Exhibit 10.2
FORM OF PROMISSORY NOTE
THIS CONVERTIBLE PROMISSORY NOTE HAS BEEN ACQUIRED
FOR INVESTMENT PURPOSES ONLY
AND NOT FOR DISTRIBUTION AND MAY BE
TRANSFERRED OR OTHERWISE DISPOSED OF ONLY IN
COMPLIANCE WITH THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). THIS LEGEND
SHALL BE ENDORSED UPON ANY CONVERTIBLE PROMISSORY NOTE ISSUED IN EXCHANGE FOR
THIS CONVERTIBLE PROMISSORY NOTE.
CENTERSTAGING MUSICAL PRODUCTIONS, INC.
_______________, 200_
$--------
CONVERTIBLE PROMISSORY NOTE
Due December 31, 2005
CENTERSTAGING MUSICAL
PRODUCTIONS,
INC., a California
corporation (the
"Company"), for value received, hereby
promises to pay to_______________________
or registered assigns (the "Holder") on the 31st day of December,
2005 (the
"Maturity Date") at the offices of the
Company, 3407 Winona
Avenue, Burbank,
California, 91540 the principal sum of
____________________ Dollars ($_____) in
such coin or currency of the United
States of America as
at the time of payment
shall be legal tender for the payment of public and private debts and to pay
simple interest on said principal sum at
the rate of ten percent (10%) per annum
from the date hereof through the Maturity Date. Interest on the principal
balance of this Convertible Promissory Note ("Note") shall be payable on the
Maturity Date.
1.
Registered
Owner. The Company may consider and treat the person in
whose name this Note shall be registered
as the absolute
owner thereof for
all
purposes whatsoever (whether or not this
Note shall be overdue) and the Company
shall not be affected by any notice to the
contrary. The registered owner of
this Note shall have the right to transfer
it by assignment and
the transferee
thereof, upon his registration as owner of this
Note, shall become vested with
all the powers and rights of the
transferor. Registration of any new owner shall
take place upon presentation of this Note
to the Company at its offices together
with the Note Assignment Form attached hereto duly executed. In case of
transfers by operation of law, the
transferee
shall notify the
Company of such
transfer and of his address, and shall
submit appropriate evidence regarding the
transfer so that this Note may be
registered in the name of the transferee. This
Note is transferable only on the books of the Company by the Holder on the
surrender hereof, duly endorsed. Communications sent to any registered owner
shall be effective as against all holders or transferees of this Note not
registered at the time of sending the
communication.
<PAGE>
2.
Conversion.
2.1 Definitions.
For purposes of this
Note, the following terms
shall have the meanings set forth
below:
(a) "Common Stock"
shall mean the Common Stock of the Company
or, if the Company completes a Reverse Merger, the Common Stock of the
Successor.
(b) "Common Stock Equivalents" of any entity at any date shall
mean the sum of: (i) the number of shares of common stock of such entity
outstanding on such date, plus (ii) the
number of shares of common stock of such
entity which may be acquired upon
exercise or
conversion of Stock
Equivalents
outstanding on such date (ignoring for this purpose vesting and similar
conditions).
(c) "Conversion
Date" shall mean the first to occur of the
following: (i) the closing of a Public Offering; or (ii) if the Company
completes a Reverse Merger, the 20th trading day following the closing of the
Reverse Merger unless the number of outstanding shares of Common Stock
Equivalents of the Successor on the closing of the Reverse
Merger is greater
than 40 million, then the date which is the
earlier of 120 days from the closing
of the Reverse Merger or the 20th trading day
following a reverse
stock split
effected by the Successor.
(d) "Conversion
Period" shall mean the
period commencing
on
the Conversion Date and expiring at 5:00 P.M.,
P.S.T., on the day immediately
preceding the Maturity Date.
(e) "Conversion
Price" shall mean 50%
of the Market Price of
the Common Stock as of the Conversion
Date.
(f) "Conversion Stock"
shall mean the Common Stock into which
this Note can be converted.
(g) "Existing
Shareholders" shall
mean Johnny Caswell,
Jan
Parent, Roger Paglia and Howard
Livingston.
(h) "Market Price" of
the Common Stock shall mean: (i) if the
Conversion Date occurs because of a Public Offering, the per share gross
offering price for the Common Stock as set
forth in the final prospectus for the
Public Offering; or (ii) if the Conversion Date occurs because of a Reverse
Merger, the average of the per share
closing sales prices (or average of bid and
asked prices if no sales price is
available)
of the Common
Stock for the ten
trading days ending on the Conversion Date
as reported on a service selected by
the Company.
(i) "Public Offering" shall mean a firmly underwritten public
offering of Common Stock by the Company pursuant to a registration statement
filed with the SEC pursuant to the
Securities Act.
(j) "Reverse
Merger" shall mean the merger between the
Company, on one hand, and the Successor or
a subsidiary of the Successor, on the
other hand, pursuant to which the shareholders
of the Company receive shares of
capital stock of the Successor and the Company becomes a subsidiary of the
Successor.
2
<PAGE>
(k) "SEC" shall mean the Securities and Exchange Commission.
(l) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(m) "Stock Equivalents" shall mean options, warrants, calls,
rights, commitments, convertible securities and other securities
pursuant to
which the holder, directly or indirectly, has the right to acquire
(with or
without additional consideration) Common
Stock.
(n) "Successor" shall mean a corporation whose common stock is
registered under Section 12 of the
Securities Exchange
Act of 1934, as amended,
which acquires the Company through the Reverse Merger and issues its stock to
the stockholders of the Company in the
Reverse Merger.
2.2 Holder Conversion Right. Subject to the terms hereof, during
the
Conversion Period, the Holder shall have the right to convert the then
outstanding principal amount of this Note, together with any accrued
interest
hereon, into shares of Conversion Stock, at the Conversion Price, by
presentation and surrender to the Company,
at its then principal office, of this
Note together with the Note
Conversion
Form attached hereto duly executed.
Subject to the terms hereof, upon receipt by the Company of this
Note and the
Note Conversion Form, duly executed at its
office, the Holder shall be deemed to
be the holder of record of the shares of
Conversion
Stock issuable upon such
conversion, notwithstanding that the stock
transfer books of the Company or the
Successor, as the case may be, shall then be closed or that certificates
representing such shares shall not then be
actually delivered to the Holder.
2.3 Company Conversion Right.
(a) During the Conversion Period, the Company shall have the
right to cause the Holder to convert the
then outstanding
principal amount of
this Note, together with any accrued interest
hereon, into
Conversion Stock at
the Conversion
