
the United States of
America as at the time of payment
shall be legal tender therein for the payment of public and private
debts or in shares of Common Stock, par value $0.001 per share, of
the Company (the “ Common Stock ”), valued at
the then current Market Price (as hereinafter defined), at the
option of the Company. For purposes hereof, “ Market
Price ” shall mean the average of the closing sale prices
of the Common stock (or if no closing sale prices are reported, the
average of the closing bid and closing ask prices for the twenty
(20) day period immediately prior to the Interest Payment Date as
reported in composite transactions for the principal United States
securities exchange on which the Common Stock is traded or, if the
Common Stock is not listed on a United States national or regional
securities exchange, as reported by the Nasdaq System, the OTC
Bulletin Board or Pinksheets LLC. In the absence of such a
quotation, the Company’s board of directors (the “
Board of Directors ”) will determine the closing sale
price on the basis it considers appropriate.
The Company shall at all times
reserve and keep available out of its authorized but unissued
shares of capital stock of the Company, solely for the purpose of
paying interest on this Note, such number of its shares of capital
stock of the Company as shall from time to time be sufficient to
pay interest on this Note; and if at any time the number of
authorized but unissued shares of capital stock of the Company
shall not be sufficient to pay interest on this Note, the Company
hereby covenants and agrees to take such corporate action as may,
in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of capital stock to such number of
shares as shall be sufficient for such purpose.
This is one of a duly authorized
issue of notes (this note being referred to as the “
Note ” and, collectively, all similar notes issued by
the Company being referred to as the “ Notes ”)
of the Company in an aggregate principal amount of
$2,100,000.
The occurrence of any of the
following shall constitute an “ Event of Default
” under this Note:
(a)
The Company shall fail to pay (i)
when due any principal or interest payment hereof on the due date
hereunder or (ii) any other payment required under the terms of
this Note on the date due and such payment shall not have been made
within fifteen (15) days of Company’s receipt of
Purchaser’s written notice to Company of such failure to pay;
or
(b)
The Company shall fail to observe or
perform any other covenant, obligation, condition or agreement
contained in this Note (other than those specified in Section 2(a))
and such failure shall continue for ten (10) days after written
notice thereof is delivered to the Company; or
(c)
Any representation, warranty,
certificate, or other statement (financial or otherwise) made or
furnished by or on behalf of the Company to the Purchaser in
writing in connection with this Note, or as an inducement to the
Purchaser to purchase this Note, shall be false, incorrect,
incomplete or misleading in any material respect when made or
furnished; or
(d)
The Company shall (i) fail to make
any payment when due under the terms of any bond, debenture, note
or other evidence of indebtedness to be paid by the Company
(excluding
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this Note, which default is
addressed by Section 2(a) above, but including any other evidence
of indebtedness of the Company to the Purchaser) and such failure
shall continue beyond any period of grace provided with respect
thereto, or (ii) default in the observance or performance of any
other agreement, term or condition contained in any such bond,
debenture, note or other evidence of indebtedness, and the effect
of such failure or default is to cause, or permit the holder
thereof to cause, indebtedness in an aggregate amount of One
Million Dollars ($1,000,000) or more to become due prior to its
stated date of maturity; or
(e)
The Company shall (i) apply for or
consent to the appointment of a receiver, trustee, liquidator or
custodian of itself or of all or a substantial part of its
property, (ii) be unable, or admit in writing its inability, to pay
its debts generally as they mature, (iii) make a general assignment
for the benefit of its or any of its creditors, (iv) be dissolved
or liquidated in full or in part (v) commence a voluntary case or
other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or
consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case
or other proceeding commenced against it, or (vi) take any action
for the purpose of effecting any of the foregoing; or
(f)
Proceedings for the appointment of a
receiver, trustee, liquidator or custodian of the Company or of all
or a substantial part of the property thereof, or an involuntary
case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Company or the debts thereof under
any bankruptcy, insolvency or other similar law now or hereafter in
effect shall be commenced and an order for relief entered or such
proceeding shall not be dismissed or discharged within thirty (30)
days of commencement; or
(g)
One or more judgments for the
payment of money in an amount in excess of One Million Five Hundred
Thousand Dollars ($1,500,000) in the aggregate, outstanding at any
one time, shall be rendered against the Company and the same shall
remain undischarged for a period of thirty (30) days during which
execution shall not be effectively stayed, or any judgment, writ,
assessment, warrant of attachment, or execution or similar process
shall be issued or levied against a substantial part of the
property of the Company and such judgment, writ, or similar process
shall not be released, stayed, vacated or otherwise dismissed
within thirty (30) days after issue or levy.
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Section 3.
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Rights Of Purchaser Upon Default.
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Upon the occurrence or existence of
any Event of Default and following the expiry of any applicable
grace periods (other than an Event of Default referred to in
Sections 2(f) or 2(g) hereof) and at any time thereafter during the
continuance of such Event of Default, the Purchaser may, by written
notice to the Company, declare all outstanding amounts payable by
the Company hereunder to be immediately due and payable without
presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived, anything contained herein to
the contrary notwithstanding. Upon the occurrence or existence of
any Event of Default described in Sections 2(f) or 2(g) hereof,
immediately and without notice, all outstanding amounts payable by
the Company hereunder shall automatically become immediately due
and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived,
anything contained herein to the contrary notwithstanding. In
addition
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to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Purchaser may
exercise any other right, power or remedy permitted to it by law,
either by suit in equity or by action at law, or both.
(a)
Purchaser Conversion
. At any time, and from time to
time, the Purchaser may, at its sole and exclusive option by
delivering to the Company a conversion notice in the form attached
hereto as Annex A (the “ Conversion Notice
”), convert all or any part of the principal (but not
interest) outstanding under this Note into fully paid and
nonassessable shares of Common Stock of the Company at a conversion
price of $1.06 per share of Common Stock (the “ Conversion
Price ”). The Conversion Price shall be subject to
adjustment as provided in Section 5 hereof. The Purchaser shall
convert a minimum of $100,000 of principal for any conversion
pursuant to this Section 4(a).
(b)
Mechanics and Effect of
Conversion . No
fractional shares of Common Stock shall be issued upon conversion
of this Note. Upon the conversion of the entire principal
outstanding under this Note, in lieu of the Company issuing any
fractional shares to the Purchaser in cash, the Company shall pay
to the Purchaser the amount of outstanding principal that is not so
converted. On partial conversion of this Note, the Company shall
issue to the Purchaser (i) the shares of Common Stock into
which a portion of this Note is converted and (ii) a new
convertible promissory note having identical terms to this Note,
except that the principal amount thereof shall equal the difference
between (A) the principal amount of this Note immediately prior to
such conversion minus (B) the portion of such principal amount
converted into Common Stock. Upon conversion of this Note pursuant
to this Section 4, the Purchaser shall surrender this Note, duly
endorsed, at the principal office of the Company. At its expense,
the Company shall, as soon as practicable but in no event more than
three (3) business days thereafter, issue and deliver to the
Purchaser at such principal office a certificate or certificates
for the number of shares of Common Stock, to which the Purchaser
shall be entitled upon such conversion (the “ Conversion
Shares ”) (bearing such legends as are required by
applicable state and federal securities laws in the opinion of
counsel to the Company), together with any other securities and
property to which the Purchaser is entitled upon such conversion
under the terms of this Note. In addition to all other available
remedies at law or in equity or otherwise under this Note, if the
Company fails to deliver certificates for the Conversion Shares
(together with any other securities and property to which the
Purchaser is entitled upon conversion of the Note under the terms
of this Note) within three (3) business days after receipt of the
Conversion Notice and the Note, then the Company shall pay to the
holder in cash a penalty (the “ Penalty ”) equal
to 1% of the number of Conversion Shares multiplied by the Current
Market Price (as defined in the Warrant of even date herewith) for
each day that the Company fails to deliver certificates for the
Conversion Shares (together with any other securities and property
to which the Purchaser is entitled upon conversion of the Note
under the terms of this Note). The Penalty shall be paid to the
holder by the third (3 rd ) day of the month following
the month in which it has accrued.
(c)
Reservation Of Stock Issuable
Upon Conversion . The
Company shall at all times reserve and keep available out of its
authorized but unissued shares of capital stock of the Company,
solely for the purpose of effecting the conversion of this Note,
such number of
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Conversion Shares as shall from time
to time be sufficient to effect the conversion of this Note;
(together with such number of its shares of capital stock as shall
be sufficient to pay interest on this Note, the “ Note
Shares ”); and if at any time the number of authorized
but unissued shares of capital stock of the Company shall not be
sufficient to effect the conversion of this Note, the Company
hereby covenants and agrees to take such corporate action as may,
in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of capital stock to such number of
shares as shall be sufficient for such purpose.
(d)
Payment Of Expenses And Taxes On
Conversion . The Company
shall pay all expenses, taxes and other charges payable in
connection with the preparation, execution, issuance and delivery
of stock certificates and new promissory notes pursuant to this
Section 4 hereof, except that, in the event such stock certificates
or new promissory notes shall be registered in a name or names
other than the name of the holder of this Note, funds sufficient to
pay all stock transfer fees, which shall be payable upon the
execution and delivery of such stock certificate or certificates or
new promissory notes, shall be paid by the holder hereof to the
Company at the time of delivering this Note to the Company upon
conversion.
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Section 5.
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Conversion Price Adjustments
.
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(a)
Adjustment For Stock Splits And
Combinations . If the
Company shall at any time or from time to time after the date of
original issuance of this Note (the “ Date of Original
Issue ”) effect a subdivision or reverse stock split of
the outstanding Common Stock, the Conversion Price in effect
immediately before a subdivision shall be proportionately
decreased, and, conversely, the Conversion Price in effect
immediately before a reverse stock split shall be proportionately
increased. Any adjustment under this Section 5(a) shall become
effective at the close of business on the date the subdivision or
reverse stock split becomes effective.
(b)
Adjustment For Common Stock
Dividends And Distributions . If the Company at any time or from time to
time after the Date of Original Issue issues, or fixes a record
date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable solely in
additional shares of Common Stock, the Conversion Price that is
then in effect shall be decreased as of the time of such issuance
or, in the event such record date is fixed, as of the close of
business on such record date, by multiplying the Conversion Price
by a fraction (i) the numerator of which is the total number
of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such
record date, and (ii) the denominator of which is the sum of the
total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common
Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Conversion Price shall be
recomputed accordingly as o
