NEITHER THIS
NOTE NOR THE SHARES OF COMMON STOCK INTO WHICH THIS NOTE IS CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND
NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, SUCH
REGISTRATION AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE
TRANSFEROR TO SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH IS
ACCEPTABLE TO THE ISSUER.
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MERRIMAN CURHAN FORD GROUP,
INC.
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SECURED CONVERTIBLE PROMISSORY
NOTE
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$
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__________, 2009
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San Francisco, California
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FOR VALUE RECEIVED , and upon and subject to the terms and
conditions set forth herein, MERRIMAN CURHAN FORD GROUP,
INC. , a Delaware corporation (“ Issuer ”),
hereby promises to pay to the order of
,
a
(together with its permitted successors and assigns, “
Holder ”), the principal sum of
UNITED STATED DOLLARS (U.S.
$ )
on the Maturity Date, together with interest as provided
herein. This Note was issued under and is subject to a
Subscription Agreement (the “ Subscription
Agreement ”) dated as of __________, 2009 among
Issuer, Holder and certain other parties. Capitalized terms
used and not otherwise defined herein will have the respective
meanings given to such terms in the Subscription
Agreement.
1.
Maturity Date . This Note will mature, and be due and
payable in full, on the earlier of (i) ______________,
2011; or (ii) the consummation of a Change of Control Event, as
defined below, unless Holder has elected to convert this Note
pursuant to Section 3 hereof. “ Maturity
Date ” shall mean the earlier to occur of (i) or (ii)
above. A “Change in Control Event”
shall mean (i) the acquisition of the Issuer by another entity
by means of any transaction or series of related transactions to
which the Issuer is party (including, without limitation, any stock
acquisition, reorganization, merger or consolidation but excluding
any sale of stock for capital raising purposes) other than a
transaction or series of transactions in which the holders of the
voting securities of the Issuer outstanding immediately prior to
such transaction continue to retain (either by such voting
securities remaining outstanding or by such voting securities being
converted into voting securities of the surviving entity), as a
result of shares in the Issuer held by such holders prior to such
transaction, at least 50% of the total voting power represented by
the voting securities of the Issuer or such surviving entity
outstanding immediately after such transaction or series of
transactions; (b) a sale, lease or other conveyance of all or
substantially all of the assets of the Issuer; or (c) any
liquidation, dissolution or winding up of the Issuer, whether
voluntary or involuntary.
2.
Interest .
From and after the date hereof, all outstanding principal of this
Note will bear interest on the outstanding principal balance at the
rate of eleven percent (11%) per annum. Outstanding interest shall
be paid on the fifteenth (15 th )
day of the month following the end of each calendar quarter during
which this Note shall be outstanding. Upon the occurrence and
during the continuance of any Event of Default (as hereinafter
defined) under this Note, all outstanding principal of this Note
shall bear interest at the rate of 15% per annum. All accrued but
unpaid interest on this Note shall be payable on the Maturity Date
or on such earlier date as this Note shall be prepaid or converted
into Common Stock.
3.
Optional Conversion of the Note .
3.1
By Holder .
At any time following 180 days from the date of issue and prior to
repayment of this Note, Holder may elect, in lieu of repayment, to
convert all, but not a portion only, of the outstanding principal
and all accrued interest on this Note into that number of shares of
Common Stock (as defined in the Subscription Agreement) equal to
the quotient obtained by dividing (a) 100.0% of the amount of
principal outstanding and accrued interest on this Note, by
(b) the Conversion Price (as hereinafter defined).
Holder will inform Issuer of such election at least 10 days prior
to the date the Note is converted into Common Stock, provided,
however, that in the event that the Issuer has issued a notice
of prepayment as provided in Section 3.3 hereof, Holder may elect
to instead convert all of this Note and any accrued interest hereon
into Common Stock on only 5 days written notice. If Holder
delivers such notice to Issuer, Issuer may not elect to pay to
Holder the amount of this Note to be converted without
Holder’s written consent. For purposes of this Note,
“Conversion Price” will initially mean $0.50 per share.
The Conversion Price will be subject to adjustment as provided in
Section 3.4 and 3.5. The Holder shall effect conversions by
delivering to the Issuer a Notice of Conversion, the form of which
is attached hereto as Annex A (a “ Notice of
Conversion ”), specifying therein the principal amount of
this Note to be converted and the date on which such conversion
shall be effected (such date, the “ Conversion Date
”), provided that such date is on or after the date the
Notice of Conversion is received by the Issuer. If no
Conversion Date is specified in a Notice of Conversion, or the
stated conversion date is prior to date of delivery of the Notice
of Conversion, the Conversion Date shall be the date that such
Notice of Conversion is deemed delivered hereunder. To effect
conversions hereunder, the Holder shall be required to physically
surrender this Note to the Issuer.
3.2
By Issuer .
At any time prior to repayment of this Note, if the volume weighted
average price of the Common Stock on the NASDAQ Capital Market
exceeds 200% of the Conversion Price then in effect during each day
for twenty consecutive trading days or more within any thirty
trading day period (whether or not such volume weighted average for
any day thereafter is 200% or less of the Conversion Price then in
effect), then Issuer may give notice to Holder of its election to
convert all of the outstanding principal and accrued interest on
this Note into the same number of shares of Common Stock as would
be calculated pursuant to Section 3.1 above in the case of an
optional conversion by Holder. Any notice of conversion
will be effective at least 10 days prior to the date of such
conversion and the Conversion Price used in calculating the number
of shares of Common Stock to be issued to Holder will be the
Conversion Price on the date of the actual conversion. To effect
conversions hereunder, at Issuers election, the Holder may not be
required to physically surrender this Note to the Issuer, in which
case the Issuer may cancel the Note upon issuance of the Common
Stock pursuant to Section 3.1 above. The Holder may deliver
an objection to any Notice of Conversion within 3 Business Days of
delivery of such Notice of Conversion.
3.3
Cash Prepayment . At any time prior to repayment of this Note, the
Issuer my elect to repay all or a portion of the outstanding
principal and any accrued interest on this Note in cash upon notice
of prepayment effective at least 10 days prior to the date of such
prepayment. If the Holder elects to instead convert that
portion of the Note that the Issuer has chosen to prepay and any
accrued interest hereon in Common Stock, the provisions of Section
3.1 shall apply and the Holder’s right to convert into Common
Stock shall take precedence over the Issuer’s right to prepay
contained in this Section 3.3, provided the notice provisions of
Section 3.1 are complied with.
3.4
Adjustments; Antidilution .
(a)
Stock Dividends, Reclassifications, Recapitalizations, Etc.
In the event the Issuer: (i) pays a dividend in
Common Stock or makes a distribution in Common Stock,
(ii) subdivides its outstanding Common Stock into a greater
number of shares, (iii) combines its outstanding Common Stock
into a smaller number of shares or (iv) increases or decreases
the number of shares of Common Stock outstanding by
reclassification of its Common Stock (including a recapitalization
in connection with a consolidation or merger in which the Issuer is
the continuing corporatio
