Exhibit 10.61
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
NOTE OR SUCH COMMON SHARES, AS APPLICABLE UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
VENTURES-NATIONAL INCORPORATED (D/B/A TITAN GENERAL HOLDINGS, INC.) THAT SUCH
REGISTRATION IS NOT REQUIRED.
CONVERTIBLE TERM NOTE
FOR VALUE RECEIVED, VENTURES-NATIONAL INCORPORATED (D/B/A TITAN GENERAL
HOLDINGS, INC.), a Utah corporation (the "BORROWER"), hereby promises to pay to
LAURUS MASTER FUND, LTD., c/o Ironshore Corporate Services Ltd., P.O. Box 1234
G.T., Queensgate House, South Church Street, Grand Cayman, Cayman Islands, Fax:
000-000-0000 (the "HOLDER") or its registered assigns or successors in interest,
on order, the sum of TWO MILLION ONE HUNDRED THOUSAND DOLLARS ($2,100,000),
together with any accrued and unpaid interest hereon, on November 20, 2006 (the
"MATURITY DATE") if not sooner paid.
Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in that certain Securities Purchase Agreement
dated as of the date hereof between the Borrower and the Holder (the "PURCHASE
AGREEMENT").
The following terms shall apply to this Note:
ARTICLE I
INTEREST & AMORTIZATION
1.1 INTEREST RATE AND PAYMENT. (a) Subject to Sections 4.9 and 5.6
hereof, interest payable on this Note shall accrue at a rate per annum (the
"Interest Rate") equal to the "prime rate" published in THE WALL STREET JOURNAL
from time to time, plus three percent (3%). The prime rate shall be increased or
decreased as the case may be for each increase or decrease in the prime rate in
an amount equal to such increase or decrease in the prime rate; each change to
be effective as of the day of the change in such rate. Subject to adjustment as
set forth in Section 1.1(b), in no event shall the Interest Rate will be less
than seven percent (7.00%). Interest shall be payable monthly in arrears
commencing on December 1, 2003, on the first day of each consecutive calendar
month thereafter (each, a "REPAYMENT DATE"), and on the Maturity Date, whether
by acceleration or otherwise.
1.1 (b) On the last business day of each month hereafter (each a
"DETERMINATION DATE"), the Interest Rate shall be adjusted: if (i) the Company
shall have registered the shares of the Company's common stock underlying the
conversion of this Note and that certain warrant of even date herewith to
purchase up to 350,000 shares of Common Stock issued to the Holder on a
registration statement declared effective by the SEC , and (ii) the volume
weighted average price of the Common Stock as reported by Bloomberg, L.P. on the
principal market for the 10 trading days immediately preceding
a Determination Date exceeds the then applicable Fixed Conversion Price in such
percentages as outlined in the table below, the Interest Rate for the succeeding
calendar month shall automatically be adjusted as follows:
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100% or less of Applicable Fixed Conversion
Price Interest Rate
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125% of the applicable Fixed Conversion Price Interest Rate minus 0.25%
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150% of the applicable Fixed Conversion Price Interest Rate minus 0.50%
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175% of the applicable Fixed Conversion Price Interest Rate minus 0.75%;
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And thereafter, for each 25% incremental increase in the Fixed
Conversion Price, the Interest Rate will be correspondingly reduced by twenty
five (25) basis points, PROVIDED, HOWEVER, that in no event will the Interest
Rate hereunder be reduced to less than 0.00%.
1.2 MINIMUM MONTHLY PRINCIPAL PAYMENTS. Amortizing payments of the
aggregate principal amount outstanding under this Note at any time (the
"PRINCIPAL AMOUNT") shall begin on February 1, 2004 and shall recur on the first
calendar day of each succeeding month thereafter until the Maturity Date (each,
an "AMORTIZATION DATE"). Subject to Section 3.4 below, beginning on the first
Amortization Date, the Borrower shall make monthly payments to the Holder on
each Repayment Date, each in the amount of $63,636.36, together with any accrued
and unpaid interest to date on such portion of the Principal Amount plus any and
all other amounts which are then owing under this Note but have not been paid
(collectively, the "MONTHLY AMOUNT").
ARTICLE II
BORROWER PAYMENT OPTIONS
2.1 (a) PAYMENT OF MONTHLY AMOUNT IN CASH OR COMMON STOCK. Subject to
the terms hereof, the Borrower shall have the sole option to determine whether
to satisfy payment of the Monthly Amount on each Repayment Date either in cash
or in shares of Common Stock (as defined in the Purchase Agreement), or a
combination of both. Each month by the tenth (10th) day of such month, the
Borrower shall deliver to the Holder a written irrevocable notice in the form of
Exhibit B attached hereto electing to pay the Monthly Amount payable on the next
Repayment Date in either cash or Common Stock, or a combination of both (each, a
"REPAYMENT ELECTION NOTICE") (the date by which such notice is required to be
given being hereinafter referred to as the "NOTICE DATE"). If a Repayment
Election Notice is not delivered to the Holder by the applicable Notice Date for
such Repayment Date, then the Monthly Amount due on such Repayment Date shall be
paid in cash. Any portion of the Monthly Amount paid in cash on a Repayment
Date, shall be paid to the Holder an amount equal to (x) 103% of the principal
portion of the Monthly Amount plus (y) any accrued and unpaid interest in
satisfaction of such obligation. If the Borrower repays all or a portion of the
Monthly Amount in shares of Common Stock, the number of such shares to be issued
for such Repayment Date shall be the number determined by dividing (x) the
portion of the Monthly Amount to be paid in shares of Common Stock, by (y) the
Fixed Conversion Price. For purposes hereof, the "FIXED CONVERSION PRICE" means
$0.77.
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(b) MONTHLY AMOUNT COMMON STOCK PAYMENT GUIDELINES. Subject to Sections
2.1(a) and 2.2 hereof, if the Borrower has elected to pay all or a portion of
the Monthly Amount due on such Repayment Date in shares of Common Stock and the
closing price of the Common Stock as reported by Bloomberg, L.P. on the
Principal Market (as defined in Section 4.7 hereof) for any of the ten (10)
trading days preceding a Repayment Date was less than 110% of the Fixed
Conversion Price, then the Borrower shall pay in cash instead. Any part of the
Monthly Amount due on such Repayment Date that the Borrower did not elect to pay
in shares of Common Stock shall be paid by the Borrower in cash on such
Repayment Date. Any part of the Monthly Amount due on such Repayment Date which
the Borrower elected to pay in shares of Common Stock but which must be paid in
cash (as a result of the closing price of the Common Stock on one or more of the
five (5) trading days preceding the applicable Repayment Date was less than 110%
of the Fixed Conversion Price) shall be paid within three (3) business days
following the applicable Repayment Date.
2.2 NO EFFECTIVE REGISTRATION. Notwithstanding anything to the contrary
herein, the Borrower shall not repay any part of its obligations to the Holder
hereunder in Common Stock if (i) there fails to exist an effective current
Registration Statement (as defined in the Registration Rights Agreement covering
the shares of Common Stock to be issued in connection with such payment, or (ii)
an Event of Default hereunder exists and is continuing, unless such Event of
Default is cured within any applicable cure period or is otherwise waived in
writing by the Holder in whole or in part at the Holder's option.
2.3 OPTIONAL PREPAYMENTS IN COMMON STOCK. Subject to Section 2.2
hereof, if the average closing price of the Common Stock on the Principal Market
is greater than 110% of the Fixed Conversion Price for a period of at least five
(5) consecutive trading days, then the Borrower may, at its sole option, provide
the Holder written notice (a "PREPAYMENT CALL NOTICE") requiring the conversion
at the then applicable Fixed Conversion Price of all or a portion of the
outstanding principal, interest and fees outstanding under this Note (subject to
compliance with Section 2.3 and 3.2), together with accrued interest on the
amount being prepaid, as of the date set forth in such Prepayment Call Notice
(the "PREPAYMENT CALL DATE"). The Prepayment Call Date shall be at least ten
(10) trading days following the date of the Prepayment Call Notice. On the
Prepayment Call Date, the Borrower shall deliver to the Holder certificates
evidencing the shares of Common Stock issued in satisfaction of the principal
and interest being prepaid. Notwithstanding the foregoing, the Borrower's right
to issue shares of Common Stock in satisfaction of its obligations under this
Note shall be subject to the limitation that the number of shares of Common
Stock issued in connection with any Prepayment Call Notice shall not exceed 25%
of the aggregate dollar trading volume of the Common Stock for the ten (10)
trading days immediately preceding the Prepayment Call Date (as such volume is
reported by Bloomberg L.P.). If the price of the Common Stock falls below 110%
of the then applicable Fixed Conversion Price during the ten (10) trading day
period immediately preceding the Prepayment Call Date, then the Holder will then
be required to convert only such amount of the Note as shall equal twenty five
percent (25%) of the aggregate dollar trading volume (as such volume is reported
by Bloomberg L.P.) for each day that the Common Stock has exceeded 110% of the
then applicable Fixed Conversion Price.
The Borrower shall not be permitted to give the Holder more than one
Prepayment Call Notice under this Note during any 22-day period.
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Any principal amount of this Note which is prepaid pursuant to this
Section 2.3 shall be deemed to constitute payments of outstanding principal
applying to Monthly Amounts for the remaining Repayment Dates in chronological
order.
2.4 OPTIONAL REDEMPTION IN CASH. The Borrower will have the option of
prepaying this Note in full ("OPTIONAL REDEMPTION") by paying to the Holder a
sum of money equal to one hundred fifteen percent (115%) of the principal amount
of this Note together with accrued but unpaid interest thereon and any and all
other sums due, accrued or payable to the Holder arising under this Note or the
Purchase Agreement or any Related Document (as defined in the Purchase
Agreement) (the "REDEMPTION AMOUNT") outstanding on the day written notice of
redemption (the "NOTICE OF REDEMPTION") is given to the Holder, which Notice of
Redemption shall specify the date for such Optional Redemption (the "REDEMPTION
PAYMENT DATE"). A Notice of Redemption shall not be effective with respect to
any portion of this Note for which the Holder has a pending election to convert
pursuant to Section 3.1 and the Redemption Amount shall be determined as if such
election to convert had been completed immediately prior to the date of the
Notice of Redemption. The Redemption Payment Date shall not be earlier than the
day after the date of the Notice of Redemption and not later than seven (7) days
after the date of the Notice of Redemption. On the Redemption Payment Date, the
Redemption Amount must be paid in good funds to the Holder. In the event the
Borrower fails to pay the Redemption Amount by the Redemption Payment Date, then
such Redemption Notice will be null and void.
ARTICLE III
CONVERSION RIGHTS
3.1. HOLDER'S CONVERSION RIGHTS. The Holder shall have the right, but
not the obligation, to convert all or any portion of the then aggregate
outstanding principal amount of this Note, together with interest and fees due
hereon, into shares of Common Stock subject to the terms and conditions set
forth in this Article III. The Holder may exercise such right by delivery to the
Borrower of a written notice of conversion not less than one (1) day prior to
the date upon which such conversion shall occur. The date upon which such
conversion shall occur is the "CONVERSION DATE".
3.2 CONVERSION LIMITATION. Notwithstanding anything contained herein to
the contrary, the Holder shall not be entitled to convert pursuant to the terms
of this Note an amount that would be convertible into that number of Conversion
Shares which would exceed the difference between the number of shares of Common
Stock beneficially owned by such Holder or issuable upon exercise of warrants
held by such Holder and 4.99% of the outstanding shares of Common Stock of the
Borrower. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and Regulation 13d-3 thereunder. The Holder may void the Conversion Share
limitation described in this Section 3.2 upon 75 days prior notice to the
Borrower or without any notice requirement upon an Event of Default.
3.3 MECHANICS OF HOLDER'S CONVERSION. (a) In the event that the Holder
elects to convert this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion
("NOTICE OF CONVERSION") to the Borrower and such
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Notice of Conversion shall provide a breakdown in reasonable detail of the
Principal Amount, accrued interest and fees being converted. On each Conversion
Date (as hereinafter defined) and in accordance with its Notice of Conversion,
the Holder shall make the appropriate reduction to the Principal Amount, accrued
interest and fees as entered in its records and shall provide written notice
thereof to the Borrower within two (2) business days after Conversion Date. Each
date on which a Notice of Conversion is delivered or telecopied to the Borrower
in accordance with the provisions hereof shall be deemed a Conversion Date (the
"CONVERSION DATE"). A form of Notice of Conversion to be employed by the Holder
is annexed hereto as Exhibit A.
(b) Pursuant to the terms of the Notice of Conversion, the Borrower
will issue instructions to the transfer agent accompanied by an opinion of
counsel within one (1) business day of the date of the delivery to Borrower of
the Notice of Conversion and, if the transfer agent is a participant in
Depository Trust Corporation, shall cause the transfer agent to transmit the
certificates representing the Conversion Shares to the Holder by crediting the
account of the Holder's designated broker with the Depository Trust Corporation
("DTC") through its Deposit Withdrawal Agent Commission ("DWAC") system within
three (3) business days after receipt by the Borrower of the Notice of
Conversion (the "DELIVERY DATE"). In the event that the transfer agent is not
such a participant, the Borrower shall use best efforts to cause a certificate
representing the Conversion Shares to be delivered to the Holder within three
(3) business days. Unless the transfer books of the Borrower should otherwise be
closed (solely as required by applicable securities law or the regulations of
the Principal Market) at the time of the receipt of such Notice of Conversion,
in the case of the exercise of the conversion rights set forth herein the
conversion privilege shall be deemed to have been exercised and the Conversion
Shares issuable upon such conversion shall be deemed to have been issued upon
the date of receipt by the Borrower of the Notice of Conversion. The Holder
shall be treated for all purposes as the record holder of such Common Stock,
unless the Holder provides the Borrower written instructions to the contrary. In
the event that the transfer books of the Borrower should be so closed (solely as
required by applicable securities law or the regulations of the Principal
Market), the Holder shall be deemed to hold the Conversion Shares commencing on
the first date upon which such transfer books are again open.
3.4 CONVERSION MECHANICS.
(a) The number of shares of Common Stock to be issued upon each
conversion of this Note shall be determined by dividing that portion of the
principal and interest and fees to be converted, if any, by the then applicable
Fixed Conversion Price. In the event of any conversions of outstanding principal
amount under this Note in part pursuant to this Article III, such conversions
shall be deemed to constitute conversions of outstanding principal amount
applying to Monthly Amounts for the remaining Repayment Dates in chronological
order. By way of example, if the original principal amount of this Note is
$2,100,000 and the Holder converted $100,000 of such original principal amount
prior to the first Repayment Date, then (1) the principal amount of the Monthly
Amount due on the first subsequent Repayment Date would equal $0.00, (2) the
principal amount of the Monthly Amount due on the second subsequent Repayment
Date would equal $27,272.72 and (3) the principal amount of the Monthly Amount
due on the third subsequent Repayment Dates would be $63,636.36.
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(b) The Fixed Conversion Price and number and kind of shares or other
securities to be issued upon conversion is subject to adjustment from time to
time upon the occurrence of certain events, as follows:
A. STOCK SPLITS, COMBINATIONS AND DIVIDENDS. If the shares of Common
Stock are subdivided or combined into a greater or smaller number of shares of
Common Stock, or if a dividend is paid on the Common Stock in shares of Common
Stock, the Fixed Conversion Price or the Conversion Price, as the case may be,
shall be proportionately reduced in case of subdivision of shares or stock
dividend or proportionately increased in the case of combination of shares, in
each such case by the ratio which the total number of shares of Common Stock
outstanding immediately after such event bears to the total number of shares of
Common Stock outstanding immediately prior to such event.
B. During the period the conversion right exists, the Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the full conversion of
this Note. The Borrower represents that upon issuance, such shares will be duly
and validly issued, fully paid and non-assessable. The Borrower agrees that its
issuance of this Note shall constitute full authority to its officers, agents,
and transfer agents who are charged with the duty of executing and issuing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the conversion of this Note.
C. SHARE ISSUANCES. Subject to the provisions of this Section 3.4, if
the Borrower shall at any time prior to the conversion or repayment in full of
the Principal Amount issue any shares of Common Stock to a person other than the
Holder (except (i) pursuant to Subsections A or B above; (ii) pursuant to
options, warrants, or other obligations to issue shares outstanding on the date
hereof as disclosed to Holder in writing; or (iii) pursuant to options that may
be issued under any employee incentive stock option and/or any qualified stock
option plan adopted by the Borrower) for a consideration per share (the "Offer
Price") less than the Fixed Conversion Price in effect at the time of such
issuance, then the Fixed Conversion Price shall be immediately reset to such
lower Offer Price. For purposes hereof, the issuance of any security of the
Borrower convertible into or exercisable or exchangeable for Common Stock shall
result in an adjustment to the Fixed Conversion Price at the time of issuance of
such securities.
D. RECLASSIFICATION, ETC. If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
to evidence the right to purchase an adjusted number of such securities and kind
of securities as would have been issuable as the result of such change with
respect to the Common Stock immediately prior to such reclassification or other
change.
3.5 ISSUANCE OF NEW NOTE. Upon any partial conversion of this Note, a
new Note containing the same date and provisions of this Note shall, at the
request of the Holder, be issued by the Borrower to the Holder for the principal
balance of this Note and interest which shall not have been converted or paid.
The Borrower will pay no costs, fees or any other consideration to the Holder
for the production and issuance of a new Note.
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ARTICLE IV
EVENTS OF DEFAULT
If an Event of Default (as defined below) occurs and is continuing, the
Borrower's rights under Sections 2.1, 2.3 and 2.4 shall immediately cease and be
of no further effect until such time as the Event of Default has been cured, or
has been waived by the Holder. Upon the occurrence and continuance of an Event
of Default beyond any applicable grace period, the Holder may make all sums of
principal, interest and other fees then remaining unpaid hereon and all other
amounts payable hereunder due and payable within five business (5) days after
written notice from Holder to Borrower (each occurrence being a "DEFAULT NOTICE
PERIOD"). In the event of such an acceleration, the amount due and owing to the
Holder shall be 125% of the outstanding principal amount of the Note (plus
accrued and unpaid interest and fees, if any). If, with respect to any Event of
Default other than a payment default described in Section 4.1 below, within the
Default Notice Period the Borrower cures the Event of Default, the Event of
Default will be deemed to no longer exist and any rights and remedies of Holder
pertaining to such Event of Default will be of no further force or effect.
The occurrence of any of the following events is an "EVENT OF DEFAULT":
4.1 FAILURE TO PAY PRINCIPAL, INTEREST OR OTHER FEES. The Borrower
fails to pay when due any installment of principal, interest or other fees
hereon in accordance herewith, or the Borrower fails to pay when due any amount
due under any other promissory note issued by Borrower.
4.2 BREACH OF COVENANT. The Borrower breaches any material covenant or
other term or condition of this Note or the Purchase Agreement in any material
respect and such breach, if subject to cure, continues for a period of thirty
(30) days after the occurrence thereof.
4.3 BREACH OF REPRESENTATIONS AND WARRANTIES. Any material
representation or warranty of the Borrower made herein, in the Purchase
Agreement, or in any Related Document (as defined in the Purchase Agreement)
shall be materially false or misleading and shall not be cured for a period of
ten (10) days after the occurrence thereof.
4.4 RECEIVER OR TRUSTEE. The Borrower shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its property or business; or such
a receiver or trustee shall otherwise be appointed.
4.5 JUDGMENTS. Any money judgment, writ or similar final process shall
be entered or filed against the Borrower or any of its property or other assets
for more than $250,000, and shall remain unvacated, unbonded or unstayed for a
period of ninety (90) days.
4.6 BANKRUPTCY. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Borrower.
4.7 STOP TRADE. An SEC stop trade order or Principal Market trading
suspension of the Common Stock shall be in effect for 5 consecutive days or 5
days during a period of 10 consecutive days, excluding in all cases a suspension
of all trading on a Principal Market, PROVIDED that the
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Borrower shall not have been able to cure such trading suspension within 30 days
of the notice thereof or list the Common Stock on another Principal Market
within 60 days of such notice. The "Principal Market" for the Common Stock shall
include the NASD OTC Bulletin Board, NASDAQ SmallCap Market, NASDAQ National
Market System, American Stock Exchange, or New York Stock Exchange (whichever of
the foregoing is at the time the principal trading exchange or market for the
Common Stock, or any securities exchange or other securities market on which the
Common Stock is then being listed or traded.
4.8 FAILURE TO DELIVER COMMON STOCK OR REPLACEMENT NOTE. The Borrower's
failure to timely deliver Common Stock to the Holder pursuant to and in the form
required by this Note, and Section 9 of the Securities Purchase Agreement, or if
required, a replacement Note if such failure to timely deliver Common Stock
shall not be cured within three (3) business days or such failure to deliver a
replacement Note is not cured within seven (7) business days.
4.9 DEFAULT UNDER RELATED AGREEMENTS. The occurrence and continuance of
any Event of Default as defined in the Related Agreements.
4.10 PAYMENT GRACE PERIOD. The Borrower shall have a three (3) business
day grace period to pay any monetary amounts due under this Note or the Purchase
Agreement or any Related Document, after which grace period a default interest
rate of five percent (5%) per annum above the then applicable interest rate
hereunder shall apply to the monetary amounts due.
4.11 CONVERSION PRIVILEGES. The conversion privileges set forth in
Article III shall remain in full force and effect immediately from the date
hereof and until this Note is paid in full.
4.12 CUMULATIVE REMEDIES. The remedies under this Note shall be
cumulative.
ARTICLE V
MISCELLANEOUS
5.1 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part
of the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
5.2 NOTICES. Any notice herein required or permitted to be given shall
be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the
Borrower at the address provided in the Purchase Agreement executed in
connection herewith, with a copy to Reitler Brown LLC, 000 Xxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxxx Xxxxx, Esq., facsimile
number (000) 000-0000, and to the Holder at the address provided in the Purchase
Agreement for such Holder, with a copy to Xxxx X. Xxxxxx,
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Esq., 000 Xxxxx Xxxxxx , 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, facsimile number
(000) 000-0000, or at such other address as the Borrower or the Holder may
designate by ten days advance written notice to the other parties hereto. A
Notice of Conversion shall be deemed given when made to the Borrower pursuant to
the Purchase Agreement.
5.3 AMENDMENT PROVISION. The term "Note" and all reference thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument issued pursuant to Section 3.5
hereof, as it may be amended or supplemented.
5.4 ASSIGNABILITY. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements of the Purchase Agreement.
5.5 GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the city of
New York, state of New York. Both parties and the individual signing this Note
on behalf of the Borrower agree to submit to the jurisdiction of such courts.
The prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Note is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or unenforceability of any other provision
of this Note. Nothing contained herein shall be deemed or operate to preclude
the Holder from bringing suit or taking other legal action against the Borrower
in any other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court in favor of the Holder.
5.6 MAXIMUM PAYMENTS. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.
5.7 SECURITY INTEREST. The holder of this Note has been granted a
security interest in certain assets of the Borrower more fully described in a
Security Agreement dated as of November 20, 2003.
5.8 CONSTRUCTION. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.
5.9 COST OF COLLECTION. If default is made in the payment of this Note,
the borrower shall
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pay to Holder reasonable costs of collection, including reasonable attorney's
fees.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, Xxxxxxxx has caused this Convertible Term Note to
be signed in its name effective as of this 20th day of November, 2003.
VENTURES-NATIONAL INCORPORATED
D/B/A TITAN GENERAL HOLDINGS, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------------------
Name: Xxxxxx Xxxxxxx
----------------------------
Title: President
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WITNESS:
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EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the Holder in order to convert all or part of the Note into
Common Stock
[Name and Address of Holder]
The Undersigned hereby elects to convert $_________ of the principal due on
[SPECIFY APPLICABLE REPAYMENT DATE] under the Convertible Term Note issued by
VENTURES-NATIONAL INCORPORATED D/B/A TITAN GENERAL HOLDINGS, INC. dated November
20, 2003 by delivery of shares of Common Stock of VENTURES-NATIONAL INCORPORATED
D/B/A TITAN GENERAL HOLDINGS, INC. on and subject to the conditions set forth in
Article II of such Note.
1. Date of Conversion
-----------------------------
2. Shares To Be Delivered:
-----------------------------
By:
------------------------------
Name:
----------------------------
Title:
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EXHIBIT B
REPAYMENT ELECTION NOTICE
(To be executed by the Borrower in order to pay all or part of a Monthly Amount
with Common Stock)
[Name and Address of Holder]
VENTURES-NATIONAL INCORPORATED D/B/A TITAN GENERAL HOLDINGS, INC. hereby elects
to pay $_________ of the Monthly Amount due on [specify applicable Repayment
Date] under the Convertible Term Note issued by VENTURES-NATIONAL INCORPORATED
D/B/A TITAN GENERAL HOLDINGS, INC. dated _______, 200__ by delivery of shares of
Common Stock of VENTURES-NATIONAL INCORPORATED D/B/A TITAN GENERAL HOLDINGS,
INC. on and subject to the conditions set forth in Article II of such Note.
1. Fixed Conversion Price: $__________________
2. Amount to be paid: $__________________
3. Shares To Be Delivered (line 2 divided by line 1) : __________________
Date: ____________ VENTURES-NATIONAL INCORPORATED
D/B/A TITAN GENERAL HOLDINGS, INC.
By:
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Name:
----------------------------
Title:
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