THIS NOTE AND THE COMMON SHARES ISSUABLE UPON
CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE COMMON SHARES
ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO THE TUBE MEDIA CORP. THAT
SUCH REGISTRATION IS NOT REQUIRED.
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Principal Amount $100,000.00
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Issue Date: September 20,
2006
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CONVERTIBLE
NOTE
FOR VALUE
RECEIVED, THE TUBE MEDIA CORP., a Delaware corporation (hereinafter
called "Borrower"), hereby promises to pay to Patrick LaPlatney
located at 3000 Devonshire Place, Atlanta, Georgia 30327 (the
"Holder") or order, without demand, the sum of One Hundred Thousand
Dollars ($100,000.00), with interest accruing thereon, on December
31, 2006 (the "Maturity Date"), if not retired sooner.
The following terms shall apply to this
Note:
ARTICLE I
GENERAL PROVISIONS
1.1 Interest Rate . Interest shall accrue on this Note at the rate
of 8% per annum based on 365 day calendar year. Following the
occurrence and during the continuance of an Event of Default,
which, if susceptible to cure is not cured within ten (10) days,
otherwise then from the first date of such occurrence, the annual
interest rate on this Note shall (subject to Section 4.7) be twelve
percent (12%) and calculated on a 365 day year.
1.2 Maturity Date . Subject to the right of the Holder with
respect to its conversion rights hereunder, all principal with
interest accruing thereon is otherwise due on December 31, 2006
(the "Maturity Date"); provided however, that should the Borrower
close a subsequent financing transaction of either debt or equity
in an amount exceeding $1,000,000 prior to the Maturity Date, then
this Note shall become due and payable in full at such closing of
the subsequent financing, inclusive of all interest
1.3 Conversion Privileges . The Conversion Privileges set forth in Article
II shall remain in full force and effect immediately from the
occurrence of an Event of Default as defined in Article III hereof
and until the Note is paid in full regardless of the subsequent
cure of the Event of Default. The Note shall be payable in full on
the Maturity Date, unless previously converted into Common Stock in
accordance with Article II hereof.
ARTICLE
II
CONVERSION
RIGHTS
The Holder shall have the right to convert the
principal and any interest due under this Note into Shares of the
Borrower's Common Stock, $.0001 par value per share (“Common
Stock”) as set forth below.
2.1. Conversion into the Borrower's Common
Stock .
(a) The Holder shall have the right from and after
the date of the occurrence of an Event of Default and then at any
time until this Note is fully paid, to convert any outstanding and
unpaid principal portion of this Note, and accrued interest, at the
election of the Holder (the date of giving of such notice of
conversion being a "Conversion Date") into fully paid and
nonassessable shares of Common Stock as such stock exists on the
date of issuance of this Note, or any shares of capital stock of
Borrower into which such Common Stock shall hereafter be changed or
reclassified, at the conversion price as defined in Section 2.1(b)
hereof (the "Conversion Price"), determined as provided herein.
Upon delivery to the Borrower of a completed Notice of Conversion,
a form of which is annexed hereto, Borrower shall issue and deliver
to the Holder within three (3) business days after the Conversion
Date (such third day being the “Delivery Date”) that
number of shares of Common Stock for the portion of the Note
converted in accordance with the foregoing. At the election of the
Holder, the Borrower will deliver accrued but unpaid interest on
the Note, if any, through the Conversion Date directly to the
Holder on or before the Delivery Date (as defined in the
Subscription Agreement). The number of shares of Common Stock to be
issued upon each conversion of this Note shall be determined by
dividing that portion of the principal of the Note and interest, if
any, to be converted, by the Conversion Price.
(b) Subject to adjustment as provided in Section
2.1(c) hereof, the Conversion Price per share shall be $2.25
(“Conversion Price).
(c) The Conversion Price and number and kind of
shares or other securities to be issued upon conversion determined
pursuant to Section 2.1(a), shall be subject to adjustment from
time to time upon the happening of certain events while this
conversion right remains outstanding, as follows:
A. Merger, Sale of Assets, etc. If the Borrower at
any time shall consolidate with or merge into or sell or convey all
or substantially all its assets to any other corporation, this
Note, as to the unpaid principal portion thereof and accrued
interest thereon, shall thereafter be deemed to evidence the right
to purchase such number and kind of shares or other securities and
property as would have been issuable or distributable on account of
such consolidation, merger, sale or conveyance, upon or with
respect to the securities subject to the conversion or purchase
right immediately prior to such consolidation, merger, sale or
conveyance. The foregoing provision shall similarly apply to
successive transactions of a similar nature by any such successor
or purchaser. Without limiting the generality of the foregoing, the
anti-dilution provisions of this Section shall apply to such
securities of such successor or purchaser after any such
consolidation, merger, sale or conveyance.
B. Reclassification, etc. If the Borrower at any
time shall, by reclassification or otherwise, change the Common
Stock into the same or a different number of securities of any
class or classes that may be issued or outstanding, this Note, as
to the unpaid principal portion thereof and accrued interest
thereon, shall thereafter be deemed to evidence the right to
purchase an adjusted number of such securities and kind of
securities as would have been issuable as the result of such change
with respect to the Common Stock immediately prior to such
reclassification or other change.
C. Stock Splits, Combinations and Dividends. If
the shares of Common Stock are subdivided or combined into a
greater or smaller number of shares of Common Stock, or if a
dividend is paid on the Common Stock in shares of Common Stock, the
Conversion Price shall be proportionately reduced in case of
subdivision of shares or stock dividend or proportionately
increased in the case of combination of shares, in each such case
by the ratio which the total number of shares of Common Stock
outstanding immediately after such event bears to the total number
of shares of Common Stock outstanding immediately prior to such
event..
(d) Whenever the Conversion Price is adjusted
pursuant to Section 2.1(c) above, the Borrower shall promptly mail
to the Holder a notice setting forth the Conversion Price after
such adjustment and setting forth a statement of the facts
requiring such adjustment.
2.2 Method of Conversion . This Note may be converted by the Holder in
whole or in part as described in Section 2.1(a) hereof and the
Subscription Agreement. Upon partial conversion of this Note, a new
Note containing the same date and provisions of this Note shall, at
the request of the Holder, be issued by the Borrower to the Holder
for the principal balance of this Note and interest which shall not
have been converted or paid.
2.3 Maximum Conversion . The Holder shall not be entitled to convert
on a Conversion Date that amount of the Note in connection with
that number of shares of Common Stock which would be in excess of
the sum of (i) the number of shares of Common Stock beneficially
owned by the Holder and its affiliates on a Conversion Date, (ii)
any Common Stock issuable in connection with the unconverted
portion of the Note, and (iii) the number of shares of Common Stock
issuable upon the conversion of the Note with respect to which the
determination of this provision is being made on a Conversion Date,
which would result in beneficial ownership by the Holder and its
affiliates of more than 4.99% of the outstanding shares of Common
Stock of the Borrower on such Conversion Date. For the purposes of
the provision to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended, and Regulation
13d-3 thereunder. Subject to the foregoing, the Holder shall not be
limited to aggregate conversions of only 4.99% and aggregate
conversion by the Holder may exceed 4.99%. The Holder shall have
the authority and obligation to determine whether the restriction
contained in this Section 2.3 will limit any conversion hereunder
and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which
portion of the Notes are convertible shall be the responsibility
and obligation of the Holder. The Holder may waive the conversion
limitation described in this Section 2.3, in whole or in part, upon
and effective after 61 days prior written notice to the Borrower to
increase such percentage to up to 9.99%.
ARTICLE
III
EVENT OF
DEFAULT
The occurrence of any of the following events of
default ("Event of Default") shall, at the option of the Holder
hereof, make all sums of principal and interest then remaining
unpaid hereon and all other amounts payable hereunder immediately
due and payable, upon demand, without presentment, or grace period,
all of which hereby are expressly waived, except as set forth
below:
3.1 Failure to Pay Principal or Interest
. The Borrower fails to pay any
installment of principal, interest or other sum due under this Note
when due and such failure continues for a period of ten (10) days
after the due date. The ten (10) day period described in this
Section
