THIS NOTE AND THE STOCK INTO WHICH IT IS CONVERTIBLE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE UNITED STATES OF AMERICA
(THE "ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES ("STATE
ACT"). THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OF DISTRIBUTION THEREOF, AND MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED FOR VALUE, DIRECTLY OR
INDIRECTLY, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND COMPLIANCE WITH APPLICABLE STATE ACTS, OR PURSUANT TO AN EXAMPTION FROM
REGISTRAITON UNDER THE ACT AND UNDER APPLICABLE STATE ACTS, THE AVAILABILITY OF
WHICH ARE ESTABLISHED BY MEANS OF AN OPINION TO SUCH EFFECT IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY AND RENDERED BY LEGAL COUNSEL SATISFACTORY
TO THE COMPANY.
OLD FASHIONED SYRUP COMPANY
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
$135,000.00 North Miami Beach, Florida
August 15, 2003
1. Promise to Pay. FOR VALUE RECEIVED, OLD FASHIONED SYRUP COMPANY, a
Florida corporation (the "Company") promises to pay, in lawful money of
the United States of America, to the order of Latitude Investment
Corp., or assignee (the "Holder"), at North Miami Beach, Florida or at
such other place as Holder shall from time to time direct, on or before
October 15, 2004, the principal amount of One Hundred and Thirty Five
Thousand Dollars and no cents ($135,000.00) plus interest at the sole
discretion of the Holder at a rate of Six (6.0%) percent. If the Note
is still outstanding after six (6) months from the date hereof, then at
the option of the Holder, the principal and any interest accrued may be
convertible into fifty-one (51%) percent of the issued and outstanding
common stock of the Company in accordance with Section 3. Conversion.
2. Default. The Company shall be in default under this Note upon the
occurrence of any of the following events:
2.1 The Company fails to timely perform any of its obligations
under, or otherwise breaches any covenants or warranties of
this Note;
2.2 Any statement, representation, or warranty made by the Company
or its agents to Holder shall prove to have been false or
materially misleading when made; and/or,
2.3 The Company shall become insolvent, or unable to meet its
obligations as they become due, or shall file or have filed
against it, voluntarily or involuntarily, a petition under the
United States Bankruptcy Code or shall procure or suffer the
appointment of a receiver for any substantial portion of its
properties, or shall make an assignment for benefit of
creditors, or shall initiate or have initiated against it,
voluntarily or involuntarily, any act, process, or proceedings
under any insolvency law or other statute or law providing for
the modifications or adjustment of the rights of creditors.
Upon any event of default, Xxxxxx may declare the entire unpaid
principal balance of this Note and all accrued unpaid interest
immediately due, without notice, and the Company agrees to pay such
amount immediately in such event. In the event of default, the Company
agrees to pay all of Xxxxxx's costs of collection, including attorney's
fees; this shall include legal expenses for the bankruptcy proceedings
or insolvency proceedings (including efforts to modify or vacate any
automatic stay or injunction), court costs, appeals, post-judgement
collection expenses and any other amount provided by law. The parties
intend this provision to be given the most liberal construction
possible and to apply to any circumstances in which such party
reasonably incurs expenses. No delay or omission on the part of any
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Holder hereof in exercising any right or option herein given to such
Holder shall impair such right or option or be considered as a waiver
thereof or acquiescence in any default hereunder. The Company hereby
waives any applicable statue of limitations, presentment, demand for
payment, protest and notice of dishonor.
3. Conversion. The Holder shall have conversion rights as follows (the
"Conversion Rights"):
3.1 Right To Convert. If such amount has not been paid in full
within six months from the date of issuance of this Note, this
Note shall be convertible, at the option of the Holder, into
fifty one (51%) percent of the issued and outstanding common
shares of the Company.
3.2 Mechanics of Conversion. Before Holder shall be entitled to
convert this Note into shares of Common Stock, he shall
surrender this Note at the office of the Company, and shall
give written notice in person, or by facsimile, mail, postage
prepaid, to the Company at its principal corporate office, of
Holder's election to convert the Note and shall state therein
the name or names in which the certificate or certificates for
shares of Common Stock are to be issued, the address of such
persons to be used for record purposes, and the address(s) to
which the certificate(s) should be delivered if different from
the record address. Such notice shall be on the form attached
to this Note as Exhibit `A'. The Company shall as soon as
practicable thereafter, issue and deliver to Holder, or to the
nominee or nominees of Holder, a certificate or certificates
for the number of shares of Common Stock to which Holder shall
be entitled as aforesaid. Such conversion shall be deemed to
have been made immediately prior to the close of business on
the date of such surrender of the Note to be converted, and
the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of
Common Stock as of such date.
3.3 Voting Rights. If at any time or from time to time there
occurs matters that require a vote by the shareholders of the
Company, the Holder shall have the right to cast votes equal
to the number of shares then convertible as of the date of the
vote required.
3.4 No Impairment. The Company will not, by amendment of its
Articles of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this
Section 3 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion
Rights of the Holder against impairment
3.5 No Fractional Shares and Certificates as to Conversion. No
fractional shares shall be issued upon conversion of the Note,
and the number of shares of Common Stock to be issued shall be
rounded to the nearest whole share.
3.6 Notices of Record Date. In the event of any taking by the
Company of a record of the holders of any class of securities
for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, any
right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or
property, or to receive any other right, the Company shall
mail to Holder, at least 20 days prior to the date specified
therein, a notice specifying the date on which any such record
is to be taken for the purpose of such dividend, distribution,
or right, and the amount and character of such dividend,
distribution, or right. In the case of rights to acquire any
shares of stock or any other class of securities or property,
Company shall grant to Holder the same rights as if the Holder
had converted his Note upon the Record Date.
3.7 Reservation of Stock Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock solely for the
purpose of effecting the conversion of the Notes such number
of shares of Common Stock as shall from time to time be
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sufficient to effect the conversion of all outstanding Notes;
and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the
conversion of all then-outstanding Notes, in addition to such
other remedies as shall be available to the Holder, the
Company will take such corporate action as may, in the opinion
of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes.
3.8 Notices. Any notice required by the provisions of this Section
3 to be given to the Holder shall be deemed given if deposited
in the United States mail, postage prepaid and certified,
return receipt requested and addressed to Xxxxxx of record at
his address appearing on the books of the Company.
4. Security. The Company has granted the Holder a security interest in the
collateral set forth in the Security Agreement, including, but not
limited to, all of the shares and assets of the Company.
5. Entitlement to Cash Flow. Until the Note is paid in full, the Holder is
entitled to fifteen (15%) percent of the cash flow of the Company with
cash flow defined as net income, plus depreciation and interest minus
capital expenditures.
6. Assignment. Subject to the restrictions on transfer herein, the Holder
may transfer this Note in whole or in part, in the event of partial
transfer(s), the Company will exchange this Note for new Notes as
instructed by the Holder equal to the total of this Note, by
endorsement and delivery in the same manner as any negotiable
instrument transferable by endorsement and delivery. Until this Note is
transferred on the Company books, the Company may treat the registered
Holder of this Note as the absolute owner of this Note for all
purposes, despite any notice to the contrary. The Company's obligations
hereunder may not be transferred without prior written consent of the
Holder; any attempt to transfer without consent shall be void ab
initio.
7. Restrictions on Transfer. This Note and the stock into which it is
convertible have not been registered under the Securities act of 1933,
as amended, of the United States of America (the "Act") or the
securities laws of any sate of the United States ("State Act"). This
Note and the stock into which it is convertible have been acquired for
investment and not with a view to, or in connection with, the sale or
distribution thereof, and may not be offered, sold, pledged,
hypothecated. Or otherwise transferred for value directly or
indirectly, in the absence of an effective registration statement under
the Act and compliance with applicable State Acts, or pursuant to an
exemption from registration under the Act and under applicable State
Acts, the availability of which are established by means of an opinion
to such effect. In form and substance satisfactory to the Company and
rendered by legal counsel satisfactory to the Company. The certificates
representing the shares into which this Note is convertible shall bear
the foregoing legend.
8. Replacement. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Note and,
in the event of such occurrence, on delivery of an indemnity agreement
or bond reasonably satisfactory in form and amount to the Company or,
in the case of mutilation, on surrender and cancellation of this Note,
the Company at its expense will execute and deliver, in lieu of this
Note, a new Note of like tenor. On surrender of this Note for exchange
and subject to the provisions of this Note on compliance with the
Securities Act, the Company, at its expense will issue to or on the
order of the Holder of this Note a new Note or Notes of like tenor, in
the name of that Holder or as that Holder (on payment by the Holder of
any applicable transfer taxes) may direct, in the same total principal
amount as this Note.
9. Appointment of Agent. The Company may, on written notice to the Holder
of this Note, appoint an agent for the purposes of issuing Common Stock
or other securities on the conversion of this Note and of replacing or
exchanging this Note; and after that appointment occurs any such
issuance, replacement, or exchange shall be made at that office by that
agent.
10. Restrictive Covenant. The Company agrees that it will provide us with
twenty four hour notice prior to entering into any agreements for
capital raising and the incurring of indebtedness and we shall have the
option of approving of such agreement.
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11. Miscellaneous.
11.1 Amendment. No supplement, modification, or amendment of this
Note shall be binding unless executed in writing by all the
parties hereto.
11.2 Waiver. No waiver of any of the provisions of this Note shall
be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
Neither the acceptance of any partial or delinquent payment by
the Holder nor the Holder's failure to exercise any of its
rights or remedies on default by the Company shall be a waiver
by the Holder of any default or the Company obligations under
this Note, or a waiver of any subsequent default by the
Company.
11.3 Timeliness. Time is of the essence of this Note and each and
all of its provisions.
11.4 Notices. Notices given under this Note shall be in writing and
shall be delivered personally, by messenger, by certified U.S.
mail, return receipt requested, or by a common overnight
carrier delivery service. Notices shall be deemed received
upon receipt of same. Notices to the Company shall be
addressed to 0000 XX 000xx Xxxxxx, Xxxxxxxxx 0, Xxxxx Xxxxx
Xxxxx, Xxxxxxx 00000. Notices to the Holder shall be directed
to Xxxxxx at the Holder's address of record on the Company's
books. A party may change its address for notice by giving
written notice to the other party in accordance with this
Section.
11.5 Governing Law and Venue. This Note shall be construed in
accordance with, and governed by, the laws of the State of
Florida, and any action or proceeding, including arbitration,
brought by any party in which this Note is a subject shall be
brought in Florida
11.6 Effect of Headings. The headings of the sections of this Note
are included for purposes of convenience only, and shall not
affect the construction or interpretation of any of its
provisions.
11.7 Invalidity. Any provision of this Note which is invalid, void,
or illegal, shall not affect, impair, or invalidate any other
provision of this Note, and such other provisions of this Note
shall remain in full force and effect.
11.8 Professional Fees and Costs. If any legal or equitable action,
arbitration, or other proceeding, whether on the merits or on
motion, are brought or undertaken, or an attorney is retained
to enforce this Note, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any
of the provisions of this Note, then the successful or
prevailing party or parties in such undertaking (or the party
that would prevail if an action were brought) shall be
entitled to recover reasonable attorney's fees and other
professional fees and other costs incurred in such action,
proceeding or discussions, in addition to any other relief to
which such party would be entitled. The parties intend this
provision be given the most liberal construction possible and
to apply to any circumstances in which such party reasonably
incurs expenses.
Old Fashioned Syrup Company.
By: /s/ Xxxxx Xxxxxxxx
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EXHIBIT `A'
CONVERSION NOTICE
TO: Old Fashioned Syrup Company
0000 XX 000xx Xxxxxx,
Xxxxxxxxx 0
Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000
Attn: Corporate Secretary
The undersigned owner of this Senior Secured Convertible Note due
October 15, 2004 (the "Note") issued by Old Fashioned Syrup Company (the
"Company") hereby irrevocably exercises its option to convert the amount owed on
the Note into fifty one (51%) percent of the issued and outstanding shares of
Common Stock of the Company in accordance with the terms of the Note. The
undersigned directs that the Common Stock and certificates therefore deliverable
upon conversion be registered in the name of and/or delivered to the undersigned
unless a different name has been indicated below. All capitalized terms used and
not defined herein have the respective meanings assigned to them in the Note.
The conversion pursuant hereto shall be deemed to have been effected at the date
and time specified below, and at such time the rights of the undersigned as a
Holder of the Principal Amount of the Note set forth above shall cease and the
Person or Persons in whose name or names the Common Stock Issued at Conversion
shall be registered shall be deemed to have become the holder or holders of
record of the Common Shares represented thereby and all voting and other rights
associated with the beneficial ownership of such Common Shares shall at such
time vest with such Person or Persons.
Date and time:
---------------------------------
Signature
Fill in for registration of Note:
Please print name and address
(including ZIP code number):
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