SUBORDINATED CONVERTIBLE PROMISSORY NOTE
TERMS AND CONDITIONS
Newave, Inc.
(the "Company") shall borrow from
-------
"Lender" $
(USD) (the
"Promissory
Note").
----------------
LOAN AMOUNT:
$
8,000.00 (USD)
PROMISSORY NOTE:
INTEREST AND
PAYMENT: Twelve
(12) month term promissory note shall
bear
simple interest
at the rate of twenty percent (20%) per annum, payable
at
maturity.
AT MATURITY:
The Lender,
at their sole discretion, and upon written
notice to the Company
prior to maturity, shall have the right to
receive the return of the principal
Loan amount
plus 20% simple annual interest.
OR CONVERT
THE LENDER'S PRINCIPAL INTO THE COMMON STOCK OF THE
COMPANY IN A
MANNER THAT
WOULD REFLECT THE HIGHEST VALUE FOR
CONVERSION AVAILABLE BASED ON
THE TERMS OF CONVERSION IN THIS DOCUMENT ON THE
DAY THAT THE NOTE MATURES. IF
THE LENDER CONVERTS AT THE END OF THE TERM, THE LENDER WILL BE
ENTITLED TO FULLY
REGISTERED SECURITIES.
IF THE LENDER CONVERTS AND IS ISSUED STOCK PRIOR TO
MATURITY, THE
LENDER WILL BE ENTITLED TO RESTRICTED SECURITIES.
TERMS OF CONVERSION:
The Lender will
receive a minimum of 10,000 Shares of Newave, Inc. Common stock
for every $1000.00
(USD) loaned to the Company or an amount of stock equal to a
thirty percent
(30%) discount to the market value of the stock
on the day of
conversion whichever
results in the greatest value for the lender, to be issued
within 20 days of maturity of this note along with the
appropriate opinion
letter, if
the Lender decides to forfeit the
principal & 20% Interest through
the process
of conversion. The Lender may convert
principal and Interest into
common shares
of Newave, Inc. or any
successor company at the time of maturity
simply by notifying the company in writing anytime prior to the
maturity date of
this note.
If the company has not
received notice by the maturity date of this
note, the authority to choose between payment of Interest and principal
or
conversion will
revert to the Company.
ADDITIONAL BENEFIT:
As an additional benefit, the lender will also be issued by the
Company, a
right, represented
by a warrant. The warrant will be issued with the
above
described common shares, to increase the Lenders holdings of
Newave, Inc. common
stock by 1000 shares per $1000 loaned to borrower at a price not to
exceed $0.75
and no lower than $0.50. The right to exercise the Warrant will
start at the day
of conversion and last for up to one-year beyond that date.
The company may,
in
its sole discretion,
offer a lower exercise price but not a price higher than $
0.75.
SUBORDINATION:
The promissory
notes will be subordinated in payment and preference to
the
Company's existing
or future commercial lenders.
If the company has not
been notified of Lenders intention by maturity date, the
option of repayment
and interest or conversion will transfer to the company and
will follow the same
terms available to the Lender prior to that maturity date.
EARLY REPAYMENT OPTION:
If the early repayment option is taken by Lender, the Company
will agree to
retire the
debt early at 125% of the principal
loan amount. The time of early
retirement will be determined by mutual agreement of the lender and
the Company.
The early repayment must be agreed upon and executed by both parties.
Once
repayment is done under this option, all repayment obligations of
this note will
be considered satisfied and all other options, rights, and warrants
of this note
will be considered canceled.
COVENANTS & COLLATERAL:
The
covenants contained within this note shall be, but not limited to
the
following:
1.)
The Company will be required to raise
additional capital through the
sale of Common Stock.
The Company may be required to seek financing through the
sale of preferred stock, convertible debentures or
other forms of debt and/or
equity financing.
The availability of
additional financing may be dependent on
the relative
success and progress of the Company and may be offered
on more
favorable terms
than offered herein.
2.)
The Company will be required to liquidate assets available to
the
company, in the case of default, to fully repay the loan, by
presenting a demand
letter for
repayment and the
company will be bound to do so immediately and be
so bound by any and all laws applicable as a
Utah Corporation and enforceable
against the
Company's assets, irrespective of the physical
location of those
assets, and irrespective of the physical description of those
assets, so long as
those assets
have a sell value alone or combined to satisfy the debt.
ADJUSTMENTS IN CONVERSION PRICE AND SHARES AND WARRANT EXERCISE
PRICE AND COMMON
SHARES:
The Conversion
Price and Common Shares and Warrant exercise
price and common
shares shall
be subject to adjustment from time to time as
provided in this
Section. [a]
If the Issuer is recapitalized thr
