EXHIBIT 10.19
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CONVERTIBLE PROMISSORY NOTE
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New York, New York
US$_______.00
February 22, 2005
FOR VALUE RECEIVED,
ASTRATA GROUP
INCORPORATED, a Nevada
corporation
(the "Maker"), hereby promises to pay to the
order of ________, a ________, or
successors or assigns (the
"Holder"), at such
place as the Holder may from time
to time designate in writing
to the Maker, in
lawful money of the United States
of America, the principal sum of _________________
and No/100 Dollars
($_____.00), together with
interest as herein provided, subject to the terms set
forth in this Convertible
Promissory Note (the "Note").
1. TERM. The principal balance of this Note, together with all
accrued
interest, shall be payable on
the earlier of (i) the "Maturity Date" (as defined
in Section 2, below), (ii) the date on which the Maker
shall have
privately
issued shares of Common Stock (as defined in Section 3,
below, and whether
or
not the Common Stock is issued in conjunction with other securities) for an
aggregate of not less than
Five Million and No/100 Dollars ($5,000,000.00) in a
single or series of offerings
(the "Equity Offering")1, or (iii) the occurrence
of any of the "Events of
Default" (as
defined in Section 6,
below). Upon the
payment in full of the
outstanding principal
and all accrued interest thereon,
this Note shall be
surrendered to the Maker for cancellation.
2. MATURITY DATE. The Maturity Date is June 15, 2005.
3. INTEREST;
PREPAYMENT.
The unpaid
principal balance of this Note
shall bear interest at the rate of the lesser of (i) nine percent (9%) per
annum, compounded annually, or (ii) the maximum rate permitted
by Nevada state
law. Interest shall commence to accrue as of the date hereof and shall be
calculated on the basis of a 365-day year. In no event shall the Holder be
entitled to interest
exceeding the maximum rate permitted by the laws of
the
State of Nevada. If any excess of interest is provided for or shall be
adjudicated to be so provided for in this Note, then in such event: (i) the
provisions of this paragraph
shall govern and control; (ii) the Maker shall
not
be obligated to pay the amount of such
interest to the extent that it is in
excess of the maximum amount
permitted by the laws
of the State of Nevada; and
(iii) any such excess which may have been collected or attributed shall be
subtracted from the then unpaid principal amount hereof, or refunded to the
Maker.
In connection
with this Note,
the Maker has
issued ____________
(___) shares of the Maker's common stock, $0.0001 par value per share
(the
"Common Stock"), to the Holder.2 As a result of
such issuance, the
Maker, if
required by generally
accepted accounting principles in the United States of
America, shall allocate and report on its
financial statements
certain amounts
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1 For clarity,
the Equity
Offering may, but need
not, consist of more
than
one tranche or
closing; however, for purposes of Section 1, the date
of
closing of the
Equity Offering
shall only be deemed
to have occurred upon
the closing of
that tranche of the
Equity Offering
that resulted in the
Maker having
privately issued such securities for aggregate
proceeds of
Five Million and
No/100 Dollars
($5,000,000).
Further, the integration
(under
Federal securities laws) of more than one
offering by the
Maker,
each of which
offering is for less
than Five Million
and No/100
Dollars
($5,000,000.00),
pursuant to which it shall have
privately issued such
securities
for an aggregate of not less than Five Million Dollars
($5,000,000.00),
shall not constitute an Equity Offering.
2 The Holder shall be
accorded registration
rights in respect of such shares
of Common Stock
that are equivalent to the registration rights accorded in
connection with
the issuance of the Conversion Shares.
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as additional interest hereunder in excess of the amounts
referenced
as
interest in the
immediately preceding
paragraph.
Further, the Maker, if
required by
generally accepted
accounting principles
in the United States
of America,
shall report on its financial statements the fee payable by
the
Maker to the
Holder in connection with the Draw-down (as defined in
Section
8, below) as additional interest hereunder in excess of the amounts
referenced as
interest in the immediately preceding paragraph. The amounts
of such
additional share- and Draw-down fee-induced interest, if any,
shall
be determined by
the Maker's independent accountants and shall be
reported
to the Holder as
soon as practicable.
Subject to Maker's
providing not less than 10 days' written notice
to the Holder to provide the
Holder with the
opportunity to exercise any or all
of his conversion rights,
Maker may prepay this Note at any time, in whole or in
part, without premium or penalty. All such payments shall be applied
first to
accrued but unpaid interest
and the remainder to principal.
4. CONVERSION. All or
any portion of the principal amount of this Note
then outstanding,
together with any
accrued and unpaid interest hereunder, may
be convertible at any time and from time to time into units of the Maker's
securities at a conversion
price (the "Conversion
Price") of $5.25 per
unit (a
"Conversion Unit"3), each Conversion Unit consisting of one share of
Common
Stock (a "Conversion Share"),
with a Conversion
Unit-allocated price
of $5.00,
and one warrant (the
"Conversion Warrant") exercisable at $5.00 for the
purchase
of one additional share of
Common Stock (a "Conversion Warrant Share"), with a
Conversion Unit-allocated price of $0.25, with the number of Conversion
Units
subject to adjustment from time to time pursuant to Section 11, at the sole
discretion of the Holder,
at any time through
and including the Maturity Date.
The form of the Conversion
Warrant is attached hereto as Exhibit 4CW. The Holder
may effect conversions under
this Section 4, by delivering written notice in the
form attached hereto as
Exhibit A (the "Conversion Notice") to the Maker. If the
Holder is converting
less than all of the
principal amount,
together with
any
accrued and unpaid interest
hereunder, represented by this Note, the Maker shall
honor such conversion to the extent
permissible
hereunder and shall
promptly
deliver to the Holder a
schedule in the form of Schedule 1 attached hereto (the
"Conversion Schedule") indicating the principal amount which has not been
converted. Further, upon any conversion, the Maker shall grant and deliver
to
the Holder an additional
warrant (the "Additional Warrant") exercisable at $5.00
for the purchase of one
additional share of Common Stock (an "Additional Warrant
Share") at the rate of one
Additional Warrant for
each ten dollars
($10.00) of
principal, but not any accrued and unpaid
interest, so
converted, the form
of
such warrant being attached
hereto as Exhibit 4AW.
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3
If the conversion
hereunder occurs into
(i) Conversion Units that are
issued in connection
with the Equity
Offering (which is the Maker's
currently proposed
private placement of units of its securities), the
registration rights to
be accorded to the
holders of the
Conversion
Shares and the Conversion Warrant Shares shall be equivalent to,
and on
a PARI PASSU basis with, the registration rights to be accorded to
all
subscribers in
such Equity Offering, the current form of which
registration rights
(subject to change as of the closing of the Equity
Offering, if there be
one) has been attached hereto as Exhibit 1; (ii)
Conversion Units that are issued prior to the closing (if there be
one)
of the Equity Offering, the registration rights to be accorded to
the
holders of the
Conversion Shares and
the Conversion
Warrant Shares
shall be equivalent to, and on a PARI PASSU basis with, the
registration rights to
be accorded to all
subscribers in such
Equity
Offering; and (iii)
Conversion Units that are not issued in connection
with Equity Offering
(in the event that the Equity Offering does not
close), the
registration
rights to be accorded
to the holders of the
Conversion Shares and the Conversion Warrant Shares shall be
equivalent
to the registration
rights that would have been accorded to all
subscribers in such Equity Offering, had there been a closing
thereof.
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5. MECHANICS OF CONVERSION.
5.1 NUMBER
OF ISSUABLE UNITS. The number of Conversion Units
issuable upon conversion of
the Note and any interest thereunder shall equal the
outstanding principal amount of this Note and any interest thereon to be
converted, divided by the Conversion
Price on the
"Conversion Date,"
when the
Conversion Notice is delivered to the Maker
in accordance with
Section 4, plus
(if indicated in the
applicable Conversion Notice) the amount of any accrued
but
unpaid interest on this Note through the Conversion Date, divided by the
Conversion Price on the
Conversion Date.
5.2 EFFECTIVE
DATE OF CONVERSION; CERTIFICATE. Each and every
conversion hereunder shall be effective at
the close of business on the date on
which the Conversion Notice is deemed to have been
delivered by the
Holder to
the Maker in the manner set
forth in Section 13.3. The Maker shall, by the third
business day following
each Conversion Date, issue or cause to be issued
and
cause to be delivered to or upon the written order of the Holder and in
such
name or names as the Holder
may designate a certificate for the Conversion
Shares, the Conversion
Warrants, and the
Additional Warrants issuable upon such
conversion. The Holder, or any Person so designated by the Holder to
receive
Conversion Units and
Additional Warrants,
shall be deemed to have become holder
of record thereof as of such
Conversion Date.
5.3 EFFECT OF CONVERSION NOTICE. The Holder shall not be required
to
deliver this original Note in
order to effect a conversion hereunder. Execution
and delivery of the
Conversion
Notice by the Holder
shall have the same effect
as cancellation of the Note and issuance of a New Note representing the
remaining outstanding
principal amount.
5.4 MAKER'S
OBLIGATIONS.
The Maker's obligations to issue and
deliver Conversion Shares,
Conversion
Warrants, and Additional Warrants upon
conversion of this Note in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the
Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action
to enforce the same,
or any setoff, counterclaim, recoupment, limitation, or termination, or any
breach or alleged
breach by the Holder
or any other Person of any obligation to
the Maker or any violation or alleged violation of law by the Holder or
any
other Person, and irrespective of any other
circumstance which
might otherwise
limit such obligation of the
Maker to the Holder in connection with the issuance
of such Conversion Shares,
Conversion Warrants, and Additional Warrants.
6. EVENTS OF
DEFAULT. Upon the occurrence of any of the following
"Events of Default," all principal and accrued and unpaid interest shall
immediately become due and
payable:
6.1 BANKRUPTCY.
The institution of bankruptcy, insolvency,
reorganization or liquidation
proceedings or other
proceedings for relief under
any bankruptcy law or any law for the
relief of debtors
shall be instituted
voluntarily by the Maker; or involuntarily against the Maker and such
proceedings shall not have been vacated by
appropriate court order within sixty
(60) days of such
institution.
6.2 DISSOLUTION.
Any order,
judgment, or decree shall have been
entered against the Maker decreeing the
dissolution or liquidation of the Maker
and such order shall
remain undischarged or unstayed for a period of ten
(10)
days.
6.3 INSOLVENCY,
RECEIVER OR TRUSTEE.
The making by the Maker of an
assignment for the benefit of
creditors; or the
making by the Maker of an offer
of settlement,
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composition or extension to the claims of all or substantially all of the
Maker's creditors or the application for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or
business; or the appointment otherwise of such a receiver or trustee or a
committee of the Maker's
creditors.
6.4 CHANGE OF CONTROL;
HOSTILE TAKEOVER;
FUNDAMENTAL CHANGE IN THE
MAKER. Any Change of Control4
of the Maker, Hostile
Takeover5 of the
Maker, or
Fundamental Change in the
Maker6.
6.5 SUBSTANTIVE
CHANGES IN CAPITALIZATION. The filing by the Maker
of (i) a Certificate
of Designation of Rights,
Privileges,
Preferences,
and
Restrictions of any Series of its Preferred Stock with the Office of the
Secretary of State of the
State of Nevada, (ii)
an Amendment to the Articles of
Incorporation that sets forth the attributes of any Series of its Preferred
Stock, (iii) an Amendment to the Articles
of Incorporation
that sets forth
an
increase in its authorized Common Stock in excess of that number of
shares of
its Common Stock authorized as of the date of this
Note (except in
furtherance
of the Maker's covenants under Section 10), or (iv) any
other Amendment to the
Articles of Incorporation
that materially adversely affects the Holder.
6.6 BREACH OF
COVENANTS. The breach
of any of the covenants of the
Maker set forth in this
Note.
6.7 NONPAYMENT OF PRINCIPAL AND INTEREST. If any of the principal
or
accrued and unpaid interest
shall not be paid when due.
7. CHARGES,
TAXES,
AND EXPENSES. Issuance of certificates for
Conversion Shares,
Conversion Warrants,
and Additional Warrants upon conversion
of (or otherwise in respect of) this Note
shall be made without
charge to
the
Holder for any issue or
transfer tax,
withholding tax,
transfer agent fee or
other incidental tax or
expense in respect of the issuance of such certificate,
all of which taxes and
expenses shall be paid by the Maker; provided, HOWEVER,
that the Maker shall not be required to pay any tax that may be
payable in
respect of any transfer
involved in
the
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4 A "Change in Control" shall mean (i) an acquisition of any voting
securities of
the Maker (the "Voting
Securities") by any
"person" (as the
term "person" is
used for purposes of Section 13(d) or Section 14(d) of
the
Securities
Exchange Act of 1934, as amended (the "1934 Act")), immediately
after which such
person has "beneficial
ownership" (within the
meaning of
Rule 13d-3
promulgated under the 1934 Act) ("Beneficial Ownership") of
more
than 50% of the
combined voting power of the Maker's then outstanding
Voting
Securities
without the approval
of the Maker's Board of Directors;
(ii) a
merger or consolidation that results in more than 50% of the
combined
voting power of the
Maker's then
outstanding Voting
Securities
changing
beneficial ownership (whether or not approved by the Maker's
Board
of Directors);
(iii) the sale of all
or substantially
all of the
Maker's
assets;
(iv) approval by the Maker's
stockholders
of a plan of
complete
liquidation of
the Maker; or (v) the individuals constituting the Maker's
Board of
Directors as of the date of this
Note (the "Incumbent Board")
cease for any
reason to constitute at least 50% of the members of the
Board
of Directors;
PROVIDED, HOWEVER, that, if the election, or
nomination for
election by the
Maker's stockholders, of any new director was approved by
a
vote of the Incumbent
Board, then such new director shall be
considered a
member of the
Incumbent Board.
5 A "Hostile
Takeover" means a transaction or series of
transactions
that
results in any
person acquiring
Beneficial
Ownership of more than
50% of
the combined
voting power of the Maker's then outstanding Voting
Securities
without the
prior approval of the Maker's Board of Directors.
6 "A Fundamental Change" shall mean, to the extent not otherwise
included
within the definition of Change in Control, the occurrence of any
transaction
or event (including, without limitation, any merger,
consolidation,
combination,
recapitalization,
sale of assets,
tender or
exchange
offer,
reclassification, compulsory share exchange, or
liquidation) in
which all or substantially all outstanding shares of
Common
Stock are
converted into or exchanged or acquired for
or constitute
the
right to receive
stock, other securities, cash, property, or assets.
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registration of any
certificates for
Conversion Shares,
Conversion
Warrants,
Conversion Warrant Shares,
Additional
Warrants, Additional Warrant Shares,
or
Note in a name other than
that of the Holder.
8. DRAW-DOWN FEE. The funds made available to the Maker under this
Note
by the Holder may be drawn down (the
"Draw-down")
in only one
tranche of
not
less than ______________ and No/100 Dollars
($_______.00).
The fee payable
by
the Maker to the Holder in
connection with the
Draw-down shall be equivalent to
two and one-half percent (2.5%) of the initial principal sum of this Note or
____________ and No/100
Dollars ($____.00),
which fee shall be
deducted by the
Holder from the funds
tendered to the Maker for a net Draw-down of ____________
and No/100 Dollars
($_______.00).
9. THE HOLDER'S
INDEPENDENT
INVESTIGATION OF THE
MAKER. By providing
the Draw-down to the Maker hereunder and accepting this Note in exchange
therefor and the shares of Common Stock referenced in Section 3, the
Holder
shall be deemed to have
completed such
independent
investigation of the Maker,
its business and affairs, and
financial
capabilities, as the
Holder shall have
reasonably
required.
10. RESERVATION OF
COMMON STOCK. The
Maker covenants that
it will at
all times reserve and keep
available out of the
aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Conversion Shares, Conversion Warrant Shares, and
Additional Warrant Shares as
required hereunder,
the number of shares of Common
Stock that are then issuable and deliverable upon the conversion of (and
otherwise in respect of) this entire
Note and the
exercise of the
Conversion
Warrants and the Additional Warrants (in each case, taking into account the
adjustments of Section 11),
free from preemptive
rights or any other contingent
purchase rights of persons other than the
Holder. The Maker
covenants that all
Conversion Shares, Conversion Warrant Shares, and
Additional Warrant Shares so
issuable and deliverable shall, upon issuance in accordance with the terms
hereof, be duly and validly
authorized, issued and fully paid and nonassessable.
11. CERTAIN ADJUSTMENTS. The Conversion Price is subject to
adjustment
from time to time as set
forth in this Section 11.
11.1 STOCK DIVIDENDS
AND SPLITS.
If the Maker,
at any time
while
this Note is outstanding: (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class
of capital stock that is payable in
shares of Common Stock, (ii)
subdivides outstanding
shares of Common Stock into
a larger number of shares, or
(iii) combines
outstanding shares of Common Stock
into a smaller number of shares, then in each such case the
Conversion
Price
shall be multiplied by a
fraction of which the numerator shall be the number of
shares of Common Stock
outstanding
immediately
before such event and
of which
the denominator shall be the number of shares of Common Stock outstanding
immediately after such event.
Any adjustment made pursuant to clause (i) of this
subsection shall become effective immediately after the record date for
the
determination of shareholders
entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii)
of this subsection
shall
become effective immediately after the effective date of such
subdivision
or
combination.
11.2 REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case at any
time
or from time to time, the Maker shall (a) effect a reorganization, (b)
consolidate with or merge with or into any
other person,
(c) reclassify its
shares of capital
stock in such a manner
as would effect its Common Stock, or
(d) transfer all or
substantially
all of its properties
or assets to any other
person under any plan or
arrangement contemplating the dissolution of the Maker,
then, in each such
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case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be
made by the Maker whereby the Holder of the Note, on
the conversion hereof as provided in Section 4, at any time after the
consummation of such
reorganization,
consolidation, merger, or reclassification
or the effective date of such
dissolution, as the case may be, shall receive, in
lieu of the Conversion
Shares and Warrants
issuable on such conversion prior to
such consummation or such effective date, the stock and other
securities
and
property (including cash) to which such Holder would
have been entitled
upon
such consummation or in
connection with such dissolution, as the case may be, if
such Holder had so converted
this Note, immediately
prior thereto, all
subject
to further adjustment
thereafter as otherwise provided in this Section 11.
11.3 CALCULATIONS.
All calculations under
this Section 11 shall be
made to the nearest cent or
the nearest 1/100th of a share, as applicable. The
number of shares of Common
Stock outstanding at any given time shall not include
shares owned or held by or
for the account of the Maker, and the disposition of
any such shares shall be
considered an issue or sale of Common Stock.
11.4 NOTICE OF
ADJUSTMENTS. Upon the
occurrence of each adjustment
pu
