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 CONSPIRACY ENTERTAINMENT HOLDINGS, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.
Principal Amount $40,000.00
|
Issue Date: March 30,
2007
|
SECURED CONVERTIBLE
NOTE
FOR VALUE
RECEIVED, CONSPIRACY ENTERTAINMENT HOLDINGS, INC., a Utah
corporation (hereinafter called "Borrower"), hereby promises to pay
to ALPHA CAPITAL ANSTALT, Pradafant 7, 9490 Furstentums, Vaduz,
Lichtenstein, Fax: 011-42-32323196 (the "Holder") or order, without
demand, the sum of Forty Thousand Dollars ($40,000.00), with
interest accruing thereon, on August 1, 2007 (the "Maturity Date"),
if not retired sooner.
This Note has been entered into pursuant to the
terms of a subscription agreement between the Borrower and the
Holder, dated of even date herewith (the “Subscription
Agreement”), and shall be governed by the terms of such
Subscription Agreement. Unless otherwise separately defined herein,
all capitalized terms used in this Note shall have the same meaning
as is set forth in the Subscription Agreement. The following terms
shall apply to this Note:
ARTICLE
I
GENERAL
PROVISIONS
1.1 Interest Rate . Interest payable on this Note shall accrue at
the annual rate of fifteen percent (15%) and be payable on the
Maturity Date, accelerated or otherwise, when the principal and
remaining accrued but unpaid interest shall be due and payable, or
sooner as described below.
1.2 Payment Grace Period . The Borrower shall have a five (5) day grace
period to pay any monetary amounts due under this Note, after which
grace period a default interest rate of eighteen percent (18%) per
annum.
1.3 Conversion Privileges . The Conversion Privileges set forth in Article
II shall remain in full force and effect immediately from the date
hereof and until the Note is paid in full regardless of the
occurrence of an Event of Default. The Note shall be payable in
full on the Maturity Date, unless previously converted into Common
Stock in accordance with Article II hereof; provided, that if an
Event of Default has occurred, the Borrower may not pay this Note,
without the consent of the Holder, until one year after the later
of the date the Event of Default has been cured or one year after
the Maturity Date.
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 CONSPIRACY ENTERTAINMENT HOLDINGS, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.
Principal Amount $40,000.00
|
Issue Date: March 30,
2007
|
SECURED CONVERTIBLE
NOTE
FOR VALUE
RECEIVED, CONSPIRACY ENTERTAINMENT HOLDINGS, INC., a Utah
corporation (hereinafter called "Borrower"), hereby promises to pay
to WHALEHAVEN CAPITAL FUND LIMITED, 3 rd Floor, 14
Par-Laville Road, Hamilton, Bermuda HM08, Fax: (441) 292-1373 (the
"Holder") or order, without demand, the sum of Forty Thousand
Dollars ($40,000.00), with interest accruing thereon, on August 1,
2007 (the "Maturity Date"), if not retired sooner.
This Note has been entered into pursuant to the
terms of a subscription agreement between the Borrower and the
Holder, dated of even date herewith (the “Subscription
Agreement”), and shall be governed by the terms of such
Subscription Agreement. Unless otherwise separately defined herein,
all capitalized terms used in this Note shall have the same meaning
as is set forth in the Subscription Agreement. The following terms
shall apply to this Note:
ARTICLE
I
GENERAL
PROVISIONS
1.1 Interest Rate . Interest payable on this Note shall accrue at
the annual rate of fifteen percent (15%) and be payable on the
Maturity Date, accelerated or otherwise, when the principal and
remaining accrued but unpaid interest shall be due and payable, or
sooner as described below.
1.2 Payment Grace Period . The Borrower shall have a five (5) day grace
period to pay any monetary amounts due under this Note, after which
grace period a default interest rate of eighteen percent (18%) per
annum.
1.3 Conversion Privileges . The Conversion Privileges set forth in Article
II shall remain in full force and effect immediately from the date
hereof and until the Note is paid in full regardless of the
occurrence of an Event of Default. The Note shall be payable in
full on the Maturity Date, unless previously converted into Common
Stock in accordance with Article II hereof; provided, that if an
Event of Default has occurred, the Borrower may not pay this Note,
without the consent of the Holder, until one year after the later
of the date the Event of Default has been cured or one year after
the Maturity Date.
ARTICLE
II
CONVERSION
RIGHTS
The Holder shall have the right to convert the
principal and any interest due under this Note into Shares of the
Borrower's Common Stock, $.001 par value per share (“Common
Stock”) as set forth below.
2.1. Conversion into the Borrower's Common
Stock .
(a) The Holder shall have the right from and after
the date of the issuance of this Note and then at any time until
this Note is fully paid, to convert any outstanding and unpaid
principal portion of this Note, and accrued interest, at the
election of the Holder (the date of giving of such notice of
conversion being a "Conversion Date") into fully paid and
nonassessable shares of Common Stock as such stock exists on the
date of issuance of this Note, or any shares of capital stock of
Borrower into which such Common Stock shall hereafter be changed or
reclassified, at the conversion price as defined in Section 2.1(b)
hereof (the "Conversion Price"), determined as provided herein.
Upon delivery to the Borrower of a completed Notice of Conversion,
a form of which is annexed hereto, Borrower shall issue and deliver
to the Holder within three (3) business days after the Conversion
Date (such third day being the “Delivery Date”) that
number of shares of Common Stock for the portion of the Note
converted in accordance with the foregoing. At the election of the
Holder, the Borrower will deliver accrued but unpaid interest on
the Note, if any, through the Conversion Date directly to the
Holder on or before the Delivery Date (as defined in the Second
Amendment). The number of shares of Common Stock to be issued upon
each conversion of this Note shall be determined by dividing that
portion of the principal of the Note and interest, if any, to be
converted, by the Conversion Price.
(b) Subject to adjustment as provided in Section
2.1(c) hereof, the Conversion Price per share shall be the lesser
of $0.02, or seventy percent (70%) of the average of the three (3)
lowest closing bid prices for the Common Stock as reported by
Bloomberg L.P. for the thirty trading days preceding a Conversion
Date.
(c) The Conversion Price and number and kind of
shares or other securities to be issued upon conversion determined
pursuant to Section 2.1(a), shall be subject to adjustment from
time to time upon the happening of certain events while this
conversion right remains outstanding, as follows:
A. 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 thereof and accrued
interest thereon, 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 after any such
consolidation, merger, sale or conveyance.
B. 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 that may be issued or outstanding, this Note, as
to the unpaid principal portion thereof and accrued interest
thereon, shall thereafter be deemed to evidence the right to
purchase an adjusted number of such securities and kind of
securities as would have been issuable as the result of such change
with respect to the Common Stock immediately prior to such
reclassification or other change.
C. Stock Splits, Combinations and Dividends. If
the shares of Common Stock are subdivided or combined into a
greater or smaller number of shares of Common Stock, or if a
dividend is paid on the Common Stock in shares of Common Stock, the
Conversion Price shall be proportionately reduced in case of
subdivision of shares or stock dividend or proportionately
increased in the case of combination of shares, in each such case
by the ratio which the total number of shares of Common Stock
outstanding immediately after such event bears to the total number
of shares of Common Stock outstanding immediately prior to such
event..
D. Share Issuance. So long as this Note is
outstanding, if the Borrower shall issue or agree to issue any
shares of Common Stock for a consideration less than the Conversion
Price in effect at the time of such issue, then, and thereafter
successively upon each such issue, the Conversion Price shall be
reduced to such other lower issue price. For purposes of this
adjustment, the issuance of any security carrying the right to
convert such security into shares of Common Stock or of any
warrant, right or option to purchase Common Stock shall result in
an adjustment to the Conversion Price upon the issuance of the
above-described security and again upon the issuance of shares of
Common Stock upon exercise of such conversion or purchase rights if
such
