Exhibit 4.1
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
COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
CONVERTIBLE NOTE
FOR VALUE
RECEIVED, PlanGraphics, Inc., a Colorado Corporation
(hereinafter called "Borrower"), hereby promises to pay to Tangiers
Investors,
LP, (the "Holder") or its registered assigns or successors in
interest or order,
without demand, the sum of twenty thousand dollars ($20,000), or
the amount
thereof advanced from time to time and oustanding ("Principal
Amount"), with
simple and unpaid interest thereon, the earlier of completion of a
debt or
equity transaction exceeding $5,000,000 or 6 months from closing
date of July
16, 2009 (the "Maturity Date"), if not sooner paid. The obligation
of the Holder
to fund all or any part of this Convertible Note shall be subject
to the
guaranty of the Borrower's payment and performance of this
Convertible Note by
Integrated Freight Systems, Inc., a Florida corporation (the
"Guarantor").
ARTICLE I
INTEREST: AMORTIZATION
1.1. Interest
Rate. Subject to Section 5.7 hereof, interest payable on
this Note shall accrue at a rate per annum (the "Interest Rate") of
eight
percent (8%). Interest on the Principal Amount shall accrue from
the date of
this Note and shall be payable at maturity. .
1.2. Default
Interest Rate. Following the occurrence and during the
continuance of an Event of Default, which, if susceptible to cure
is not cured
within twenty (20) days, otherwise then from the first date of such
occurrence,
the annual interest rate on this Note shall (subject to Section
5.7)
automatically be increased to fifteen percent (15%).
ARTICLE II
CONVERSION REPAYMENT
2.1. No Effective
Registration. Notwithstanding anything to the
contrary herein, no amount payable hereunder may be paid in shares
of Common
Stock by the Borrower without the Holder's consent unless (a)
either (i) an
effective current Registration Statement covering the shares of
Common Stock to
be issued in satisfaction of such obligations exists, or (ii) an
exemption from
registration of the Common Stock is available pursuant to Rule 144
of the 1933
Act, and (b) no Event of Default hereunder (or an event that with
the passage of
time or the giving of notice could become an Event of Default),
exists and is
continuing, unless such event or Event of Default is cured within
any applicable
cure period or is otherwise waived in writing by the Holder in
whole or in part
at the Holder's option.
2.2. Optional
Redemption of Principal Amount. Provided that (i) an
Event of Default or an event which with the passage of time or the
giving of
notice could become an Event of Default has not occurred, whether
or not such
Event of Default has been cured, and (ii) an effective current
Registration
Statement covering the shares of Common Stock to be issued upon
conversion of
the Notes exists, the Borrower will have the option of prepaying
the outstanding
Principal amount of this Note ("Optional Redemption"), in whole or
in part, by
paying to the Holder a sum of money equal to one hundred and twenty
percent
(125%) of the Principal amount to be redeemed, together with
accrued but unpaid
interest thereon and any and all other sums due, accrued or payable
to the
Holder arising under this Note or any Transaction Document through
the
Redemption Payment Date as defined below (the "Redemption Amount").
Borrower's
election to exercise its right to prepay must be by notice in
writing ("Notice
of Redemption"). The Notice of Redemption shall specify the date
for such
Optional Redemption (the "Redemption Payment Date"), which date
shall be no
sooner than ten (10) days after the date of the Notice of
Redemption (the
"Redemption Period"). A Notice of Redemption shall not be effective
with respect
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to any portion of the Principal Amount for which the Holder has a
pending
election to convert, or for conversions initiated or made by the
Holder during
the Redemption Period if the Redemption Period is based on thirty
days prior
notice. On the Redemption Payment Date, the Redemption Amount, less
any portion
of the Redemption Amount against which the Holder has exercised its
conversion
rights, shall be paid in good funds to the Holder. In the event the
Borrower
fails to pay the Redemption Amount on the Redemption Payment Date
as set forth
herein, then (i) such Notice of Redemption will be null and void,
(ii) Borrower
will have no right to deliver another Notice of Redemption, and
(iii) Borrower's
failure may be deemed by Holder to be a non-curable Event of
Default. A
Redemption Notice may be given only at a time a Registration
Statement is
effective. A Notice of Redemption may not be given nor may the
Borrower
effectuate a Redemption without the consent of the Holder, if at
any time during
the Redemption Period an Event of Default or an Event which with
the passage of
time or giving of notice could become an Event of Default (whether
or not such
Event of Default has been cured), has occurred or the Registration
Statement
registering the Registrable Securities is not effective each day
during the
Redemption Period.
ARTICLE III
CONVERSION RIGHTS
3.1. Holder's
Conversion Rights. Subject to Section 3.2, the Holder
shall have the right, but not the obligation at all times, to
convert all or any
portion of the then aggregate outstanding Principal Amount of this
Note, into
shares of Common Stock, subject to the terms and conditions set
forth in this
Article III at the rate of 65% of the average of the lowest three
volume
weighted average prices of the shares during the preceding 10 day
trading period
prior to conversion. The Holder may exercise such right by delivery
to the
Borrower of a written Notice of Conversion pursuant to Section
3.2.
3.2. Mechanics of
Holder's Conversion.
(a) In the event that the Holder elects to convert any amounts
outstanding under this Note into Common Stock, the Holder shall
give notice of
such election by delivering an executed and completed notice of
conversion (a
"Notice of Conversion") to the Borrower, which Notice of Conversion
shall
provide a breakdown in reasonable detail of the Principal Amount,
accrued
interest and amounts being converted. The original Note is not
required to be
surrendered to the Borrower until all sums due under the Note have
been paid. On
each Conversion Date (as hereinafter defined) and in accordance
with its Notice
of Conversion, the Holder shall make the appropriate reduction to
the Principal
Amount, accrued interest and fees as entered in its records. Each
date on which
a Notice of Conversion is delivered or telecopied to the Borrower
in accordance
with the provisions hereof shall be deemed a "Conversion Date." A
form of Notice
of Conversion to be employed by the Holder is annexed hereto as
Exhibit A.
(b) Pursuant to the terms of a Notice of Conversion, the
Borrower
will issue instructions to the transfer agent accompanied by an
opinion of
counsel, if so required by the Borrower's transfer agent and shall
cause the
transfer agent to transmit the certificates representing the
Conversion Shares
to the Holder by crediting the account of the Holder's designated
broker with
the Depository Trust Corporation ("DTC") through its Deposit
Withdrawal Agent
Commission ("DWAC") system within two (2) business days after
receipt by the
Borrower of the Notice of Conversion (the "Delivery Date"). In the
case of the
exercise of the conversion rights set forth herein the conversion
privilege
shall be deemed to have been exercised and the Conversion Shares
issuable upon
such conversion shall be deemed to have been issued upon the date
of receipt by
the Borrower of the Notice of Conversion. The Holder shall be
treated for all
purposes as the record holder of such shares of Common Stock,
unless the Holder
provides the Borrower written instructions to the contrary.
Notwithstanding the
foregoing to the contrary, the Borrower or its transfer agent shall
only be
obligated to issue and deliver the shares to the DTC on the
Holder's behalf via
DWAC (or certificates free of restrictive legends) if the
registration statement
providing for the resale of the shares of Common Stock issuable
upon the
conversion of this Note is effective and the Holder has complied
with all
applicable securities laws in connection with the sale of the
Common Stock,
including, without limitation, the prospectus delivery
requirements. In the
event that Conversion Shares cannot be delivered to the Holder via
DWAC, the
Borrower shall deliver physical certificates representing the
Conversion Shares
by the Delivery Date.
3.4. Conversion
Mechanics.
(a) The number of shares of Common Stock to be issued upon each
conversion of this Note pursuant to this Article III shall be
determined by
dividing that portion of the Principal Amount and interest and fees
to be
converted, if any, by the then applicable Conversion Price.
2
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(b) The Conversion
Price and number and kind of shares or other
securities to be issued upon conversion 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 provision
