EXHIBIT 4.4
FORM OF
VIPER MOTORCYCLE COMPANY
SERIES A 16% CONVERTIBLE SECURED NOTE
Serial No. ___ Dated: ____________, 20___
Principal Amount: $______________
VIPER MOTORCYCLE COMPANY, a Minnesota corporation (hereinafter "Maker"), for
value received, hereby promises to pay to the order of: _____________________,
at the address designated below, or to any registered transferee (hereinafter
"Note Holder"), the principal sum of $______________, on the earlier of (i) that
date which is within 150 calendar days of the effective date of the Initial
Public Offering (IPO) of Maker, or (ii) that date which is 18 months after the
above-stated date of this Note, together with interest from the issuance date
hereof until all principal is paid in full at the rate of Sixteen Percent (16%)
per annum, in lawful money of the United States of America.
1. PART OF CLASS. This Note is one of an issue of Series A 16% Convertible
Secured Notes authorized to be issued by Maker incident to a limited
private placement being offered only to accredited investors pursuant to
a maximum offering of $600,000.
2. PAYMENT OF INTEREST. Interest shall be paid quarterly during the term
hereof, provided that such quarterly interest payments shall be made on
March 31, 2004, June 30,2004, September 30, 2004, December 31,2004, March
31, 2005, June 30, 2005, September 30,2005 provided that the term of this
Note has not ended prior thereto due to conversion to common stock of
Viper or to prior maturity hereof and payment of all principal due
hereon. The first quarterly payment due March 31, 2004 shall also contain
any accrued interest from 2003, if applicable.
3. ACCELERATION OF MATURITY. In the event of any bankruptcy, liquidation,
dissolution or any other insolvency of Maker, then the Noteholder may
declare the entire principal and any accrued interest due and payable
immediately without further notice, demand or presentment.
4. SECURED STATUS OF NOTE. This Note is secured and collateralized, along
with all other Notes in its class, by hereby assigning to Noteholders of
such Notes a security interest in and to all of Maker's tangible and
intangible assets including Maker's inventory of motorcycle components,
Maker's development and production and office fixtures and equipment, and
all Maker's proprietary motorcycle technology, whether presently owned or
acquired in the future by Maker.
5. OBLIGATION OF MAKER. This Note shall constitute a binding obligation of
the Maker until satisfied in full.
SERIES A 16% CONVERTIBLE SECURED NOTE
6. INVESTMENT INTENT OF NOTEHOLDER. Noteholder hereby acknowledges and
represents that Noteholder has acquired this Note for investment and
without any present view toward resale, transfer or other disposition
thereof, and that no transfer of this Note will be valid unless made in
compliance with relevant securities laws restrictions.
7. COVENANTS OF MAKER. The Maker hereof agrees that for so long as this Note
or any portion hereof is outstanding, the Maker will:
i. Maintain and preserve its corporate existence and all rights,
franchises, and other authority adequate for the effective conduct
of its business; maintain its properties, equipment, facilities
and intellectual property in good status, order and repair; and
conduct its business in an orderly manner without voluntary
interruption.
ii. Maintain adequate insurance including public liability, property
damage, fire and other hazards with responsible insurance carriers
sufficient to protect all property and business operations of
Maker.
iii. Pay and discharge, prior to becoming delinquent, all taxes,
assessments and governmental charges upon or against the Maker or
its properties, except to the extent and so long as any of such
liabilities are being contested by Maker in good faith.
iv. Promptly notify Noteholder in writing of any event of default
hereunder.
v. Shall not make any loans or advances to any person or party unless
in the ordinary course of business, and shall not incur any
material mortgage, pledge, encumbrance or lien against any
property of Maker unless for a valid business purpose.
vi. Shall not sell, lease, assign or transfer any substantial part of
its business or fixed assets or intellectual property unless
consented to in writing by Noteholder.
8. CONVERSION RIGHTS. The principal of this Note shall be convertible into
common stock of Maker anytime, and from time to time, at the option of
Noteholder, at the rate of one share of common stock of Maker for each
$2.50 principal hereof; provided, however, that in the event Maker
obtains an effective date from the SEC for its proposed IPO, this Note
shall mature 150 calendar days thereafter and Noteholder shall exercise
its conversion right during such 150 calendar day period or Maker will
pay all principal and accrued interest thereon upon the expiration of
such 150 calendar days.
Upon any conversion hereof, only principal shall be converted and any
accrued interest shall be paid to Noteholder in cash, unless upon such
conversion date both parties hereto agree in writing to also convert such
accrued interest amount.
Maker shall not be required to issue any fractional shares of its common
stock incident to any conversion hereof, but rather any fractional amount
shall be rounded off to the nearest whole common share.
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SERIES A 16% CONVERTIBLE SECURED NOTE
9. MANNER OF CONVERSION. In order to convert this Note into common stock of
Maker, the Noteholder shall surrender this Note to Maker duly endorsed to
Maker and give written notice to Maker that all or a specified part of
this Note is being converted, such Notice to specify clearly the amount
to be converted. As of the time of such written notice, the Noteholder
shall be treated for all purposes as the record holder of common stock of
Maker into which this Note or portion thereof is converted. Promptly
thereafter,
Maker shall issue and deliver to Noteholder a certificate representing
the number of common shares of Maker into which this Note or portion
thereof is being converted, and the amount converted shall be deemed to
be satisfied and discharged, and the shares of common stock of Maker
relating to such conversion shall be fully paid and non-assessable. In
the event only a portion of this Note is converted, Maker shall issue and
deliver to Noteholder a replacement Note like the one surrendered by
Noteholder except that it shall be in the correct principal amount, which
has not been converted.
Common shares of Maker issued incident to such conversion shall
constitute restricted securities" of Maker as defined under relevant
securities laws, and accordingly certificates issued therefore shall bear
a standard restrictive legend evidencing such restricted nature.
10. ANTI-DILUTION. If Maker shall change its outstanding common shares
hereafter by stock dividend, stock split, sale without consideration,
reorganization, recapitalization, merger or other business combination,
then and in each such event a proportionate adjustment shall be made to
the conversion rate of this Note so as to avoid any diminishment or
enlargement of the conversion terms of this Note.
11. INVESTMENT REPRESENTATION/LACK OF REGISTRATION. By accepting this Note,
the Noteholder represents that the principal amount of this Note and all
shares of common stock of Maker issued incident to any conversion hereof
have been acquired for Noteholder's own account for long-term investment
and with no present intention to transfer, resell or otherwise dispose of
such securities or any part thereof; and Noteholder further agrees that
any common stock into which this Note is converted shall be legend to
evidence its status as restricted securities as defined under relevant
securities laws and regulations.
Neither this Note nor the shares of common stock issuable upon conversion
hereof have been registered under the Securities Act of 1933 or any state
securities laws. Noteholder agrees hereby that prior to any transfer or
other disposition of such common shares of Maker in the future,
Noteholder will give written notice to Maker of such proposed transfer or
disposition and Noteholder further will not make any such transfer or
disposition unless, in the opinion of counsel of the Maker, either a
proper registration has become effective or such registration is not
required due to the existence of a lawful exemption there from.
12. EVENT OF DEFAULT. The following shall be a default on this Note by Maker:
i. Maker shall fail to make any payment of interest or principal to
Noteholder when due under the terms hereof; or
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SERIES A 16% CONVERTIBLE SECURED NOTE
ii. Maker shall fail materially to comply with the covenants of Maker
contained herein and such default shall remain uncured for 30 days
after written notice thereof from Noteholder to Maker.
iii. Maker shall agree to immediately grant Noteholder bonus warrants
in the event the effective date of the IPO does not occur as
follows:
a. April 1, 2004: ________ warrants exercisable at $1.00 per
share for a period of 150 calendar days after the effective
date of the IPO; and
b. May 1, 2004: _________ warrants exercisable at $1.00 per
share for a period of 150 calendar days after the effective
date of the IPO.
iv. In the event the effective date of the IPO does not occur as
follows:
a. April 1, 2004: The effective interest rate increases to
eighteen percent (18%), commencing on April 1, 2004.
Interest payments would then be due monthly, rather than
quarterly.
b. May 1, 2004: The effective interest rate increases to
eighteen percent (18%), retroactive, from the commencement
date of the note. Interest payments would then be due
monthly, rather than quarterly.
13. REMEDY ON DEFAULT. In the event of any default hereunder, Noteholder
shall have the option to declare the entire principal amount hereof plus
any accrued interest hereon to be immediately due and payable without
further notice, demand, presentment for payment, notice of intention to
accelerate or acceleration. Maker hereby guarantees payment of this Note
and waives demand for payment, presentment for payment, notice of
non-payment, protest, notice of protest, notice of dishonor, notice of
acceleration of maturity, and any other similar notices. Maker further
agrees to pay all costs and expenses of collection incurred by
Noteholder, including reasonable attorney's fees.
14. TRANSFER. This Note may not be sold, pledged or otherwise transferred to
any person other than an "accredited investor" as that term is defined in
Regulation D of the Securities Act of 1933. Any authorized transfer of
this Note shall be made only by surrendering this Note duly endorsed to
Maker for cancellation, together with the Noteholder's instructions to
Maker that a replacement Note of like principal amount shall be issued to
such qualified transferee.
15. GENERAL. Noteholder shall not have by any act, delay, omission or
otherwise be deemed to have waived any of Noteholder's rights or remedies
set forth herein, and no waiver of any kind shall be valid unless in
writing and signed by Noteholder. This Note has been executed in the
State of Minnesota and shall be construed and governed by the laws of
Minnesota. No modification or amendment of this Note shall be effective
unless made in writing and signed by both Maker and Noteholder. This Note
shall be binding upon any successors or assigns of Maker, provided also
that Maker shall not assign its obligations under this Note without the
written consent of Noteholder.
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SERIES A 16% CONVERTIBLE SECURED NOTE
16. NOTICES. All demands and notices to be given hereunder shall be delivered
or mailed to Maker at 0000 Xxxxxxxxxx Xxxxxxx, Xxx Xxxx, XX 00000 (or at
such substituted address notified to Noteholder by Maker); and in the
case of Noteholder to the address written below (or at such substituted
address notified to Maker by Noteholder).
IN WITNESS WHEREOF, the Maker has caused this Note to be signed by its duly
authorized officer as of the aforesaid date of issuance.
VIPER MOTORCYCLE COMPANY
By_____________________________________
Its________________________________
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SERIES A 16% CONVERTIBLE SECURED NOTE
RESTRICTIVE LEGEND:
THIS NOTE HAS NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933 OR ANY
STATE BLUE SKY LAWS, AND ACCORDINGLY THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION UNDER SUCH RELEVANT SECURITIES LAWS, OR SATISFYING THE CONDITIONS
OF AN APPROPRIATE EXEMPTION FROM SUCH REGISTRATION TO THE REASONABLE
SATISFACTION OF COUNSEL FOR MAKER.
AGREEMENT OF NOTEHOLDER:
Noteholder xxxxxx confirms and agrees to any representations made in writing by
Noteholder in this document.
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Signature of Noteholder
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Joint Noteholder, if any
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Printed or Typed Name of Noteholder(s)
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Address of Noteholder
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City State ZIP
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