Exhibit 4.2
THIS NOTE AND THE SECURITIES
ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY U.S. STATE
SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY BE OFFERED OR SOLD,
DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS AND
IN ACCORDANCE WITH THE PROVISIONS OF REGULATION UNDER THE
SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.
FNDS3000 CORP.
AND
ATLAS MERCHANT SERVICE,
LLC
SECURED CONVERTIBLE PROMISSORY
NOTE
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$320,000
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October 29, 2008
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Atlanta, Georgia
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FOR VALUE RECEIVED, FNDS3000
CORP. , a Delaware corporation (the “ Parent
”), and ATLAS MERCHANT SERVICES, LLC , a Nevada
limited liability company (the “ Subsidiary ”;
each of the Parent and the Subsidiary are sometimes hereinafter
referred to individually as an “ Issuer ” and
collectively as the “ Issuers ”), each with its
principal executive office located at 818 AIA North, Suite 201
Ponta Vedra Beach, Florida 32082 (the “ Principal
Office ”), promises to pay to SHERINGTON HOLDINGS,
LLC (“ Purchaser ”), or its registered
assigns, in lawful money of the United States of America the
principal sum of Three Hundred Twenty Thousand Dollars
($320,000) , or such lesser amount as shall equal the
outstanding principal amount hereof, together with interest from
the date of this Note on the unpaid principal balance at a rate
equal to 10% per annum, simple interest, computed on the basis
of a 360 day year consisting of twelve 30-day months (the “
Interest ”). All unpaid principal, together with any
then unpaid and accrued Interest and other amounts payable
hereunder, shall be due and payable on the earlier of: (i) the
close of business on December 13, 2008, or (ii) when,
upon or after the occurrence of an Event of Default (as defined
below), such amounts become due and payable to Purchaser in
accordance with the terms hereof (hereinafter, the “
Maturity Date ”). This Note is the “Note”
issued pursuant to the Note Purchase Agreement of even date
herewith (as amended, modified or supplemented, the “ Note
Purchase Agreement ”) among the Issuers and the
Purchaser.
The following is a statement of the rights of
Purchaser and the conditions to which this Note is subject, and to
which Purchaser, by the acceptance of this Note, agrees:
1. Definitions
. As used in this Note,
the following capitalized terms have the following
meanings:
(a) “Business
Day” means any day other than a Saturday, a Sunday or a
day on which banking institutions in Atlanta, Georgia are
authorized or obligated to close.
(b) “Common
Stock” means the Parent’s Common Stock, par value
$0.001 per share.
(c) “ Event of Default
” has the meaning given in Section 4
hereof.
(d) “ Interest ”
has the meaning given in the introductory paragraph
hereof.
(e) “ Material Adverse
Effect ” means a material adverse effect on (i) the
business, assets, operations, prospects or financial or other
condition of either Issuer; (ii) the ability of either Issuer
to pay or perform the Obligations in accordance with the terms of
this Note and the other Transaction Documents and to avoid an Event
of Default, or an event which, with the giving of notice or the
passage of time or both, would constitute an Event of Default,
under any Transaction Document; or (iii) the rights and
remedies of Purchaser under this Note, the other Transaction
Documents or any related document, instrument or
agreement.
(f) “ Maturity Date
” has the meaning given in the introductory paragraph
hereof.
(g) “ Note Purchase
Agreement ” has the meaning given in the introductory
paragraph hereof.
(h) “ Obligations
” means and includes all loans, advances, debts, liabilities
and obligations, howsoever arising, owed by the Issuers, or either
of them, to Purchaser of every kind and description (whether or not
evidenced by any note or instrument and whether or not for the
payment of money), now existing or hereafter arising under or
pursuant to the terms of this Note and the Note Purchase Agreement,
including, all interest, fees, charges, expenses, attorneys’
fees and costs and accountants’ fees and costs chargeable to
and payable by the Issuers hereunder and thereunder, in each case,
whether direct or indirect, absolute or contingent, due or to
become due, and whether or not arising after the commencement of a
proceeding under Title 11 of the United States Code (11 U. S.
C. Section 101 et seq .), as amended from time to time
(including post-petition interest) and whether or not allowed or
allowable as a claim in any such proceeding.
(i) “ Parent ”
has the meaning given in the introductory paragraph hereof and
includes the corporation initially executing this Note and any
Person which shall succeed to or assume the obligations of the
Parent under this Note.
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(j) “ Person ”
means and includes an individual, a partnership, a corporation
(including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture
or other entity or a governmental authority.
(k) “ Pledge Agreement
” means that certain Pledge Agreement, dated as of the date
hereof, executed by the Parent in favor of the Purchaser, as the
same may be amended, restated, supplemented or otherwise modified
from time to time.
(l) “ Prospectus
” shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the
Securities or amendment covered by such Registration Statement and
by all other amendments and supplements to the prospectus,
including post-effective amendments and all material incorporated
by reference in such prospectus.
(m) “ Purchaser ”
means Sherington Holdings, LLC, a Georgia limited liability company
or any Person who shall at the time be the registered holder of
this Note.
(n) “ Registration
Statement ” shall mean any registration statement of
Issuer filed under the 1933 Act that covers the resale of any of
the Securities pursuant to the provisions of this Agreement, any
amendments and supplements to such Registration Statement,
including any post-effective amendments, all exhibits thereto and
all material incorporated by reference in such Registration
Statement.
(o) “ Securities Act
” means the Securities Act of 1933, as amended.
(p) “ Security
Agreement ” means that certain Security Agreement, dated
as of the date hereof, executed by the Subsidiary in favor of the
Purchaser, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
(q) “ Subsidiary
” has the meaning given in the introductory paragraph hereof
and includes the corporation initially executing this Note and any
Person which shall succeed to or assume the obligations of the
Parent under this Note.
(r) “ Transaction
Documents ” means this Note, the Note Purchase Agreement,
the Security Agreement, the Pledge Agreement, and each related
agreement, document and instrument executed in connection herewith
or therewith from time to time.
2. Interest .
Accrued Interest on this Note shall
be payable on the Maturity Date.
As stated above, the Interest
payable hereunder shall be calculated on the basis of a 360-day
year and actual days elapsed, and the foregoing statement of the
stated interest rate hereunder has been made without regard to the
effect of the use of such 360-day year. If interest were calculated
hereunder on the basis of a 365 or 366-day year and actual days
elapsed, the equivalent rate of interest in effect on any date may
be obtained by multiplying the stated interest rate set forth above
by a fraction, the numerator of which is 365 or 366, as the case
may be, and the
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denominator of which is 360. Computing interest
on a 360 day year and actual number of days elapsed could produce
an annualized effective interest rate that exceeds that of the
stated rate. The purpose of this paragraph is to express the rate
of interest in simple interest terms per annum in accordance with
Section 7-4-2(a)(1)(A) of the Official Code of Georgia
Annotated.
3. Collateral .
The Obligations and all other
amounts owing hereunder are secured by (i) a grant of a
security interest in and to all of the assets of the Subsidiary
pursuant to the terms of the Security Agreement, and (ii) a
pledge of all of the issued and outstanding membership interests of
the Subsidiary pursuant to the terms of the Pledge
Agreement.
4. Events of Default
. The occurrence of any
of the following shall constitute an “ Event of
Default ” under this Note and the other Transaction
Documents:
(a) Failure to Pay . The
Issuers shall fail to pay (i) when due any principal payment
on the due date hereunder or (ii) any interest or other
payment required under the terms of this Note on the date due and
such payment under this subclause (ii) shall not have been
made within five days of the due date; or
(b) Representations and
Warranties . Any representation or warranty made in this Note
or in connection with this Note, any of the other Transaction
Documents, or the Obligations, shall prove to have been false or
misleading when made (or, if applicable, when reaffirmed) in any
material respect; or
(c) Covenants . Either Issuer
fails to timely and properly observe, keep or perform, any term,
covenant, agreement or condition in this Note or in any of the
other Transaction Documents; or
(d) Cross Default . Either
Issuer is in default under any indebtedness or other obligations
(other than those evidenced by this Note); or
(e) Validity of
Transaction Documents . Either Issuer shall challenge the
validity and binding effect of any provision of any of the
Transaction Documents or shall state its intention to make such a
challenge of any of the Transaction Documents or any of the
Transaction Documents shall for any reason (except to the extent
permitted by its express terms) cease to be effective or to create
a valid and perfected security interest in any of the collateral
purported to be covered thereby; or
(f) Inability to Pay Debts .
Either Issuer admits in writing its inability generally to pay its
debts as they mature or shall make any assignment for the benefit
of any of its creditors; or
(g) Judgments . The entry of
a final judgment for the payment of money involving more than
$25,000 against either Issuer, and the failure by such Issuer to
discharge the same, or cause it to be discharged, within thirty
(30) days from the date of the order, decree or process under
which or pursuant to which such judgment was entered; or
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(h) Suspension of Business.
Either Issuer suspends or terminates its business operations or
liquidates, dissolves or terminates its existence; or
(i) Voluntary Bankruptcy or
Insolvency Proceedings . Either Issuer shall (i) apply for
or consent to the appointment of a receiver, trustee, liquidator or
custodian of itself or of all or a substantial part of its
property, (ii) be unable, or admit in writing its inability,
to pay its debts generally as they mature, (iii) make a
general assignment for the benefit of its or any of its creditors,
(iv) be dissolved or liquidated, (v) become insolvent (as
such term may be defined or interpreted under any applicable
statute), (vi) commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or consent to any such
relief or to the appointment of or taking possession of its
property by any official in an involuntary case or other proceeding
commenced against it, or (vii) take any action for the purpose
of effecting any of the foregoing; or
(j) Involuntary Bankruptcy or
Insolvency Proceedings. Proceedings for the appointment of a
receiver, trustee, liquidator or custodian of either Issuer or of
all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation,
reorganization or other relief with respect to either Issuer or the
debts thereof under any bankruptcy, insolvency or other similar law
now or hereafter in effect shall be commenced and an order for
relief entered or such proceeding shall not be dismissed or
discharged within 30 days of commencement; or
(k) Material Adverse Effect.
The occurrence of a Material Adverse Effect.
5. Rights of Purchaser upon
Defaul t. Upon the
occurrence or existence of any Event of Default (other than
an
