Exhibit 4.1
NEITHER THIS NOTE NOR THE
SECURITIES THAT MAY BE ISSUED BY THE BORROWER UPON CONVERSION
HEREOF (COLLECTIVELY, THE “SECURITIES”) HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”),
OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
NEITHER THE SECURITIES NOR ANY INTEREST OR PARTICIPATION THEREIN
MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED:
(i) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE 1933 ACT, OR APPLICABLE STATE
SECURITIES LAWS; OR (ii) IN THE ABSENCE OF AN OPINION
OF COUNSEL, IN A FORM ACCEPTABLE TO THE ISSUER, THAT REGISTRATION
IS NOT REQUIRED UNDER THE 1933 ACT OR; (iii) UNLESS
SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO RULE 144 UNDER THE 1933
ACT.
CONVERTIBLE NOTE
Miami, Florida
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, 2007 (the “ Issuance
Date ”)
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$
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FOR VALUE RECEIVED,
Dynamic Response Group, Inc., a
Florida corporation (the “Company”), hereby promises to
pay to the order of
or registered
assigns (the “Holder”) the principal amount of
Dollars ($
), on
, 2007 (the “Maturity Date”), and to pay interest on
the unpaid principal balance hereof at the rate of Ten percent
(10%) per annum from the Issuance Date in accordance with the
terms hereof or otherwise. The principal balance of this Note shall
be payable pursuant to Paragraph 1. Interest on this Note shall
accrue and be payable pursuant to Paragraph I. Each capitalized
term used herein, and not otherwise defined, shall have the meaning
ascribed thereto in the Subscription Agreement, dated
between the Company and the Holder (the “Securities Purchase
Agreement”), pursuant to which this convertible note (the
“Note”) was originally issued. The term
“Note” and all reference thereto, as used throughout
this instrument, shall mean this instrument as originally executed,
or if later amended or supplemented, then as so amended or
supplemented. This Note and the Other Notes (as hereinafter
defined) issued by the Company on the Issuance Date pursuant to
Securities Purchase Agreements executed by the Company and
purchasers of the Other Notes (collectively, the
“Securities Purchase Agreements”) are
collectively referred to in this Note as the
“Notes.”
1. Payments of Principal and
Interest.
(a) Payment of Principal. The
principal balance of this Note shall be paid to the Holder hereof
on the Maturity Date. The Company shall not prematurely pay or
prepay any outstanding principal balance to the Holder.
(b) Payment of Interest.
Interest on the unpaid principal balance of this Note shall accrue
at a rate of Ten percent (10%) per annum commencing on the
Issuance Date. Interest shall be computed on the basis of a 365-day
year and actual days elapsed. Interest shall be paid in accordance
with Schedule 1(b.) attached hereto.
(c) Default Interest. Any
amount of principal or interest on this Note which is not paid when
due shall bear interest at the rate of fifteen percent
(15%) per annum from the date thereof until the
same is paid (“Default
Interest”) and the Holder, at the Holder’s sole
discretion, may include any accrued but unpaid Default Interest in
the Conversion Amount.
(d) General Payment
Provisions. All payments of principal and interest on this Note
shall be made in lawful money of the United States of America by
check to such account as the Holder may from time to time designate
by written notice to the Company in accordance with the provisions
of this Note. Whenever any amount expressed to be due by the terms
of this Note is due on any day which is not a Business Day (as
defined below), the same shall instead be due on the next
succeeding day which is a Business Day and, in the case of any
interest payment date which is not the date on which this Note is
paid in full, the extension of the due date thereof shall not be
taken into account for purposes of determining the amount of
interest due on such date. For purposes of this Note,
“Business Day” shall mean any day other than a
Saturday, Sunday or a day on which commercial banks in the City of
Miami are authorized or required by law or executive order to
remain closed.
2. Conversion of Note. At any
time prior to the Maturity Date, this Note shall be convertible
into shares of the Company’s common stock, par value $.001
per share (the “Common Stock”), on the terms and
conditions set forth in this Paragraph 2.
(a) Certain Defined Terms.
For purposes of this Note, the following terms shall have the
following meanings:
(1) “Conversion Amount”
means the sum of (A) the principal amount of this Note to be
converted with respect to which this determination is being made,
(B) accrued and unpaid interest, if so included at the
Holder’s sole discretion and (c) Default Interest, if
any, on unpaid interest and principal, if so included at the
Holder’s sole discretion.
(2) “Conversion Price” means One
Dollar ($1.00).
(3)
.
“Other
Notes” means the convertible notes, other than this Note,
issued by the Company pursuant to Securities Purchase
Agreements.
(4) “Person” means an
individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and
a government or any department or agency thereof.
(b) Holder’s Conversion
Right. At any time or times on or after the Issuance Date, the
Holder shall be entitled to convert any part of the outstanding and
unpaid principal amount of this Note into fully paid and
nonassessable shares of Common Stock in accordance with Paragraph
2.(d), at the Conversion Rate (as defined below), provided that the
Holder shall be required to request conversions in increments of
$1,000 or more, The Company shall not issue any fraction of a share
of Common Stock upon any conversion; if such issuance would result
in the issuance of a fraction of a share of Common Stock, the
Company shall round such fraction of a share of Common Stock up to
the nearest whole share.
(c) Conversion Rate. The
number of shares of Common Stock issuable upon conversion of a
Conversion Amount of this Note pursuant to Paragraph 2.(b) shall be
determined according to the following formula (the
“Conversion Rate”):
Conversion Amount
Conversion Price
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(d) Mechanics of Conversion.
The conversion of this Note shall be conducted in the following
manner:
(1) Holder’s Delivery
Requirements. To convert this Note into shares of Common Stock
on any date set forth in the Conversion Notice by the Holder (the
“Conversion Date”), the Holder hereof shall
(A) transmit by facsimile (or otherwise deliver), for receipt
on or prior to 11:59 p.m., Eastern Time on such date, a copy of a
fully executed notice of conversion in the form attached hereto as
Exhibit 2.(d)(1) (the “Conversion Notice”) to the
Company; and (B) surrender to a common carrier for delivery to
the Company as soon as practicable following the date of the
Conversion Notice original of the Note being converted.
(2)
Company’s Response. Upon receipt by the Company of a
copy of a Conversion Notice, the Company shall as soon as
practicable, but in no event later than five (5) Business Days
after receipt of such Conversion Notice, send, via facsimile and
overnight courier, a confirmation of receipt of such Conversion
Notice (the “Conversion Confirmation”) to such
Holder indicating that the Company will process such Conversion
Notice in accordance with the terms herein. Within fifteen
(15) Business Days after the date of the Conversion
Confi r mation, the Company shall issue
and surrender to a common carrier for delivery to the address as
specified in the Conversion Notice, a certificate, registered in
the name of the Holder, for the number of shares of Common Stock to
which the Holder shall be entitled. If less than the full principal
amount of this Note is submitted for conversion, then the Company
shall within fifteen (15) Business Days after receipt of the
Note and at its own expense, issue and deliver to the Holder a new
Note for the outstanding principal amount not so converted;
provided that such new Note shall be substantially in the same form
as this Note.
(3) Record Holder, The person
or persons entitled to receive the shares of Common Stock issuable
upon a conversion of this Note shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on the
Conversion Date.
(e) Taxes. The Company shall
pay any and all taxes that may be payable with respect to the
issuance and delivery of Common Stock upon the conversion of
Notes.
Adjustments to Conversion
Price. If the Company at
any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares,
the Fixed Conversion Price in effect immediately prior to such
subdivision will be proportionately reduced. If the Company at any
time combines (by combination, reverse stock split or otherwise)
one or more classes of its outstanding shares of Common Stock into
a smaller number of shares, the Fixed Conversion Price in effect
immediately prior to such combination will be proportionately
increased.
Other Rights of
Holders.
(a) Reorganization,
Reclassification, Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Company’s
assets to another Person or other transaction which is effected in
such a way that holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities
or assets with respect to or in exchange for Common Stock is
referred to herein as “Organic Change.” Prior to the
consummation of any (i) Organic Change or (ii) other
Organic Change following which the Company is not a surviving
entity, the Company will secure from the Person purchasing such
assets or the successor resulting from such Organic Change (in each
case, the “Acquiring Entity”) a written agreement (in
form and
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substance reasonably satisfactory to the holders
of a majority of the Notes then outstanding) to deliver to each
Holder in exchange for this Note, a security of the Acquiring
Entity evidenced by a written instrument substantially similar in
form and substance to this Note, and reasonably satisfactory to the
Holders of a majority of the Conversion Amount of the Notes then
outstanding. Prior to the consummation of any other Organic Change,
the Company shall make appropriate provision (in form and substance
reasonably satisfactory to the Holders of a majority of the
Conversion Amount of the Notes then outstanding) to ensure that
each of the Holders will thereafter have the r
