ELEMENT 21 GOLF COMPANY 10% CONVERTIBLE PROMISSORY NOTE
Exhibit
4.1
ELEMENT
21 GOLF COMPANY
|
$___________
|
May
14, 2006
|
FOR
VALUE RECEIVED,
the
undersigned, ELEMENT
21 GOLF COMPANY,
a
Delaware corporation (the “Borrower”),
hereby
promises to pay to the order of _____________ (the “Lender”),
the
principal amount of __________ ($______) on May 14, 2007 (the “Maturity Date”)
plus accrued and unpaid interest.
Section
1. Definitions. All
capitalized terms used herein and that are not otherwise defined herein shall
have the respective meanings ascribed to them in the Subscription Agreement,
dated May 14, 2006, by and between the Borrower and the Lender (the
“Subscription Agreement”).
Section
2. Prepayment. This
Note
or any part of the principal amount hereof (in denominations of one thousand
dollars ($1,000) or multiples thereof) may be prepaid by the Borrower without
penalty, premium or prior notice.
Section
3. Interest. All
indebtedness outstanding under this Note shall bear interest (computed on the
basis of a 360-day year) at the rate of ten percent (10%) per annum commencing
from the date of this Note. Interest shall be payable on the Maturity
Date.
Section
4. Conversion.
(a) The
outstanding principal and accrued interest on this Note shall, at the option
of
the Lender, be converted at any time on or prior to the Maturity Date into
shares of the Company’s Common Stock, $.01 par value per share (the “Common
Stock”), at a conversion price equal to the
greater of (i) $0.175, or (ii) the ten day trading average of shares of Common
Stock on the OTC Bulletin Board for the ten trading days ending on the day
immediately prior to the date of conversion
(such
price being referred to herein the “Conversion Price”).
(b) If
the
Lender desires to exercise the conversion rights set forth in this Section
4,
the Lender shall surrender this Note, duly endorsed, at the principal office
of
the Company and shall give written notice to the Borrower at such office of
its
election to convert the outstanding principal and accrued interest hereon into
shares of Common Stock. The notice shall state the name(s) of the nominee(s)
of
the Lender in which any shares of Common Stock 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
shares of Common Stock to which the Lender or such nominee(s) is
entitled.
(c)
No
fractional shares or scrip 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, multiplied by the Conversion
Price.
Section
5. Payment
in U.S. Funds. Unless
this Note is converted into shares of Common Stock 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
6. 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 seven (7) business days prior written
notice that such obligation has become due;
(ii) the
Borrower fails, for seven (7) 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
7. 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
8. 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
9. 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.
Section
10. 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: President | ||
