EXHIBIT 4.1
THIS
NON-NEGOTIABLE CONVERTIBLE PROMISSORY NOTE (THIS
“NOTE”) AND THE COMMON SHARES ISSUABLE UPON CONVERSION
OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THIS NOTE AND THE COMMON SHARES
ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO BIGSTRING CORPORATION THAT
SUCH REGISTRATION IS NOT REQUIRED.
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Principal
Amount: $175,000
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Issue Date: August 25,
2008
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NON-NEGOTIABLE CONVERTIBLE
PROMISSORY NOTE
FOR VALUE
RECEIVED, BIGSTRING CORPORATION, a Delaware corporation
(hereinafter called the “Borrower”), hereby promises to
pay to Dwight Lane Capital, LLC, a limited liability company with
an address of c/o TMRIB, LLC, 183 Madison Avenue, Suite #505, New
York, NY 10016 (the “Holder”), without demand, the sum
of One Hundred and Seventy-Five Thousand Dollars ($175,000), with
compound and unpaid interest thereon, on the earlier of (i) January
26, 2009, or (ii) three (3) days after the date on which the
Borrower receives the Tax Credit (as such term is defined below)
(the “Maturity Date”). This Note may be
prepaid in whole or in part at any time without premium or
penalty. The following additional terms shall apply to
this Non-Negotiable Convertible Promissory Note (this
“Note”):
ARTICLE I
GENERAL PROVISIONS
1.1
Payment Grace Period . The Borrower shall have a
three (3) business day grace period to pay any monetary amounts due
under this Note, after which grace period a default interest rate
of twenty-four percent (24%) per annum (the “Default Interest
Rate”) shall apply to the amounts owed
hereunder. The Default Interest Rate shall also apply to
the amounts owed hereunder following an uncured Event of Default
(as defined in Article III below).
1.2
Origination Fee . Within three (3) business days
following the issuance date of this Note, the Borrower shall pay to
the Holder a fee in the amount of Three Thousand Five Hundred
Dollars ($3,500).
1.3
Interest Rate . Interest payable on this Note
shall accrue at the annual rate of twelve percent (12%) and shall
compound monthly. Accrued interest will be payable in
cash on the Maturity Date, unless the Holder otherwise provides the
Borrower with a Notice of
Conversion (as
defined below).
1.4
Security . As security for the due performance
and payment of the Borrower’s obligations under this Note,
the Borrower, to the extent permitted under applicable law, hereby
grants to the Holder a security interest in any and all amounts
received by the Borrower as part of the State of New Jersey’s
Technology Business Tax Certificate Transfer Program for the year
ended December 31, 2008 (the “Tax
Credit”). Borrower warrants that upon receipt of
the Tax Credit, Borrower shall apply the Tax Credit first towards
the full satisfaction of the amounts due hereunder, prior to using
the Tax Credit for any other purpose.
ARTICLE II
CONVERSION RIGHTS
2.1
Conversion into the Borrower’s Common Stock Upon an Event
of Default .
(a) Upon
an Event of Default, the Holder shall have the right to convert the
outstanding and unpaid principal portion hereof and accrued
interest hereon (the date of giving of notice of conversion by the
Holder being the “Conversion Date”) into fully paid and
nonassessable shares of the Borrower’s common stock, par
value $0.0001 per share (“Common Stock”), or any shares
of capital stock of the Borrower into which such Common Stock shall
hereafter be changed or reclassified, at the Conversion Price (as
defined in Section 2.1(b)). Upon delivery to the
Borrower of a completed Notice of Conversion, a form of which is
attached hereto as Exhibit A (the Notice of
Conversion”), the Borrower shall issue and deliver to the
Holder within twenty (20) business days after the Conversion Date
that number of shares of Common Stock in accordance with the
foregoing.
(b) Subject
to adjustment as provided for in Section 2.1(c) hereof, the
conversion price per share of Common Stock shall be at a thirty
percent (30%) discount to the fifteen (15) day moving average
following the reporting by the Borrower of an Event of Default on a
Form 8-K (the “Conversion Price”). In the
event that the Borrower does not report the Event of Default, the
Conversion Price per share of Common Stock shall be at a thirty
percent (30%) discount to the moving average of any fifteen (15)
day period following the Event of Default selected by the
Holder. Cash will be paid in lieu of fractional shares
upon conversion.
(c) The
number and kind of shares or other securities to be issued upon
conversion of this Note shall be subject to adjustment from time to
time upon the happening of certain events while this conversion
right remains outstanding, as follows:
(i)
Merger, Sale of Assets, etc . If the Borrower at
any time shall consolidate with or merge into or sell or convey all
or substantially all its assets to any other corporation, this
Note, as to the unpaid principal portion hereof and accrued
interest hereon, shall thereafter be deemed to evidence the right
to purchase such number and kind of shares or other securities and
property as would have been issuable or distributable on account of
such consolidation, merger, sale or conveyance, upon or with
respect to the securities subject to the conversion or purchase
right immediately prior to such consolidation, merger, sale or
conveyance. The foregoing provision shall similarly
apply to successive transactions of a similar
nature by any
such successor or purchaser. Without limiting the
generality of the foregoing, the anti-dilution provisions of this
section shall apply to such securities of such successor or
purchaser or surviving entity of the surviving corporation after
any such consolidation, merger, sale or conveyance.
(ii)
Reclassification, etc . If the Borrower at any
time shall, by reclassification or otherwise, change the Common
Stock into the same or a different number of securities of any
class or classes of the Borrower’s capital stock that may be
issued or outstanding, this Note, as to the unpaid principal amount
hereof and accrued interest hereon, shall thereafter be deemed to
evidence the right to purchase an adjusted number of such
securities an
