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EXHIBIT 99.1
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS
NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE
SECURITIES LAWS. 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
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY
SATISFACTORY TO PERFISANS HOLDINGS, INC. THAT SUCH REGISTRATION
IS NOT REQUIRED.
SECURED CONVERTIBLE TERM NOTE
FOR VALUE RECEIVED, PERFISANS HOLDINGS, INC., a Maryland
corporation
(the "BORROWER" or the "COMPANY"), hereby promises to pay to
Platinum Value
Arbitrage Fund LP (the "HOLDER") or its registered assigns or
successors in
interest, the sum of Five Hundred Thousand Dollars ($500,000),
together with any
accrued and unpaid interest hereon, on September 17, 2006 (the
"MATURITY DATE")
if not sooner paid or converted.
Capitalized terms used herein without definition shall have
the
meanings ascribed to such terms in that certain Securities
Purchase Agreement
dated as of the date hereof between the Borrower and the Holder
(the "PURCHASE
AGREEMENT").
The following terms shall apply to this Note:
ARTICLE I
INTEREST
1.1 (a) INTEREST RATE. Subject to Sections 1.1(b), 4.12 and 5.6
hereof,
interest payable on this Note shall accrue at a rate per annum
(the "Interest
Rate") equal to seven percent (7%) per annum. Interest on the
Principal Amount
shall be payable semi-annually in cash or common stock, at the
Borrower's
option. In addition, beginning on August 17, 2005 (five months
from the date of
this Note) and continuing on the same day of each successive
month thereafter,
the Borrower must repay 1/13th of the aggregate face amount of
this Note, (the
"Monthly Amount"), either in cash or common stock, at the
Company's option
(each, a "REPAYMENT DATE").
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ARTICLE II
REPAYMENT
2.1 (a) PAYMENT OF MONTHLY AMOUNT IN CASH OR COMMON STOCK. If
the
Monthly Amount (or a portion thereof of such Monthly Amount if
such portion of
the Monthly Amount would have been converted into shares of
Common Stock but for
Section 2.2) is required to be paid in cash, then the Borrower
shall pay the
Holder an amount equal to 110% of the Monthly Amount due and
owing to the Holder
on the Repayment Date in cash. If the Monthly Amount (or a
portion of such
Monthly Amount if not all of the Monthly Amount may be converted
into shares of
Common Stock pursuant to this Section) may be paid in shares of
Common Stock
pursuant to this Section the number of such shares to be issued
by the Borrower
to the Holder on such Repayment Date (in respect of such portion
of the Monthly
Amount converted into shares of Common Stock), shall be the
number determined by
dividing (x) the Monthly Amount to be converted into shares of
Common Stock, by
(y) an amount equal to a 25% discount to the volume weighted
average price (the
"VWAP") of the Company's common stock for the ten trading days
immediately
preceding (but not including) the applicable Repayment Date. The
Borrower may
not elect to pay a Monthly Amount due on a Repayment Date in
Common Stock in
amount of shares of Common Stock which would exceed in the
aggregate for all
Holders of Notes similar to this Note, fifteen percent (15%) of
the aggregate
daily trading volume for the seven trading days preceding the
Repayment Date
multiplied by the average volume weighted average price of the
Common stock as
reported by Bloomberg, L.P. for the Principal Market using the
AQR function
("VWAP") for the seven trading days preceding the "Repayment
Date." The right to
repay the Note in shares of common stock on each Repayment Date
is subject to
the condition that the registration statement registering such
shares must be
effective and available for use by the Holder on each Repayment
Date and the
Borrower must give the Holder ten (10) days notice of its intent
to utilize
shares for the repayment.
(b) APPLICATION OF CONVERSION AMOUNTS. Any amounts converted by
the
Holder pursuant to Sections 2.1 or 3 hereof, shall be deemed to
constitute
payments of, or applied against, (i) first, outstanding fees,
(ii) second,
accrued interest on the Principal Amount, and (iii) third the
Principal Amount.
2.2 NO EFFECTIVE REGISTRATION. Notwithstanding anything to the
contrary
herein, no amount payable hereunder may be converted into Common
Stock unless
(a) either (i) an effective current Registration Statement (as
defined in the
Registration Rights Agreement) covering the shares of Common
Stock to be issued
in satisfaction of such obligations exists, or (ii) an exemption
from
registration of the Common Stock is available pursuant to Rule
144 of the
Securities Act, and (b) no Event of Default hereunder exists and
is continuing,
unless such Event of Default is cured within any applicable cure
period or is
otherwise waived in writing by the Holder in whole or in part at
the Holder's
option.
2.3 OPTIONAL REDEMPTION OF PRINCIPAL AMOUNT. The Borrower will
have the
option of prepaying up to 50% of the outstanding Principal
Amount ("OPTIONAL
REDEMPTION"), in whole or in part, by paying to the Holder a sum
of money equal
to one hundred twenty five percent (125%) of the Principal
Amount to be
redeemed, together with accrued but unpaid interest thereon and
any and all
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other sums due, accrued or payable to the Holder arising under
this Note, the
Purchase Agreement or any Related Agreement (the "REDEMPTION
AMOUNT") on the day
written notice of the optional redemption is given to the
Holder. The ability of
the Borrower to effect an Optional Redemption is conditioned
upon the Borrower
having an effective registration statement covering the shares
of common stock
issuable upon conversion of the Note and the exercise of the
Warrants at the
time of the Optional Redemption. The Notice of the Optional
Redemption shall
specify the date for such Optional Redemption (the "REDEMPTION
PAYMENT DATE"),
which date shall be not less than seven (7) business days after
the date of the
Notice of Redemption (the "REDEMPTION PERIOD"). A Notice of the
Optional
Redemption shall not be effective with respect to any portion of
the Principal
Amount for which the Holder has a pending election to convert
pursuant to
Section 3.1, or for conversions initiated or made by the Holder
pursuant to
Section 3.1 during the Redemption Period. The Redemption Amount
shall be
determined as if such Holder's conversion elections had been
completed
immediately prior to the date of the Notice of the Optional
Redemption. On the
Redemption Payment Date, the Redemption Amount shall be paid in
good funds to
the Holder. In the event the Borrower fails to pay the
Redemption Amount on the
Redemption Payment Date as set forth herein, then such Notice of
the Optional
Redemption will be null and void.
ARTICLE III
CONVERSION RIGHTS
3.1. HOLDER'S CONVERSION RIGHTS. Subject to Section 2.2, the
Holder
shall have the right, but not the obligation, to convert all or
any portion of
the then aggregate outstanding Principal Amount of this Note,
together with
interest and fees due hereon, into shares of Common Stock,
subject to the terms
and conditions set forth in this Article III. The Holder may
exercise such right
by delivery to the Borrower of a written Notice of Conversion
pursuant to
Section 3.3.
3.2 MANDATORY CONVERSION. The Company may cause the Holder to
convert
the Notes into Common Stock if (i) the condition in Section 2.2
is met; (ii) if
the closing price of the Common Stock exceeds 200% of the
Conversion Price, then
in effect, for each of the twenty consecutive trading days
immediately preceding
the date that the Mandatory Conversion Notice is given by the
Company; and (iii)
the average daily trading volume for the Common Stock during
such twenty
consecutive trading day period exceeds 1,000,000 shares. After,
the above
conditions are met, the Company may give the Holder notice that
it is required
to convert the Note (the "Mandatory Conversion Notice").
3.3 MECHANICS OF HOLDER'S CONVERSION. (a) In the event that the
Holder
elects to convert any amounts outstanding under this Note into
Common Stock
pursuant to Section 3.1 hereof, the Holder shall give notice of
such election by
delivering an executed and completed notice of conversion (a
"NOTICE OF
CONVERSION") to the Borrower, which Notice of Conversion shall
provide a
breakdown in reasonable detail of the Principal Amount, accrued
interest and
fees being converted. On each Conversion Date (as hereinafter
defined) and in
accordance with its Notice of Conversion, the Holder shall make
the appropriate
reduction to the Principal Amount, accrued interest and fees as
entered in its
records and shall provide written notice thereof to the Borrower
within two (2)
business
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days after the Conversion Date. Each date on which a Notice of
Conversion is
delivered or telecopied to the Borrower in accordance with the
provisions hereof
shall be deemed a "CONVERSION DATE". A form of Notice of
Conversion to be
employed by the Holder is annexed hereto as Exhibit A.
(b) Pursuant to the terms of a Notice of Conversion, the
Borrower
will issue instructions to the transfer agent accompanied by an
opinion of
counsel, if so required by the Borrower's transfer agent, within
one (1)
business day of the date of the delivery to Borrower of the
Notice of Conversion
and shall cause the transfer agent to transmit the certificates
representing the
Conversion Shares to the Holder. In the case of the exercise of
the conversion
rights set forth herein the conversion privilege shall be deemed
to have been
exercised and the Conversion Shares issuable upon such
conversion shall be
deemed to have been issued upon the date of receipt by the
Borrower of the
Notice of Conversion. The Holder shall be treated for all
purposes as the record
holder of such shares of Common Stock, unless the Holder
provides the Borrower
written instructions to the contrary.
3.4 CONVERSION MECHANICS.
(a) The number of shares of Common Stock to be issued upon
each
conversion of this Note pursuant to this Article III shall be
determined by
dividing that portion of the Principal Amount and interest and
fees to be
converted, if any, by the then applicable Fixed Conversion
Price. The Fixed
Conversion Price shall be $.3375 per share (75% of the five day
average closing
price for the five days preceding, but not including the date of
this Note). In
the event of any conversions of outstanding obligations under
this Note in part
pursuant to this Article III, such conversions shall be deemed
to constitute
conversions (i) first, of the Monthly Amount for the current
calendar month,
(ii) then of outstanding Principal Amount, by applying the
conversion
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