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Exhibit
4.1
THIS NOTE AND THE SHARES OF COMMON
STOCK ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR APPLICABLE STATE SECURITIES LAWS, AND MAY
NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION OR RECEIPT BY THE MAKER OF AN OPINION OF
COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO
THE MAKER THAT THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION HEREOF MAY BE SOLD, TRANSFERRED, OR OTHERWISE
DISPOSED OF, UNDER AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND
SUCH STATE SECURITIES LAWS.
FLO
CORPORATION
Senior Convertible Promissory
Note
due April 3,
2010
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No. CN-08-__
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$ |
___________ |
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Dated: April 3, 2008
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For value received, FLO
Corporation, a Delaware corporation (the “ Maker
”), hereby promises to pay to the order of
(together with its successors, representatives, and permitted
assigns, the “ Holder ”), in accordance with the
terms hereinafter provided, the principal amount of
($
), together with interest thereon. Concurrently with the issuance
of this Note, the Maker is issuing separate convertible promissory
notes (the “ Additional Notes ”) to separate
purchasers (the “ Additional Holders ”) in the
aggregate principal amount of up to $8,500,000 (inclusive of this
Note).
All payments under or
pursuant to this Note shall be made in United States Dollars in
immediately available funds to the Holder at the address of the
Holder set forth in the Purchase Agreement (as defined below) or at
such other place as the Holder may designate from time to time in
writing to the Maker or by wire transfer of funds to the
Holder’s account, instructions for which are attached hereto
as Exhibit A . The outstanding principal balance of this
Note shall be due and payable on April 3, 2010 (the “
Maturity Date ”) or at such earlier time as provided
herein.
ARTICLE I
Section 1.1 Purchase
Agreement . This Note has been executed and delivered pursuant
to the Note and Warrant Purchase Agreement dated as of
April 3, 2008 (the “ Purchase Agreement ”),
by and among the Maker and the purchasers listed therein.
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth for such terms in the Purchase
Agreement.
Section 1.2 Interest .
Beginning on the issuance date of this Note (the “
Issuance Date ”), the outstanding principal balance of
this Note shall bear interest, in arrears, at a rate per annum
equal to twelve percent (12%), payable quarterly commencing on
July 1, 2008 and on the first business day of each following
quarter at the option of the Maker in cash or Additional Notes,
which shall also each mature on the Maturity Date (the “
Ordinary Interest ”). Interest shall be computed on
the basis of a 360-day year of twelve (12) 30-day months and
shall accrue commencing on the Issuance Date. Furthermore, upon the
occurrence of an Event of Default (as defined in Section 2.1
hereof), then to the extent permitted by law, in lieu of the
Ordinary Interest, the Maker will pay interest in cash to the
Holder, payable on demand, on the outstanding principal balance of
the Note from the date of the Event of Default until such Event of
Default is cured at the rate of the lesser of fifteen percent
(15%) and the maximum applicable legal rate per
annum.
Section 1.3 Payment on
Non-Business Days . Whenever any payment to be made shall be
due on a Saturday, Sunday or a public holiday under the laws of the
State of New York, such payment may be due on the next succeeding
business day and such next succeeding day shall be included in the
calculation of the amount of accrued interest payable on such
date.
Section 1.4 Transfer .
This Note may be transferred or sold, subject to the provisions of
Section 4.8 of this Note, or pledged, hypothecated or
otherwise granted as security by the Holder.
Section 1.5
Replacement . Upon receipt of a duly executed, notarized and
unsecured written statement from the Holder with respect to the
loss, theft or destruction of this Note (or any replacement hereof)
and a standard indemnity, or, in the case of a mutilation of this
Note, upon surrender and cancellation of such Note, the Maker shall
issue a new Note, of like tenor and amount, in lieu of such lost,
stolen, destroyed or mutilated Note.
ARTICLE II
EVENTS OF DEFAULT;
REMEDIES
Section 2.1 Events of
Default . The occurrence of any of the following events shall
be an “ Event of Default ” under this
Note:
(a) the Maker shall fail to
make any principal or interest payments on the date such payments
are due and such default is not fully cured within five
(5) business days after the occurrence thereof; or
(b) the Maker’s notice
to the Holder, including by way of public announcement, at any
time, of its inability to comply (including for any of the reasons
described in Section 3.8(a) hereof) or its intention not to
comply with proper requests for conversion of this Note into shares
of Common Stock; or
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(c) the Maker shall fail to
(i) timely deliver the shares of Common Stock upon conversion
of the Note or any interest accrued and unpaid, or (ii) make
the payment of any fees and/or liquidated damages under this Note
or the other Transaction Documents, which failure in the case of
items (i) and (ii) of this Section 2.1(c) is not
remedied within five (5) business days after the incurrence
thereof; or
(d) default shall be made in
the performance or observance of (i) any material covenant,
condition or agreement contained in this Note (other than as set
forth in clause (f) of this Section 2.1) and such default
is not fully cured within five (5) business days after the
Holder delivers written notice to the Maker of the occurrence
thereof or (ii) any material covenant, condition or agreement
contained in the Purchase Agreement or any other Transaction
Documents which is not covered by any other provisions of this
Section 2.1 and such default is not fully cured within five
(5) business days after the Holder delivers written notice to
the Maker of the occurrence thereof; or
(e) any material
representation or warranty made by the Maker herein or in the
Purchase Agreement or any other Transaction Documents shall prove
to have been false or incorrect or breached in a material respect
on the date as of which made; or
(f) the Maker shall
(i) apply for or consent to the appointment of, or the taking
of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property or assets,
(ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the United
States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic),
(iv) file a petition seeking to take advantage of any
bankruptcy, insolvency, moratorium, reorganization or other similar
law affecting the enforcement of creditors’ rights generally,
(v) acquiesce in writing to any petition filed against it in
an involuntary case under United States Bankruptcy Code (as now or
hereafter in effect) or under the comparable laws of any
jurisdiction (foreign or domestic), (vi) issue a notice of
bankruptcy or winding down of its operations or issue a press
release regarding same, or (vii) take any action under the
laws of any jurisdiction (foreign or domestic) analogous to any of
the foregoing; or
(g) a proceeding or case
shall be commenced in respect of the Maker, without its application
or consent, in any court of competent jurisdiction, seeking
(i) the liquidation, reorganization, moratorium, dissolution,
winding up, or composition or readjustment of its debts,
(ii) the appointment of a trustee, receiver, custodian,
liquidator or the like of it or of all or any substantial part of
its assets in connection with the liquidation or dissolution of the
Maker or (iii) similar relief in respect of it under any law
providing for the relief of debtors, and such proceeding or case
described in clause (i), (ii) or (iii) shall continue
undismissed, or unstayed and in effect, for a period of thirty
(30) days or any order for relief shall be entered in an
involuntary case under United States Bankruptcy Code (as now or
hereafter in effect) or under the comparable laws of any
jurisdiction (foreign or domestic) against the Maker or action
under the laws of any jurisdiction (foreign or domestic) analogous
to any of the foregoing shall be taken with respect to the Maker
and shall continue undismissed, or unstayed and in effect for a
period of thirty (30) days; or
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(h) the failure of the Maker
to instruct its transfer agent to remove any legends from shares of
Common Stock eligible to be sold under Rule 144 of the Securities
Act and issue such unlegended certificates to the Holder within ten
(10) business days of the Holder’s request so long as
the Holder has complied with Section 5.1 of the Purchase
Agreement; or
(i) the failure of the Maker
to pay any other amounts due to the Holder herein or any other
Transaction Document, and not otherwise addressed un this
Section 2.1 , within five (5) business days of the
date such payments are due.
Section 2.2 Remedies Upon
An Event of Default . If an Event of Default shall have
occurred and shall be continuing, the Holder of this Note may at
any time at its option, (a) declare the entire unpaid
principal balance of this Note, together with all interest accrued
hereon, due and payable, and thereupon, the same shall be
accelerated and so due and payable, (b) demand that the
principal amount of this Note then outstanding and all accrued and
unpaid interest thereon shall be converted into shares of Common
Stock at a Conversion Price per share calculated pursuant to
Section 3.1 hereof assuming that the date that the Event of
Default occurs is the Conversion Date (as defined in
Section 3.1 hereof), or (c) exercise or otherwise enforce
any one or more of the Holder’s rights, powers, privileges,
remedies and interests under this Note, the Purchase Agreement or
applicable law. No course of delay on the part of the Holder shall
operate as a waiver thereof or otherwise prejudice the right of the
Holder. No remedy conferred hereby shall be exclusive of any other
remedy referred to herein or now or hereafter available at law, in
equity, by statute or otherwise.
ARTICLE III
CONVERSION; ANTIDILUTION;
PREPAYMENT
Section 3.1
Conversion.
(a) Optional
Conversion . At any time on or after the Issuance Date, this
Note shall be convertible (in whole or in part), at the option of
the Holder (the “ Conversion Option ”), into
such number of fully paid and non-assessable shares of Common Stock
(the “ Conversion Rate ”) as is determined by
dividing (x) that portion of the outstanding principal balance
plus any accrued but unpaid interest under this Note as of such
date that the Holder elects to convert by (y) the Conversion
Price (as defined in Section 3.2(a) hereof) then in effect on
the date on which the Holder faxes a notice of conversion (the
“ Conversion Notice ”), duly executed, to the
Maker (facsimile number (425) 278-1299, Attn.: Chief Executive
Officer, with a copy to facsimile number 206-839-4801, Attn.: W.
Michael Hutchings, Esq.) (the “ Optional Conversion
Date ”), provided, however, that the Conversion Price
shall be subject to adjustment as described in Section 3.6
below. The Holder shall deliver this Note to the Maker at the
address designated in the Purchase Agreement at such time that this
Note is fully converted. With respect to partial conversions of
this Note, the Maker shall keep written records of the amount of
this Note converted as of each Conversion Date.
(b) Mandatory
Conversion . On the Mandatory Conversion Date (as defined
below), this Note shall automatically and without any action on the
part of the Holder, convert into such number of fully paid and
non-assessable shares of Common Stock as is determined by dividing
(x) that portion of the outstanding principal balance plus any
accrued but unpaid interest
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under this Note as of the Mandatory
Conversion Date by (y) the Conversion Price then in effect on
the Mandatory Conversion Date, provided, however, that the
Conversion Price shall be subject to adjustment as described in
Section 3.6 below. As used herein, “Mandatory Conversion
Date” shall be the first date on or after October 3,
2008 that the Closing Bid Price (as defined below) of the Common
Stock has exceeded $3.00 (as adjusted for stock splits, stock
dividends, combinations and similar transactions) for twenty
(20) consecutive trading days. The Mandatory Conversion Date
and the Voluntary Conversion Date collectively are referred to in
this Note as the “Conversion Date.” Notwithstanding the
foregoing to the contrary, the Note shall automatically convert
pursuant to this Section 3.1(b) only if (1) the
Conversion Shares are eligible to be sold under Rule 144 of the
Securities Act (2) trading in the Common Stock shall not have
been suspended by the Securities and Exchange Commission or the OTC
Bulletin Board (or other exchange or market on which the Common
Stock is trading), and (3) the Maker is in material compliance
with the terms and conditions of this Note and the other
Transaction Documents. The term “Closing Bid Price”
shall mean, on any particular date, the last closing bid price per
share of the Common Stock on such date quoted on the OTC Bulletin
Board or any registered national stock exchange on which the Common
Stock is then listed, or if there is no such price on such date,
then the last closing bid price on such exchange or quotation
system on the date nearest preceding such date.
Section 3.2 Conversion
Price.
(a) The term “
Conversion Price ” shall mean $1.00, subject to
adjustment under Section 3.6 hereof.
Section 3.3 Mechanics of
Conversion.
(a) Not later than three
(3) Trading Days after any Conversion Date, the Maker or its
designated transfer agent, as applicable, shall issue and deliver
to the Depository Trust Company (“ DTC ”)
account on the Holder’s behalf via the Deposit Withdrawal
Agent Commission System (“ DWAC ”) as specified
in the Conversion Notice, registered in the name of the Holder or
its designee, such number of shares of Common Stock to which the
Holder shall be entitled. In the alternative, not later than three
(3) Trading Days after any Conversion Date, the Maker shall
deliver to the applicable Holder by express courier a certificate
or certificates which shall be free of restrictive legends and
trading restrictions (other than those required by Section 5.1
of the Purchase Agreement) representing the number of shares of
Common Stock being acquired upon the conversion of this Note (the
“ Delivery Date ”). If in the case of any
Conversion Notice such certificate or certificates are not
delivered to or as directed by the applicable Holder by the
Delivery Date, the Holder shall be entitled by written notice to
the Maker at any time on or before its receipt of such certificate
or certificates thereafter, to rescind such conversion, in which
event the Maker shall immediately return this Note tendered for
conversion, whereupon the Maker and the Holder shall each be
restored to their respective positions immediately prior to the
delivery of such notice of revocation, except that any amounts
described in Sections 3.3(b) and (c) shall be payable through
the date notice of rescission is given to the Maker.
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(b) The Maker understands
that a delay in the delivery of the shares of Common Stock upon
conversion of this Note beyond the Delivery Date could result in
economic loss to the Holder. Subject to Section 3.3(d) hereof,
if the Maker fails to deliver to the Holder such shares via DWAC or
a certificate or certificates pursuant to this Section hereunder by
the Delivery Date, the Maker shall pay to such Holder, in cash, an
amount per Trading Day for each Trading Day until such shares are
delivered via DWAC or certificates are delivered, together with
interest on such amount at a rate of 10% per annum, accruing
until such amount and any accrued interest thereon is paid in full,
equal to the greater of (A) (i) 1% of the aggregate
principal amount of the Note requested to be converted for the
first five (5) Trading Days after the Delivery Date and
(ii) 2% of the aggregate principal amount of the Note
requested to be converted for each Trading Day thereafter and
(B) $2,000 per day (which amount shall be paid as liquidated
damages and not as a penalty). Except as set forth in
Sections 3(c) and 3(d), the remedy provided by this
Section 3.3(b) is exclusive and Holder shall have no other
right to pursue any remedies available to it at law or in equity
(including, without limitation, a decree of specific performance
and/or injunctive relief) arising out of the same occurrence or
series of related occurrences that gave rise to this remedy.
Notwithstanding anything to the contrary contained herein, the
Holder shall be entitled to withdraw a Conversion Notice, and upon
such withdrawal the Maker shall only be obligated to pay the
liquidated damages accrued in accordance with this
Section 3.3(b) through the date the Conversion Notice is
withdrawn.
(c) Subject to
Section 3.3(d) hereof, if the Maker fails to cause its
transfer agent to transmit to the Holder a certificate or
certificates representing the shares of Common Stock issuable upon
conversion of this Note on or before the Delivery Date, and if
after such date the Holder is required by its broker to purchase
(in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the shares of
Common Stock issuable upon conversion of this Note which the Holder
anticipated receiving upon such exercise (a “
Buy-In” ), then the Maker shall (1) pay in cash
to the Holder the amount, if any, by which (x) the
Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (A) the
number of shares of Common Stock issuable upon conversion of this
Note that the Maker was required to deliver to the Holder in
connection with the conversion at issue times (B) the price at
which the sell order giving rise to such purchase obligation was
executed, and (2) at the option of the Holder, either
reinstate the portion of the Note and equivalent number of shares
of Common Stock for which such conversion was not honored or
deliver to the Holder the number of shares of Common Stock that
would have been issued had the Maker timely complied with its
conversion and delivery obligations hereunder. For example, if the
Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion
of shares of Common Stock with an aggregate sale price giving rise
to such purchase obligation of $10,000, under clause (1) of
the immediately preceding sentence the Maker shall be required to
pay the Holder $1,000. The Holder shall provide the Maker written
notice indicating the amounts payable to the Holder in respect of
the Buy-In, together with applicable confirmations and other
evidence reasonably requested by the Maker. The remedy provided by
this Section 3.3(c) is exclusive and Holder shall have no
other right to pursue any remedies available to it at law or in
equity (including, without limitation, a decree of specific
performance and/or injunctive relief) arising out of the same
occurrence or series of related occurrences that gave rise to this
remedy.
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(d) Notwithstanding the
foregoing, the remedies provided by Sections 3.3(b) and
(c) shall be exclusive of each other and shall not both be
available with respect to any single occurrence or series of
related occurrences. If the remedies provided by both Sections
3.3(b) and (c) would otherwise be available with respect to an
occurrence or series of related occurrences, then Holder, in its
sole discretion, must elect which one shall apply. Notwithstanding
the foregoing, in the event that the Holder is an Insider
Purchaser, then subsections (b) and (c) of this
Section 3.3 shall not apply and shall have no force or effect.
An “Insider Purchaser” means a Holder who is a director
or executive officer of the Maker.
Section 3.4 Ownership Cap
and Certain Conversion Restrictions.
(a) Notwithstanding anything
to the contrary set forth in Section 3 of this Note, but
subject to Section 3.4(c) hereof, at no time may the Holder
convert all or a portion of this Note if the number of shares of
Common Stock to be issued pursuant to such conversion would exceed,
when aggregated with all other shares of Common Stock beneficially
owned (as determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and the rules thereunder) by the Holder at such time,
the number of shares of Common Stock which would result in the
Holder beneficially owning (as determined in accordance with
Section 13(d) of the Exchange Act and the rules thereunder)
more than 4.9% of all of the Common Stock outstanding at such time;
provided , however , that upon the Holder providing
the Maker with sixty-one (61) days notice (pursuant to
Section 4.1 hereof) (the “ Waiver Notice ”)
that the Holder would like to waive this Section 3.4(a) with
regard to any or all shares of Common Stock issuable upon
conversion of this Note, this Section 3.4(a) will be of no
force or effect with regard to all or a portion of the Note
referenced in the Waiver Notice.
(b) Notwithstanding anything
to the contrary set forth in Section 3 of this Note, but
subject to Section 3.4(c) hereof, at no time may the Holder
convert all or a portion of this Note if the number of shares of
Common Stock to be issued pursuant to such conversion, when
aggregated with all other shares of Common Stock beneficially owned
(as determined in accordance with Section 13(d) of the
Exchange Act and the rules thereunder) by the Holder at such time,
would result in the Holder beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the
rules thereunder) in excess of 9.9% of the then issued and
outstanding shares of Common Stock outstanding at such
time.
(c) In the event the Holder
is unable to fully convert this Note in connection with a
conversion election following the delivery of a Maker’s
Prepayment Notice pursuant to Section 3.7(k) hereof due to the
restrictions set forth in this Section 3.4, such holder may
elect to receive, in lieu of shares of Common Stock, Series C
Convertible Preferred Stock of the Company convertible into the
number of shares of Common Stock that would have been delivered to
such holder but for the limitations set forth in this
Section 3.4(a). The foregoing sentence shall not preclude the
Holder from providing a Waiver Notice. In the event the Holder is
unable to fully convert this Note in connection with a mandatory
conversion pursuant to Section 3.1(b) hereof, such holder
shall receive, in lieu of shares of Common Stock, Series C
Convertible Preferred Stock of the Company convertible into the
number of shares of Common Stock that would have been delivered to
such holder but for the limitations set forth in this
Section 3.4(a). “Series C Convertible Preferred
Stock” means a series of non-voting preferred
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stock of the Maker with terms such that
a holder thereof shall not be deemed a beneficial owner (as
determined in accordance with Section 13(d) of the Exchange
Act and the rules thereunder) of the Common Stock issuable upon
conversion thereof, and otherwise with terms similar to the Common
Stock. Any determinations as to whether the Holder is unable to
fully convert this Note as a result of the provisions of this
Section 3.4 shall be in the sole discretion of the Holder;
provided , however , that in the absence of a written
notice of such a determination delivered by the Holder to the Maker
prior to any event requiring such a determination, the Maker may
make such determination its sole discretion and shall have no
liability to Holder for any errors in such
determination.
Section 3.5 Intentionally
Omitted.
Section 3.6 Adjustment of
Conversion Price.
(a) The Conversion Price
shall be subject to adjustment from time to time as
follows:
(i) Adjustments for Stock
Splits and Combinations . If the Maker shall at any time or
from time to time after the Issuance Date, effect a stock split of
the outstanding Common Stock, the applicable Conversion Price in
effect immediately prior to the stock split shall be
proportionately decreased. If the Maker shall at any time or from
time to time after the Issuance Date, combine the outstanding
shares of Common Stock, the applicable Conversion Price in effect
immediately prior to the combination shall be proportionately
increased. Any adjustments under this Section 3.6(a)(i) shall
be effective at the close of business on the date the stock split
or combination occurs.
(ii) Adjustments for
Certain Dividends and Distributions . If the Maker shall at any
time or from time to time after the Issuance Date, make or issue or
set a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in
shares of Common Stock, then, and in each event, the applicable
Conversion Price in effect immediately prior to such event shall be
decreased as of the time of such issuance or, in the event such
record date shall have been fixed, as of the close of business on
such record date, by multiplying, the applicable Conversion Price
then in effect by a fraction:
(1) the numerator of which
shall be 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
(2) the denominator of which
shall be 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 shall have been fixed and such dividend or
other distribution is not fully paid or if such dividend or other
distribution is not fully made on the date fixed therefor, the
Conversion Price shall be adjusted pursuant to this paragraph as of
the time of actual payment of such dividends or
distributions.
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(iii) Adjustment for Other
Dividends and Distributions . If the Maker shall at any time or
from time to time after the Issuance Date, make or issue or set a
record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in
other than shares of Common Stock, then, and in each event, an
appropriate revision to the applicable Conversion Price shall be
made and provision shall be made (by adjustments of the Conversion
Price or otherwise) so that the holders of this Note shall receive
upon conversions thereof, in addition to the number of shares of
Common Stock receivable thereon, the number of securities of the
Maker which they would have received had this Note been converted
into Common Stock on the date of such event and had thereafter,
during the period from the date of such event to and including the
Conversion Date, retained such securities (together with any
distributions payable thereon during such period), giving
application to all adjustments called for during such period under
this Section 3.6(a)(iii) with respect to the rights of the
holders of this Note and the Additional Notes; provided ,
however , that if such record date shall have been 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 adjusted pursuant to this paragraph as of the time of actual
payment of such dividends or distributions.
(iv) Adjustments for
Reclassification, Exchange or Substitution . If the Common
Stock issuable upon conversion of this Note at any time or from
time to time after the Issuance Date shall be changed to the same
or different number of shares of any class or classes of stock,
whether by reclassification, exchange, substitution or otherwise
(other than by way of a stock split or combination of shares or
stock dividends provided for in Sections 3.6(a)(i), (ii) and
(iii), or a reorganization, merger, consolidation, or sale of
assets provided for in Section 3.6(a)(v)), then, and in each
event, an appropriate revision to the Conversion Price shall be
made and provisions shall be made (by adjustments of the Conversion
Price or otherwise) so that the Holder shall have the right
thereafter to convert this Note into the kind and amount of shares
of stock and other securities receivable upon reclassification,
exchange, substitution or other change, by holders of the number of
shares of Common Stock into which such Note might have been
converted immediately prior to such reclassification, exchange,
substitution or other change, all subject to further adjustment as
provided herein.
(v) Adjustments for
Reorganization, Merger, Consolidation or Sales of Assets . If
at any time or from time to time after the Issuance Date there
shall be a capital reorganization of the Maker (other than by way
of a stock split or combination of shares or stock dividends or
distributions provided for in Section 3.6(a)(i), (ii) and
(iii), or a reclassification, exchange or substitution of shares
provided for in Section 3.6(a)(iv)), or a merger or
consolidation of the Maker with or into another corporation where
the holders of outstanding voting securities prior to such merger
or consolidation do not own over fifty percent (50%) of the
outstanding voting securities of the merged or consolidated entity
immediately after such merger or consolidation, or the sale of all
or substantially all of the Maker’s properties or assets to
any other person (an “ Organic Change ”), then
as a part of such Organic Change, (A) if the surviving entity
in any such Organic Change is a public company whose common stock
is registered pursuant to the Exchange Act of 1934 and its common
stock is listed or quoted on a national securities exchange, a
national automated quotation system or the OTC Bulletin Board, an
appropriate revision to the Conversion Price shall be made and
provision shall be made (by
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adjustments of the Conversion
Price or otherwise) so that the Holder shall have the right
thereafter to convert such Note into the kind and amount of shares
of stock and other securities or property of the Maker or any
successor corporation resulting from Organic Change, and
(B) if the surviving entity in any such Organic Change is not
a public company whose common stock is registered pursuant to the
Exchange Act or its common stock is not listed or quoted on a
national securities exchange, a national automated quotation system
or the OTC Bulletin Board, the Holder shall have the right to
demand prepayment pursuant to Section 3.7(b) hereof. In any
such case, appropriate adjustment shall be made in the application
of the provisions o
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