THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE
SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR MEDICAL MEDIA
TELEVISION, INC.
SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH
SECURITIES
UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE
STATE SECURITIES
LAWS IS NOT REQUIRED.
MEDICAL MEDIA TELEVISION, INC.
CONVERTIBLE PROMISSORY NOTE
U.S. $1,000,000
February 15, 2006
No.: PN-02-15
FOR VALUE RECEIVED, the undersigned, Medical Media Television,
Inc., a
Florida corporation (the "Company"), hereby promises to pay to the
order of
CapitalSmart, LLC or any future permitted holder of this promissory
note (the
"Payee"), at the principal office of the Payee set forth herein, or
at such
other place as the Payee may designate in writing to the Company,
the principal
sum of One Million Dollars (U.S. $1,000,000), or such other amount
as may be
outstanding hereunder, together with any accrued but unpaid
interest, in such
coin or currency of the United States of America as at the time
shall be legal
tender for the payment of public and private debts and in
immediately available
funds, as provided in this promissory note (the "Note"). This Note
is the Note
referred to in the Note Purchase Agreement dated as of January 27,
2006 between
the Company and the purchaser named therein (the "Purchase
Agreement").
Capitalized terms used and not otherwise defined herein shall have
the meanings
set forth for such terms in the Purchase Agreement.
1. Loan Schedule; Principal Payment; Interest Payment;
Subordination.
(a) The Payee shall loan the Company an aggregate of $1,000,000
under
the following loan schedule:
February 15, 2006
$250,000
March 31, 2006
$750,000
(b) The Company shall repay in full the entire principal balance
then
outstanding under this Note plus any accrued but unpaid interest on
the first to
occur (the "Maturity Date") of: (i) February 14, 2007, as it may be
extended
pursuant to the terms hereof, or (ii) the acceleration of the
obligations as
contemplated by this Note.
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(c) The Note shall bear interest at a rate of 20% per annum,
compounded
semi-annually. Interest shall be paid at the end of each calendar
quarter in
either: (i) shares of Series C Zero Coupon Preferred Stock of the
Company valued
at $1.00 per share, or (ii) cash, at Investor's option, with the
first interest
payment being on March 31, 2006. The Series C Zero Coupon Preferred
Stock shall
be convertible into shares of the Company's Common Stock on the
Maturity Date at
a ten percent (10%) discount to the then-current market price based
on the
average closing price for the twenty (20) days immediately
preceding the
conversion. The Series C Zero Coupon Preferred Stock shall be
subordinate to
Series A Zero Coupon Preferred Stock and Series B Zero Coupon
Preferred Stock.
The Payee shall make his election as to receipt of interest in cash
or in Series
C Zero Coupon Preferred Stock by written notice to the Company at
least five (5)
business days before the interest payment due date (the "Interest
Notice Date").
If no notice is given by Payee by such Interest Notice Date, the
Company shall
pay the interest in cash.
(d) The Note shall not be convertible until the Maturity Date. With
the
consent of both the Company and the Investor, the Note may be
extended for an
additional 12-month term, with the terms of the interest payments
remaining the
same as outlined in 1(b) above. The Note shall not be convertible
such that the
Investor's overall Common Stock ownership position in the Company
exceeds 4.99%.
2. Conversion Option; Issuance of Certificates.
(a) At the Maturity Date, the outstanding principal amount of this
Note
plus any accrued but unpaid interest shall be due and payable in
cash; provided,
however, the Payee shall have the sole option to convert on the
Maturity Date
the outstanding principal amount of this Note plus any accrued but
unpaid
interest into such number of shares of common stock of the Company,
par value
$.0005 per share (the "Common Stock"), equal to the principal
amount of this
Note plus any accrued but unpaid interest being converted divided
by the Fixed
Conversion Price. For purposes of this Note, "Fixed Conversion
Price" shall mean
$.40. The Fixed Conversion Price shall be subject to adjustment
pursuant to
Section 3 hereof. Upon conversion of this Note into shares of
Common Stock, the
outstanding principal amount of this Note, together with any
accrued but unpaid
interest, shall be deemed to be the consideration for the Payee's
interest in
such shares of Common Stock.
(b) In the event that the Payee elects to convert this Note into
shares
of Common Stock on the Maturity Date, the Company shall, not later
than five (5)
trading days after the conversion of this Note, issue and deliver
to the Payee
by express courier a certificate or certificates representing the
number of
shares of Common Stock being acquired upon the conversion of this
Note.
3. Ownership Cap and Certain Exercise Restrictions.
(a) Notwithstanding anything to the contrary set forth in this
Note, at
no time may a Holder of this Note convert 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 owned by such
Holder at such
time, the number of shares of Common Stock which would result in
such Holder
owning more than 4.999% of all of the Common Stock outstanding at
such time;
provided, however, that upon a holder of this Note providing the
Company with
sixty-one (61) days notice (pursuant to Section 13 hereof) (the
"Waiver Notice")
that such Holder would like to waive this Section 3(a) with regard
to any or all
shares of Common Stock issuable upon exercise of this Note, this
Section 3(a)
will be of no force or effect with regard to all or a portion of
the Note
referenced in the Waiver Notice; provided, further, that this
provision shall be
of no further force or effect during the sixty-one (61) days
immediately
preceding the expiration of the term of this Note.
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<PAGE>
(b) The Holder may not convert this Note hereunder to the extent
such
conversion 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 9.999% of the then issued and outstanding shares of
Common Stock,
including shares issuable upon conversion of the Note held by the
Holder after
application of this Section; provided, however, that upon a holder
of this Note
providing the Company with a Waiver Notice that such holder would
like to waive
this Section 3(b) with regard to any or all shares of Common Stock
issuable upon
conversion of this Note, this Section 3(b) shall be of no force or
effect with
regard to those shares of Common Stock referenced in the Waiver
Notice;
provided, further, that this provision shall be of no further force
or effect
during the sixty-one (61) days immediately preceding the expiration
of the term
of this Note.
4. Adjustment of Fixed Conversion Price.
(a) The Fixed Conversion Price shall be subject to adjustment from
time
to time as follows:
(i) Adjustments for Stock Splits and Combinations. If the Company
shall
at any time or from time to time after the date hereof, effect a
stock split of
the outstanding Common Stock, the applicable Fixed Conversion Price
in effect
immediately prior to the stock split shall be proportionately
decreased. If the
Company shall at any time or from time to time after the date
hereof, combine
the outstanding shares of Common Stock, the applicable Fixed
Conversion Price in
effect immediately prior to the combination shall be
proportionately increased.
Any adjustments under this Section 4(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
Company shall at any time or from time to time after the date
hereof, 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 Fixed 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, as
applicable, the
applicable Fixed 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
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<PAGE>
(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.
(iii) Adjustment for Other Dividends and Distributions. If the
Company
shall at any time or from time to time after the date hereof, 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 Fixed
Conversion Price shall be made and provision shall be made (by
adjustments of
the Fixed Conversion Price or otherwise) so that the holder 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 Company
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
4(a)(iii) with
respect to the rights of the holder of this Note.
(iv) Adjustments for Issuance of Additional Shares of Common Stock.
In
the event the Company, shall, at any time, from time to time, issue
or sell any
additional shares of Common Stock or securities convertible into or
exchangeable
for shares of Common Stock to a third party for a consideration per
share less
than the Fixed Conversion Price then in effect immediately prior to
the time of
such issue or sale, then, forthwith upon such issuance or sale, the
Fixed
Conversion Price then in effect for this Note shall be reduced to a
price equal
to the consideration per share paid for such securities.
(b) Issue Taxes. The Company shall pay any and all issue and
other
taxes, excluding federal, state or local income taxes, that may be
payable in
respect of any issue or delivery of shares of Common Stock on
conversion of this
Note pursuant thereto; provided, however, that the Company shall
not be
obligated to pay any transfer taxes resulting from any transfer
requested by any
holder in connection with any such conversion.
(c) Fractional Shares. No fractional shares of Common Stock shall
be
issued upon conversion of this Note. In lieu of any fractional
shares to which
the Payee would otherwise be entitled, the Company shall pay cash
equal to the
product of such fraction multiplied by the average of the closing
bid prices of
the Common Stock for the five (5) consecutive trading days
immediately preceding
the date of conversion of this Note.
(d) Reservation of Common Stock. The Company shall at all times
when
this Note shall be outstanding, reserve and keep available out of
its authorized
but unissued shares of Common Stock, such number of shares of
Common Stock as
shall from time to time be sufficient to effect the conversion of
this Note.
(e) Registration Rights. At Company's earliest opportunity, and in
any
event not more than 120 days from the date hereof, the Company
shall file a
Registration Statement on Form SB-2 (or an alternative available
form) covering
the underlying equity position of the Holder of the Note, and the
Company will
keep said Registration Statement effective for a period of three
years, subject
to
