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Term Sheet
Secured Convertible
Note
March 29, 2009
This Term
Sheet is by and between the Investor (as defined below) and the
Company (as defined below) and no other person or entity and is
meant to be a party hereto or a third party beneficiary thereof.
The purpose of this Term Sheet is to set forth the indicative terms
pursuant to which the Investor would purchase the securities of the
Company described herein. The terms and conditions set forth herein
are not a complete statement of the terms and conditions for any
such investment and are subject to change, and this Term Sheet does
not constitute an offer or solicitation or commitment to purchase
or sell any securities of the Company. The issuance and sale of
such securities is subject to completion of the Investor’s
due diligence to the Investor’s satisfaction, the preparation
of definitive legal documentation to effect the transaction that is
mutually satisfactory to the Company and the Investor and, in the
case of the Investor, that the Investor shall have determined that
subsequent to the date hereof and prior to the closing of the
transaction contemplated hereby, there shall have been no material
adverse developments relating to the business, assets, liabilities,
operations, properties, condition (financial or otherwise) or
prospects of the Company or any of its subsidiaries, either
individually or taken as a whole. Nothing contained herein
constitutes an agreement or obligation on the part of any person to
purchase or sell securities of the Company or enter into any
agreement to purchase or sell securities of the
Company.
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Cranshire
Capital, L.P. (“Investor”)
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7 months from
original issuance date
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8% per annum,
calculated and payable quarterly in arrears. At the Company’s
option, interest may be paid in cash or in shares of the
Company’s common stock that have been registered for resale
under an effective registration statement. If the Company elects to
pay in common stock, such shares will be valued at a 10% discount
to the average of the daily volume weighted average price of the
Company’s common stock for the 20 trading days immediately
preceding the interest payment date.
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20%
premium to the closing price of the Company’s
common stock on the closing date
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The Convertible
Note will be redeemed in cash by the Company over 4 months in 4
equal monthly installments (each a “Redemption Date”)
commencing with the four month anniversary of the initial issuance
date thereof.
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At the
Company’s option after a resale registration statement
registering the common stock underlying the Convertible Note and
the warrants described below is declared effective by the SEC, the
Company may elect to have the portion of the Convertible Note to be
redeemed automatically convert into common stock on the applicable
Redemption Date in lieu of paying the applicable redemption price
in cash, provided that if the Company elects such automatic
conversion in lieu of paying cash, the conversion will occur at the
lower of the fixed conversion price or a 10% discount to the
average of the daily volume weighted average price of the
Company’s common stock for the 20 trading days immediately
preceding the applicable Redemption Date, and, among other
customary conditions, the common stock to be received is then
registered for resale pursuant to an effective registration
statement.
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The Company may
prepay the Convertible Note in full beg
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