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Exhibit 10.18
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR
THE WRITTEN ACKNOWLEDGEMENT OF THE ISSUER, WHICH ACKNOWLEDGEMENT WILL NOT BE
UNREASONABLY WITHHELD, THAT A SALE IS PURSUANT TO A VALID EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER SAID ACT OR STATE SECURITIES LAWS.
CONVERTIBLE PROMISSORY NOTE
$8,750 June 23, 2000
FOR VALUE RECEIVED, x-Xxxxxxx.xxx Inc., a Delaware corporation, its
successors and assigns (the "COMPANY"), hereby promises to pay to the order of
Gamma Fund LLC, its successors and assigns (the "HOLDER"): (i) upon the
consummation of a Subsequent Financing (as defined below); (ii) upon an Event of
Default (as defined below); or (iii) in accordance with the other terms of
paragraph 3 herein, whichever is earlier, the principal amount of $8,750, or
such amount advanced or outstanding hereunder, plus interest in arrears from and
including the date hereof on the principal balance from time to time
outstanding, at a rate per annum equal to eight percent (8%). This Note may not
be prepaid in whole or in part, unless such prepayment is approved in writing by
Xxxxxx. Interest shall be calculated on the basis of actual number of days
elapsed over a year of 365 days. Notwithstanding any other provision of this
Note, the Holder does not intend to charge, and the Company shall not be
required to pay, any interest or other fees or charges in excess of the maximum
permitted by applicable law; any payments in excess of such maximum shall be
refunded to the Company or credited to reduce the principal hereunder. All
payments received by the Holder will be applied first to costs of collection, if
any, then to interest and the balance to principal.
Payments of principal and interest will be made by check in immediately
available United States funds sent to the Holder at the address furnished to the
Company for that purpose.
1. Registered Holder; Transfer This Note will be registered on
the books of the Company or its agent as to principal and interest. Any transfer
of this Note will be effected only by surrender of this Note to the Company and
reissuance of a new note to the transferee.
2. Events of Default. The outstanding principal and accrued
interest on this Note shall, at the option of the Holder hereof, become due and
payable without notice or demand, upon the occurrence of any one of the
following specified events (each event referred to as "EVENT OF DEFAULT"):
(a) failure to pay any amount as herein set forth;
(b) default in the performance by the Company of any
material obligation to
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the Holder under this Note, which default is not cured within fifteen (15)
business days after written notice of such default from the Holder;
(c) insolvency (however evidenced) or the commission of
any act of insolvency;
(d) the making of a general assignment for the benefit of
creditors;
(e) the filing of any petition or the commencement of any
proceeding by the Company or any endorser or guarantor of this Note for any
relief under any bankruptcy or insolvency laws, or any laws relating to the
relief of debtors, readjustment of indebtedness, reorganizations, compositions,
or extensions;
(f) the filing of any petition or the commencement of any
proceeding against the Company or any endorser or guarantor of this Note for any
relief under any bankruptcy or insolvency laws, or any laws relating to the
relief of debtors, readjustment of indebtedness, reorganizations, compositions,
or extensions, which proceeding is not dismissed within sixty (60) days; or
(g) suspension of the transaction of the usual business
of the Company for five (5) or more business days.
3. Conversion.
(a) If a Subsequent Financing does not occur by July 31,
2000, the outstanding principal and interest on this Note shall be due in full
on October 15, 2000, or such other date selected by the Holder upon three days
prior written notice to the Company. The outstanding principal on this Note may
be converted at any time by the Holder, and shall automatically convert upon the
consummation of a Subsequent Financing, into the following number of shares of
Series A Common Stock of the Company:
Date of Conversion Shares
Prior to 8/1/2000 4,375
Between 8/1/2000 and 8/31/2000 5,147
After 8/31/2000 6,250
Accrued and unpaid interest shall be paid in cash upon any such
conversion of this Note.
(b) The term "Subsequent Financing" as used herein shall
refer to the sale by the Company to one or more third parties equity securities
of the Company at a financing equal to or exceeding $5,000,000 (or a lesser
amount as agreed by the Holder) in aggregate gross proceeds to the Company.
4. Expenses of Collection. The Company agrees to pay the
Holder's reasonable costs in collecting and enforcing this Note, including
reasonable attorney's fees.
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5. Waiver by Xxxxxx. No waiver of any obligation of the Company
under this Note shall be effective unless it is in a writing signed by the
Holder. A waiver by the Holder of any right or remedy under this Note on any
occasion shall not be a bar to exercise of the same right or remedy on any
subsequent occasion or of any other right or remedy at any time.
6. Notice. Any notice required or permitted under this Note shall
be in writing and shall be deemed to have been given on the date of delivery, if
personally delivered to the party to whom notice is to be given, or on the fifth
business day after mailing, if mailed to the party to whom notice is to be
given, by certified mail, return receipt requested, postage prepaid, or
overnight courier service with proof of receipt.
7. Investment Representations. The Holder is acquiring this Note,
and any securities issued upon conversion hereof, for investment and not with a
view to the distribution thereof within the meaning of the Securities Act of
1933, as amended (the "Securities Act"). The Holder understands that neither
this Note, nor any securities obtainable upon conversion hereof, have been
registered or qualified under the Securities Act or any state securities laws,
by reason of their issuance and sale in transactions exempt from the
registration or qualification requirements of the Securities Act and applicable
state securities laws. The Holder acknowledges that reliance on said exemptions
is predicated in part on the accuracy of Xxxxxx's representations and warranties
herein. The Holder acknowledges and agrees that the Note and such securities
must be held by the Holder indefinitely unless a subsequent disposition thereof
is registered or qualified under the Securities Act and applicable state
securities laws or is exempt from registration. The Holder is an "accredited
Purchaser" as defined in Regulation D promulgated under the Securities Act.
8. Waiver by Company. The Company hereby expressly waives
presentment, demand and protest, notice of demand, dishonor and nonpayment of
this Note, and all other notices or demands of any kind in connection with the
delivery, acceptance, performance, default or enforcement hereof, and hereby
consents to any delays, extensions of time, renewals, waivers or modifications
that may be granted or consented to by the Holder hereof with respect to the
time of payment or any other provision hereof.
9. Severability. In the event any one or more of the provisions
of this Note shall for any reason be held to be invalid, illegal or
unenforceable, in whole or in part or in any respect, or in the event that any
one or more of the provisions of this Note operate or would prospectively
operate to invalidate this Note, then and in any such event, such provision(s)
only shall be deemed null and void and shall not affect any other provision of
this Note and the remaining provisions of this Note shall remain operative and
in full force and effect and in no way shall be affected, prejudiced, or
disturbed thereby.
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10. Governing Law. This Note shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware without giving
effect to the conflict of laws principles thereof.
X-XXXXXXX.XXX INC.
By:
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Name: Xxxxxxx X. Xxxxxxxxx, Xx.
Its: President
GAMMA FUND LLC
By:
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Name: Xxxxxx X. Xxxxxxx, Xx.
Its: Managing Member
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