January 20 , 2009 Element 21 Golf Company
Name of
Investor:
January 20
, 2009
Element
21 Golf Company
000
Xxxxxx Xxxx X Xxxx #0
Toronto,
Ontario, Canada M5A 4K9
ELEMENT 21
BRIDGE LOAN TERMS
$ 300,000
US
FOR VALUE RECEIVED, the
undersigned, ELEMENT 21 GOLF
COMPANY, a Delaware corporation (the “Borrower”), hereby promises
to pay to the order of , (the “Lender”), the principal
amount of Three Hundred
Thousand Dollars ($ 300,000).
Section 1. The
Note. The $ 300,000 loan shall take the
form of a 7% Convertible
Promissory Note which shall be repaid in a period of not more than 6 months from
the date of origination.
Section 2. Interest. All indebtedness outstanding
under this Note shall bear interest (computed on the basis of a 360-day year) at
the rate of seven percent (7%) per annum commencing from the date of this
Note. Interest shall be payable on the Maturity Date.
Section 3. Prepayment. This Note or any part of the
principal amount hereof (in denominations of ten thousand dollars ($10,000) or
multiples thereof) may be prepaid by the Borrower without penalty, premium or
prior notice, however, the right of conversion remains with the lender for the
full period of six months one.
Section 4. Conversion.
|
|
(a)
|
The
outstanding principal, at the option of the Lender, can be converted
anytime during the six months, on terms and conditions applicable thereto
at a conversion price equal to 45 cents per
share.
|
|
|
(b)
|
If
the Lender desires to exercise its conversion rights during 6 months
period, the Lender shall surrender his Note, duly endorsed, at the
principal office of the Company and shall give written notice to the
Borrower of his election to convert the outstanding principal hereon into
Equity Securities. The notice shall state the name(s) of the nominee(s) of
the Lender in which any Equity Securities are to be issued. The Company
shall, as soon as practicable thereafter, issue and deliver at such office
to the Lender or such nominee(s), a certificate or certificates for the
number of Equity Shares to which the Lender or such nominee(s) is
entitled.
|
|
|
(c)
|
No
fractional shares shall be issued upon conversion of this Note. Instead of
issuing any fractional shares that would otherwise be issuable upon
conversion of this Note (or any portion hereof), the Borrower shall round
up to the nearest whole number of shares and pay to the Lender cash in an
amount equal to the amount of such fractional
interest.
|
|
|
(d)
|
In
addition under the choice of conversion, Xxxxxx again retains the right to
convert at the price per share of 45
cents.
|
|
|
(e)
|
In
addition to the terms above, the Lender shall have the option to purchase
additional shares at 35
cents for maximum amount of the original investment ($300,000).
This exercise of this option can be made anytime during the twelve (12)
months from the date of
origination.
|
|
|
(f)
|
In
such case, the Lender may choose to exercise all options during or at the
termination of twelve (12) months by converting the Bridge Loan and by
purchasing 1 x (one times) the number of original shares converted at the
termination of 12 months at the price of conversion of 35
cents. All future options would then be
extinguished.
|
|
|
(g)
|
If
the Lender does not choose to exercise his option to purchase
at the conversion date, that option would expire worthless, and
would not be available again.
|
Section 5. Special Circumstances. Element 21 agrees to honor and uphold the specific tenants of this agreement which shall remain in effect withstanding any future changes to the subscription agreement which may be made by Xxxxxxxx’s legal counsel.
Section 6. Payment
in U.S. Funds.
Unless this Note is converted into Equity Securities in accordance with
Section 4 hereof, payments of both principal and interest on this Note are to be
made in lawful money of the United States payable by check payable to the Lender
and mailed to the address of the Lender as set forth in the first paragraph of
this Note or such other place as the holder hereof shall designate to the
Borrower in writing.
Section 7. Events of
Default. The
following events are Events of Default:
(i) the Borrower fails to pay to the
holder of this Note any monetary obligation due under this Note after having
received fourteen (14) business days prior written notice that such obligation
has become due;
(ii) the Borrower fails, for fourteen
(14) business days after written notice, to comply with any other material term,
condition, covenant, or agreement in this Note;
(iii) the Borrower becomes insolvent,
makes an assignment for the benefit of creditors, calls a meeting of its
creditors to obtain any general financial accommodation or suspends business;
or
(iv) a case under the Bankruptcy Code
is commenced by or against the Borrower or a liquidator, trustee, custodian or
similar officer is appointed for all or a material portion of the Borrower's
assets, and such case is not dismissed or such appointment is not rescinded
within thirty (30) days thereafter.
Section 8. Remedies
Upon Default.
Upon the occurrence of any Event of Default, the principal amount of and
accrued and unpaid interest on this Note may be declared by the Lender (by
giving written notice to the Borrower) to be immediately due and payable by the
Borrower. Thereafter, the Lender shall be entitled to all rights and
remedies provided by applicable law.
The Borrower shall pay the costs and
expenses of collection, including, without limitation, reasonable attorneys'
fees and disbursements if any action, suit or proceeding is brought by the
holder hereof to collect this Note.
Section 9. Amendments
and Assignment.
This Note may be amended by one or more written instruments signed by the
Borrower and by the Lender. Without the Borrower’s prior written
consent, this Note may not be assigned or negotiated by the Lender.
Section 10. Non-Recourse. No officer, director,
shareholder, agent or employee of the Borrower shall be personally liable for
any of the indebtedness of the Borrower represented by this Note or
otherwise.
CHOICE OF LAWS AND
JURISDICTION. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO ITS
RULES PERTAINING TO CONFLICTS OF LAWS.
|
ELEMENT
21 GOLF COMPANY
|
||||
|
By:
|
||||
|
Name:
|
Xxxxxxxx
Xxxxx
|
|||
|
Title:
|
Chief
Executive Officer
|
|||
