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 APPLICABLE STATE SECURITIES LAWS.
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO COMMERCIAL CONCEPTS, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.
CONVERTIBLE NOTE
FOR VALUE RECEIVED, COMMERCIAL CONCEPTS, INC., a Utah corporation
(hereinafter called "Borrower"), hereby promises to pay to KESHET L.P., Ragnall
House, 00 Xxxx Xxxx, Xxxxxxx, Xxxx xx Xxx, 0X0 0X0, Xxxxxx Xxxxxxx, Fax No.:
000-000-00000000 (the "Holder") or order, without demand, the sum of Forty-Seven
Thousand Five Hundred Dollars ($47,500.00), with simple interest accruing at the
annual rate of 6%, on July 20, 2003 (the "Maturity Date").
The following terms shall apply to this Note:
ARTICLE I
DEFAULT RELATED PROVISIONS
1.1 Payment Grace Period. The Borrower shall have a ten (10) day grace
period to pay any monetary amounts due and payable under this Note, after which
grace period a default interest rate of 15% per annum shall apply to the amounts
owed hereunder.
1.2 Conversion Privileges. The Conversion Privileges set forth in
Article II shall remain in full force and effect immediately from the date
hereof and until the Note is paid in full.
1.3 Interest Rate. Subject to the Holder's right to convert, the
interest payable on this Note shall accrue at the annual rate of six percent
(6%) and be payable annually commencing July 31, 2001 (or more frequently as
provided below) and on the Maturity Date, accelerated or otherwise, when the
principal and remaining accrued but unpaid interest shall be due and payable.
ARTICLE II
CONVERSION RIGHTS
The Holder shall have the right to convert the principal amount and
interest due under this Note into Shares of the Borrower's Common Stock as set
forth below.
2.1. Conversion into the Borrower's Common Stock.
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(a) The Holder shall have the right from and after the issuance of this
Note and then at any time until this Note is fully paid, to convert any
outstanding and unpaid principal portion of this Note of $25,000 or greater
amount, or any lesser amount representing the full remaining outstanding and
unpaid principal portion and at the Holder's election, and the interest accrued
on the Note, (the date of giving of such notice of conversion being a
"Conversion Date") into fully paid and nonassessable shares of common stock of
Borrower as such stock exists on the date of issuance of this Note, or any
shares of capital stock of Borrower into which such stock shall hereafter be
changed or reclassified (the "Common Stock") at the conversion price as defined
in Section 2.1(b) hereof (the "Conversion Price"), determined as provided
herein. Upon delivery to the Company of a Notice of Conversion as described in
Section 9 of the subscription agreement entered into between the Company and
Holder relating to this Note (the "Subscription Agreement") of the Holder's
written request for conversion, Borrower shall issue and deliver to the Holder
within five business days from the Conversion Date that number of shares of
Common Stock for the portion of the Note converted in accordance with the
foregoing. At the election of the Holder, the Company will deliver accrued but
unpaid interest on the Note through the Conversion Date directly to the Holder
on or before the Delivery Date as defined in the Subscription Agreement. 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 on the Note to be
converted, by the Conversion Price.
(b) Subject to adjustment as provided in Section 2.1(c) hereof, the
Conversion Price per share shall be the lesser of: (i) eighty (80%) percent of
the average of the three lowest closing bid prices for the Common Stock as
reported by Bloomberg Financial for the Principal Market (as defined in the
Subscription Agreement), or on any securities exchange or other securities
market on which the Common Stock is then being listed or traded for the thirty
(30) trading days prior to but not including the date of this Note ("Maximum
Base Price"), or (ii) seventy-six (76%) of the average of the three lowest
closing bid prices for the Common Stock as reported by Bloomberg Financial for
the Principal Market, or on any securities exchange or other securities market
on which the Common Stock is then being listed or traded, for the sixty (60)
trading days prior to the Conversion Date.
(c) The Conversion Price described in Section 2.1(b)(i) above and
number and kind of shares or other securities to be issued upon conversion
determined pursuant to Section 2.1(a) and 2.1(b), shall be subject to adjustment
from time to time upon the happening of certain events while this conversion
right remains outstanding, as follows:
X. Xxxxxx, Sale of Assets, etc. If the Borrower at any time
shall consolidate with or merge into or sell or convey all or substantially all
its assets to any other corporation, this Note, as to the unpaid principal
portion thereof and accrued interest thereon, shall thereafter be deemed to
evidence the right to purchase such number and kind of shares or other
securities and property as would have been issuable or distributable on account
of such consolidation, merger, sale or conveyance, upon or with respect to the
securities subject to the conversion or purchase right immediately prior to such
consolidation, merger, sale or conveyance. The foregoing provision shall
similarly apply to successive transactions of a similar nature by any such
successor or purchaser. Without limiting the generality of the foregoing, the
anti-dilution provisions of this Section shall apply to such securities of such
successor or purchaser after any such consolidation, merger, sale or conveyance.
B. 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 portion thereof and accrued interest thereon, shall thereafter
be deemed to evidence the right to purchase such number and kind of securities
as would have been issuable as
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the result of such change with respect to the Common Stock immediately prior to
such reclassification or other change.
C. 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 Conversion Price 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.
D. Share Issuance. Subject to the provisions of this Section,
if the Borrower at any time shall issue any shares of Common Stock prior to the
conversion of the entire principal amount of the Note otherwise than as: (i)
provided in Sections 2.1(c)A, 2.1(c)B or 2.1(c)C or this subparagraph D; or (ii)
pursuant to options, warrants, or other obligations to issue shares, outstanding
on the date hereof as described in the Reports and Other Written Information, as
such terms are defined in the Subscription Agreement (which agreement is
incorporated herein by this reference); [(i), and (ii) above, are hereinafter
referred to as the "Existing Option Obligations"] for a consideration less than
the Maximum Base Price that would be in effect at the time of such issue, then,
and thereafter successively upon each such issue, the Maximum Base Price shall
be reduced as follows: (i) the number of shares of Common Stock outstanding
immediately prior to such issue shall be multiplied by the Maximum Base Price in
effect at the time of such issue and the product shall be added to the aggregate
consideration, if any, received by the Borrower upon such issue of additional
shares of Common Stock; and (ii) the sum so obtained shall be divided by the
number of shares of Common Stock outstanding immediately after such issue. The
resulting quotient shall be the adjusted conversion price. Except for the
Existing Option Obligations, the issuance of any security of the Borrower
carrying the right to convert such security into shares of Common Stock or of
any warrant, right or option to purchase Common Stock shall result in an
adjustment to the Maximum Base Price upon the issuance of shares of Common Stock
upon exercise of such conversion or purchase rights.
(d) During the period the conversion right exists, 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. Borrower represents that upon issuance, such shares will be duly and
validly issued, fully paid and non-assessable. Xxxxxxxx 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.
2.2 Method of Conversion. This Note may be converted by the Holder in
whole or in part as described in Section 2.1(a) hereof and the Subscription
Agreement. Upon partial conversion of this Note, a new Note containing the same
date and provisions of this Note shall 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.
ARTICLE III
EVENT OF DEFAULT
The occurrence of any of the following events of default ("Event of
Default") shall, at the option of the Holder hereof, make all sums of principal
and interest then remaining unpaid hereon and all other
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amounts payable hereunder immediately due and payable, all without demand,
presentment or notice, or grace period, all of which hereby are expressly
waived, except as set forth below:
3.1 Failure to Pay Principal or Interest. The Borrower fails to pay any
installment of principal or interest hereon when due and such failure continues
for a period of ten (10) days.
3.2 Breach of Covenant. The Borrower breaches any material covenant or
other term or condition of this Note and such breach, if subject to cure,
continues for a period of seven (7) days after written notice to the Borrower
from the Holder.
3.3 Breach of Representations and Warranties. Any material
representation or warranty of the Borrower made herein, in the Subscription
Agreement entered into by the Holder and Borrower in connection with this Note,
or in any agreement, statement or certificate given in writing pursuant hereto
or in connection therewith shall be false or misleading.
3.4 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.
3.5 Judgments. Any money judgment, writ or similar final process shall
be entered or filed against Borrower or any of its property or other assets for
more than $50,000, and shall remain unvacated, unbonded and unstayed for a
period of forty-five (45) days.
3.6 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.
3.7 Delisting. Delisting of the Common Stock from any Principal Market
or such other principal exchange on which the Common Stock is listed for
trading, Xxxxxxxx's failure to comply with the conditions for listing on a
Principal Market on which the Common Stock is listed or traded, or notification
from such Principal Market that the Borrower is not in compliance with the
conditions for such continued listing on the Principal Market.
3.8 Concession. A concession by the Borrower or a default under any one
or more obligations in an aggregate monetary amount in excess of $50,000.
3.9 Stop Trade. An SEC stop trade order or NASDAQ trading suspension.
3.10 Failure to Deliver Common Stock or Replacement Note. Xxxxxxxx'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 Subscription Agreement, or if
required a replacement Note.
3.11 Registration Default. The occurrence of a Non-Registration Event
as described in Section 10.4 of the Subscription Agreement.
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ARTICLE IV
MISCELLANEOUS
4.1 Failure or Indulgence Not Waiver. No failure or delay on the part
of 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.
4.2 Notices. Any notice herein required or permitted to be given shall
be in writing and may be personally served or sent by fax transmission (with
copy sent by regular, certified or registered mail or by overnight courier). For
the purposes hereof, the address and fax number of the Holder is as set forth on
the first page hereof. The address and fax number of the Borrower shall be
Commercial Concepts, Inc., 000 Xxxxx 000 Xxxx, Xxxxx X, Xxxx Xxxx Xxxx, Xxxx
00000, telecopier number: (000) 000-0000. Both Xxxxxx and Borrower may change
the address and fax number for service by service of notice to the other as
herein provided. Notice of Conversion shall be deemed given when made to the
Company pursuant to the Subscription Agreement.
4.3 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.
4.4 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.
4.5 Cost of Collection. If default is made in the payment of this Note,
Borrower shall pay the Holder hereof reasonable costs of collection, including
reasonable attorneys' fees.
4.6 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York. 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 state of New York. The Borrower, and, by accepting
this Note, the Holder and the individual signing this Agreement 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.
4.7 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.
4.8 Prepayment. This Note may not be paid prior to the Maturity Date
without the consent of the Holder except as set forth in the Subscription
Agreement.
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IN WITNESS WHEREOF, Xxxxxxxx has caused this Note to be signed in its
name by its Chief Executive Officer on this 20th day of July, 2000.
COMMERCIAL CONCEPTS, INC.
By:/s/ Xxxxxx X. Xxxxxxxx, Xx.
---------------------------
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NOTICE OF CONVERSION
(To be executed by the Registered Holder in order to convert the Note)
The undersigned hereby elects to convert $_________ of the principal
and $_________ of the interest due on the Note issued by COMMERCIAL CONCEPTS,
INC. on _______________, 2000 into Shares of Common Stock of COMMERCIAL
CONCEPTS, INC. (the "Company") according to the conditions set forth in such
Note, as of the date written below.
Date of Conversion:____________________________________________________________
Conversion Price:______________________________________________________________
Shares To Be Delivered:________________________________________________________
Signature:_____________________________________________________________________
Print Name:____________________________________________________________________
Address:_______________________________________________________________________
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