NEITHER THIS
SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT” ), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
THIS NOTE DOES
NOT REQUIRE PHYSICAL SURRENDER OF THE NOTE IN THE EVENT OF A
PARTIAL REDEMPTION OR CONVERSION. AS A RESULT, FOLLOWING ANY
REDEMPTION OR CONVERSION OF ANY PORTION OF THIS NOTE, THE
OUTSTANDING PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE LESS
THAN THE PRINCIPAL AMOUNT AND ACCRUED INTEREST SET FORTH
BELOW.
10% SECURED CONVERTIBLE NOTE
DUE FEBRUARY 17, 2010
OF
ABAZIAS, INC.
Original
Principal Amount: $ 100,000
Issuance
Date: February __,
2009
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Gainesville,
Florida
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For Value Received, ABAZIAS INC. a corporation
duly organized and existing under the laws of the State of Delaware
(the “ Corporation ”), hereby promises to
pay to the order of OMNIRELIANT HOLDINGS, INC., or its registered
assigns or successors-in-interest (
“Holder” ) the principal sum of up One
Hundred Thousand Dollars (U.S. $100,000.00), together with all
accrued but unpaid interest thereon, no later than February 17,
2010 ( the “ Maturity Date ”) to the
extent such principal amount and interest has not been repaid or
converted into the Corporation’s Common Stock, par value
$0.001 per share (the “Common Stock” ),
in accordance with the terms hereof.
Interest on the unpaid and unconverted principal
balance hereof shall accrue at the rate of 10% per annum from the
date of original issuance hereof (the “Issuance
Date” ) until the same becomes due and payable on the
Maturity Date, or such earlier date upon acceleration or by
conversion, redemption or repayment in accordance with the terms
hereof or of the other Agreements. Interest on this Note
shall accrue daily commencing on the Issuance Date and shall be
computed on the basis of a 360-day year, 30-day months and actual
days elapsed and shall be payable in accordance with Section 1
hereof. Unless otherwise agreed or required by
applicable law, payments will be applied first to any unpaid
collection costs, then to unpaid interest and fees and any
remaining amount to principal.
All payments of principal and interest on this
Note shall be made in lawful money of the United States of America
by wire transfer of immediately available funds to such account as
the Holder may from time to time designate by written notice in
accordance with the provisions of this Note or by company
check. This Note may not be prepaid in whole or in part
except as otherwise provided herein. Whenever any amount
expressed to be due by the terms of this Note is due on any day
which is not a Business Day (as defined below), the same shall
instead be due on the next succeeding day which is a Business
Day.
For purposes hereof the following terms shall
have the meanings ascribed to them below:
“ Business Day ” shall
mean any day other than a Saturday, Sunday or a day on which
commercial banks in the City of New York are authorized or required
by law or executive order to remain closed.
“Conversion Price”
shall equal the greater of (i) $0.50
or (ii) the closing bid price of the
Corporation’s shares of Common Stock on the date of the
Conversion.
“Convertible
Securities” means any convertible securities, warrants,
options or other rights to subscribe for or to purchase or exchange
for, shares of Common Stock.
“ Exchange Act ”
shall mean the Securities Exchange Act of 1934, as
amended.
“ Per Share Selling Price
” shall include the amount actually paid by any Person for
each share of Common Stock in a sale or issuance by the
Corporation. In the event a fee is paid by the
Corporation in connection with such transaction directly or
indirectly to such Person being sold or issued such securities or
its affiliates, any such fee shall be deducted from the selling
price pro rata to all shares sold in the transaction to arrive at
the Per Share Selling Price. A sale of shares of Common
Stock shall include the sale or issuance of rights, options,
warrants or convertible, exchangeable or exercisable securities
under which the Corporation is or may become obligated to issue
shares of Common Stock, and in such circumstances the Per Share
Selling Price of the Common Stock covered thereby shall also
include the exercise, exchange or conversion price thereof (in
addition to the consideration received by the Corporation upon such
sale or issuance less the fee amount as provided
above). In case of any such security issued in a
Variable Rate Transaction or an MFN Transaction, the Per Share
Selling Price shall be deemed to be the lowest conversion or
exercise price at which such securities are converted or exercised
or might have been converted or exercised in the case of a Variable
Rate Transaction, or the lowest adjustment price in the case of an
MFN Transaction, over the life of such securities. If shares are
issued for a consideration other than cash, the Per Share Selling
Price shall be the fair value of such consideration as determined
in good faith by independent certified public accountants mutually
acceptable to the Corporation and the Purchaser.
“ Principal Amount ”
shall refer to the sum of (i) the original principal amount of this
Note, (ii) all accrued but unpaid interest hereunder, and (iii) any
default payments owing under the Agreements but not previously paid
or added to the Principal Amount.
“Principal Market”
shall mean the OTC Bulletin Board or
such other principal market or exchange on which the Common Stock
is then listed for trading.
“ Securities Act ”
shall mean the Securities Act of 1933, as amended.
“Underlying Shares”
means the shares of Common Stock
into which this Note are convertible (including interest or
principal payments in Common Stock as set forth herein) in
accordance with the terms hereof.
The following
terms and conditions shall apply to this Note:
Section
1. Interest Payments .
Subject to and in accordance with the terms of this
Section 1, on the ____ of each month (the
“Interest Payment Date”) during the term of this Note,
the Corporation shall pay to the Holder all interest accrued to
date on the entire outstanding principal amount of this Note
(“ Interest Amount ”). On such
Interest Payment Date the Corporation shall pay to the Holder an
amount equal to such Interest Amount in satisfaction of such
obligation.
(a)
Voluntary Conversion Right . Subject to the terms
hereof and restrictions and limitations contained herein, the
Holder shall have the right, at such Holder’s option, at any
time and from time to time, to convert the outstanding Principal
Amount under this Note in whole or in part by delivering to the
Corporation a fully executed notice of conversion in the form of
conversion notice attached hereto as Exhibit A (the
“Conversion Notice” ), which may be
transmitted by facsimile or electronic transmission.
(b) Common
Stock Issuance upon Conversion
. The Corporation will deliver to the Holder not later than
two (2) Business Days after the Conversion Date, a certificate or
certificates representing the number of shares of Common Stock
being acquired upon the conversion of this Note.
(c) Conversion
Price Adjustments .
(ii)
Stock Dividends, Splits
and Combinations . If the Corporation or any of its
subsidiaries, at any time while this Note are outstanding (A) shall
pay a stock dividend or otherwise make a distribution or
distributions on any equity securities (including instruments or
securities convertible into or exchangeable for such equity
securities) in shares of Common Stock, (B) subdivide outstanding
Common Stock into a larger number of shares, or (C) combine
outstanding Common Stock into a smaller number of shares, then the
Conversion Price shall be multiplied by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding
before such event and the denominator of which shall be the number
of shares of Common Stock outstanding after such event. Any
adjustment made pursuant to this Section 2(c)(ii) shall become
effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in
the case of a subdivision or combination.
(iii)
Distributions . If the
Corporation or any of its subsidiaries, at any time while
this