BONDS.COM GROUP, INC. SECURED CONVERTIBLE PROMISSORY NOTE
Exhibit
10.2
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAS
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
XXXXX.XXX
GROUP, INC.
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U.S.
$[ ]
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JUNE
8, 2009
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THIS SECURED CONVERTIBLE PROMISSORY
NOTE (this “Note”) is made as of
the 8th day of June 2009, by Xxxxx.xxx Group, Inc., a Delaware
corporation (the “Maker”), in favor of [_____________] or its
assigns (“Payee”).
RECITALS
WHEREAS, this Note is being issued pursuant to
and in connection with a Secured Convertible Note and Warrant Purchase Agreement
dated June 8, 2009 (the “Purchase
Agreement”) among the
Maker, the Payee and certain other Purchasers set forth
therein.
NOW,
THEREFORE, for and in
consideration of the mutual agreements herein contained, and for and in
consideration of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Maker and Payee hereby covenant
and agree as set forth below.
FOR VALUE RECEIVED, Maker
hereby promises to pay to the order of Payee, the principal sum of
[_______________ DOLLARS ($________)], or such lesser amount as
may from time to time be otherwise owing from Maker to Payee under this Note,
together with interest on the principal amount from time to time outstanding
hereunder accrued from the date hereof at the rate and in the manner set forth
below. All payments of principal or interest or both shall be paid as
set forth below, and each such payment shall be made in lawful money of the
United States of America.
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This Note is subject to the following
terms and conditions:
1. Payments
of Principal and Interest.
(a) Repayment. Unless
otherwise repaid, exchanged or converted as provided herein, the entire unpaid
principal balance of this Note, together with all accrued but unpaid interest
thereon, shall be due and payable in full on April 30, 2011 (the “Maturity
Date”). Xxxxx’s conversion rights shall be extinguished upon
payment in full of all principal and accrued interest and all other amounts due
hereunder on or after the Maturity Date. Interest shall accrue and be
payable in arrears on the Maturity Date.
(b) Prepayment. The Maker shall not have
the right to repay this Note or any Notes unless consented to in writing by the
Payee.
(c) Manner of
Payment. Maker
shall send a written notice to the Holder not less then 15 days prior to the
Maturity Date requesting that the Holder inform the Maker as to whether the
Holder wishes to have the outstanding principal and interest due under this Note
repaid on the Maturity Date in either: (i) immediately available funds, or (ii)
shares of Common Stock at a price per share equal to the then existing
Conversion Price (as defined below) (the “Form of
Payment Instruction”). The Holder shall provide
the Form of Payment Instruction to the Maker in writing no later then three days
prior to the Maturity Date. Maker shall make payment in accordance with the Form
of Payment Instruction and the terms of this Note no later than 5:30 p.m. E.S.T.
on the date when due. Each payment of principal and of
interest shall be paid by Maker without setoff or counterclaim to Payee at
Payee’s address set forth below, or to such other location or accounts within
the United States as Payee may specify in writing to Maker from time to
time. Notwithstanding the foregoing, in the event that the Maker does
not receive the Form of Payment Instruction within the time frame set forth
above, the Maker shall be entitled to choose whether to repay the Note in
immediately available funds or shares of Common Stock.
(d) Cancellation;
Surrender. After all amounts owed on this Note have been
satisfied in full and/or all amounts due under this Note have been converted
into Common Stock, this Note will be surrendered to Maker, duly endorsed, at the
principal offices of Maker or any transfer agent for Maker. Xxxxx
shall also execute and deliver any ancillary agreements as may be reasonably
requested to effect the exchange of this Note. Maker shall pay any
and all issue and other taxes, if any, that may be payable in respect of any
issue or delivery of the securities hereunder.
2. Interest
Rate.
(a) This
Note will bear interest at the rate of ten percent (10%) per year, from the date
hereof to and including the date of payment, exchange or conversion of this
Note. Interest on this Note shall be calculated on the basis of
actual days elapsed and a 360-day year of twelve 30-day months, compounded
annually.
(b) Interest
on this Note shall be due and payable on the earlier of (i) conversion of the
Notes by the Payee or (iii) the Maturity Date (each such date, an
“Interest Payment
Date”), except that if such date is not a business day then the Interest
Payment Date shall be
the next day that is a business day. Any accrued interest that is not otherwise
paid in cash or in shares of Common Stock on the applicable Interest Payment
Date (whether due to Maker’s inability to pay such interest in cash or in shares
of Common Stock) shall automatically, and without any action on the part of
Maker, accrue and be added to the outstanding principal and interest due under
the Note on such Interest Payment Date.
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(c) Interest
shall be paid in the same form (i.e. cash or share of Common Stock) as the form
in which the associated principal amount is paid.
3.
Voluntary
Conversion.
(a) Generally. At any
time at which there is principle or interest outstanding under this Note, the
Payee shall be entitled upon written notice to the Maker to convert all of the
principal and interest due hereunder into shares of Common Stock of the Maker.
Such Conversion shall occur upon the date of the provision of such written
notice and shall be effectuated at a price (the “Conversion Price”)
per share equal to the lower of: (i) $0.375 per share (as adjusted for stock
splits, combinations and the like) and (ii) the price per share (as adjusted for
stock splits, combinations and the like) of any shares of Common Stock sold by
the Company to any person or entity other then pursuant to an Excluded
Transaction (as defined below) while this Note is outstanding. For
the purposes hereof, the term Exempted Transaction shall mean: (i) the issuance
of options and/or restricted stock to employees and consultants of the Maker and
approved by the board of directors of the Maker and (ii) warrants issued to
third parties in strategic transactions and approved by the board of directors
of the Maker.
(b) Mechanics of
Conversion. No fractional shares of the Maker’s capital stock
will be issued upon conversion of this Note. In lieu of any
fractional share to which the Payee would otherwise be entitled, the Maker will
pay to the Payee in cash the amount of the unconverted principal and interest
balance of this Note that would otherwise be converted into such fractional
share. Upon conversion of this Note pursuant to this Section 3, the
Payee shall surrender this Note, duly endorsed, at the principal offices of the
Maker or any transfer agent of the Maker. At its expense, the Maker
will, as soon as practicable thereafter, issue and deliver to such Payee, at
such principal office, a certificate or certificates for the number of shares to
which such Payee is entitled upon such conversion, together with any other
securities and property to which the Payee is entitled upon such conversion
under the terms of this Note, including a check payable to the Holder for any
cash amounts payable as described herein. Upon conversion of this
Note, the Maker will be forever released from all of its obligations and
liabilities under this Note with regard to that portion of the principal amount
and accrued interest being converted including without limitation the obligation
to pay such portion of the principal amount and accrued interest.
4.
Events
of Default. The
following are “Events of
Default”
hereunder:
(a) any failure by Maker to pay when due all
or any principal or accrued interest hereunder;
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(b) any representation or warranty made by
or on behalf of Maker in this Purchase Agreement proves to have been incorrect,
false or misleading in any material respect on the date of which
made;
(c) any failure by Maker to perform any
covenant or agreement under this Note or any other agreement, document or
instrument contemplated hereby and such failure shall remain uncured for a
period of fifteen (15) days after receipt by Maker of written notice of such
failure from Payee;
(d) if Maker or any of its material
subsidiaries shall (i) apply for or consent to the appointment of a receiver,
trustee, custodian or liquidator or any of its property, (ii) admit in writing
its inability to pay its debts as they mature, (iii) make a general assignment
for the benefit of creditors, (iv) be adjudicated bankrupt or insolvent or be
the subject of an order for relief under Title 11 of the United States
Bankruptcy Code, (v) file a voluntary petition in bankruptcy or a petition for
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation, or an answer admitting the material allegations of a petition filed
against it in any proceeding under any such law and such petition or proceeding
shall remain undismissed or unstayed for thirty (30) days, or (vi) take or
permit to be taken any action in furtherance of or for the purpose of effecting
any of the foregoing;
(e) any dissolution, liquidation or winding
up of Xxxxx.xxx. or any substantial portion of their
businesses;
(f)
any cessation of operations by
Xxxxx.xxx or Xxxxx.xxx is otherwise generally unable to pay its debts as such
debts become due;
(g) if a default with respect to payment of
indebtedness of $100,000 or more occurs under any other loan agreement, note or
other instrument or evidence of indebtedness of Maker and continues beyond any
applicable grace period therein provided; or
provided, however, that with respect to
any Event of Default (other than under Section
5(a) (with respect to
payment of principal), 5(d), or 5(e)), the Maker shall have ten (10)
business days to cure such Event of Default following the receipt of a written
notice of such Default from the Payee.
5.
Remedies
on Default. If
any Event of Default shall occur and be continuing, then the entire principal
and all accrued interest under this Note shall, at the option of Payee (except
in the case of an Event of Default under Section
5(d) or 5(e) above, in which event acceleration
shall be automatic), become immediately due and payable, without notice or
demand and such principal and accrued interest shall be paid by the Maker in
accordance with the provisions of Section 1(c) hereof.
6.
Certain
Waivers. Except
as otherwise expressly provided in this Note, Maker hereby waives diligence,
demand, presentment for payment, protest, dishonor, nonpayment, default and
notice of any and all of the foregoing.
7.
No
Impairment. Maker will not, by
amendment of its articles of incorporation, bylaws, or through reorganization,
consolidation, merger, dissolution, sale of assets, or
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another
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Note, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of Payee against
impairment.
8. Amendments. This Note may not be
changed orally, but only by an agreement in writing and signed by holders
holding at least a majority of the principal amounts outstanding under the
Notes.
9. GOVERNING
LAW; JURISDICTION; WAIVER OF JURY TRIAL. THIS NOTE SHALL BE DEEMED
TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF FLORIDA AND SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA.
MAKER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS
LOCATED IN PALM BEACH COUNTY, FLORIDA, AND ANY APPELLATE COURT FROM ANY THEREOF,
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE OF FLORIDA
OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. NOTHING IN THIS NOTE
OR ANY OTHER LOAN DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS NOTE TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
10. Notices. All notices and
communications shall be in writing and shall be delivered pursuant to the
addresses and consistent with the procedures set forth in the Purchase
Agreement.
11. Transaction
and Enforcement Costs. In the event that Payee
shall, after the occurrence and during the continuance of an Event of Default
(and provided that Payee shall be permitted, at such time, to enforce its rights
hereunder and retain payments received hereunder), turn this Note over to an
attorney for collection, Maker shall further be obligated to Payee for Xxxxx’s
reasonable attorneys’ fees and expenses incurred in connection with such
collection as well as any other reasonable costs incurred by Payee in connection
with the collection of all amounts due hereunder.
12. Loss,
Theft, Destruction or Mutilation of Note. Upon notice by Payee to
Maker of the loss, theft, destruction or mutilation of this Note, and upon
surrender and cancellation of this Note, if mutilated, Maker, as its expense,
will make and deliver a new note of like tenor, in lieu of this Note, subject to
receipt of an Affidavit of Loss by the Company and reasonably
satisfactory indemnification (as determined by the Company).
13. Successors
and Assigns. This Note and the
obligations and rights of Maker hereunder, shall be binding upon and inure to
the benefit of Maker, the holder of this Note, and their respective successors
and assigns. This Note shall not be assigned by the Maker or Payee
whether by contract or by law, or in a merger or any other similar
transaction.
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14. Severability. In the event that any
provision of this Note becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Note will continue in
full force and effect without said provision and the parties agree to replace
such provision with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of such provisions;
provided,
however, that no such
severability will be effective against a party if it materially and adversely
changes the economic benefits of this Note to such party.
15. Further
Assurances. Maker and its agents shall
each cooperate with Payee and use (or cause its agents to use) its best efforts
to promptly (i) take or cause to be taken all necessary actions, and do or cause
to be done all things necessary, proper or advisable under this Note and
applicable laws to consummate and make effective all transactions contemplated
by this Note as soon as practicable following the request of Payee, and (ii)
obtain all approvals required to be obtained from any third party necessary,
proper or advisable to the transactions contemplated by this
Note.
16. Usury. Notwithstanding
any provision to the contrary contained in this Note, or any and all other
instruments or documents executed in connection herewith, Maker and Payee intend
that the obligations evidenced by this Note conform strictly to the applicable
usury laws from time to time in force. If, under any circumstances
whatsoever, fulfillment of any provisions thereof or any other document, at the
time performance of such provisions shall be due, shall involve transcending the
limit of validity prescribed by law, then, ipso facto, the obligation to
be fulfilled shall be reduced to the limit of such validity.
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IN WITNESS
WHEREOF, Maker has duly
caused this Note to be signed on its behalf, in its company name and by its duly
authorized officer as of the date first set forth above.
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XXXXX.XXX GROUP,
INC.
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By.
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Name:
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Title:
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NOTICE OF
CONVERSION
The
undersigned hereby irrevocably elects to exercise the right set forth in Section
3 of the Promissory Note of XXXXX.XXX GROUP, INC. dated as
of______________, 20___, to convert $ _______________ of principal due
under such Promissory Note (and all associated accrued interest) into shares of
Common Stock of XXXXX.XXX
GROUP, INC. at a Conversion Price of $0.375 per share, for an aggregate
total of ____________ shares of Common Stock.
Please
deliver the stock certificate to:
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Dated:
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[Name
of Xxxxxx]
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By:
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