EXHIBIT 4.1
THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE " ACT "). NO INTEREST IN THIS NOTE MAY BE
OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT
APPLICABLE, PURSUANT TO RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE
UNDER THE ACT), OR (iii) AN EXEMPTION FROM REGISTRATION UNDER
THE ACT WHERE THE HOLDER HAS FURNISHED TO THE COMPANY AN OPINION OF
ITS COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE.
WINSONIC DIGITAL MEDIA GROUP, LTD.
9 % CONVERTIBLE SUBORDINATED PROMISSORY
NOTE
FOR VALUE RECEIVED, the
undersigned, Winsonic Digital Media Group, Ltd., a Nevada
corporation (" Payor "), having its executive office at 260
Peachtree Street, Suite 2200, Atlanta, Ga. promises to pay to
ATLANTA CENTENNIAL, LLC. ("Payee"), having an address at Payor's
address set forth above (or at such other place as Payee may from
time to time hereafter direct by notice in writing to Payor), the
principal sum of TWO HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS
($250,000.00), in such coin or currency of the United States of
America as at the time shall be legal tender for the payment of
public and private debts, on the first to occur of the following
dates: (i): June 1, 2006, (the " Maturity Date ")
upon the demand by the holders of a majority in interest of the
Notes; (ii) the date on which the outstanding principal amount
of this Note is prepaid in full as hereinafter permitted (the "
Prepayment Date "); (iii) the date of which the
outstanding principal amount of this Note is automatically
converted, or the Payee elects to convert into Common Stock of the
Payor (the “Conversion Date”); and (iv) (any other date
on which any principal amount of, or accrued unpaid interest on,
this Note is declared to be, or becomes, due and payable pursuant
to its terms prior to the Maturity Date (the " Acceleration
Date ").
1.
Interest And Payment .
1.1.
The principal amount of this Note outstanding from time
to time shall bear simple interest at the annual rate (the "
Note Rate ") of nine percent (9%) from the date hereof
through the earliest to occur of (i) the Maturity Date;
(ii) the Prepayment Date; (iii) the Conversion Date, or
(iv) the Acceleration Date.
1.2. Interest accrued on this Note
shall be payable not later than, on the earliest to occur of (i)
the Maturity Date; (ii) the Prepayment Date; (iii) the Acceleration
Date; or (iv) the Conversion Date.
1.3. All payments made by the Payor on
this Note shall be applied first to the payment of accrued unpaid
interest on this Note and then to the reduction of the unpaid
principal balance of this Note.
1.4. In the event that the date for
the payment of any amount payable under this Note falls due on a
Saturday, Sunday or public holiday under the laws of the State of
Georgia, the time for payment of such amount shall be extended to
the next succeeding business day and interest at the Note Rate
shall continue to accrue on any principal amount so effected until
the payment thereof on such extended due date.
2.
Replacement Of Note .
2.1. In the event that this Note is
mutilated, destroyed, lost or stolen, Payor shall, at its sole
expense, execute, register and deliver a new Note, in exchange and
substitution for this Note, if mutilated, or in lieu of and
substitution for this Note, if destroyed, lost or stolen. In the
case of destruction, loss or theft, Payee shall furnish to Payor
indemnity reasonably satisfactory to Payor, and in any such case,
and in the case of mutilation, Payee shall also furnish to Payor
evidence to its reasonable satisfaction of the mutilation,
destruction, loss or theft of this Note and of the ownership
thereof. Any replacement Note so issued shall be in the same
outstanding principal amount as this Note and dated the date to
which interest shall have been paid on this Note or, if no interest
shall have yet been paid, dated the date of this Note.
2.2. Every Note issued pursuant to the
provisions of Section 2.1 above in substitution for this Note shall
constitute an additional contractual obligation of the Payor,
whether or not this Note shall be found at any time or be
enforceable by anyone.
3.
Prepayment . The principal
amount of this Note may be prepaid in whole at any time, or in part
from time to time, without penalty or premium, together with unpaid
interest thereon accrued through the Prepayment Date. Each partial
prepayment of this Note shall first be applied to interest accrued
through the Prepayment Date and then to principal.
4.
Acceleration Date. On or
before the Maturity Date, if the Payor completes a transaction
(“Merger Transaction”) in which (a) Payor is merged or
consolidated with or into any other corporation in which the
shareholders of the Payor shall own less than 50% of the voting
securities of the surviving corporation or (b) the acquirer
purchases all or substantially all of the Payor’s assets, the
principal and accrued interest outstanding under the Notes will be
due and payable upon the closing (the Acceleration Date”)
subject to the Payee’s rights of conversion set forth in
Section 8 below.
5.
Covenants of Payor .
Payor covenants and
agrees that, so long as this Note remains outstanding and unpaid,
in whole or in part:
5.1. Payor will not sell, transfer or
dispose of a material part of its assets;
5.2. Payor will promptly pay and
discharge all lawful taxes, assessments and governmental charges or
levies imposed upon it, its income and profits, or any of its
property, before the same shall become in default, as well as all
lawful claims for labor, materials and supplies which, if unpaid,
might become a lien or charge upon such properties or any part
thereof; provided, however, that Payor or such subsidiary shall not
be required to pay and discharge any such tax, assessment, charge,
levy or claim so long as the validity thereof shall be contested in
good faith by appropriate proceedings and Payor or such subsidiary,
as the case may be, shall set aside on its books adequate reserves
with respect to any such tax, assessment, charge, levy or claim so
contested;
5.3. Payor will do or cause to be done
all things necessary to preserve and keep in full force and effect
its corporate existence, rights and franchises and substantially
comply with all laws applicable to Payor as its counsel may
advise;
5.4. Payor will at all times maintain,
preserve, protect and keep its property used or useful in the
conduct of its business in good repair, working order and condition
(except for the effects of reasonable wear and tear in the ordinary
course of business) and will, from time to time, make all necessary
and proper repairs, renewals, replacements, betterments and
improvements thereto;
5.5. Payor will, promptly following
the occurrence of an Event of Default or of any condition or event
which, with the giving of notice or the lapse of time or both,
would constitute an Event of Default, furnish a statement of
Payor's Chief Executive Officer or Chief Financial Officer to Payee
setting forth the details of such Event of Default or condition or
event and the action which Payor intends to take with respect
thereto; and
5.6. Payor will, and will cause each
of its subsidiaries to, at all times maintain books of account in
which all of its financial transactions are duly recorded in
conformance with generally accepted accounting principles.
6.
Events of Default . If any of
the following events (each an " Event of Default ")
occurs:
6.1. The dissolution of Payor or any
vote in favor thereof by the board of directors and shareholders of
Payor; or
6.2. Payor makes an assignment for the
benefit of creditors, or files with a court of competent
jurisdiction an application for appointment of a receiver or
similar official with respect to it or any substantial part of its
assets, or Payor files a petition seeking relief under any
provision of the Federal Bankruptcy Code or any other federal or
state statute now or hereafter in effect affording relief to
debtors, or any such application or petition is filed against
Payor, which application or petition is not dismissed or withdrawn
within sixty (60) days from the date of its filing; or
6.3. Payor fails to pay the principal
amount, or interest on, or any other amount payable under, this
Note as and when the same becomes due and payable; and such default
is not cured within thirty (30) days of such default or
6.4. Payor admits in writing its
inability to pay its debts as they mature; or
6.5. Payor sells all or substantially
all of its assets or merges or is consolidated with or into another
corporation; other than a merger or other transactions in
connection with the Arcadia Acquisition, or
6.6. A proceeding is commenced to
foreclose a security interest or lien in any property or assets of
Payor as a result of a default in the payment or performance of any
debt (in excess of $50,000 and secured by such property or assets)
of Payor or of any subsidiary of Payor; or
6.7. A final judgment for the payment
of money in excess of $50,000 is entered against Payor by a court
of competent jurisdiction, and such judgment is not discharged (nor
the discharge thereof duly provided for) in accordance with its
terms, nor a stay of execution thereof procured, within sixty (60)
days after the date such judgment is entered, and, within such
period (or such longer period during which execution of such
judgment is effectively s
