Exhibit 4.4
EXECUTION
VERSION
SENIOR SECURED CONVERTIBLE
PROMISSORY NOTE
THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), NOR UNDER ANY APPLICABLE STATE SECURITIES
LAWS. THIS SECURITY HAS BEEN ACQUIRED FOR INVESTMENT AND THIS
SECURITY MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION OF IT UNDER THE ACT OR AN OPINION OF COUNSEL
OR OTHER EVIDENCE ACCEPTABLE TO THE MAKER THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT. THIS
SECURITY MAY NOT BE TRANSFERRED EXCEPT UPON THE CONDITIONS
SPECIFIED IN THIS NOTE AND THE SECURITIES PURCHASE AGREEMENT, DATED
NOVEMBER , 2005 (THE “PURCHASE
AGREEMENT”), AND NO TRANSFER OF THIS SECURITY SHALL BE VALID
OR EFFECTIVE UNLESS AND UNTIL SUCH CONDITIONS SHALL HAVE BEEN
COMPLIED WITH. THE TRANSFERABILITY OF THIS SECURITY IS
SUBJECT TO THE TRANSFER RESTRICTIONS SET FORTH HEREIN AND IN THE
PURCHASE AGREEMENT, A COPY OF WHICH WILL BE PROVIDED TO THE HOLDER
HEREOF UPON WRITTEN REQUEST TO THE MAKER.
IT & E
INTERNATIONAL GROUP
SENIOR SECURED
CONVERTIBLE PROMISSORY NOTE
THIS SENIOR SECURED NOTE
IS MADE AND DELIVERED PURSUANT TO THE PURCHASE AGREEMENT AND
SUBJECT TO THE TERMS AND CONDITIONS THEREOF. THIS SENIOR
SECURED NOTE IS SECURED BY THE COLLATERAL DESCRIBED IN A CERTAIN
SECURITY AGREEMENT, DATED AS OF EVEN DATE HEREWITH (THE
“SECURITY AGREEMENT”).
November 9,
2005
$
FOR
VALUE RECEIVED, IT & E INTERNATIONAL GROUP, a Nevada
corporation (the “Maker”), promises to pay, in cash or
Common Stock at the option of the Holder (in accordance with
Section 4 hereof), to the order of [
] or its registered assigns (the “Holder”) upon
a written request of the Holder, on or before a date which shall be
the earlier of (i) three (3) months following the Closing
Date, (ii) a merger or combination of the Company or the sale,
transfer or other disposition of all or substantially all of the
assets of the Company or (iii) the acquisition by a single
entity, person or a “group” within the meaning of
Rule 13d-1 of the Exchange Act, of more than fifty percent
(50%) of the voting power or capital stock of the Company (on a
fully-diluted basis) or (iv) the issuance by the Maker of
Common Stock Equivalents other than an Exempt Issuance, whereby the
Maker shall pay an amount equal to Fifty Percent (50%) of the net
proceeds received by the Maker from such sale (or a lesser amount
if the aggregate outstanding principal and interest is less that
50% of the net proceeds) (the “Demand Date”) the
principal amount of
Million
Dollars
($ )
together with all accrued and unpaid interest thereon, unless this
Note is sooner converted in accordance with the terms set forth
herein. All capitalized terms used but not defined herein
shall
have the meaning set forth
in the Purchase Agreement.
1.
Interest Rate
. The unpaid balance
of the principal amount of this Note shall accrue simple interest
(the “Interest”) at a rate (the “Interest
Rate”) per annum as follows:
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Month 1 of the Senior Secured
Note
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No interest
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Month 2 of the Senior Secured
Note
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No interest
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Month 3 of the Senior Secured
Note
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No interest
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Month 4 and thereafter of the Senior
Secured Note
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12% per annum
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Interest shall begin
accruing as of the date that is three (3) months after the
date hereof through the Demand Date. Interest shall accrue on
a monthly basis and on the date of a conversion, if applicable, and
shall be computed on the basis of a 365-day year, for the actual
number of days involved. If any Event of Default has occurred
and is continuing, the Senior Secured Note shall bear interest at a
rate of the then-applicable Interest plus four percent (4%)
per annum until such time as such Event of Default has been
cured.
2.
Payment of Principal Amount
and Interest . Accrued Interest
shall be due and payable on a monthly basis. Such payments
shall be made either by wire transfer or by delivery to the Holder
of a check payable to the Holder.
3.
Conversion into Preferred
Stock and Common Stock .
(a)
Series D Preferred
Stock This Note shall
automatically convert into shares of Series D Convertible
Preferred Stock without any action required by either the Maker or
the Holder as soon as the Maker has sufficient Series D
Convertible Preferred Shares authorized for issuance
(“Automatic Conversion”). Initially the Note
shall be converted into shares of Series D Convertible
Preferred Stock based upon the Preferred Conversion Ratio (for
purposes hereof “Preferred Conversion Ratio” shall mean
the quotient arrived at by dividing the principal amount of this
Note plus any accrued Interest by the Preferred Conversion Price)
subject to adjustment as hereinafter provided, and the
“Preferred Conversion Price” initially shall be
$1,000. Promptly after the date of Automatic Conversion,
Holder shall deliver this Note to the Company for cancellation in
exchange for a certificate representing the applicable number of
shares of Series D Preferred Stock.
(b)
Interest
Payments . Any unpaid accrued
Interest shall be paid to the Holder on the date of the Automatic
Conversion by wire transfer.
(c)
Common Stock
On the Demand Date,
and to the extent that the Maker has sufficient shares of Common
Stock available for issuance, the Holder may request that payment
be made in whole or in part in shares of Common Stock, based upon
the Common Conversion Ratio (for purposes hereof “Common
Conversion Ratio” shall mean the quotient arrived at by
dividing the principal amount of this Note plus any accrued
Interest by the Conversion Price) subject to adjustment as
hereinafter provided, and the “Common Conversion Price”
initially shall be $0.07 per share, (the “Common Conversion
Price”). Promptly after the date of the request from
the Holder, Holder shall deliver this Note to the Company
for
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cancellation in exchange
for a certificate representing the applicable number of shares of
Common Stock.
4.
Adjustment
Provisions . The Preferred
Conversion Price and the Common Conversion Price and number and
kind of shares or other securities to be issued upon conversion
determined pursuant to this Note shall be subject to adjustment
from time to time upon the happening of certain events, as
follows:
(a)
Reclassification
. If the Maker 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, this Note, shall thereafter be deemed to evidence
the right to convert this Note into 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
(i) immediately prior to, or (ii) immediately after, such
reclassification or other change at the sole election of the holder
of this Note.
(b)
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 or any preferred stock issued by the Maker 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.
(c)
Share Issuances
. If and whenever
the Maker issues or sells, or in accordance with
Section 5(c) hereof is deemed to have issued or sold, any
shares of Common Stock for an effective consideration per share of
less than the then Common Stock Conversion Price (as defined
herein) or for no consideration then, the Conversion Price shall be
adjusted pursuant to this Section 5(c). Such adjustment
shall be made whenever shares of Common Stock or an instrument
convertible into Common Stock are issued (except (i) pursuant
to Sections 4(a) or (b) above; (ii) for an Exempt
Issuance). For purposes of this Section an “
Exempt Issuance ” shall mean the issuance of
(a) shares of Common Stock options or shares of Common Stock
issued upon the exercise of any such options to employees, officers
or directors of the Maker pursuant to any stock or option plan duly
adopted by a majority of the non-employee members of the Board of
Directors of the Maker or a majority of the members of a committee
of non-employee directors established for such purpose,
(b) securities upon the exercise of or conversion of any
convertible securities, options or warrants issued and outstanding
on the date of issuance, provided that such securities have not
been amended, (c) the securities issued or issuable hereunder
or pursuant to the Securities Purchase Agreement between the Maker
and the holder, dated as of the date hereof, (d) issuances in
connection with mergers, acquisitions, joint ventures or other
transactions with an unrelated third party in a bona fide
transaction the purpose of which is not fundraising, or
(e) issuances at fair market value to the Maker’s
suppliers, consultants and other providers of services and goods
not to exceed $100,000 to any one Person, and not to exceed an
aggregate of $250,000 in any fiscal year without the prior written
consent of the holder. For purposes hereof, the issuance of any
security of the Maker convertible into or
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exercisable or exchangeable
for Common Stock shall result in an adjustment to the Conversion
Price upon the issuance of such securities pursuant to the formula
below.
If
the Maker issues any additional shares of Common Stock or Preferred
Stock for a consideration per share less than the rate at which the
Note is convertible into Common Stock or the Note is convertible
into Series D Preferred Shares, based upon the then applicable
Common Conversion Price or Preferred Conversion Price, as the case
may be, then the Common Conversion Price or the Preferred
Conversion Price, as the case may be, shall be adjusted by
multiplying the then applicable Common Conversion Price or
Preferred Conversion Price, as the case may be, by the following
fraction:
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A + B
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(A + B) + [((C - D) x B) / C]
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A
= The total amount of common shares (in the case of a
dilutive common stock issuance) or the total amount of the
preferred shares (in the case of a dilutive preferred stock
issuance) issuable upon conversion of the Note, as the case may
be.
B
= Actual common shares (in the case of a dilutive common
stock issuance) or preferred shares (in the case of a dilutive
preferred stock issuance) sold in the offering.
C
= Common Conversion Price (in the case of a dilutive common
stock issuance) or Preferred Conversion Price (in the case of a
dilutive preferred stock issuance), as the case may be.
D
= The Offer Price
(d)
Computation of
Consideration . For purposes of
any computation respecting consideration received pursuant to
Section
